H.863

AN ACT RELATING TO CREATION AND PRESERVATION OF AFFORDABLE HOUSING AND SMART GROWTH DEVELOPMENT

It is hereby enacted by the General Assembly of the State of Vermont:

* * * Vermont Neighborhoods Program * * *

Sec. 1.  24 V.S.A. § 2791(15) is added to read:

(15)  “Vermont neighborhood” means an area of land that is in a municipality with an approved plan, a confirmed planning process, zoning bylaws, and subdivision regulations, and:

(A)  that is located in one of the following:

(i)  A designated downtown, village center, new town center, or growth center; or

(ii)  An area of land that is within the municipality and outside but contiguous to a designated downtown, village center, or new town center, and is not more than 100 percent of the total acreage of the designated downtown, village center, or new town center; and

(B)  that contains substantially the following characteristics:

(i)  Its contiguous land, if any, complements the existing downtown district, village center, or new town center by integrating new housing units with existing residential neighborhoods, commercial and civic services and facilities, and transportation networks, and is consistent with smart growth principles.                    

(ii)  It is served by either a municipal sewer infrastructure or a community or alternative wastewater system approved by the agency of natural resources.

(iii)  It incorporates minimum residential densities of no fewer than four units of single-family, detached dwelling units per acre, and higher densities for duplexes and multi-family housing.

(iv)  It incorporates neighborhood design standards that promote compact, pedestrian-oriented development patterns and networks of sidewalks or paths for both pedestrians and bicycles that connect with adjacent development areas.

Sec. 2.  24 V.S.A. § 2793d is added to read:
§ 2793d.  DESIGNATION OF VERMONT NEIGHBORHOODS

(a)  A municipality that has a duly adopted and approved plan and a planning process that is confirmed in accordance with section 4350 of this title, has adopted zoning bylaws and subdivision regulations in accordance with section 4442 of this title, and has a designated downtown district, a designated village center, a designated new town center, or a designated growth center served by municipal sewer infrastructure or a community or alternative

wastewater system approved by the agency of natural resources, is authorized to apply for designation of a Vermont neighborhood.  A municipal decision to apply for designation shall be developed according to the procedures established in sections 4441 and 4442 of this title, with regard to the development by the planning commission of a proposed bylaw, and its adoption or rejection by the municipal legislative body.  Designation is possible in two different situations:

(1)  If an application is submitted in compliance with this subsection for a designated Vermont neighborhood that would have boundaries that are entirely within the boundaries of a designated downtown district, designated village center, designated new town center, or designated growth center, the downtown board shall issue the designation.

(2)  If an application is submitted in compliance with this subsection, by a municipality that does not have a designated growth center and that proposes to create a Vermont neighborhood that has boundaries that include land that is not within its designated downtown, village center, or new town center, the downtown board, in its expanded configuration in which it considers growth center applications, shall consider the application.  This application may be for approval of one or more Vermont neighborhoods that is outside but contiguous to a designated downtown district, designated village center, or designated new town center.  The application for designation shall include a map of the boundaries of the proposed Vermont neighborhood, including the property outside but contiguous to a designated downtown district, village center, or new town center and evidence that the municipality has notified the regional planning commission and the regional development corporation of its application for this designation. 

(b)  Within 45 days of receipt of a completed application, the expanded downtown board shall designate a Vermont neighborhood if the board finds the applicant has met the requirements of subsections (a) and (c) of this section.  When designating a Vermont neighborhood, the board may change the boundaries that were contained in the application by reducing the size of the area proposed to be included in the designated neighborhood, but may not include in the designation land that was not included in the application for designation.  Any Vermont neighborhood designation shall terminate when the underlying downtown, village center, new town center, or growth center designation terminates.

(c)  The applicant shall demonstrate all of the following:

(1)  The municipality has a duly adopted and approved plan and a planning process that is confirmed in accordance with section 4350 of this title, and has adopted zoning bylaws and subdivision regulations in accordance with section 4442 of this title.

(2)  The cumulative total of all Vermont neighborhood land located within the municipality but outside a designated downtown district, designated village center, or designated new town center is not more than 100 percent of the total acreage of the designated downtown district, village center, or new town center.

(3)  The contiguous land of the Vermont neighborhood complements the existing designated downtown district, village center, or new town center by integrating new housing units with existing residential neighborhoods, commercial and civic services and facilities, and transportation networks, and the contiguous land, in combination with the designated downtown development district, village center, or new town center, is consistent with smart growth principles established under subdivision 2791(13) of this title.

(4)  The Vermont neighborhood will be served by either:

(A)  a municipal sewer infrastructure; or

(B)  a community or alternative wastewater system approved by the agency of natural resources.

(5)  The municipal zoning bylaw requires both of the following:

(A)  Minimum residential densities that may be calculated by excluding land occupied by community wastewater systems, flood hazard areas, wetlands, rare and irreplaceable natural areas, necessary wildlife habitat, or other resource lands that are not able to be developed due to state or federal regulation, and that shall require the following:

(i)  No fewer than four units of single-family, detached dwelling units per acre, exclusive of accessory apartments.

