In many small towns in rural Vermont, there’s a need for new residential growth to support existing residents or attract new ones. But these places tend to lack public water supplies and sewer systems, both critical ingredients for development.
A group promoting housing production in the Green Mountain State wants to apply future taxes expected from new homes to pay for the water and sewer lines needed for those projects to happen. Otherwise, with state and local budgets strained, it’s unclear where the money will come from, the group says.
Vermont needs 30,000 new homes in the next five years, according to Miro Weinberger, who sits on the board for Let’s Build Homes, a recently formed group to advocate for growth while preserving the state’s distinct character.
“It won’t be easy to meet that [30,000-home] goal, which would be more than doubling current levels of production,” Weinberger told members of the state House of Representatives housing committee on Feb. 13. “Projects are facing headwinds they hadn’t faced in the past 20 years — high interest rates, high construction costs and high costs of public infrastructure," said Weinberger, the former mayor of Burlington, the state’s largest city.
The idea of leveraging future tax revenue to pay for today’s costs isn’t new; many states use this tool to help pay for economic development. What’s distinctive about the concept Let’s Build Homes is promoting is that it would direct future tax dollars specifically for public investments like water and sewer pipes, to make housing viable. Developers could use up to 80% of new tax revenue from a property to support their projects for up to a 20-year period.
Public support is the only way a mix of homeownership and rental units under construction in the town of Middlebury can go forward, Zeke Davisson, chief operating officer for Vermont’s Summit Properties, told the housing committee. The first 80 homes, intended for employees at Middlebury College, got millions of dollars in support from the 2021 American Rescue Plan Act and other federal sources. That funding source isn’t available for the next 104 houses in the 254-unit project.
From the Homes.com blog: Build your home
The combination of duplexes, townhouses and apartments in the first phase of development needed $6 million for water and sewer infrastructure; the next section will need another $2.5 million, Davisson said. Once constructed, the housing will produce $450,000 annually in new taxes.
“I do think leveraging future tax dollars that otherwise are unlikely to exist is something we should really be thinking about,” he said.
One member of the House of Representatives committee questioned whether it made sense to build more housing in rural towns, given that the state is closing many small public schools that are often the draw for new residents. Another member wondered whether the new housing would encourage sprawling development beyond town centers, something Vermont has made a point over many years to try to avoid.
The proposed tax revenue program would only be available for development within existing settlements or in other areas the state isn’t trying to protect from growth, Weinberger said. He doubted the program would affect more than 4% of the state’s land area.
Let’s Build Homes could not be immediately reached on whether the group is working with a House of Representatives member to introduce a bill in the current session.
