Updated 5:44 p.m.
House and Senate lawmakers have advanced a compromise on one of two bills aimed at solving one of the most vexing problems Vermont faces: the lack of affordable housing.
But facing a veto threat from Gov. Phil Scott, negotiators shelved a key provision. House conferees on Tuesday eliminated a proposed statewide registry of rental properties from the bill, and Senate conferees went along.
Scott vetoed a similar registry last year, and has referred to the current proposal as a “poison pill.”
“This bill is so important, we wanted to eliminate a veto excuse,” said one conferee, Rep. Tommy Walz, D-Barre City, as he explained the bill to Democratic colleagues in a House caucus Wednesday afternoon.
Rep. Tom Stevens, D-Waterbury, told VTDigger the conferees sacrificed the registry in the hope of saving something more important to legislators: state-run inspections of rental housing.
“I don’t think the governor enthusiastically supports the enforcement, and that was truly important to us,” Stevens said.
“Our priority in that bill was the housing inspections,” another conferee, Sen. Michael Sirotkin, D-Chittenden, told VTDigger.
The bill, S.210, enables the state Division of Fire Safety to go into rental housing to enforce health and housing codes on top of fire safety inspections. In most towns, housing code inspections currently fall to the local health officer, often a volunteer who may also serve on the selectboard. Â
The $300,000 budgeted to set up a rental housing registry will now go to the Division of Fire Safety, along with an additional $100,000, to hire two or three people to start investigating housing violations. Ultimately, the division is authorized to hire up to five inspectors. As it takes over inspection duties, it may have to continue to rely on town health officers.
Renters, landlords and neighbors will be able to complain about health violations to either the town health officer or the Division of Fire Safety.
The rental registry would have provided revenue, through fees, that would have paid for inspections. Instead, lawmakers are using $400,000 in one-time, one-year federal funds from the American Rescue Plan Act signed by President Biden last year.
Without the registry, legislators will have to find another way to pay for the inspections when federal money runs out. That’s a concern for some committee members.
“We’re authorizing what essentially becomes a continuing program without a general source other than the general fund,” said Sen. Randy Brock, R-Franklin, in committee discussions Tuesday.
Sirotkin said the proposal to eventually maintain the program with state funds came from the Scott administration.
“Adam Greshin has said he will find the money for future use,” Sirotkin told the committee, referring to the state commissioner of finance and management. Greshin confirmed that statement to VTDigger.
The bill provides $20 million for a program the governor wanted, renamed by legislators the Vermont Rental Housing Improvement Program. The program would award grants or loans of up to $50,000 to landlords to fix housing that is not up to code, as well as to create new accessory dwelling units.
Stevens said the goal is to create more housing by upgrading units that are not available now, as many owners cannot afford to bring apartments up to code.
Senators pushed for specific support for construction of accessory dwelling units, sometimes known as in-law apartments. Under existing Vermont law, property owners may convert part of a house or another structure — such as a garage, a carriage house or a barn — into a separate home. They can then rent out that new unit, or move into it and rent out the larger home.
“We have an aging population,” Sirotkin told VTDigger. “They are over-housed.”
He said if people can get guidance and help, they can “almost instantaneously” create additional dwelling units. The bill provides funding to guide property owners through the process.
House members wanted to allow property owners to build new units on land where there is already a structure. Senators were skeptical of that proposal and expressed worry that it deviated from the intent of the program, which is to convert Vermont’s derelict housing into rentable housing.
The two sides compromised, allowing grants for new buildings, but only if they are accessory dwelling units, meaning the owner must live somewhere on the property.
Landlords receiving the grants or loans must give preference to people experiencing homelessness, refugees, or people making less than 80 percent of median area income when they rent out the refurbished or new units. No matter who the tenant is, landlords may not charge more than the fair market rent established by the U.S. Department of Housing and Urban Development. There is an exception for accessory dwelling units. Senators worried that no one would want to create such units if they could not rent them out at market rates, and House members agreed.
Lawmakers in both chambers fast-tracked votes Wednesday and approved the compromise version of the bill.
The other major housing bill, S.226, is stuck in the Senate. As of Wednesday afternoon, legislators were working out how to deal with portions that were moved into yet another bill, S.234, which primarily covers reforms to Act 250, the state’s landmark land use law.
Scott announced Tuesday that he planned to veto that bill.
Correction: An earlier version of this story overstated the length of the funding from the American Rescue Plan Act.