Workforce Housing

Lawmakers voted to override the Governor’s veto of H.687, marking the final passage of the historic compromise that has been a monumental undertaking for policymakers and stakeholders this session. The successful passage of the bill will immediately exempt the building of housing units across Vermont, which is a top priority for the Vermont business community. The Vermont Chamber has been engaged on this bill throughout the session to secure this crucial provision, among others.

There will be an opportunity to address the areas of concern that led to the Governor’s veto decision in the next biennium. In the meantime, the passage of this bill marks an important step forward to achieving common goals. Act 250 exemptions for housing will start immediately and a location-based jurisdiction approach will see full exemptions in smart growth areas soon. No single piece of legislation will absolve the housing crisis that has been generations in the making and more work needs to be done to find solutions that get at the root of the problem. The Vermont Chamber remains committed to working with legislators and the Governor’s administration in the years ahead on further policy solutions for Vermonters. 

Amid a lengthy debate and amendments, the Senate is poised to approve H.687, which will be another step towards codifying the historic agreement on location-based jurisdiction. The bill would then need to go back to the House to review changes. The bill removes barriers to residential development in smart growth areas with interim exemptions. Notably, the Vermont Chamber successfully advocated for Act 250 appeals to remain with the Environmental Court. In a compromise to secure this, the future of appeals would be studied, and a report would be due back to the legislature for further consideration in 2026.

Here is a breakdown of much of what the Senate version of the bill would do over the next 3 years:

Development Exemptions: Establishes exemptions for all development in Tier 1A up to 49 units of housing in mixed-use developments in Tier 1B. Interim exemptions include:

• All housing within downtowns until July 1, 2028.
• Up to 75 units in new town centers, growth centers, and neighborhood development areas until July 1, 2028.
• Up to 50 units within ¼ mile of village centers with zoning and in urbanized areas of 50,000 people near transit routes until July 1, 2028.

Name Change and Authority Expansion: The Natural Resources Board becomes the Land Use Review Board (LURB), the five-member board will be appointed by the Governor and have the authority to hear appeals and review regional plans and maps.

Tier 1A Area Application Process: Municipalities can apply from 2026 or after regional plan approval, with LURB guidelines issued by 2026.

Review of Applications for Tier 1A: LURB to manage the workload of District Commissions. Leaves Act 250 permit appeals at the Environmental Division of the Superior Court and will further study the issue.

Act 250 Amendments: Definitions added for forest blocks and habitat connectors. Rules to be adopted for Act 250 in areas with highly sensitive natural resources administration and mapping.

Regional Planning Process: LURB to review future land use maps and Tier 1B designations. RPCs submit to LURB plans and maps which must comply with requirements. Village areas are given Tier 1B status unless the town requests not to have it.

Appeal Changes: The threshold for appeals increased from 10 to 25 people.

Taxation Adjustments: A new property transfer tax rate of 2.5% for residential properties that will not be used as a principal residence, are fit for habitation all year, and are not used for a long-term rental. A temporary education property tax exemption was introduced for flood-impacted communities.

Safety Guidance for Short-Term Rental (STR) Operators: The Division of Fire Safety provides health and safety rules guidance for STR platforms; operators are required to post guidance.

The Senate Natural Resources and Energy Committee combined the Senate’s housing bill with the House’s Act 250 modernization bill, creating a 171-page omnibus bill. While much of the legislation incorporates a historic compromise on Act 250, a substantial poison pill remains. Appeals of Act 250 permits would move from the environmental courts to a newly established professional board. The Vermont Chamber is advocating against this transition. A legal appeal of a complicated development process requires a legal review in a court, not an informal review by a politically appointed quasi-judicial board that does not have legal expertise.

The Vermont Chamber has supported a compromise of establishing a working group to dig into underlying issues that result in Act 250 appeals leading to timely and expensive disputes and ultimately development delays and how best to address them. The Senate Economic Development, Housing, and General Affairs Committee has done a walk-through of the bill and is looking at opportunities to bolster parts of the bill that will address Vermont’s housing crisis. With only weeks remaining in the session, the bill still has several more hoops to jump through before reaching the Governor’s desk. As it currently stands, it is poised for a veto.