(ii)  Higher density for duplexes and multi-family housing.

(B)  Neighborhood design standards that promote compact, pedestrian-oriented development patterns that include the following:

(i)  Pedestrian scale and orientation of development.  Networks of sidewalks or paths, or both, are provided and available to the public to connect the Vermont neighborhood with adjacent development areas, existing and planned adjacent sidewalks, paths, and public streets and the designated downtown, village center, or new town center.

(ii)  Interconnected and pedestrian-friendly street networks.  Street networks are designed to safely accommodate both pedestrians and bicycles through the provisions of sidewalks on at least one side of the street, on-street parking, and traffic-calming features.

(d)  Incentives for Vermont neighborhoods include the following:

(1)  The agency of natural resources shall charge no more than a $50.00 fee for wastewater applications under 3 V.S.A. § 2822(j)(4) where the applicant has received an allocation for sewer capacity from an approved municipal system.  Act 250 fees under 10 V.S.A. § 6083a for residential developments in Vermont neighborhoods shall be 50 percent of the fee otherwise applicable.

(2)  Fifty percent of Act 250 fees under 10 V.S.A. § 6083a for proposed development in Vermont neighborhoods shall be paid upon application, and 50 percent shall be paid within 30 days of the issuance or denial of the permit.

(3)  No land gains tax under chapter 236 of Title 32 shall be levied on a transfer of land in a Vermont neighborhood.

(e)   Initial designation shall be for a period of three years.  After that time has expired, the expanded state board shall review a Vermont neighborhood concurrently with the next periodic review conducted of the underlying designated entity, even if the underlying designated entity was not designated originally by the expanded state board.  However, the expanded board may review compliance with the designation requirements at more frequent intervals.  If at any time the expanded state board determines that the designated Vermont neighborhood no longer meets the standards for designation established in this section, it may take any of the following actions:

(1)   require corrective action;

(2)  remove the Vermont neighborhood designation, with that removal not affecting any of the benefits previously awarded to the designated Vermont neighborhood; or

(3)  limit eligibility for the benefits established in this chapter, with the limitation not affecting any of the benefits previously awarded to the designated Vermont neighborhood.

(f)  Designation decisions made under this section may be appealed to the environmental court pursuant to Rule 5 of the Vermont Rules for Environmental Proceedings by an interested person as defined in subsection 4465(b) of this title.  Review by the environmental court shall be de novo.

* * * Agency of Natural Resources Fees * * *

Sec. 3.  3 V.S.A. § 2822(j)(4)(D) is amended to read:

(D)  Notwithstanding the other provisions of this subdivision,:

* * *

(ii)  when a potable water supply is subject to the fee provisions of this subdivision and subdivision (j)(7)(A) of this section, only the fee required by subdivision (j)(7)(A) shall be assessed; and

(iii)  when a project is subject to the fee provision for the subdivision of land and the fee provision for potable water supplies and wastewater systems of this subdivision, only the higher of the two fees shall be assessed; and

(iv)  when a project is located in a Vermont neighborhood, as designated under 24 V.S.A. chapter 76A, the fee shall be no more than $50.00 in situations in which the application has received an allocation for sewer capacity from an approved municipal system.

* * * Act 250 Provisions * * *

Sec. 4.  10 V.S.A. § 6001(3)(B) and (C) are amended to read:  

(3)(A)  “Development” means:

* * *

(B)(i)  Notwithstanding the provisions of subdivision (3)(A) of this section, if a project consists exclusively of any combination of mixed income housing or mixed use and is located entirely within a growth center designated pursuant to 24 V.S.A. § 2793c or within a downtown development district designated pursuant to 24 V.S.A. § 2793, “development” means:

(i)(I)  Construction of mixed income housing with 200 or more housing units or a mixed use project with 200 or more housing units, in a municipality with a population of 25,000 or more.

(II)  Construction of mixed income housing with 100 or more housing units or a mixed use project with 100 or more housing units, in a municipality with a population of 20,000 15,000 or more, but less than 25,000.

(ii)(III)  Construction of mixed income housing with 50 or more housing units or a mixed use project with 50 or more housing units, in a municipality with a population of 10,000 7,000 or more but less than 20,000 15,000.

(iii)(IV)  Construction of mixed income housing with 30 or more housing units or a mixed use project with 30 or more housing units, in a municipality with a population of 5,000 3,000 or more and less than 10,000 7,000.

(iv)(V)  Construction of mixed income housing with 25 or more housing units or a mixed use project with 25 or more housing units, in a municipality with a population of less than 5,000 3,000.

