Housing Bill Hailed as Historic Win, But A Closer Look Reveals A Complicated Picture
The final law is the result of a bare-knuckle legislative battle that forced major compromises.
Vermont has a powerful new weapon in its fight against the state's crippling housing shortage. A sweeping bill, S.127, signed into law this month, creates a multi-billion-dollar program to fund the infrastructure—like water, sewer, and roads—needed to build thousands of new homes.
Hailed by advocates as the "single largest investment in municipal infrastructure in Vermont's history," the bill's centerpiece is the Community and Housing Infrastructure Program, or CHIP. It’s a landmark achievement that aims to break the gridlock that has stalled housing development for years.
But the celebratory headlines don't tell the whole story. The final law is the result of a bare-knuckle legislative battle that forced major compromises. While the state now has a new way to pay for housing, critics point out that the bill does little to lower the sky-high cost of building that housing or streamline the complex regulatory maze that adds time and expense to every project. Key proposals to tackle the root causes of the crisis—the high price of land, construction, and permitting—were weakened or stripped from the bill entirely.
Here’s a breakdown of what the new law does, where it falls short, and what it means for Vermonters.
The Big Win: A Powerful New Tool for Towns
At its core, CHIP is designed to solve a classic chicken-and-egg problem: You can't build homes without infrastructure, but small towns can't afford to build infrastructure for homes that don't yet exist.
How it Works: CHIP allows towns to borrow money for housing-related infrastructure projects. That loan is then paid back over time using the new property tax money generated by the very homes that are built. It’s a way to let future growth pay for today's needs without raising taxes on current residents.
The Scale: The program is massive. It authorizes up to $2 billion in state-backed public investment over the next decade, a figure supporters believe will finally make a serious dent in the state's housing deficit.
Who It's For: Every city and town in Vermont is eligible, a major change from past programs that were limited to a few designated downtowns.
The Compromise: From 'Bold and Simple' to 'Guarded and Complex'
The version of CHIP that passed is much different from the one originally proposed. The State Senate's vision was a flexible program with few strings attached. But the House, citing fiscal concerns, added several "guardrails" that critics worry could make the program difficult for the small, rural towns that need it most.
Feature
The Original Vision
The Final Law
Simplicity
A simple, flexible tool for all towns.
A more complex program with a detailed application process.
The "But For" Test
No test required.
Developers of market-rate homes must prove the project wouldn't happen "but for" the CHIP funding. Affordable housing projects are exempt.
Funding Cap
No annual limit on projects.
A massive $2 billion potential, but with complex annual authorization limits.
The biggest sticking point is the "but for" test. Supporters say it’s a necessary check to ensure taxpayer-backed financing isn't used for projects that would have been built anyway. Opponents, including Governor Phil Scott, argue it creates a bureaucratic hurdle that could scare off private developers and overwhelm small towns with limited staff.
What Else Is in the Bill? Other Clear Positives
Beyond the main event, S.127 contains a number of other clear wins for housing in Vermont.
Fixing Up Rental Homes: More money is now available—up to $70,000 per unit—to help landlords renovate vacant or substandard apartments and bring them back online.
Supporting Manufactured Homes: The bill provides funding to improve manufactured home parks and, crucially, requires that they be allowed in any part of town where single-family homes are permitted, ending a common form of local exclusion.
Protecting Tenants: It is now illegal for landlords to charge rental application fees. The law also expands fair housing protections to include citizenship and immigration status.
Cleaning Up for Housing: The bill sets aside $2 million to help clean up "brownfield" sites—old, contaminated industrial properties—to make them safe for new housing.
The Setbacks: What Was Left on the Cutting Room Floor
For many housing advocates, the bill is as notable for what it's missing as for what it includes. The intense focus on passing CHIP meant other big ideas were abandoned.
Regulatory Hurdles Remain Untouched: A major driver of housing costs in Vermont is the state's complex and often lengthy permitting process, particularly the Act 250 land use law. While other legislative efforts to reform these regulations were attempted, S.127 itself did not contain significant changes to streamline permitting. This means that even with new financing available, developers still face the same time-consuming and expensive approval processes that can kill projects with delays and legal fees before they break ground.
The Land Bank Idea Was Dropped: A proposal to study and create a statewide land bank—a powerful tool to acquire vacant or abandoned property and repurpose it for affordable housing—was in a competing House bill. This idea, which directly tackles the high cost of land, did not make it into the final law.
No Action on High Construction Costs: Early in the session, lawmakers showed significant interest in promoting off-site and modular construction as a way to build homes more cheaply. But no major policies to support this industry were included in S.127.
The Bottom Line: A Step Forward, But the Journey Isn't Over
S.127 is a landmark compromise. It gives Vermont a powerful new engine to finance the infrastructure that housing desperately needs. It is, by any measure, a major step forward.
However, it leaves the primary drivers of cost—expensive land, expensive construction, and a complex regulatory environment—untouched. The state has committed to helping pay for the roads and pipes, but the price of the house at the end of the driveway remains the fundamental challenge.
The next step lies with state officials, who have until November 15th to write the final rules for the CHIP program. Their decisions will determine whether the program is a truly accessible tool for all of Vermont, or one that only the most well-resourced communities can use. For now, Vermont has a new plan to pay for housing, but the work of making it truly affordable and faster to build is far from finished.