Proposed Housing Infrastructure Program Advances in Legislature
As Vermont employers continue to face workforce shortages driven in part by a lack of available housing, the Legislature is considering a new tool to address this challenge. The Community and Housing Infrastructure Program (CHIP) proposed in S.127 would give municipalities the ability to invest in infrastructure that enables the development of housing, borrowing against future tax revenue rather than increasing taxes. The Vermont Chamber strongly supports this legislation as an innovative solution that could support workforce growth, strengthen communities, and make meaningful use of constrained public resources.
Program Overview:
CHIP is designed to help communities overcome infrastructure barriers that prevent new housing development. If enacted, it would allow municipalities to use future local property tax revenue growth—via a housing-specific form of tax increment financing (TIF)—to fund infrastructure improvements that support housing construction.
Key Components:
- Municipal Participation: Towns and cities could create housing infrastructure projects, requiring a development plan, public hearings, and local approval.
- Housing Infrastructure Agreement: A binding agreement would be required between the municipality, developer, and potentially a third-party sponsor.
- VEPC Review: The Vermont Economic Progress Council (VEPC) would review applications and approve eligible projects based on housing development goals and location criteria.
- Eligible Infrastructure: Includes utilities, broadband, roads, brownfield remediation, flood mitigation, and other core infrastructure.
- Financing Structure: Municipalities could borrow against future property tax growth, subject to voter approval, with a portion of both municipal and education property tax increment retained to repay project costs.
- Oversight and Accountability: Annual reporting and audits would be required, with guidance from VEPC and the Department of Taxes.
Legislative Activity:
In a recent House Commerce Committee hearing, stakeholders emphasized that CHIP could help close Vermont’s $240 million infrastructure funding gap by giving communities a flexible new financing tool without relying on additional state spending. The program is not intended to replace existing funding, but to provide a complementary approach. There was strong support for CHIP’s inclusion of flood mitigation, especially for rural towns, and for its focus on publicly owned infrastructure that benefits residents across income levels. Concerns were raised about provisions that could shift long-term debt to non-governmental partners.
Committee discussion also addressed how the program could help grow local grand lists. Testimony emphasized that the most recent grand list growth has come from property revaluations rather than new development, and that adding housing stock is a more sustainable way to increase the tax base. With Vermont’s state budget under pressure, tools like CHIP offer communities a way to finance needed infrastructure for housing, building long-term capacity and supporting workforce needs without increasing taxes. The Vermont Chamber will continue to engage with and support this legislation as it moves forward.