(v)(VI)  Construction of 10 or more units of mixed income housing or a mixed use project with 10 or more housing units where the construction involves the demolition of one or more buildings that are listed on or eligible to be listed on the state or national register of historic places.  However, demolition shall not be considered to create jurisdiction under this subdivision if the division for historic preservation has determined the proposed demolition will have no adverse effect, an effect that will not be adverse provided that specified conditions are met, or an adverse effect that will be adequately mitigated, and if any imposed conditions are enforceable through a grant condition, deed covenant, or other legally binding document.

(ii)  Notwithstanding the provisions of subdivision (3)(A) of this section, if a project consists exclusively of mixed income housing located entirely within a Vermont neighborhood designated pursuant to 24 V.S.A.

§ 2793d, but outside of a growth center designated pursuant to 24 V.S.A.

§ 2793c or a downtown development district designated pursuant to 24 V.S.A. § 2793, “development" shall be determined in accordance with the numerical thresholds established in subdivision (3)(B)(i) of this section.

(C)  For the purposes of determining jurisdiction under subdivisions (3)(A) and (3)(B) of this section:

(i)  Housing units constructed by a person partially or completely outside a designated downtown development district or designated growth center shall not be counted to determine jurisdiction over housing units constructed by a person entirely within a designated downtown development district or designated growth center.

(ii)  Within any continuous period of five years, housing units constructed by a person entirely within a designated downtown district, or designated growth center, or designated Vermont neighborhood shall be counted together with housing units constructed by a person partially or completely outside a designated downtown development district, or designated growth center, or designated Vermont neighborhood to determine jurisdiction over the housing units constructed by a person partially or completely outside the designated downtown development district, or designated growth center, or designated Vermont neighborhood and within a five-mile radius.

(iii)  All housing units constructed by a person within a designated downtown development district, or designated growth center, or designated Vermont neighborhood within any continuous period of five years, commencing on or after the effective date of this subdivision, shall be counted together, but only if they are part of a discrete project located on a single tract or multiple contiguous tracts of land.

(iv)  In the case of  a project undertaken by a railroad, no portion of a railroad line or railroad right-of-way that will not be physically altered as part of the project shall be included in computing the amount of land involved.  In the case of a project undertaken by a person to construct a rail line or rail siding to connect to a railroad’s line or right-of-way, only the land used for the rail line or rail siding that will be physically altered as part of the project shall be included in computing the amount of land involved.

(v)  Notwithstanding subdivision (C)(iii) of this subdivision (3), any affordable housing units, as defined by this section, (3)(A)(iv) and subdivision (19) of this section, jurisdiction shall be determined exclusively by counting housing units, and when counting housing units to determine jurisdiction, only housing units in a discrete project on a single tract or multiple contiguous tracts of land shall be counted, regardless of whether located within an area designated under 24 V.S.A. chapter 76A, provided that the housing units are affordable housing units, as defined by this section, that are subject to housing subsidy covenants as defined in 27 V.S.A. § 610 that preserve their affordability for a period of 99 years or longer, and that are constructed by a person within a designated downtown development district, designated village center, or designated growth center, shall count toward the total number of housing units used to determine jurisdiction only if they were constructed within the previous 12-month period, commencing on or after the effective date of this subdivision.

Sec. 4a.  24 V.S.A. § 2793e is added to read:

§ 2793e.  MUNICIPAL FEE FOR EXEMPT HOUSING UNIT IN A

               VERMONT NEIGHBORHOOD

(a)  The developer of a project in a Vermont neighborhood designated in accordance with 24 V.S.A. § 2793d and exempted from Act 250 review under the definition of “development” in 10 V.S.A. § 6001(3)(B) shall pay a municipal fee of $500.00 for each housing unit in the exempt project.  The fee shall be paid to the municipality in which the development is located at the time of the closing of the initial sale of the unit.  Municipalities shall have the authority to collect and enforce fees imposed by this section in the manner authorized for the collection of municipal impact fees under chapter 131 of Title 24.

(b)  Revenues from the fees imposed by this section may be used by the municipality only to improve or create public infrastructure required by the Vermont neighborhoods program under 24 V.S.A. § 2793d; to cover the municipality’s expenses of the planning process relating to the Vermont neighborhoods program; or to create pedestrian and multimodal transportation infrastructure, recreation facilities, or other services deemed necessary by the municipality as a result of new housing units created under the Vermont neighborhoods program.

* * *  Rules on Mixed Income Housing * * *

Sec. 4b.  3 V.S.A. § 2472(a) is amended to read:

(a)  The department of housing and community affairs is created within the agency of commerce and community development.  The department shall:

* * *

(4)  In partnership with the division for historic preservation, direct, supervise, and administer the Vermont downtown program, and any other program designed to preserve the continued economic vitality of the state’s traditional commercial districts.  By no later than May 1, 2009, the commissioner, in consultation with the Vermont housing finance agency and the Vermont housing and conservation trust, shall adopt rules that establish mechanisms and options for assuring affordability, which shall be used in determinations of jurisdiction over mixed income housing, under 10 V.S.A. chapter 151.

