Amy Spear

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.

• Medical Monitoring (S.113): The Senate unanimously approved S.113, a proposal to establish a cause of action for the remedy of medical monitoring for a person who is exposed to a proven toxic substance. While the Senate-passed bill addresses some of the Governor’s concerns, its fate remains uncertain. Whether or not insurance can be written for small and medium-sized manufacturers, for example, is a concern for both the Vermont Chamber and the manufacturing community.
• Budget Adjustment Act: The Budget Adjustment Act was approved by the Senate and a conference committee will reconcile differences with the House-passed version. The bill includes retention incentives for childcare and healthcare workers, and other workforce investments advocated for by the Vermont Chamber.
• Child Tax Credit (H.510): The $50 million Child Tax Credit was passed by the Ways and Means Committee 8-3 and will provide $1,200 a year to families for each child under the age of six. The Committee also included a last minute amendment to increase the income excluded from taxation for social security benefits by $5,000.
• Retail Theft (S.180): A bill proposed to curb a rise in retail theft has stalled in the Senate Judiciary Committee after members agreed existing laws are sufficient if enforced at the local level. The Committee plans to send a letter to business owners, reminding them of their right to detain shoplifters, as well as a letter to state’s attorneys, urging them to enforce existing law.

Several committees heard from representatives of Career and Technical Education (CTE) schools around the state, who spoke of the lingering stigma around CTE and lack of funding challenging their ability to market their programs to students and parents. There is broad consensus that these programs are highly successful at training and licensing students for rewarding, lucrative careers, and facilitating career connections to quickly get graduates into the career path without taking on college debt. The current funding model forces high schools and CTE centers to compete for funding, with high schools losing funding for each student they send to a CTE. And while CTE’s agree that they need to be educating more students, they lack the space in their programs and facilities necessary to expand their offerings. The Vermont Chamber supports CTE as a tool for preparing high school and adult learners for in-demand jobs and supports changes to the funding model as well as the Governor’s proposed $1.725 million for CTE’s in the Budget Adjustment Act, which will allow them to serve more students as part of the effort to train tomorrow’s workforce.

The House Energy and Technology Committee heard testimony from the Agency of Digital Services and the Department of Labor on the Unemployment Insurance modernization project. Despite the interest of several committees to increase benefits before the outdated mainframe system can accommodate such significant changes, the reality is that other states have taken five or more years to complete their modernization projects, and Vermont is still only in phase one of the project, with the Request for Proposal (RFP) due out later this month. Realistically, the project will take at least four years to complete, if not longer, and the Governor’s budget request included an additional $30 million to complete it. The Vermont Chamber supports this budget request because UI modernization cannot wait and the current system, in constant need of repair, cannot handle additional policy changes.  

The House Natural Resource Committee has taken testimony on a bill to shift oversight of Act 250 by creating a new Environmental Review Board. The new Board would assume the responsibilities of the Natural Resource Board, plus the appeals process, which will be removed from the Environmental Court. The new Environmental Review Board is proposed to be a professional five-member review board, with one full time Chair and four part time members. The proposed changes would also remove the interrogatory and discovery process. The purpose of the change is to strengthen the Board, make this a more citizen-friendly process, and reduce the cost associated with Act 250.

The Senate Economic Development, Housing and General Affairs Committee reviewed a proposal to allow homeowners to create Accessory Dwelling Units (ADUs) within their home or on their property. State statute currently allows for ADUs, but the Committee is assessing how to incentivize, educate homeowners, and finance these units. It was encouraging that the Committee and witnesses were cognizant of this conversation in terms of the housing crisis and using state resources to create long term housing solutions and not add to Vermont’s growing short term rental stock. The Committee discussed the requirements for owner occupancy and local bylaws to address this. The Vermont Chamber supports efforts to increase units of housing stock in Vermont, which will provide the workforce with affordable and suitable housing opportunities.

The Governor’s proposal for increased funding for a program that can help with ADUs was removed from the Budget Adjustment Act (BAA) by Senate Appropriation. Twenty million dollars for the Vermont Rental Housing Investment Program (VRHIP), which provides funding to upgrade rental units and create ADUs, was passed by the House in the BAA but was removed by the Senate Appropriation Committee in order to combine the program language currently in S.210 with the money for it. Last year program funding was approved but program language was vetoed. Consideration of S.210 has been postponed by the Senate until February 8.

Vermont is currently one of only three states (CA, VT, VA) and Washington, D.C. that fully tax military retirement pay. Military retirees often receive their pension for 20 years of service between 38 and 42 years old and are uniquely positioned to continue contributing to the workforce in impacted industries until they reach traditional retirement age. Following a press conference held by a bipartisan group of legislators and Administration officials, the Vermont National Guard and Veterans Affairs Caucus sent a letter urging the House and Senate to raise the threshold of federally taxable U.S. military retirement pay in S.53 from $10,000 to $30,000.  The Vermont Chamber supports the $3.1 million expenditure in the Governor’s proposed 2022 Budget for a full exemption. This will incentivize military retirees to either stay or move to Vermont and increase the diversity of our communities while also strengthening our workforce and helping to address the severe workforce labor shortages.

To address the workforce shortage, Governor Phil Scott has proposed a budget that includes significant investments in programs to incentivize new families and workers to move to Vermont. We currently have 24,000 fewer workers in the workforce than we did two years ago, and we have 23,000 job openings. We desperately need more people to keep our economy and our communities strong. The Governor is proposing $6 million for the Remote and Relocated Worker Grant program, as well as $8.46 million over the next three years in marketing Vermont as an attractive place to live and work. The Vermont Chamber is supportive of these investments and provided the Senate Economic Development, Housing, and General Affairs Committee with specific feedback on how to ensure these investments are maximized for the best impact. The Vermont Chamber is also supporting the Declaration of Inclusion for towns. In the past week, two additional towns have adopted the Declaration, which will help demonstrate that they are welcoming and inclusive communities.