Lawmakers Hear Push for CHIP program to Fund Housing Infrastructure with TIF-like Tool

Michael Weinberger, executive chair of the coalition Let's Build Homes, told the House Commerce and Economic Development Committee on April 15 that S.127 — the so-called CHIP bill — is designed to help municipalities pay for infrastructure that makes housing projects feasible.

Weinberger said the coalition, which he described as representing “more than 200 organizations from all 14 counties” and “over 700 individuals,” sees the measure as a way to increase overall housing supply, not only permanently affordable units. “We have a deep problem here that we have been digging a hole that we've been digging deeper for decades now,” he said, adding that production needs to be “far in excess of the current creeping higher levels.”

The bill, as described in testimony, would let municipalities and third-party sponsors use incremental property-tax revenues tied to a single project (not a whole district) to finance necessary infrastructure — water, sewer, roads, digital infrastructure, and qualified flood-resilience expenses — that otherwise make projects financially infeasible. Witnesses repeatedly contrasted CHIP’s single-site, project-focused structure with larger TIF districts and argued the narrower approach reduces ongoing administrative burdens and eliminates “background growth” capture associated with broad TIFs.

Developer and municipal examples illustrated the financing gap the bill aims to close. David White, president of Weidenberg Real Estate Advisors, described two stalled Vermont projects he advised: an 87-unit workforce housing proposal on the municipally owned “Fonda Site” in St. Albans and a downtown Bellows Falls site that drew no viable proposals. White said the St. Albans site required roughly $9.8 million in subordinate, low-interest financing — about 40–45% of total project financing — and despite free land and municipal support, most developers “couldn't make the numbers work” because construction costs and interest rates have risen sharply since the pandemic.

White presented local grand-list data for Hartford and St. Albans to argue that targeted increment financing can spur investment and ultimately increase education-fund receipts compared with a counterfactual of no targeted incentives. He said Hartford’s TIF area doubled its taxable value over the period he reviewed and that St. Albans’ TIF rose about 47%, with education-fund receipts exceeding what prior trends would have predicted.

Jessica Hartleben, executive director of the Vermont Economic Progress Council (VEPC), testified that VEPC can administer CHIP using its experience with TIF districts and that VEPC recommends a 10-year review of the program because planning and construction timelines often span multiple years. She said VEPC already coordinates with the Department of Taxes’ PVR division, Agency of Natural Resources, and VTrans when evaluating TIF applications and that VEPC intends to provide yearly TIF-like reports and could aim to have CHIP operational in early 2026 if statute and rulemaking proceed.

Committee members and witnesses discussed several recurrent policy questions: whether to include a statutory “but-for” test (witnesses opposed making a strict but-for threshold part of the statute), how to allocate incremental revenue between municipal and education shares (several witnesses suggested flexibility rather than a fixed 80/20 split), whether infrastructure may be privately owned or financed (witnesses asked that private ownership and sponsor-incurred related costs be explicitly allowed), and whether eligible costs should explicitly include flood mitigation and certain digital infrastructure (witnesses confirmed the bill language, as drafted and explained in testimony, contemplates qualified flood-resilience expenses and lists digital infrastructure as eligible when necessary to serve the project).

Several practical points about administration and protections were raised repeatedly: - CHIP is structured around a single site or project (which may include multiple parcels) and is intended to avoid the administrative complexity of large TIF districts. - Municipalities retain control: a project moves forward only if a municipality is willing to negotiate and approve an infrastructure agreement with the sponsor; testimony emphasized that nothing in the bill forces a municipality to participate. - The statute (as discussed by witnesses) can allow the developer or a private sponsor to finance infrastructure and be repaid from increment; bond counsel advice was recommended to make that pledge explicit in the statute or rules. - Protections for municipalities typically appear in the infrastructure agreement (for example, requiring developer financing to be closed before municipal construction obligations commence, or requiring developer guarantees where preconstruction is necessary).

Witnesses proposed targeted statutory clarifications and rulemaking choices they said would improve usability: allow municipal increment to be set above the education share rather than forcing a rigid split; explicitly permit private or sponsor-owned infrastructure where appropriate; include sponsor-incurred related costs (attorney, closing) as eligible; and permit technical-assistance spending from increment so regional commissions or municipal staff can help smaller towns prepare agreements.

On reporting and oversight, Hartleben said VEPC recommended a 10-year program review because projects and infrastructure often take 2–5 years to plan and longer to generate taxable increment, and VEPC will continue to provide annual statutory reports similar to its current TIF reporting.

No formal vote was taken during the committee session excerpted here. Committee members said they intended to continue hearings and language work on S.127.

Ending: Supporters described CHIP as a focused financing tool intended to make specific housing projects feasible by covering infrastructure costs that otherwise get passed onto a project's residents or make projects unbuildable. Witnesses urged the committee to balance guardrails against undue complexity in statute so VEPC can move quickly with rulemaking and make the program available to smaller, rural municipalities as well as larger towns.