Sec. 4c.  10 V.S.A. § 6001(27) is amended to read:

(27)  “Mixed income housing” means a housing project in which at least 15 20 percent of the total housing units are affordable housing units:

(A)  Owner-occupied housing, the purchase price of which does not exceed 80 percent of the new construction targeted area purchase price limits established by the Vermont housing finance agency.  Owner household income shall meet Vermont housing finance agency income limits.  The housing shall be in compliance with affordability requirements established in rules adopted by the commissioner of housing and community affairs, in consultation with the Vermont housing finance agency and the Vermont housing and conservation board, and shall have a duration of affordability of no less than 15 years; or

(B)  Housing that is rented by the occupants whose gross annual household income does not exceed 60 percent of the county median income, or 60 percent of the standard metropolitan statistical area income if the municipality is located in such an area, as defined by the United States Department of Housing and Urban Development for use with the Housing Credit Program under Section 42(g) of the Internal Revenue Code, and the total annual cost of the housing, as defined at Section 42(g)(2)(B) is not more than 30 percent of the gross annual household income as defined at Section 42(g)(2)(C), and with a duration of affordability of no less than 15 years.

Sec. 4d.  EFFECTIVE DATES

The following sections shall take effect upon May 1, 2009:  Sec. 4, which amends the 10 V.S.A. § 6001(3), definition of “development”; Sec. 4c, which amends the 10 V.S.A. § 6001(27), definition of “mixed income housing”; and Sec. 4a, as proposed by the Committee on Ways and Means, which adds 24 V.S.A. § 2793e, municipal incentives.

Sec. 5.  REPEAL

10 V.S.A. § 6001(16)(rural growth areas definition) is repealed.

Sec. 6.  10 V.S.A. § 6001(31) and (32) are added to read:

(31)  “Existing settlement” means an extant community center similar to the traditional Vermont center which is compact in size and contains a mixture of uses which may include commercial, industrial, and residential components which are, to a large extent, within walking distance of each other, and which have appreciably higher densities than densities that occur outside these areas.  For the purposes of this subdivision, the term shall include downtown development districts designated in accordance with 24 V.S.A. § 2793, village centers designated in accordance with 24 V.S.A. § 2793a, new town centers designated in accordance with 24 V.S.A. § 2793b, growth centers designated in accordance with 24 V.S.A. § 2793c, and Vermont neighborhoods designated in accordance with 24 V.S.A. § 2793d.  This term specifically excludes areas of commercial, highway-oriented uses commonly referred to as “strip development.”

(32)  “Strip development” means linear commercial development along an arterial highway leading from an existing settlement or connecting two existing settlements.  The characteristics of strip development, which need not all be present in order for strip development to exist, include the following:  broad road frontage; individual curb cuts for individual projects; lack of connection to existing settlements by anything except highway; limited accessibility to pedestrians; and lack of coordination with surrounding projects in terms of design, signs, lighting and parking.

Sec. 7.  10 V.S.A. § 6083a is amended to read:

§ 6083a.  ACT 250 FEES

* * *

(d)  Fees for residential development in a Vermont neighborhood designated according to 24 V.S.A. § 2793d shall be no more than 50 percent of the fee otherwise charged under this section, with 50 percent due with the application and 50 percent due within 30 days after issuance or denial of the permit. 

Sec. 8.  10 V.S.A. § 6086(a)(5) is amended to read:

(5)  Will not cause unreasonable congestion or unsafe conditions with respect to use of the highways, sidewalks, bikeways, waterways, railways, airports, and airways, and other means of transportation existing or proposed and provides appropriate connections to transit, bicycle, and pedestrian networks, where existing or planned, with the objective of minimizing motor vehicle use.

Sec. 9.  10 V.S.A. § 6086(a)(9)(L) is amended to read:

(L)  Rural growth areas. A permit will be granted for the development or subdivision of rural growth areas when it is demonstrated by the applicant that in addition to all other applicable criteria provision will be made in accordance with subdivisions (9)(A) “impact of growth,” (G) “private utility service,” (H) “costs of scattered development” and (J) “public utility services” of subsection (a) of this section for reasonable population densities, reasonable rates of growth, and the use of cluster planning and new community planning designed to economize on the cost of roads, utilities and land usage.

Settlement Patterns.

(i)  Inside existing settlements, a permit shall be granted for development or subdivision of land if the applicant, in addition to other applicable criteria, demonstrates that the project will not significantly detract from Vermont’s historic settlement pattern of compact village and urban centers separated by rural countryside, which shall be accomplished by complying with planned densities that are appreciably higher than densities outside existing settlements within the municipality and region.  