H.687 was the subject of lengthy, and at times fiery, House floor sessions this week. The bill establishes a plan and timeline to modernize Act 250 with a tiered and location-based jurisdiction, including exemptions in smart growth areas. The proposed changes for Vermont land use would take place over the coming years to allow for considerable public outreach and input. In total, there were 11 amendments to the bill with all but one passing. This included an amendment to extend Act 250 housing exemptions passed last year in the HOME Act. The bill was ultimately passed by the House on a split voice vote, sending a message to the Senate that further changes will need to be made if the bill is to garner enough widespread support to withstand a potential veto.

The bill will now go to the Senate, where the Natural Resources Committee has been reviewing S.311, the Senate’s housing and Act 250 omnibus bill, in anticipation of receiving H.687. The Vermont Chamber testified before the committee this week in favor of the approach to Act 250 appeals that S.311 makes, keeping appeals to Act 250 decisions in the court with increased support. The committee is likely to make H.687 the final vessel for Act 250 modernization this session.

In response to stakeholder concerns on the version of the House Act 250 modernization bill that was voted out of the committee last week, the House Energy and Environment Committee has taken up an amendment to that bill. It will include important provisions related to the timeline of how Act 250 changes are implemented and is based on the significant package of compromises made by stakeholders before the session in the Necessary Updates to Act 250 report. Changes in the timeline ensure that the growth and protection provisions move in concert with each other, as agreed upon by stakeholders. The Vermont Chamber remains concerned about language that would transfer the responsibility of hearing Act 250 appeals from the environmental court to the new Environmental Review Board.

Meanwhile, the Senate Natural Resources Committee took up the “Be Home” bill, S.311, this week which was passed out of the Senate Economic Development, Housing, and General Affairs Committee with changes to Act 250, local zoning, and housing programs. Builders and developers testified regarding regulatory hurdles and housing market dynamics. They emphasized the importance of regulatory clarity and streamlined processes to expedite housing construction while ensuring compliance with environmental standards. Bill sponsor Senator Kesha Ram Hinsdale also testified, reiterating the need for evaluation of Act 250’s efficacy. In particular, she emphasized the need to incentivize development projects that cater to various income brackets, creating more diverse housing options, from affordable rentals to multigenerational housing.

When the House Act 250 bill makes it to the Senate, pulling them together will be a focus of the Senate Natural Resources Committee for much of the remainder of this legislative session. The Vermont Chamber will be engaged and at the table to ensure businesses are represented in this process.

The House Energy and Environment Committee has spent much of the first half of this session working on an Act 250 modernization bill. As passed out of committee this week on an 8-3-0 vote, it incorporates some of the provisions within the Necessary Updates to Act 250 report. Unfortunately, it does not yet include other important provisions from the significant package of compromises made by stakeholders before the session. These compromises were based on exemptions in smart growth areas, which are implemented alongside protections. When it is presented on the floor, Rural Caucus members have indicated that they plan to propose amendments. After passing through the House, the bill will be considered by the Senate Natural Resources and Energy Committee, along with the Senate’s version of a housing and Act 250 bill. The five Senators on this committee have the responsibility to implement changes that more effectively balance the efforts invested in this historic compromise.

While there is no single solution to Vermont’s housing crisis, modernizing land use regulations is a crucial step to encourage housing development and meet workforce needs across all income levels. The version of H.687 that the House Environment and Energy Committee approved introduces a vital framework for a tiered, location-based approach to Act 250. However, the current criteria for a smart growth area to qualify for Tier One status are too stringent, likely limiting the number of communities that can receive the exemption benefits.

Additionally, the proposed “road rule” as a new jurisdictional trigger would come into effect years before any area exemptions are approved. This timing means the road rule’s broad application could pose immediate challenges to large-scale housing development in our downtowns, villages, and neighborhood development areas. Implementing this trigger before the Tier One exemptions undermines the compromise agreed upon by stakeholders, and would add additional trigger in places where there has been broad consensus that expedited growth is necessary.

Furthermore, the bill proposes the establishment of an environmental board to decide on appeals to Act 250 decisions, shifting this responsibility from the environmental court. While having a professional board is crucial to ensuring Act 250 becomes a regulatory program that is fair, predictable, and timely throughout the state, assigning it the additional role of hearing appeals may lead to complications, as it would review decisions made by its own staff. This concern echoes the backlash from mayors, town managers, developers, housing advocates, and community leaders when a similar proposal was put forward in 2022, highlighting fears that it could complicate essential housing developments.