Amy Spear

• Child Tax Credit: H.510 passed the House and now heads to the Senate for review of the $50 million Child Tax Credit proposal.
• Workers’ Compensation: H.559, which updates the annual rate of contribution for workers’ compensation from the current 1.4% to 1.5% in 2023, was passed by the House and now goes to the Senate.

As anticipated, S.210, which contains a short-term rental provision, passed the Senate this week. To craft a bill that could gain the Governor’s approval, several exemptions were added, including an exemption for properties rented for fewer than 90-days each year. What remains to be seen is whether Governor Scott is willing to meet the Legislature in the middle. It is anticipated that the bill will move quickly through the House.

Despite tourism being one of Vermont’s largest economic contributors, the State’s tourism budget has historically been one of the smallest in the country. Thanks to an influx of Federal dollars, the Scott Administration has proposed historic investments in marketing to bring visitors to Vermont and marketing to attract new residents to Vermont.

In addition to the base budget funding of approximately $3.5 million, key investments include:

• $8.46 million which will be spent over 3 years (not funded via ARPA) as an investment for a Regional Relocation Network which would fund marketing, regional partners, and a new staff member.
• $10.4 million granted from the Federal Economic Development Authority Travel, Tourism and Outdoor Recreation program to support destination marketing, workforce and business development, and destination development and infrastructure investments.

These investments would resource the Vermont Department of Tourism and Marketing to improve the existing marketing efforts and help bolster Vermont’s long-term economic vitality with consistent messaging for visitors and prospective residents.

New data shows that restaurant recovery is paralyzed and nowhere near complete. Together with the Vermont Independent Restaurants, the Vermont Chamber engaged with the offices of Senator Leahy and Senator Sanders, demonstrating how urgent the need is among restaurants that did not receive relief before funding ran out. It has now been 263 days since the fund was depleted, leaving 581 Vermont restaurants shouldering more than $120 million in demonstrated unmet need. The inequity between restaurants that received funding and those that did not is staggering. Each day restaurants take on more debt to keep their doors open and their staff employed as business continues to lag. RRF replenishment was promised as a lifeline to small businesses that are essential to the community. The time for Congressional action is now.

The Scott Administration initially proposed to redeploy the remaining $26 million of business grants to other worthy projects while creating a new loan program for struggling businesses. While it’s less than 10% of the $350 million in State business grant relief that has been allocated during the pandemic, it would provide meaningful relief to the small business in the lodging, restaurant, and wedding industries. The Vermont Chamber cried foul and worked to prove that the formula and process were flawed. After much lobbying, including emails from members to legislators, the Senate Economic Development Committee is set to make changes so that small businesses can access these funds quickly.

The proposal moves the money to the Vermont Economic Development Authority (VEDA) for loans that could be converted to grants, like the PPP loans. However, applicants will have the opportunity to apply for forgiveness at the same time as applying for the loan so it would take minimal time for the loan being converted to the grant. Many details need to be worked out, but there is consensus building around this direction. This is just the first step in a long process to ensure this $26 million is granted to businesses as promised last year.

After testimony that the proposed smart growth designation would add time and cost to building housing, not efficiency, the Senate Natural Resources and Energy Committee updated S.234 to remove the smart growth designation program proposal. Instead, the Committee included the proposal in the Omnibus Housing Bill to amend the statute governing neighborhood planning areas and neighborhood development areas so more municipalities can access that designation and be eligible for Act 250-exempt priority housing projects. While these provisions are a positive change for building housing development projects, the Agency of Natural Resources warned legislators that the proposed Road Rule would lead to an assured veto from the Governor. The rule would trigger Act 250 jurisdiction when all roads and driveways of a proposed development cumulatively measured 2,000 feet or more or a single road or driveway of 800 feet in length or more. Extending Act 250 beyond its current form while the State is grappling with a housing crisis will slow the development of new housing supply for middle income Vermonters. The Vermont Chamber supports proposals that will make permitting for development efficient, predictable, and affordable.

The Senate Committee on Economic Development, Housing and General Affairs released its Omnibus Housing Bill which proposes a broad range of new housing programs and modernizations to existing programs. These include:

• Creation of a municipal land bank to give municipalities the authority to purchase, own and blighted or vacant properties.
• Allowing for neighborhood planning development areas so more municipalities can access them and be eligible for Act 250-exempt priority housing projects.
• $150,000 for the study of the effectiveness of State designation programs
• Requirement that, to the extent possible, COVID-19 money for housing be used under smart growth principals.
• A homeless bill of rights
• $5 million to design and implement a first-generation homebuyer incentive program.
• $5 million to design and implement a manufactured home relocation incentive program.
• $5 million for a matching grant program for large employers that provide workforce housing.
• $5 million to work with organizations including the Vermont Chamber to design and implement a program to convert vacant commercial properties into housing units.
• $5 million to contract with an entity to provide housing support services to New Americans.
• Extension of period to incur debt by 3 years for Tax Increment Financing Districts.
• Creation of a First Time Home Buyers Account, similar to an Education Savings Account.
• Language for municipal bylaw modernization grants
• Permit exemptions for downtown housing developments in high demand counties.
• Sales and Use Tax exemption for materials purchased in construction of priority housing projects.
• Penalties to the Environmental Division for permits requests not responded to in a timely way.
• Missing Middle Income Home Ownership Development Program

Absent from this cornucopia of housing incentives is the Vermont Rental Housing Incentive program (VRHIP), which is included in the rental registry bill, S.210, passed by the Senate and headed to the house. Learn more details on the Vermont Chamber’s advocacy on S.210.