(ii)  In rural areas outside existing settlements, a permit shall be granted for development or subdivision if, in addition to all other applicable criteria, the applicant demonstrates that the project:

(I)  will not substantially detract from Vermont’s historic settlement pattern of compact village and urban centers separated by rural countryside, which shall be accomplished by contributing to overall densities that are appreciably lower than densities planned for existing settlements within the municipality and region;

(II)  will not establish or extend a pattern of strip development along public highways.  In situations in which a pattern of strip development has already been established, development should reinforce compact in-fill site design;

(III)  will promote an efficient use of land, energy, roads, utilities and other supporting infrastructure through compact site development, clustering, or conservation subdivision design, in order to avoid conflicts with agriculture, forestry, and other natural resource‑based land uses; and will promote the preservation of open space, as well as the protection of headwaters, streams, shorelines, floodways, rare and irreplaceable natural areas, necessary wildlife habitat, wetlands, endangered species, productive forest lands, and primary agricultural soils.

* * * Consolidated Appeals * * *

Sec. 10.  10 V.S.A. § 8502(9) is added to read:

(9) “State board,” also referred to as the “Vermont downtown development board,” means a board created pursuant to 24 V.S.A. § 2792. 

Sec. 11.  10 V.S.A. § 8503(b)(4) is added to read:

(4)  Appeals from designation decisions issued by the state board in its review of a Vermont neighborhood for conformance with the criteria of 24 V.S.A. §  2793d. 

Sec. 12.  10 V.S.A. § 8504(a) is amended to read:

(a)  Act 250 and agency appeals.  Within 30 days of the date of the act or decision, any person aggrieved by an act or decision of the secretary, a district coordinator, or a district commission under the provisions of law listed in section 8503 of this title, or any party by right, may appeal to the environmental court. Within 30 days of the date of a Vermont neighborhood designation decision issued by the state board under 24 V.S.A. chapter 76A, an interested person, as defined in 24 V.S.A. § 4465(b), may appeal to the environmental court.

Sec. 13.  10 V.S.A. § 8504(c)(2) is amended to read:

(2)  Upon the filing of an appeal from the act or decision of the secretary or from a Vermont neighborhood designation decision of the state board under the provisions of law listed in section 8503 of this title, the appellant shall provide notice of the filing of an appeal to the following persons: the applicant before the agency of natural resources or the state board, if other than the appellant; the owner of the land where the project is located if the applicant is not the owner; the municipality in which the project is located; the municipal and regional planning commissions for the municipality in which the project is located; if the project site is located on a boundary, any adjacent Vermont municipality and the municipal and regional planning commissions for that municipality; any state agency affected; the solid waste management district in which the project is located, if the project constitutes a facility pursuant to subdivision 6602(10) of this title; all persons required to receive notice of receipt of an application or notice of the issuance of a draft permit; and all persons on any mailing list for the decision involved.  In addition, the appellant shall publish notice not more than 10 days after providing notice as required under this subsection, at the appellant's expense, in a newspaper of general circulation in the area of the project which is the subject of the decision.

Sec. 14.  10 V.S.A. § 8504(n) is amended to read:

(n)  Intervention.  Any person may intervene in a pending appeal if that person:

(1)  appeared as a party in the action appealed from and retained party status;

(2)  is a party by right;

(3)  is the natural resources board, or either panel of the board;

(4)  is a person aggrieved, as defined in this chapter;

(5)  qualifies as an "interested person," as established in 24 V.S.A.

§ 4465, with respect to appeals under 24 V.S.A. chapter 117 or appeals of a Vermont neighborhood designation decision by the state board; or

(6)  meets the standard for intervention established in the Vermont Rules of Civil Procedure.

* * * Chapter 117 Conditional Use Appeals * * *

Sec. 15.  24 V.S.A. § 4471(e) is added to read:

(e)  Notwithstanding subsection (a) of this section, a determination by an appropriate municipal panel that the density of a proposed residential development within a designated downtown development district, designated growth center, or Vermont neighborhood seeking conditional use approval shall not result in an undue adverse effect on the character of the area affected as provided in subdivision 4414(3)(A)(ii) of this title is not subject to appeal.

* * * Reports * * *

Sec. 16.  REPORT ON POLLUTION CONTROL SYSTEM

By no later than January 15, 2009, the secretary of natural resources shall report to the legislative committees on natural resources and energy with regard to the agency’s implementation of and compliance with the municipal pollution control priority system rules, and as to the impact of these rules on development.


Sec. 17.  STATE SURPLUS LAND AND HOUSING

     The department of housing and community affairs, in consultation with the Vermont housing finance agency, the Vermont housing and conservation board, and other interested parties, shall develop program recommendations for the use of state land that may be available and appropriate for the creation of housing.  The proposal shall include methods to ensure that each housing project shall include a substantial amount of affordable housing, including permanently affordable units.  The department shall present the program recommendations no later than January 15, 2009 to the house committee on general, housing and military affairs, the senate committee on economic development, housing and general affairs, and the house and senate committees on natural resources and energy.

