House committee reviews S.127 changes to Vermont Rental Housing Improvement Program, keeps 5-year option and voucher language

The House Committee on Housing on April 15 reviewed the Senate-passed S.127 and debated several substantive changes to the Vermont Rental Housing Improvement Program (VHIP), including whether to keep a five-year forgivable-loan option, how to treat fair-market rent and utilities, and a minimum set-aside for certain populations.

Committee chair opened the session by describing S.127 as “the senate analog to our committee housing bill,” and turned the walk-through to Cameron Wood of the Office of Legislative Council. Wood summarized the document as “the unofficial version as passed by the senate” and guided members through differences from the committee’s House bill.

At issue was the Senate’s removal of a five-year forgivable-loan option. The House bill had retained both five-year forgivable loans and ten-year forgivable loans; the Senate language removes the five-year forgivable-loan form while leaving five-year grants. Members noted the administration’s explanation that, in practice, the agency typically issues five-year grants rather than forgivable loans. One member said the forgivable-loan option had been left in the House draft so the agency would have flexibility; others said removing it simply aligns statute with administrative practice. The committee agreed to keep the House language (retaining the five-year forgivable-loan option) for now.

Members also discussed rent limits for the ten-year program and the program’s treatment of housing vouchers. The bill’s language requires that “total cost of rent for the unit, including utilities not covered by rent payments, shall not exceed the applicable fair market rent established by the Department of Housing and Urban Development (HUD).” Committee members queried whether HUD’s fair-market-rent calculation includes utilities; Cameron Wood reported the initial HUD answer was yes and that he would follow up with detail.

Wood flagged an apparent drafting oversight in the Senate version: language stating that a landlord “shall accept any housing vouchers that are available to pay all or a portion of the tenant’s rent and utilities” had been removed. He said the administration indicated that removal appeared inadvertent and that the agency did not intend to eliminate the requirement. Committee members agreed to restore language clarifying that landlords accept vouchers.

The committee also agreed to retain House language that sets a minimum annual set-aside of 30% of funds for grants and five-year forgivable loans for applicant households from specified populations (for example, households exiting homelessness or refugees). That provision includes Department reporting and consultation with the Agency of Human Services on capacity and the set-aside percentage.

Committee members discussed whether to add people “displaced due to activity related to climate change” as a specifically eligible population. After questions about definitional clarity and administrative burden, the committee settled on narrower language: households displaced due to a natural disaster (omitting the broader “activity related to climate change” phrasing).

The committee did not take a formal roll-call vote on these editorial and policy reconciliations during the meeting; members instructed staff and legislative counsel to draft amendments that preserve the House approach on forgivable loans, restore voucher-acceptance language, retain the 30% minimum set-aside, and change the climate-related displacement language to “natural disaster.”

The committee requested follow-up research on two technical points: whether HUD’s fair-market-rent calculations include utilities and whether any tax-liability differences for recipients would materially change program operation if forgivable-loan language remains. Cameron Wood and a VHFA representative agreed to follow up.

The discussion closed as the committee moved on to other sections of S.127. The committee indicated it will incorporate the agreed drafting fixes into the next amendment and continue reconciling the House and Senate versions ahead of crossover.