This commentary is by Jonah Richard of Bradford, a real estate developer focused on building small-scale multifamily housing projects. He is currently wrapping up a nine-unit mixed-use project on Main Street in Fairlee.
This is in response to Aaron Adler’s op-ed from March 10 titled “Changes in Act 250 and local zoning won’t solve housing problems.”
Respectfully, Mr. Adler seems to be misguided in his understanding of the proposed S.100 bill making its way through the Senate.
The Act 250 portions of the bill focus on supporting infill housing development in our core village centers and downtowns — areas where denser housing projects belong.
S.100 does not, as Mr. Adler implies, repeal the pieces that limit rural sprawl (“if reduced regulation leads to more housing, it will be expensive rural sprawl that fragments our forests and farmland”).
I encourage folks to browse the text as introduced in the Senate (Sections 16-21).
Perhaps as a result of his misunderstanding of the proposed bill, Mr. Adler comes to the conclusion that Act 250 reform will not spur more affordable development:
“A builder who can command (half a million dollars) for a new home will not lower it simply because the builder does not have to get a permit, especially when the builder’s costs have climbed. The builder will charge what the market will bear.”
This is the wrong scenario to be talking about.
S.100 does not change the Act 250 requirements for major subdivisions or large single-family development projects outside priority areas. That builder chopping up our cherished Vermont land is still going to have to jump through the same hoops as before.
Instead, we should be talking about the small, local developer (like myself) who is actively avoiding small-scale multifamily projects in our village centers because of some unintended side effects of the original 1970 legislation.
Specifically, the 10-5-5 rule and Priority Housing Project designation.
The 10-5-5 rule requires developers to go through Act 250 review if they create 10 or more housing units in a 5-mile radius in a five-year period. It is one of 12 triggers for an Act 250 review.
I am now wrapping up a nine-unit mixed-use project in Fairlee. Under the 10-5-5 rule, any further projects I take on in town are subject to Act 250. Even a small triplex on a vacant corner lot.
For those unfamiliar with an Act 250 application, here’s the 51-page set of instructions. 51 pages just to explain how to apply. The application itself is a 100-plus-hour endeavor and includes requirements like a soil evaluation, noise analysis, and calculations for the additional property, sales and income tax revenue as a result of the project.
Then, factor in the ~60-day review period, and attorney fees should any party appeal the decision.
As a small developer with zero staff, I do not have the capacity to invest/risk that amount of time and capital for a triplex.
Instead, I have three options: 1) tackle a larger project in Fairlee that justifies going through Act 250 review (for me, that number is 25-plus units), 2) look outside the 5-mile radius for a new project, or 3) stop building.
Option 1 is difficult for smaller developers. Larger projects are more capital intensive (about $2 million in equity needed for a 25-unit project). And that’s just not feasible for many.
More importantly, these larger projects don’t always fit the character of our village centers. And they certainly don’t solve the problem of filling in the myriad small, vacant lots peppered throughout our towns.
I ended up choosing option 2 for my next project, finding a site 6 miles away in Bradford. But this isn’t a long-term solution and I have no interest in moving farther away with each subsequent project.
Those of you savvy with Act 250 might say: “Well, why don’t you just take advantage of the Priority Housing Project (PHP) loophole?
A project is deemed a PHP and avoids Act 250 review if it is:
- Located in a Downtown Development District, New Town Center, Growth Center, or Neighborhood Development Area.
- Below the threshold for number of units (49 in towns with more than 5,999 people).
- Rented to folks making 80% of the area median income for 15 years.
Great in theory — but take a look at the map for that first location requirement. Many town centers aren’t covered. Fairlee — which has only a designated Village Center — does not qualify for PHPs.
The surges in labor and material costs that Mr. Adler cites as contributing to the housing crisis are very real. But equally real are the unseen blockers — like Act 250’s 10-5-5 rule — that cull new projects before they even reach the design phase.
S.100 addresses these issues and makes it possible for small-scale developers like myself to continue building projects in our core town centers. Specifically, it looks to extend the 10-5-5 rule to 25-5-5 (25 units in a 5-mi radius in five years) and include Village Centers in the group of designated areas supporting PHPs.
This is a subtle, but powerful, update to Act 250. Most importantly, it does it in a way that preserves the original goals of the legislation and, as Mr. Adler aptly puts it, maintains “the wildlife habitat and the land use patterns that make Vermont a place to cherish.”