* * * Sales and Use Tax Provisions * * *

Sec. 18.  32 V.S.A. § 9819(c)(2) is amended to read:

(2)  "Qualified project" means expansion or rehabilitation of contiguous real property that is or will be used at the completion of the expansion or rehabilitation as of a structure in a downtown development district or Vermont neighborhood, designated under in accordance with chapter 76A of Title 24, but only to the extent that the expansion or rehabilitation becomes an integral component of the real property and the project does not seek qualification for either tax credit authorized under subsection 5930cc(a) or (b) of this title. "Qualified project" also means new construction of contiguous real property that will be used at the completion of the construction as a structure in a downtown development district or Vermont neighborhood, designated under in accordance with chapter 76A of Title 24, but only to the extent that the new construction is compatible with the buildings that contribute to the integrity of the district or Vermont neighborhood in terms of materials, features, size, scale, and proportion, and massing of buildings.

* * * Land Gains Tax * * *

Sec. 19.  32 V.S.A. § 10002(p) is added to read:

(p)  Also excluded from the definition of “land” is any land in a Vermont neighborhood designated in accordance with 24 V.S.A. § 2793d.

* * * VHFA Sunset Repeal * * *

Sec. 20.  10 V.S.A. § 625(1) is amended to read:

(1)  The residential housing is primarily for occupancy by persons and families of low and moderate income, or qualifies for financing with proceeds of federally tax-exempt obligations, or at least 20 percent of the units are for occupancy by persons and families of low and moderate income;

Sec. 21.  EFFECTIVE DATE

Sec. 20 of this act shall take effect July 1, 2008.  The prospective repeal provisions of Sec. 7a of No. 189 of the 2005 Adj. Sess. (2006) shall have no force or effect.

* * * Housing Tax Credit * * *

Sec. 22.  32 V.S.A. § 5930u is amended to read:

§ 5930u.  TAX CREDIT FOR AFFORDABLE HOUSING

(a)  As used in this section:

(1)  “Affordable housing project” or “project” means a rental housing project identified in 26 U.S.C. § 42(g) or owner-occupied housing identified in 26 U.S.C. § 143(e) and (f) and eligible under the Vermont housing finance agency allocation plan criteria.

(2)  “Affordable housing tax credits” means the tax credit provided by this subchapter.

(3)  “Allocating agency” means the Vermont housing finance agency.

(4)  “Committee” means the joint committee on tax credits consisting of five members; a representative from the department of housing and community affairs, the Vermont housing and conservation board, the Vermont housing finance agency, the Vermont state housing authority, and the office of the governor.

(5)  “Credit certificate” means a certificate issued by the allocating agency to a taxpayer that specifies the amount of affordable housing tax credits that can be applied against the taxpayer’s individual or corporate income tax or franchise or insurance premium tax liability as provided in this subchapter.

(6)  “Eligible applicant” means any municipality, private sector developer, department of state government as defined in 10 V.S.A. § 6302(a), nonprofit organization qualifying under Section 501(c)(3) of the Internal Revenue Code, or cooperative housing organization, the purpose of which is the creation and retention of affordable housing for lower income Vermonters, and the bylaws that require that housing to be maintained as affordable housing for lower income Vermonters on a perpetual basis.

(7)  “Eligible cash contribution” means an amount of cash contributed to the owner, developer, or sponsor of an affordable housing project and determined by the allocating agency as eligible for affordable housing tax credits.

(8)  “Section 42 credits” means tax credit provided by 26 U.S.C. §§ 38 and 42.

(9)  “Allocation plan” means the plan recommended by the committee and approved by the Vermont housing finance agency, which sets forth the eligibility requirements and process for selection of eligible housing projects to receive affordable housing tax credits under this section.  The allocation plan shall include requirements for creation and retention of affordable housing for low income persons, and requirements to ensure that eligible housing is maintained as affordable by subsidy covenant, as defined in 27 V.S.A. § 610 on a perpetual basis, and meets all other requirements of the Vermont housing finance agency related to affordable housing.

(b)(1)  Affordable housing credit allocation.  Prior to the placement of an affordable housing project in service, the owner, or a person having the right to acquire ownership of a building, may apply to the committee for an allocation of affordable housing tax credits under this section.  The committee shall advise the allocating agency on an affordable housing tax credit application based upon published priorities and criteria.  An eligible applicant may apply to the allocating agency for an allocation of affordable housing tax credits under this section related to an affordable housing project authorized by the allocating agency under the allocation plan.  In the case of a specific affordable rental housing project, the eligible applicant must also be the owner or a person having the right to acquire ownership of the building and must apply prior to placement of the affordable housing project in service.  In the case of

owner-occupied housing units, the applicant must apply prior to purchase of the unit and must ensure that the allocated funds will be used to ensure that the housing qualifies as affordable for all future owners of the housing.  The allocating agency shall issue a letter of approval if it finds that the applicant meets the priorities, criteria, and other provisions of subdivision (2) of this subsection.  The burden of proof shall be on the applicant.

(2)  Upon receipt of a completed application, an allocation of affordable housing tax credits with respect to a project under this section shall be granted to an applicant, provided the applicant demonstrates to the satisfaction of the committee all of the following:

(A)  The owner of the project has received from the allocating agency a binding commitment for, a reservation or allocation of, an out-of-cap determination letter for, Section 42 credits, or meets the requirements of the allocation plan for development of units to be owner-occupied;

(B)  The project has received community support.