The Vermont Chamber has been supportive of many of these initiatives and outlined their importance to the future of the Sate in a recent op-ed. Review and markup of the bill will take place over the next few weeks. If you have questions or comments on these proposals or Vermont’s housing crisis, please contact Vermont Chamber Government Affairs Vice President Megan Sullivan.

Legislators in many committees are working to make necessary changes to solve the workforce shortage. The Senate Economic Development, Housing, and General Affairs Committee, worked on the Omnibus Economic Development Bill, which includes new relocating and remote employee incentives. Kevin Chu of the Vermont Futures Project testified before the House Commerce and Economic Development Committee about Vermont’s population trends and the implications for the workforce. The House Human Services Committee looked at the Governor’s proposed budget for FY23, regarding support services for people in recovery as they seek stable employment. Finally, the House Appropriations Committee dug into the details of the FY23 budget including $5 million for the new and remote worker grant programs, $5 million for affordable mixed-income rental housing, and $10 million for the missing middle-income home ownership development pilot program. The budget seeks to maximize the impact of federal ARPA dollars to make Vermont work for workers

By Megan Sullivan, Vermont Chamber of Commerce. 

As the pandemic approaches the two-year mark, businesses continue to experience a severe workforce shortage. The harsh reality is that even if every young Vermonter committed to staying here into adulthood, we still wouldn’t have enough people to fill all 23,000 open jobs. While funding workforce development and capital investment opportunities remain crucial, there is only one ultimate solution. We need more people to call Vermont home. This requires a robust and sustained marketing effort of Vermont as a welcoming community, with job opportunities and an unmatched quality of life. It also requires taking immediate action to address the glaring barrier to workforce growth: an overwhelming lack of suitable and affordable housing stock for middle-income families. 

While our members have raised this issue for years, the pandemic has heightened the impact on recruiting and retaining workers. One manufacturer in Essex has hired new Americans for over a decade as the core of their workforce with most of their team originally from Nepal or Bhutan. With years of good wages and benefits, these valued employees dream of deepening their community commitment through home ownership. One couple spent years searching for middle-income housing to no avail and just this past year gave up and the moved their entire extended family to Scranton, Pennsylvania, where they were able to find modern, efficient, single-family homes. Without change, this story will be repeated, exactly the opposite of our policy goals to attract a diverse population and welcome them into our communities. 

If we don’t address the availability of suitable housing options, we cannot expect to attract the new population we so desperately need. According to Zillow, the average home listed in Vermont is valued at $326,063, up from $205,000 in 2019. The housing stock that was once available to the middle-income demographic is dwindling. In 2020 the Vermont housing needs assessment found the year-round housing stock increasing at only 0.6% per year. Considering the amount of aging housing stock removed from the market each year, Vermont is set to lose 1,247 renter units and 1,392 owner housing units by 2025 due to destruction, conversion to other usage, or other causes. 

Over the last year, Vermont committed significant funds to develop affordable housing, prioritizing housing insecurity for our most vulnerable. These are crucial discussions; however, in this pivotal moment, with unprecedented federal funds available, we have an opportunity to expand our focus and invest in strategic solutions aimed at our workforce crisis by addressing middle-income housing. To achieve this, the Vermont Chamber is focused on five housing initiatives that directly address this problem:

• The Homeownership Development Proposal addresses housing supply by creating opportunities for middle-income families. This program will confront the value gap between the cost of building a modest home and the selling price. The program will also maintain a subsidy in the home, so it remains at a modest price point while allowing homeowners to build equity, an essential factor to creating generational wealth and eliminating generational poverty.
• National moving trends indicate families are migrating to micropolitan areas and small towns. Vermont can capitalize on this by ensuring predictable housing investment practices in downtowns and neighborhoods by modernizing State and local land use regulations, making designation programs more accessible, and expanding Downtown Tax Credits to Neighborhood Development Areas where housing is concentrated.
• Increasing supply doesn’t always mean building new. The State should provide regulatory and financial incentives to convert commercial buildings into housing. With remote and hybrid work arrangements growing, the need for office space will be reviewed over the next few years. These buildings are already located in smart growth areas, presenting an advantageous opportunity to redeploy them as housing units.
• Furthering investments in initiatives like the Vermont Rental Housing Investment Program will change the trajectory of housing stock being removed from the market each year by rehabilitating uninhabitable rental stock and will create new accessory dwelling units within existing structures.
• Finally, for Vermont to attract more people, we need to understand how short-term rentals impact housing scarcity and affordability. Towns researching this independently have already produced shocking data on the number of units removed from the housing market to instead be managed as short-term rentals. The State should begin collecting this data to inform housing policy.

The time for action is now. The current housing market trajectory will only exacerbate Vermont’s workforce crisis. To change that, we have a responsibility to invest in solutions that address housing for middle-income workers to stay in the communities they love and ensure the opportunity of moving to Vermont is achievable for all. The future of Vermont depends on it. 

Megan Sullivan, of Jericho, is the Vice President of Government Affairs at the Vermont Chamber of Commerce, whose mission is focused on creating an economic climate conducive to business growth while enhancing Vermont’s quality of life.