2008 Legislative Session Wrap-Up
Housing Bill Passes
In the waning hours of the legislative session, lawmakers approved a bill that provides incentives for construction of housing in smart growth locations in and around our downtowns and village centers. Originally characterized as "an affordable housing bill," the legislation became one of the most hotly-debated issues of the session.
Smart Growth Vermont advocated for strong locational criteria that would provide incentives in areas where such growth made the most sense - in and around designated downtowns and village centers. "We understand there is a critical need for new housing," said Noelle MacKay, Executive Director of Smart Growth Vermont. "It just makes good sense to create that housing in the heart of our communities where we have already made investments in infrastructure."
New Smart Growth Housing Program Created
The bill creates the Vermont Neighborhood Program (VNP) as a housing-focused component of the state Designated Downtown, Village Center and Growth Center programs. It extends location-based permit reforms and incentives to areas contiguous to designated community centers. The new program is intended to encourage high-density, mixed-income housing development in and around our more developed downtown and village centers. A community with infrastructure (sewer or alternative sewer) and local development rules (planning, zoning, and subdivision regulations) can designate an area to host incentives for the construction of high-density (at least 4 units/acre), mixed income homes and apartments.
Location Requirements
To promote smart growth principles, one of our key priorities for this the bill was to ensure that designated areas were of appropriate size, scale and location. The bill accomplishes this, as Vermont Neighborhood" can be in: (1) a designated downtown, new town center or village center; (2) contiguous to a designated downtown, new town center or village center; or (3) a designated growth center. The size of this area can be no more than 100% of the size of the designated downtown, 75% of the size of a new town center or 50% the size of a designated village center. The number of units that would trigger Act 250 would rise to between 25 and 200, depending on the population of the municipality.
Affordability
One of the key smart growth principles is providing housing opportunities for everyone that lives in our communities. We believe it is essential that residential development offers a mixture of housing types and price points. The bill helps to ensure this by providing regulatory benefits for projects offering homes for Vermonters in different income ranges. The Vermont Neighborhoods Program would ease state permit rules for qualifying mixed-income housing projects. To qualify a housing development would need to meet one of the following ‘affordability’ requirements:
- 20 percent of the homes would need to be sold to the first purchaser at a price that is no more than 90 percent of the VHFA maximum guideline (around 250K in many areas); or
- 15 percent of the homes would need to be sold to the first purchaser at a price that is no more than 85 percent of the VHFA maximum guidelines; or
- During the first 30 years after construction, 20 percent of the apartments have to be rented to people earning no more than 60 percent of the area median income.
Incentives
Like the Downtown and Growth Centers Programs, the Vermont Neighborhoods Program provides incentives to develop in areas that are typically more expensive and difficult top develop. Financial incentives for developments in Vermont Neighborhoods include:
- A $50 cap on ANR fees for wastewater if the application is already locally approved (sec 3);
- Act 250 fees for housing at 50 percent the normal rate. These fees would be paid on a staggered basis (50% up front and 50% upon decision). This would apply to projects not exempted from Act 250 by the bill. (Sec. 7); and
- A Land Gains Tax exemption.
Downtown Board Restructuring
Two state agency appointments were removed and replaced with an one person nominated from the business community and another from the smart growth community.
Regulation of Strip Development and Protection of the Countryside (Act 250 Criteria 9L)
Early in the process, we had hoped there would be updates to some of the Act 250 rules that govern rural development This was a very contentious issue. It was decided that this and other issues would be examined by a Study Committee. This committee will:
- Study Act 250 (10 V.S.A. § 6086) criterion 5, relating to traffic, criterion 9(H), relating to scattered development, criterion 9(L), relating to rural development, and other criteria identified by the committee, to determine the effectiveness of those criteria to promote compact settlement patterns, prevent sprawl, and protect important natural resources, and to make recommendations to improve the effectiveness of those criteria in preserving the economic vitality of Vermont’s existing settlements and preventing sprawl development.
- Evaluate the development potential of existing designated downtowns, new town centers, and village centers and evaluate the community and natural resource impacts of developing surrounding lands.
- Make recommendations for incentives designed to encourage municipalities to preserve Vermont’s working landscape and to develop Vermont neighborhoods and new housing. The committee will be comprised of lawmakers and a wide range of stakeholders, including Smart Growth Vermont.
In the end, the “Vermont Neighborhood –Smart Growth” bill became an omnibus housing package. In addition to the Vermont Neighborhoods provisions, the bill includes mobile home park legislation, lead paint legislation, a safe rental housing task force, landlord and tenant law reforms and a VHFA funding provision. An additional provision called attention to understaffing of the planning and designation and downtown programs in the Agency of Commerce and Community Development.
Tax Credits Increased for Designated Downtown and Villages
Thanks to all of you who signed our letter supporting downtown tax credits! Your petition letter made a difference. With your help, Preservation Trust of Vermont (PTV), our legislative partner, and Smart Growth Vermont successfully advocated for a one-time increase of $150,000 in tax credits for designated downtowns and village centers. "We are particularly appreciative that the special Legislative committee that reviewed a variety of proposals to stimulate our economy found that the Downtown and Village Center Tax Credit Program produces a wide variety of benefits from downtown revitalization to job production to boosting the Vermont economy," said Paul Bruhn, PTV's Executive Director. The current maximum for these tax credits is $1.6 million. PTV and Smart Growth Vermont recommended that state increase the tax credits available under the Downtown Program rather than creating a new tax credit program proposed by the Administration. This would help stimulate the economy in the coming year and avoid a delay resulting from creation of a new program.
VHCB Investments Remain a Top Priority; Proposed Cuts Rejected
Appropriations for the Vermont Housing and Conservation Board (VHCB) were set at approximately $16.1M for FY09. The Legislature rejected Governor Douglas’ proposal to cut VHCB by about $5.2M, and his call for the state to put land conservation investments on a back burner. The appropriation essentially provides level-funding to VHCB for next the year, although some of those funds are contingent on state revenues remaining at the same level as the previous year.
Current Use Program Improved
Legislation (S.311) that passed the Senate and House updates and streamlines the Use Value Program (commonly known as Current Use). Prior to the session, an independent study committee determined that the program was critical to helping landowners keep land in farming and forestry by taxing land at its use rather than its higher development value. The Study Committee also recommended the Legislature consider targeted improvements to the program. S.311 streamlines some of the duties of listers, improves the administrative burden for county foresters by requiring them to visit parcels every ten years versus every five. A key new provision directs the Commissioner of Forests, Parks and Recreation to develop guidelines for the enrollment of important ecological areas. This recognizes one of the original goals of the program of protecting natural ecosystems. One point of contention was a one-time $25 fee per-parcel to help automate and improve the overall administration of the program. The issue of increasing resources for administrating the program was sent out for study this summer.