(c)  Amount of credit.  A taxpayer who makes an eligible cash contribution shall be entitled to claim against the taxpayer’s individual income, corporate, franchise, or insurance premium tax liability a credit in an amount specified on the taxpayer’s credit certificate.  The first-year allocation of a credit amount to a taxpayer shall also be deemed an allocation of the same amount in each of the following four years.

* * *

(e)  Claim for credit.  A taxpayer claiming affordable housing tax credits shall submit with each return on which such credit is claimed a copy of the allocating agency’s credit allocation to the affordable housing project and the taxpayer’s credit certificate.  Any unused affordable housing tax credit may be carried forward to reduce the taxpayer’s tax liability for no more than 14 succeeding tax years, following the first year the affordable housing tax credit is allowed.

(f)  [Deleted.]

(g)  In any fiscal year, the allocating agency may award up to $400,000.00 in total first-year credit allocations to all applicants under this subchapter for rental housing projects; and may award up to $100,000.00 per year for owner‑occupied unit applicants.  In any fiscal year, total first-year allocations plus succeeding-year deemed allocations shall not exceed $2,000,000.00 $2,500.000.00.

* * * Property Transfer Tax * * *

Sec. 23.  32 V.S.A. § 9602(1) is amended to read:

A tax is hereby imposed upon the transfer by deed of title to property located in this state.  The amount of the tax equals one and one quarter

one-quarter percent of the value of the property transferred, or $1.00, whichever is greater, except as follows:

(1)  with respect to the transfer of property to be used for the principal residence of the transferee:  the tax shall be imposed at the rate of five-tenths of one percent of the first $100,000.00 in value of the property transferred and at the rate of one and one quarter one-quarter percent of the value of the property transferred in excess of $100,000.00; except that no tax shall be imposed on the first $110,000.00 in value of the property transferred if the purchaser obtains a purchase money mortgage funded in part with a homeland grant through the Vermont housing and conservation trust fund or which the Vermont housing and finance agency or U.S. Department of Agriculture and Rural Development has committed to make or purchase and tax at the rate of one and one-quarter percent shall be imposed on the value of that property in excess of $110,000.00.

Sec 24.  EFFECTIVE DATES

(a)  Sec. 22 of this act, amending 32 V.S.A. § 5930u, shall apply to fiscal years 2009 and after.

(b)  Sec. 23 of this act, amending 32 V.S.A. § 9602, shall apply to transfers on or after July 1, 2008.

* * * Preservation of Affordable Housing * * *

Sec. 25.  20 V.S.A. Part 7A, chapter 181 is added to read:

Chapter 181.  RENtal Housing Safety and Habitability

§ 3201.  LEGISLATIVE PURPOSE AND INTENT

It is the intent of the general assembly to provide for rental housing safety and habitability and to establish a statewide rental housing inspection program and registry to achieve the following goals:

(1)  Promote the health and safety of the citizens of Vermont;

(2)  Facilitate compliance with existing health and safety standards;

(3)  Provide support to municipal health officers;

(4)  Create a resource for tenants and landlords;

(5)  Enable communities to focus on problem properties;

(6)  Encourage a private sector response to a public health and safety need;

(7)  Reduce fire fatalities.

§ 3202.  SAFE RENTAL HOUSING TASK FORCE

(a)  A safe rental housing task force is created to consist of the following 12 members:

(1)  The director of the division of fire safety or designee;

(2)  The commissioner of the department of health or designee;

(3)  The commissioner of the department of housing and community affairs or designee;

(4)  The attorney general or designee;

(5)  The executive director of the Vermont housing finance agency or designee.

(6)  A representative of commercial landlords.

(7)  A representative of nonprofit landlords.

(8)  A tenant representative.

(9)  A municipal inspection program representative.

(10)  A town health officer from a municipality without an exempt program.

(11)  A regional revolving loan fund representative.

(12)  An architect.

(b)  The speaker of the house and the senate president pro tempore shall appoint members of the task force that are not ex-officio and shall designate a chair.

(c)  The task force shall, before January 15, 2009:

(1)  Identify information to be gathered for the rental housing registry, develop a questionnaire for rental unit sites and coordinate with existing data collected by the department of health, the department of taxes, the department of housing and community affairs, and the department of public service.

(2)  Develop a simplified rental housing code, to include lead safety, habitability, and basic life safety standards.

(3)  Establish a priority for inspections based on factors including:  the age of the rental unit, a score of the rental units’ self-assessment, and complaints from rental units at the address.

(4)  Develop procedures for scheduled, complaint-based, emergency and time-of-sale inspections, including a time frame and a priority for scheduled inspections.

(5)  Develop standards for licensed rental housing inspectors, including:

(A)  Training standards;

(B)  A code of professional ethics.

