Committee reviews S.327 changes to rural industry development grant program, debates broader uses and payout terms

The Vermont House Committee on Commerce & Economic Development met April 1 to review draft 1.1 of S.327, which would move and revise the rural industry development grant program into Title 10 and change how grants may be used and awarded. Legislative counsel Rick Seo walked members through the draft and the statute's history, saying the program was created in session law (Act 78, 2023) and explaining why codifying it in Title 10 would make it easier to find and to sustain.

The bill would expand eligible uses beyond industrial site acquisition and renovation to allow commercial development and — in the case of federally impacted property — residential use. "The rural industry development grant program... was created in session law in 2020," Rick Seo said while explaining the change and why the language is being moved into the economic development chapter in Title 10. Committee members sought clearer statutory language about whether projects must be categorized as a single "use" or could be mixed‑use and whether the statute should use "shall" (mandatory) instead of "may" (permissive) for certain funded activities.

A key substantive change in the draft is how awards would be sized. Under current law an award is capped at the lesser of $1 million or 50% of total project cost; the draft raises the program’s flexibility and includes a 100% funding tier for certain federally impacted properties, but caps those awards at $2 million. Committee members questioned the criteria for the 100% tier and whether it should require a designated downtown location or other local designations. "If the property is classified as a federally impacted property... the secretary can certify the project and it could be 100% up to $2 million," counsel said, describing the committee's proposed tiering and the need to define qualifying areas.

Members also flagged a drafting change with budget and policy implications: the new draft appears to remove earlier statutory language requiring deed restrictions or state recapture of proceeds if a grantee later sells property that was improved with program funds. "If this were to pass as written... removing the deed restrictions would make it a pure grant program," one committee member noted; counsel said he would research how that change would affect current recipients who already have deed restrictions in place.

The committee debated how to define "rural" for prioritization (options discussed included a population cap such as 10,000 or a density measure) and asked counsel to clarify terms such as "development agreement" and how the program interfaces with existing VA/authority programs. Members also discussed whether federally impacted properties outside of downtown areas should be eligible for the highest funding tier.

The committee did not take a vote on S.327 at the April 1 meeting. Members asked counsel to return with clearer draft language addressing the "use vs. development" wording, explicit definitions for "rural" and "federally impacted property" tiers, and the legal treatment of existing deed restrictions. The committee plans further discussion next week and said it will consult appropriations staff about funding and possible federal matching opportunities.