Conservation districts ask legislature to lift mortgage ban so they can buy and repair offices

Michelle Monroe, executive director of the Roman Association of Conservation Districts, told the committee the Soil Conservation Act of 1939 currently bars conservation districts from holding mortgages and asked lawmakers to remove the restriction so districts can buy and repair office space.

The restriction, Monroe said, prevents districts from accessing the U.S. Department of Agriculture Rural Development community facilities program, which requires a loan up front and can forgive a percentage of the loan later. "Because it's a forgivable loan, we first need to take out the loan and then they would forgive 75% of it but we can't take out the loan currently," Monroe said, describing the rule as a practical barrier to projects such as Orleans County's plan to purchase a building from the Barton fairgrounds.

Monroe said conservation districts historically colocalized with USDA Natural Resources Conservation Service offices and are increasingly outgrowing shared space. She also cited service interruptions during shutdowns — including a 47-day shutdown that blocked mail and equipment access — as further evidence that districts need independent office space.

Representative O'Brien asked whether the committee had found a historical rationale for the mortgage prohibition. Monroe replied the group had not dug back into the archive but noted Vermont appears to be the only state that bars conservation districts from mortgages while comparable entities in other states (such as solid-waste districts or regional planning commissions) can hold mortgages or even bond. "We're not entirely sure what the rationale was for it," she said.

Committee members discussed risk and lender practice. One member with banking experience said that after a 75% forgiveness level, a 25% loan-to-value position represents an unusually low lender risk. Monroe said lenders had discussed unsecured municipal loans with some districts, but a secured mortgage gives collateral that would make it easier to recoup money if a district failed: under current law the Natural Resources Conservation Council would assume outstanding contracts, which could include loans, but a mortgage would provide a clearer path to secure collateral.

Monroe also said the Agency of Agriculture had brought the language forward in the Senate and that agency and ANR representatives had signaled they support the change in principle but wanted the administration to vet the language before final action. The committee did not take a vote on the matter during this session; staff and legislators said they would follow up and continue consideration when the bill returns to committee.

The committee then moved on to other sections of the bill.

(Reporting note: the transcript identified the speaker as Michelle Monroe, executive director of the Roman Association of Conservation Districts; she described districts as municipal entities when asked about tax status.)