(C)  Curriculum outlines and a delivery mechanism.

(6)  Recommend a fee structure necessary and appropriate to implement the inspection program and registry.

(7)  Establish a procedure for issuing a certificate of habitability.

(8)  Develop procedures to assure enforcement and compliance.

(9)  Make recommendations regarding the role of town health officers in regard to safe rental housing in municipalities without an exempt program.

(10)  Develop training and education resources for landlords and tenants, including all the following:

(A)  A rental housing code self-assessment checklist.

(B)  A one‑stop shopping resource for rental unit owners and managers that provides:

(i)  Lead safety, minimum housing habitability, and basic life safety standards available from one site.

(ii)  Coordinated training across disciplines for owners and managers of rental housing units.

(11)  Recommend incentives and develop a process for nonexempt municipalities to establish an inspection program.

(12)  Establish an implementation schedule, to begin July 1, 2009, to include all the following:

(A)  Training of inspectors and certification by the department of public safety.

(B)  Collection of rental housing information for the registry.

(C)  Collection of fees.

(D)  Commencement of inspections beginning January 1, 2010.

(13)  Recommend staffing levels necessary to establish and maintain the program and provide for enforcement.

(14)  Recommend an appropriation sufficient to fund the certification program, licensing, complaint-driven inspections, enforcement, and the registry.

(15)  Develop a system for coordinating appropriate displacement services.

(16)  Develop a program and identify resources for repair and improvement.

(d)  The task force shall submit a written report on its progress on or before January 15 of each year to the house committee on general, housing and military affairs and the senate committee on economic development, housing and general affairs.

§ 3203.  RENTAL HOUSING SAFETY AND HABITABILITY FUND;

              ESTABLISHED

(a)  A rental housing safety and habitability fund is established in the state treasury for the purpose of creating a statewide rental housing inspection program to be administered by the department of public safety for the purposes of collecting and maintaining data about rental housing units in Vermont and providing education, training, and support to landlords and tenants to assure that the safety and habitability of rental housing are maintained for the benefit of owners, tenants, and communities.  The fund shall provide financing for scheduled, complaint-based, and emergency inspections of rental housing units, the enforcement of orders issued in conjunction with inspections, and enhancing communications among owners, tenants, and compliance personnel.

(b)  Proceeds from fees, grants, donations, contributions, and other sources of revenue that may be provided by statute or by rule may be deposited in the fund.  Interest earned on the fund and any balances remaining at the end of a fiscal year shall be retained in the fund.

§ 3204.  RENTAL HOUSING REGISTRY

The department of public safety in association with the Vermont housing finance agency, the department of health, and the department of housing and community affairs shall manage a database set up by a private contractor to include all rental housing, including rented single-family homes and rental units in owner-occupied multi-family buildings of two or more rental units and excluding vacation homes.

§ 3205.  RENTAL HOUSING SAFETY INSPECTOR LICENSING

               PROGRAM

The department of public safety shall establish and manage a licensing program for rental housing safety inspectors beginning July 1, 2009.

§ 3206.  RENTAL HOUSING HEALTH AND SAFETY STANDARDS

The department of public safety shall adopt minimum standards that apply to existing rental housing.  The standards shall include life safety, electrical, plumbing, and boiler codes, the rental housing health code, and lead paint requirements.

§ 3207.  RENTAL HOUSING SAFETY INSPECTION PROGRAM

The department of public safety shall establish a cyclical and point-of-sale rental housing safety inspection program beginning January 1, 2010.

(1)  Regular inspections shall be carried out by a licensed rental housing safety inspector under contract with the unit owner to assure units meet the rental housing health and safety standards.

(2)  Complaint-driven inspections shall be carried out by a licensed rental housing safety inspector under contract with the state or the municipality.


§ 3208.  RULES

The department of public safety shall adopt rules to implement the recommendations of the safe rental housing task force to carry out the purposes of this chapter.  The department shall propose such rules no later than

January 15, 2009.

§ 3209.  EXEMPTIONS

Rental housing units subject to the jurisdiction of municipal housing programs organized pursuant to 24 V.S.A. chapter 123 are exempt from the provisions of this chapter.  This chapter shall not be interpreted to limit or decrease the authority of the exempt municipal housing program in regard to building, housing, and fire safety codes.  A municipal program may lose this exemption if the commissioner of public safety determines that any of the following is true:

(1)  The habitability and enforcement criteria, including standards for issuing certificates of habitability, are less stringent than those of the state program.

(2)  Regularly scheduled inspections of the municipal program are less frequent than those of the state program.

(3)  The municipal program permits rental of units that lack a current certificate of habitability.

(4)  Any other aspect of the municipal program is less stringent than the state program.

Sec. 26.  APPROPRIATION

In fiscal year 2009, there is appropriated from the general fund to the department of public safety the amount of $30,000.00 to be used by the department for the purpose of retaining a consultant to assist the safe rental housing task force in carrying out its duties under chapter 181 of Title 20.