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Committee examines draft Vermont Infrastructure Sustainability Fund to finance municipal infrastructure for housing
Summary
Legislative counsel presented draft language creating a special fund, administered by the Vermont Bond Bank, to provide low-interest loans or bonds to municipalities for water, sewer and other public infrastructure where lack of capacity blocks housing development.
Legislative counsel presented draft language on Feb. 19 creating a Vermont Infrastructure Sustainability Fund to provide capital for municipal water, sewer and other public infrastructure projects that block housing development, the committee heard.
The draft would establish a special, revolving fund administered by the Vermont Bond Bank, with program guidelines developed in consultation with the Department of Housing and Community Development and other agencies. Eligible activities in the draft include preliminary engineering, design and construction, transportation investments and other activities the bank's guidelines identify.
Wood said the draft envisions that the bond bank would offer low-interest loans or bonds to municipalities to expand infrastructure capacity, and that proceeds returning to the fund would be reused for additional projects. He told the committee the proposal is a loan program, not a grant program: "It's just they'd be lending at a very low, as you heard this morning's test on very, very low interest rates, like 2%, 1%. And as it returns, it returns to the fund."
Application criteria in the draft would require an explicit link between the financed project and housing unit production, municipal commitment to own and operate the project, project readiness, and demonstration of financing for project completion. The draft also directs the bank to establish award terms such as maximum loan amount, amortization, maximum interest rate, eligible security and whether a loan is eligible for forgiveness.
Why it matters: Municipal infrastructure capacity is frequently cited by developers and municipal officials as a barrier to housing production. A revolving loan fund aimed at capacity expansion could accelerate housing projects linked to water, sewer and transportation improvements.
Next steps: Committee members signed up to follow the section; Wood said the draft references an administration proposal for $9.1 million to seed the fund and that the committee may follow up with administration witnesses to detail eligible activities and guidelines.
