Witnesses tell House Commerce & Economic Development Committee S.127CHIP could nudge middle-income housing but needs oversight

Montpelier — Testimony before the House Commerce and Economic Development Committee on Wednesday urged lawmakers to approve S.127, a bill that would create a project-based tax increment financing program known as CHIP to help bring middle‑income housing projects to financial viability.

Andrew Brewer, testifying "for the record" as a representative of the law firm Downs, Rackland, Mark and on behalf of regional development corporations and the Vermont Builders and Remodelers Association, told the committee CHIP is aimed at addressing a supply problem in the housing market rather than demand. "This isn't a demand problem. It's a supply problem," Brewer said. "The market does not, on its own, build these kind of middle‑income affordable homes." Brewer added that CHIP is intended to offer incentives that let a project "pencil out" without tapping the general fund.

Brewer framed the bill as one tool among many to expand housing stock and said the committee must make a "judgment call" on whether projects funded through CHIP would have been built absent the subsidy. Quoting Representative Olsen, Brewer said Olsen called the question "a judgment call," and Brewer cautioned the panel against circular debate over the "but for" test used to evaluate tax‑increment incentives.

Brewer described several program features in S.127 as written or discussed: a current two‑year sunset in the statute that proponents seek to extend to 10 years, an annual reporting requirement to the committee each April 1, and a required program report at the end of the sunset period. He told members the annual report would include, for each approved project, "the date of approval, a description of the housing infrastructure project, original taxable value of the site, scope and value, [and] number of units being created." Brewer said those recurring reports would allow the committee to "pull the plug" if the program was not performing as intended.

Committee members questioned how developers and builders view the bill. Brewer said developers — who handle land acquisition, zoning, permitting and financing — would be the primary users of a CHIP tool and that builders generally follow developers' leads. He said many single‑family builders are unlikely to engage directly with a small project‑based TIF and that regional development corporations favor a broad definition of eligible infrastructure tied to housing, including mixed‑use projects with ground‑floor businesses and upper‑floor apartments.

On affordability requirements, Brewer said adding defined affordability targets narrows the pool of potential developers and builders unless subsidy dollars are provided to make projects feasible. Using an example, he said that if a program targeted households at 50 percent of area median income, "where's the money gonna come from to provide the incentive to get a builder to take on the job?" He added that, in high‑cost counties such as Chittenden County, a 50 percent AMI cap could force subsidy levels that the CHIP structure alone would not cover.

Brewer also recounted examples and perspectives he said illustrated housing market dynamics, including a remark he attributed to an economist, Jeff Carr: "How do you build affordable housing? You build a house today and you wait 20 years." He urged committee members not to view CHIP as a silver bullet but as "one of those ideas" that together with other tools could increase supply.

No formal vote or committee action on S.127 occurred during Brewer's testimony. Members indicated the committee will continue hearings and questions about program scope, affordability thresholds and oversight.

Details from the hearing that committee staff and members may follow up on include the proposed extension of the program sunset from two to ten years and the bill's annual reporting elements. Brewer also recommended considering tax stabilization as a complementary tool for smaller communities.

The hearing record shows only testimony and questions during this session; no motions, votes or final committee decisions were recorded in the transcript excerpt provided.