Committee hears support, concerns for S.127 CHIP program as tool to fund housing infrastructure

The Vermont House Committee on Commerce and Economic Development on April 22 heard testimony on S.127's CHIP program, a proposal to defer or reallocate municipal and education property-tax revenue to pay for infrastructure and site improvements that support housing.

Charlie Baker, executive director of the Chittenden County Regional Planning Commission and representative of the Vermont Association of Planning and Development Agencies, urged the committee to explicitly allow regional planning commissions (RPCs) and regional development corporations to be reimbursed for related costs so they can assist towns applying to the program. "We have the ability to step in and help a town if they need help with this process, and then get reimbursed out of the proceeds of it," Baker said.

Committee members and witnesses debated two central issues: (1) narrow versus broad eligibility for CHIP-funded improvements, and (2) safeguards to ensure projects produce housing that benefits year-round residents rather than primarily second homes or luxury units.

Maura Collins, executive director of the Vermont Housing Finance Agency (VHFA), said she supports S.127 and described CHIP as a tool that can lower the cost of developing housing by socializing certain infrastructure costs. "If you are adding housing to a community, you are ultimately going to support the education fund," Collins said, while warning that affordable housing usually requires direct subsidy in addition to infrastructure support.

Witnesses discussed specific guardrails. Baker suggested a front-end requirement that applicants obtain a letter of regional plan conformance from the RPC to confirm projects align with regional housing targets and land-use plans. Several committee members raised the risk that the bill's long list of eligible improvements (utilities, digital infrastructure, transportation, recreation, parking, public facilities, land acquisition, demolition, brownfield remediation, site preparation, flood mitigation) could be used for projects that do not advance affordable or primary-residence housing.

Collins noted the bill's reporting requirements (cited in testimony as beginning on page 39) as an important accountability tool: annual reports to the legislature must describe approved projects, improvements made, changes in taxable value and revenue generated, and evaluate program performance relative to legislative intentions about primary residences and modest-income housing. She recommended relying on the planned reporting and legislative review to identify unintended outcomes and adjust the program over time rather than layering burdensome up-front restrictions that might make the tool unusable.

Committee members asked about numerical guardrails discussed elsewhere, including a recurring reference to 20% affordability thresholds used previously for "priority housing projects" (rentals affordable at 80% of area median income; owner-occupied units priced to an affordability threshold) and ideas to adjust captured increments by project type so municipalities retain more revenue when projects are not housing-heavy. Collins and Baker said those are policy choices that could be considered but cautioned that affordability requirements create enforcement and monitoring needs beyond the infrastructure funding CHIP is designed to supply.

Witnesses also clarified planning and implementation details committee members raised: town and regional plan cycles are on an eight-year statutory schedule; not all Vermont towns currently have up-to-date town plans; RPCs are working to disaggregate regional housing targets to municipal levels; and municipal participation (selectboard sign-off) is an important local safeguard because the municipality must elect to use its tax increment or participation in a given project.

No formal votes on S.127 were recorded during the hearing excerpt. Committee members and witnesses repeatedly said the program may need legislative tweaks after initial implementation, and they urged the committee to monitor aggregate outcomes through the bill's reporting and evaluation requirements.