Commerce committee weighs converting $5M development loan fund to grants and making VEGI permanent
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Summary
Committee members and agency staff debated S 3 27 provisions to convert a $5 million revolving loan fund into grants, loosen matching requirements to help smaller regional development corporations, expand eligibility for federally impacted properties, and make the VEGI employer incentive permanent while preserving oversight.
The Brabaugh House Committee on Commerce and Economic Development opened a detailed review of S 3 27 on April 1, hearing agency staff describe several proposed changes to the state's economic development toolbox.
Agency staff told the committee the bill would convert an existing $5,000,000 development fund from a loan program with deed restrictions and an 80/20 match into a grant program and change the required applicant match to 50%. "Right now it is a loan; smaller development corporations simply don't have the capital to meet an 80/20 split," an agency official said, urging the change to broaden access for regional development corporations statewide.
The committee also considered language to create a special eligibility path for "federally impacted" properties (sites harmed by federal action or inaction, including properties that suffered flood damage) that could access awards up to $2,000,000. Agency staff recommended a partial match for those projects and proposed raising the disaster-declaration lookback window (the draft currently requires a two‑year window) so eligible sites are not arbitrarily excluded. "We believe there should be a match so there's skin in the game," the agency official told the committee; other members argued that some federally impacted downtowns need larger, lower‑matched awards to move quickly.
Several lawmakers raised sustainability concerns. Committee members noted the $5 million is a one-time appropriation and the agency reported roughly $2.5 million remains available after a small number of prior awards. "If we convert it to a grant and award large sums quickly, we will run out of money and have no revenue source to replenish the fund," one member said. Staff acknowledged the risk and said the report commissioned under the bill should identify funding pathways and possible legislative follow-ups.
S 3 27 also contains provisions on two separate statewide tools the committee discussed in the same hearing. Jessica Hartleben, executive director of the Vermont Economic Progress Council, gave a 60‑day update on the CHIP portal (a TIF-like program for housing and infrastructure under the bill) and recommended continued technical assistance for small municipalities. Hartleben also outlined the council's support for removing VEGI's sunset to make the Vermont Employment Growth Incentive a permanent tool while retaining the program's annual reporting and return-on-investment safeguards. "For every dollar paid out in earned VEGI incentives," Hartleben said, "the council's analysis shows roughly $42.70 is generated in payroll and capital investment that otherwise would not be occurring in Vermont."
Committee members asked staff to refine the draft language on matches, the disaster-declaration window, and whether awards should be capped differently for federally impacted sites. The chair directed staff ("Rick") to walk the committee through the new language later in the day and scheduled additional consideration of the bill.
What happens next: Committee staff will bring updated draft language reflecting member concerns on matching, disaster-eligibility windows and award caps; the committee will hear those revisions and continue the deliberation on S 3 27.
