House committee continues H.757 review, flags sublease limits and funding rules for limited-equity cooperatives

The House Committee on General and Housing on Jan. 27 continued its review of H.757, a bill that would revise how Vermont treats manufactured homes and limited-equity cooperatives (LECs). Committee members and Legislative Counsel Cameron Wood spent the session parsing statutory definitions, sublease limits and the implications of treating LECs as nonprofits for state funding.

Wood, of the Office of Legislative Council, told the committee the cooperative-housing provisions sit in Title 11 (corporations) and include a specific section for limited-equity cooperatives (section 15-98). "The purpose of this chapter is to foster creation and preservation of affordable housing in Vermont by enabling individuals to form cooperative housing corporations, including a limited equity cooperative," he said, describing statutory limits that require transfer values to be set by formulas in the articles of incorporation so membership remains affordable.

Why it matters: The bill contains several changes that, as currently drafted, would apply to all limited-equity cooperatives rather than only those that are manufactured-home communities. That broad wording could alter eligibility for state grants, reporting classification with the Secretary of State and requirements tied to stormwater permits and subleasing. Committee members repeatedly urged drafters to narrow the bill or add a clear definition so relief or restrictions apply only to manufactured-home LECs when intended.

Key specifics discussed included: Wood said current law bars subleases that charge more than 110% of the proprietary monthly payment. H.757 would, for LECs organized before July 1, 2026, limit total sublease rent (including utilities) to applicable fair-market rent; for LECs incorporated after that date, the bill would prohibit subleasing except when a board grants a hardship waiver. The statute does not currently define "hardship," and Wood said boards would be the entity granting waivers unless the committee amends the language.

Committee members raised practical questions about oversight and enforcement. One member asked who checks that transfer formulas and income limits are followed; Wood pointed to the statute's language that an amendment "as determined and certified by the commissioner of housing" (the Department of Housing and Community Development, THCD) is required, but he said he did not know how actively THCD or the Secretary of State review or enforce those requirements in practice. The chair commented, "as is so much the case in Vermont, that it is the law is there and it's not enforced," a concern the committee said merits follow-up.

Members also discussed conversion thresholds in the cooperative-housing chapter: typically a cooperative must secure memberships for 80% of units within two years, conversions must have 50% secured at incorporation, but mobile-home park conversions require only 25% at incorporation. A committee member said there are 19 limited-equity cooperative manufactured-home communities in Vermont, roughly 16–17 that are resident-owned.

Wood recommended inviting the Secretary of State to explain registration categories and any system limitations and suggested inviting operators and financial advisers from existing LECs to explain grant access. He also flagged a stormwater-permit provision in the bill that, as written, would exempt any LEC from stormwater permit requirements; he urged narrowing or defining the term "limited-equity cooperative" where appropriate.

The committee did not take votes during the session. The committee will reconvene at 1:00 p.m. after floor business to hear testimony from Rachel Siegel of the Pew Charitable Trust and representatives from East Rise (a credit union active in manufactured-home financing) and other stakeholders. The continuing conversation will focus on drafting precise definitions, clarifying which LECs the bill targets, and establishing who may grant hardship waivers or certify affordability.