Committee reviews H.398 rewrite of VEDA law; adds $2M disaster loan fund and housing coordination with VHFA

House Committee on Commerce & Economic Development members on an unspecified date reviewed H.398, a bill that would rewrite 10 V.S.A. chapter 12, which governs the Vermont Economic Development Authority (VEDA). The bill combines broad housekeeping edits with several substantive changes: expanding VEDA’s secured‑loan authority, extending some loan terms from 10 to 20 years, modernizing bond language, redesignating the Vermont Jobs Fund within the chapter, and creating a new disaster recovery revolving loan fund with a $2,000,000 appropriation.

“For the record, Cameron Wood, office of legislative counsel,” said Cameron Wood as he opened a line‑by‑line walkthrough of the draft bill. Wood and committee members identified three areas warranting particular attention: the housing language, a reference to the state’s sustainable jobs strategy, and a new disaster recovery loan fund.

The nut of H.398 is structural cleanup across the entire chapter, Wood said, removing outdated reporting requirements and neutralizing gendered language. The draft also makes several technical revisions recommended by bond counsel, including replacing some references to “digital” signatures with broader “electronic” signatures and aligning pledge and bond language with common conduit issuer practice.

Substantive changes discussed

- Housing: The bill would allow VEDA to finance certain multifamily rental housing, including employer‑sponsored or similar rental projects, but only after consultation and “deference to the Vermont Housing Finance Agency (VHFA)” for applications eligible for financing from both agencies. Committee members and VEDA staff discussed draft amendment language that would add a subsection enumerating eligible housing types rather than relying on the original prohibition‑then‑exception formulation. Cassie Palinas, introduced for the record as “Cassie Palinas, CEO of VIDA,” presented VEDA’s proposed text and said the change was intended to clarify how housing fits within VEDA’s loan programs. VEDA staff emphasized that their typical direct‑loan authority historically capped participation at a fraction of project cost (40% was noted during the meeting) and that finance structures would continue to be underwritten case‑by‑case. VEDA staff said the authority would not be a source of 100% project financing.

- Sustainable jobs strategy: H.398 removes a specific statutory reference requiring projects to meet criteria set by the state’s sustainable jobs strategy (a document enacted under Governor Howard Dean in 1999). Wood flagged that removal for discussion and suggested the committee ask VEDA and the Agency of Commerce why the reference was being struck and whether the strategy should instead be made more accessible or its key elements codified. VHFA and ACCD representatives said the strategy exists as a short, dated document and is rarely invoked, but it has been used selectively for projects that did not fit other program categories.

- Disaster recovery loan fund (new subchapter 15): The draft creates a revolving disaster recovery loan fund to provide loans and other financial assistance to businesses and agricultural enterprises after disasters. The bill designates a $2,000,000 appropriation (unobligated funds from a previously authorized program) to seed the fund, requires VEDA to adopt policies and procedures for timely delivery, makes the fund revolving (repayments return to the fund), and includes draft language limiting interest charged to rates necessary to cover administrative costs. Committee members debated whether eligibility should require a governor’s disaster declaration or whether VEDA should have discretion to deploy funds after consultation with the governor and relevant agencies. ACCD Secretary Lindsay Kurrle said the agency is “very supportive of the $2,000,000 going to VEDA to establish a disaster recovery fund” but recommended that VEDA develop guardrails and consult with state officials on triggers.

Comments from VHFA and others

Mara Collins, executive director of the Vermont Housing Finance Agency, testified on the housing language. She told the committee that VHFA and VEDA are “sister agencies” with overlapping histories and partnerships and that VHFA already has loan authority and lending capacity for housing. Collins emphasized that most current lending needs for new rental housing are subsidy‑driven: construction costs and current interest rates mean many projects require below‑market financing or grants to “pencil.” She said VHFA can offer long amortizations (30–40 years) and lower effective rates when subsidy is available, and cautioned that creating another lender in the housing space could change negotiation dynamics with developers and potentially duplicate underwriting work. Collins recommended close coordination and suggested developers be encouraged to test proposals with VHFA to determine whether subsidy, rather than additional lender capacity, is the limiting factor.

Other technical and program changes

Committee and counsel discussed a set of consistent language edits: replacing repeated references to “mortgage” with broader references to secured loans or business assets in subchapter 5; changing some loan‑term caps (committee discussion noted current 10‑year terms for some programs and the draft’s move to permit 20 years); restoring an inadvertent deletion referring to job development zones; modernizing bond execution language to reflect current practice; and removing staff from the list of officers in the VEDA governance provision so officers would be elected from the board membership.

What the committee asked of staff and stakeholders

Committee members asked VEDA to: (1) present the proposed housing amendment in formal amendment language for the committee’s consideration; (2) explain the policy rationale for removing the statutory reference to the sustainable jobs strategy and, if the committee desires, supply an electronic copy of the 1999 strategy; and (3) draft policy guardrails and trigger language for the disaster recovery fund, including whether the fund’s activation should require a governor’s declaration or consultation with the governor, ACCD and the Agency of Agriculture.

No formal votes were recorded on H.398 at this session. Committee members said they expect further markup after VEDA and VHFA provide additional materials and that staff will return with clarified amendment text and suggested program rules.

Ending

Committee members asked VEDA and VHFA to continue coordination and to provide the committee with the sustainable jobs strategy document and draft amendment language before the next meeting. Several members urged testing the housing proposals with real developer applications over the coming months so the committee can judge whether statutory changes are filling unmet market needs or creating overlap between VEDA and VHFA.