Vermont League of Cities and Towns urges state action on municipal tools for housing, appeals, short-term rentals and tax relief

John Hanford and Samantha Sheehan of the Vermont League of Cities and Towns (VLCT) briefed the House Committee on General & Housing on Jan. 17, outlining municipal priorities that the League says are essential to produce more housing and to stabilize municipal finances.

“We represent every city and town in the state,” Hanford said, describing VLCT’s role in municipal training, legal guidance and technical assistance. He said VLCT has taken a larger role since recent floods and that the organization currently holds a time-limited $1 million U.S. Department of Agriculture grant to provide technical assistance to municipalities.

VLCT identified housing availability and affordability as its top legislative priority. The presenters asked the committee to authorize new local financing and infrastructure tools so municipalities can borrow for water, sewer and roads needed by dense development and then recover that investment from growth in local revenue. Hanford said the existing tax increment financing (TIF) structure is “too complicated, too cumbersome, and too political” and that municipalities need practical alternatives to finance developer-ready infrastructure.

On permitting and appeals, VLCT urged changes to reduce late-stage challenges that can derail projects in areas that communities have designated for growth. The League cited Act 181’s previous change increasing Act 250 standing thresholds and said municipalities need additional balance so projects that passed robust public planning are not defeated by late appeals.

VLCT also recommended giving municipalities more authority over short-term rentals, including the option to add a local surcharge to help pay for housing mitigation and municipal impacts. Sheehan said the state-authorized 3 percent short-term rental surcharge currently flows to the state’s education fund; the League argued municipalities should be able to impose a local surcharge and retain revenue to mitigate local impacts.

On homelessness, Hanford said the GA motel placements that relocated people to communities have produced disproportionate local costs and that municipalities need more proportional state support for homeless prevention and emergency response.

The League raised several fiscal and liability issues: return of surplus payments-in-lieu-of-taxes (PILOT) to municipalities that generate the revenue, the strain of rising delinquent property taxes on municipal collectors, and a request that municipalities receive the same statutory liability caps the state has adopted for itself (the League cited state caps of $500,000/$200,000 as a possible model). Hanford warned that high-cost lawsuits can bankrupt small towns.

Panelists urged the Legislature to authorize revenue-sharing and programmatic support rather than rely exclusively on competitive grants that favor municipalities with greater capacity. Sheehan and Hanford noted VLCT’s municipal-operations team provides grant and ARPA reporting support and urged investment in technical assistance so smaller towns can compete for funds.

Committee members asked about the mechanics of appeals and about whether VLCT would support limiting appeals only for projects in locally-designated growth areas. Hanford said VLCT is open to proposals that protect projects that have passed local planning processes and designated-center approvals, while retaining meaningful public input earlier in the planning timeline.

VLCT representatives said they will continue to develop these proposals with municipal members and other coalition partners and expect to return to testify as bills and budget measures are drafted.