Vermont Business Magazine Governor Phil Scott signed 10 bills into law today, including S.127, An act relating to housing and housing development. S.127 includes establishing a tax increment (TIF) retention program for housing infrastructure projects. He also signed two more health care-related bills: S.63, An act relating to modifying the regulatory duties of the Green Mountain Care Board and S.126, An act relating to health care payment and delivery system reform. He also signed S.69, An act relating to an age-appropriate design code, which is intended to protect the personal information of minors.
On June 12, Governor Scott signed bills of the following titles:
- S.12, An act relating to sealing criminal history records
- S.45, An act relating to protection from nuisance suits for agricultural activities
- S.63, An act relating to modifying the regulatory duties of the Green Mountain Care Board
- S.69, An act relating to an age-appropriate design code
- S.109, An act relating to miscellaneous judiciary procedures
- S.122, An act relating to economic and workforce development
- S.123, An act relating to miscellaneous changes to laws related to motor vehicles
- S.124, An act relating to miscellaneous agricultural subjects
- S.126, An act relating to health care payment and delivery system reform
- S.127, An act relating to housing and housing development
When signing S.69, An act relating to an age-appropriate design code, Governor Scott issued the following statement:
“As we see more and more kids using technology, I believe most would agree we need to take steps to protect them in a reasonable and responsible way when they’re online. With ongoing lawsuits in other states, I recognize this new law will likely face a legal challenge. But I’m hopeful with the enactment of this law delayed until January 1, 2027, it will allow enough time to provide clarity and change the law if necessary.”
S.127 - An Act Relating to Housing and Housing Development
Vermont Legislative Joint Fiscal Office 1 Baldwin Street · Montpelier, VT 05633-5701 · (802) 828-2295 · https://ljfo.vermont.gov
Fiscal Note May 28, 2025 James Duffy, Fiscal Analyst Ted Barnett, Senior Fiscal Analyst
House Proposal of Amendment
Bill Summary
This bill would establish various policy directives and new programs aimed at increasing the supply, affordability, and accessibility of housing in Vermont. The bill would also establish a tax increment retention program for housing infrastructure projects.
Fiscal Summary
The bill proposes a program that would have impacts on the statewide Education Fund:
- Sections 25 and 26 would create a new, project-based tax increment financing (TIF) program, called the Community and Housing Infrastructure Program (CHIP). The proposed program would allow municipalities to retain up to 100% of incremental municipal property tax revenues and 60% - or 80% if at least 20% of the units in the housing development meet mixed-income criteria established by the bill - of incremental education property tax revenues for 20 years to support financing of local projects.
- The bill allows the Vermont Economic Progress Council (VEPC) to approve up to $40 million in lifetime Education tax increment retention in each year VEPC is authorized to approve applications. In each year, VEPC may request a $5 million increase of the cap, subject to Joint Fiscal Committee (JFC) approval. This annual cap represents the total lifetime amount of Education Fund increment that can be retained over the 20-year debt retention period to pay for CHIP project debt.
- Even with the cap described above, there are too many unknowns to provide a fiscal estimate of the cost of this proposal to the Education Fund. The approved increment retention caps are estimated at the time of application, and the actual fiscal impact would depend on the amount of debt incurred, the total size of project districts, and future growth in property tax revenues. The impact would also depend on the number of projects that are made possible by CHIP versus the number of projects that would have happened in some capacity anyway.
The bill would also authorize the creation of the Residential Universal Design Study Committee, the State Housing and Residential Services Planning Committee, and the CHIP Board. Certain members of all three groups would be eligible for per diem compensation and expense reimbursement.
Background and Details
Section 1: Vermont Rental Housing Improvement Program (VHIP)
VHIP provides 5-year grants or loans and 10-year forgivable loans to rehabilitate existing vacant units or structural elements affecting multiple units, build accessory dwelling units (ADUs), build new residential units in an existing or new structure, and complete repairs necessary for code compliance.
- Property owners are eligible to receive $30,000 per unit for rehabilitation of 0-2 bedroom units, and $50,000 per unit for 3+ bedroom units or creation of new units.
- Section 1 would adjust tenant selection requirements for grants and 5-year forgivable loans and replace tenant selection requirements for 10-year forgivable loans with a requirement that rent payments including utilities not exceed fair market rent.
- This section also creates the VHIP Revolving Fund, which would receive funds repaid or returned to DHCD from VHIP grants or forgivable loans and allow DHCD to use these funds for VHIP expenditures and administrative costs.
Section 2: Vermont Manufactured Home Improvement and Repair Program (MHIR)
MHIR provides funding to improve existing manufactured homes, incentivize new slab placement, and for infill of more new homes.
- Up to $20,000 can be awarded for small-scale capital needs to help infill vacant lots with new homes.
- Up to $15,000 per grant can be awarded to pay for approved slabs or other site preparation, skirting, tie-downs, or utility connections.
- This program was originally funded through $4 million in American Rescue Plan Act (ARPA) funding. Section 2 would permanently place the program in statute.
Section 3: Vermont Infrastructure Sustainability Fund
Section 3 would create the Vermont Infrastructure Sustainability Fund, a revolving loan fund administered by the Vermont Bond Bank. Loans would be available to fund:
- Preliminary engineering and planning
- Engineering design and bid specifications
- Construction for municipal water and wastewater systems
- Transportation investments
- Other eligible activities determined by future guidelines
Applications would have to demonstrate that a project would create reserve capacity necessary for new housing unit development, have a direct link to housing unit creation, and be owned by a municipality throughout its useful life.
Section 5: Residential Universal Design Study Committee
Section 5 would create a Residential Universal Design Study Committee to explore implementation of statewide universal design standards for all residential buildings.
- The Committee would meet for not more than six meetings, submit a report by November 1, 2025, and cease to exist on December 1, 2025.
- The Joint Fiscal Office (JFO) estimates that legislator per diems and expense reimbursements would cost up to $3,000 in fiscal year 2026, and non-legislative members would cost up to $11,500 in fiscal year 2026.
Section 6: State Housing and Residential Services Planning Committee
Section 6 would create the State Housing and Residential Services Planning Committee to generate a State plan to develop housing for individuals with developmental disabilities.
- The Committee would meet for not more than six meetings, submit a report by November 15, 2025, and cease to exist on November 30, 2025.
- JFO estimates legislator per diems and expense reimbursements would cost up to $3,000 in fiscal year 2026, and non-legislative members would cost up to $6,300 in fiscal year 2026.
Sections 25, 26, and 27: Community and Housing Infrastructure Program (CHIP)
Sections 25 and 26 would create CHIP, a TIF program that would allow municipalities to retain growth in incremental property tax revenues to finance housing development.
- Municipalities would be able to retain 100% of the municipal increment until CHIP project debt is retired and 60% - or 80% if at least 20% of the units created meet middle-income criteria established by the bill - of the education property tax increment for 20 years.
- The bill allows VEPC to approve up to $40 million of total retained education property tax increment to service CHIP project debt each year, with an up to $5 million increase if approved by the Governor and JFC, until the program sunsets on December 31, 2031.
- In total, the $40 million annual increment retention cap places a $240 million limit on the amount of forgone revenue to the Education Fund that could occur over the lifetime of approved CHIP projects.
As proposed to be amended by the House, Section 27 would end VEPC’s authority to approve new TIF Districts on July 1, 2031.
For the full fiscal note history, visit the Vermont Joint Fiscal Office.
To view a complete list of action on bills passed during the 2025 legislative session, click here.
6.12.2025. Governor. 109 State Street | The Pavilion | Montpelier, VT 05609-0101 | www.vermont.gov
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