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Senate committee agrees to narrow fix in H.775 to prevent CHIP/TIF from blocking special-assessment bonds
Summary
Committee staff and legal counsel proposed and the committee endorsed a narrow statutory change in H.775 to prevent CHIP or TIF increment retention from sweeping special-assessment revenues that secure special-assessment revenue bonds or are used only for operating expenses, preserving communities’ ability to layer financing tools. The bill will be reworked and taken up again on Friday.
Chair convened the Senate Economic Development, Housing & General Affairs committee to discuss a drafting problem in H.775 that could unintentionally block local infrastructure financing. Michael Gan, executive director of the Vermont Bond Bank, told the committee he had found language in the CHIP statute copied from TIFF that treats many special assessments as property taxes eligible for CHIP/TIF increment retention. "This presents an issue," Gan said, noting that swept assessments could make special-assessment revenue bonds or CPACE financing infeasible in areas subject to CHIP or TIFF.
John Gray of the Office of Legislative Council read the controlling statutory language and outlined two legislative fixes: a narrow change that would exclude special assessments from being treated as property taxes for purposes of CHIP/TIF when their proceeds are used exclusively for operating expenses or when revenues secure special-assessment bonds; or a broader approach declaring that special assessments are not property taxes for the section's purposes. Gray recommended the narrower option as the least disruptive. "You could say special assessments levied under D shall not be considered property taxes for the purpose of the section if the proceeds are used exclusively for operating expenses or if the revenues are secured for purposes of a special assessment bond," he said.
Committee members voiced support for the narrow fix so municipalities would not have to "choose one or the other" financing tool. The chair reported the administration requested removal of the bill’s off-site accelerator pilot and the additional 1% credit facility because no single agency owned the pilot and staff capacity was limited; the committee agreed to drop those features and keep previously agreed loan-capacity changes. The chair said staff (including Cameron) would prepare a revised H.775 for consideration on Friday.
Next steps: the committee will circulate a new draft of H.775 reflecting the narrow statutory fix and the removal of the off-site accelerator and 1% credit facility and will reconvene to consider the revised draft. There was no formal vote recorded during this session.
The discussion centered on ensuring towns and developers can sequence financing (for example, using a special-assessment revenue bond to finance streets and utilities in phase one and then using CHIP for later multifamily phases) without unintentionally voiding bond security or prohibiting later CHIP/TIF use.
