Josh Hanford, director of intergovernmental relations at the Vermont League of Cities and Towns, and Samantha Sheehan, the league’s municipal policy and advocacy specialist, told the House General & Housing Committee on Feb. 21 that municipalities are already planning water and wastewater projects to support housing but lack the financing to complete them.

“These are infrastructure that housing will be built on,” Hanford said, describing a recent league survey of 35 municipalities that reported planned projects totaling an average cost of about $14,000,000 per project and a median of $10,000,000. The league estimated an unmet funding need of roughly $240,000,000 to complete those projects.

The survey entries, Hanford said, represent projects that have voter action to start planning or construction; they include expansions of existing systems and new systems. “These are essentially projects where there's been a voter action, initiating the project,” Sheehan added.

Why it matters: committee members and municipal advocates said municipal water and wastewater capacity is now closely linked to the ability to site higher-density housing under recent state land-use changes, and that without upfront capital municipalities cannot scale infrastructure to meet housing goals.

What the league recommended: Hanford and Sheehan urged the committee to pursue multiple financing tools rather than a single approach. They discussed three main options under consideration statewide:

- A tax-increment financing (TIF)-like instrument (the governor’s SPARK proposal) to channel future tax increments into infrastructure for new neighborhoods; the Vermont League said a SPARK-style approach could be broadened to serve more communities.

- A focused HIT-like program, designed for housing and mixed-use developments, but broadened to allow resiliency and flood-recovery projects to qualify, which the league said would increase uptake in flood-prone valleys such as the Winooski.

- Expanded use of special assessment districts, which in other states limit assessments to property owners within a specific project area (the league noted Vermont’s current statewide practice requires townwide bond votes and that limiting voting to affected property owners is common elsewhere).

The witnesses said tax abatements can also play a role for discrete deals in small communities and that different tools suit different scales.

Questions and constraints: committee members pressed on details the league did not have at the hearing — for example, whether the 35 survey projects included upgrades like wastewater plant expansions that towns have not yet planned. Hanford and Sheehan confirmed the survey captured only projects already initiated through voter action and that other needs (for example, preplanning or major wastewater upgrades that have not yet been planned) were not included in the $240 million figure.

Municipal capacity: the witnesses recommended allowing eligible loan or grant programs to fund not only planning and design but also project and grants management because local governments frequently need help assembling complex funding stacks that combine multiple grants and debt sources.

Funding scale: when asked for a rough funding number, Hanford said the level of need across the state was “north of several hundred million” to address broader infrastructure demand beyond the 35 projects identified.

What the committee is likely to do next: committee members noted the financing language and exact program mechanics will be shaped in Commerce and Appropriations, and asked the witnesses to coordinate with the Commerce Committee staff.

Ending: Committee members thanked the league for testimony and asked staff to seek draft language that would expand eligible activities and consider geography (villages, settlement areas, fire districts) when finalizing program criteria.