House committee examines H-134 off-ramp from current-use tax to spur housing development

The House Committee on Agriculture, Food Resiliency & Forestry discussed bill H-134 on proposed changes to the state's current‑use tax program intended to encourage housing development, particularly workforce and entry‑level homes.

Chairman Durfee opened the discussion, saying the committee has “3 bills” under consideration and that “as written the 3 mile radius is excessive and that essentially covers the entire state.” The committee had invited state agency staff and mapping experts to offer technical input before any markup.

Commissioner Farrell, representing the administration, told the committee, “I love the idea of some off ramp to current use, that would incentivize development to housing.” Farrell said the administration and agencies have discussed the bill with the committee and are watching how H-134 would interact with work already underway on future land‑use mapping and interim Act 250 exemptions.

Representative Richard Nelson, who described the bill’s intent, said it was meant to target “affordable workforce housing” and suggested the language could be broadened to say “residential housing” so it would not be used to create large single‑lot luxury homes. Representative Jed Lipsky emphasized the bill’s focus on “entry level housing” for young Vermonters and local workers.

State staff advised the committee to consider linking any tax off‑ramp to existing definitions and mapped areas rather than a simple radius. The mapping presentation showed the state’s designated village centers (orange), downtowns (red), neighborhood development areas (blue) and designated growth centers (green). Staff noted that “in village centers, that line represents a quarter mile” buffer and that “for downtowns, that line represents a half mile.” They warned that a three‑mile buffer from every center would cause designations to “bleed together,” producing a statewide coverage that would be difficult to target.

Staff suggested using the interim Act 250 exemption areas created under Act 181 and the future land‑use mapping tiers (1A and 1B) as starting points for a targeted incentive. They cautioned, however, that many Northeast Kingdom village centers lack municipal zoning or one of the infrastructure prerequisites (municipal water, municipal wastewater, or suitable soils) and therefore currently do not qualify for the interim exemptions; tying an incentive directly to those interim exemptions could unintentionally exclude some rural village centers.

Technical tradeoffs came up repeatedly. Committee members and staff discussed prime agricultural soils and whether removing land from agricultural use in growth areas could be appropriate when the land no longer serves agricultural purposes. Committee members said developers and funding partners have identified the cost of dealing with prime soils and other constraints as a barrier to building housing in some locations. The commissioner and several members suggested reaching out to the Vermont Housing and Conservation Board, regional planning commissions and development practitioners for more examples and data.

Flood risk and climate resilience also entered the discussion. Representative O’Brien asked how growth‑center strategies align with recent flood events and buyouts. Staff replied that many historic downtowns sit in flood plains, and that future land‑use mapping should account for this by enabling growth “just uphill, just outside of the downtown.” Staff used Montpelier’s proposed Elk’s Club Road development as an example of a site that could add “3 to 400 units of housing” in a less flood‑prone location.

Committee members discussed timeline and process constraints. The House crossover schedule requires committees to act on measures by Friday to keep them moving through the session; any provision that affects state revenue would also need review by Ways and Means. Members noted H-134 might touch tax, land‑use and agency jurisdictional issues that could require referrals to other committees and further drafting, and one member said the measure “may not be ready till next year.”

Several members urged simplicity in drafting and recommended tying incentives to existing programs and maps so the bill would not add a second layer of land‑use regulation. Staff and lawmakers agreed to continue collecting technical input, including more detailed maps, AMI thresholds used in priority housing projects (staff noted the priority housing framework uses roughly 80% AMI for rentals and up to 120% AMI for ownership as reference points) and examples from municipalities and developers.

The committee did not take formal action on H-134 during the meeting. Members scheduled additional testimony and mapping demonstrations and discussed the option of placing some items into a miscellaneous agricultural bill under consideration this week. Several participants said they would supply more technical materials and coordinate with regional planning commissions and the housing board before the committee’s next markup.

The committee paused for a break and planned to reconvene to continue testimony and consider draft language; no votes or amendments were recorded during the portion of the meeting in the transcript.