The Vermont Statutes Online

Title 10: Conservation and Development

Chapter 029: Community Development

• Subchapter 001: COMMUNITY DEVELOPMENT ACT

• § 681. Title

  This subchapter may be cited as the “Vermont Community Development Act.” (Added 1983, No. 10, § 1, eff. March 18, 1983.)

• § 682. Intent and purpose

  (a) It is the intent of this subchapter to provide for the State administration of the federal community development block grant program as is authorized by Title I of the Housing and Community Development Act of 1974, as amended (42 U.S.C. § 5301 et seq.), hereinafter called the “Federal Act,” so as to meet the objectives and requirements of that title.

  (b) The purpose of this subchapter is to meet the State goal and objectives so that the most effective projects in the neediest areas are funded.

  (1) The goal is to improve and maintain the economic and physical environment in Vermont’s municipalities so as to enhance the quality of life for all Vermonters, particularly those of lower incomes.

  (2) The objectives are to conserve, expand, and improve housing; to create and retain employment; and to improve public facilities in support of housing or economic development activities, or where there is a threat to the public health and safety. (Added 1983, No. 10, § 1, eff. March 18, 1983.)

• § 683. Title

  (1) As used in this subchapter:

  (2) “Municipality” means a town or city. It also means an incorporated village the charter of which enables it to function as a general purpose unit of local government. It shall also mean a “nonentitlement area” as defined in Title I, Sec. 102(a)(7) of the Federal Act.

  (3) “Grantee” means a municipality that receives a grant under the provisions of this subchapter.

  (4) “Board” means the Vermont Community Development Board.

  (5) “Agency” means the Vermont Agency of Commerce and Community Development.

  (6) “Secretary” means the Secretary of the Agency.

  (7) “Legislative body” means the aldermen of a town, the board of aldermen, or the council of a city, or the board of trustees or prudential committee of an incorporated village.

  (8) “Chief executive officer” means the mayor of a city; or if no mayor, the president of the board of aldermen, the chair of the city council, the chair of the board of selectboard, the president of the board of trustees, or chair of the prudential committee.

  (9) “Lower income” means less than or equal to 80 percent of median income. The Secretary shall determine the best measure of median income based on statistics from federal and/or State sources. (Added 1983, No. 10, § 1, eff. March 18, 1983; amended 1995, No. 190 (Adj. Sess.), § 1(a).)

• § 684. Powers and duties of the municipalities

  (a) In addition to the powers and authority that the municipalities have under existing law, they are hereby granted such additional authority and power, essential and incidental, as may be necessary for the administration and implementation of this subchapter.

  (b) Prior to filing an application under this subchapter a municipality shall:

  (1) through action by the legislative body, adopt or pass an official act or resolution authorizing the filing of the application and directing the chief executive officer or designee to act in connection with the application and to provide such information as may be required;

  (2) hold at least one public hearing, after notice of at least 15 days by publication in a newspaper of general circulation in the municipality, to obtain the views of citizens on community development, to furnish the citizens with information concerning the amount of funds available and the range of community development activities that may be undertaken under this subchapter, and to give affected citizens an opportunity to examine a proposed statement of the projected use of such funds;

  (3) allow citizens an opportunity to examine the application and all supporting documentation.

  (c) The chief executive officer or designee shall certify that the grantee will comply with the provisions of this subchapter and with other applicable federal and state laws and rules as may be determined by the secretary. (Added 1983, No. 10, § 1, eff. March 18, 1983.)

• § 685. The Vermont Community Development Board

  (a) There is created within the Agency of Commerce and Community Development the Vermont Community Development Board consisting of nine members who shall be residents of the State.

  (b)(1) The members shall be appointed by the Governor for a term of three years, or for the unexpired portion thereof. For the initial appointments, the Governor shall appoint three for one year, three for two years, and three for three years.

  (2) In the appointment of the members, consideration shall be given to the selection of such persons as shall adequately represent the interests of various sections of the State and the principal beneficiaries of the program.

  (c) The Chair shall be appointed annually by the Governor from among the members.

  (d) Members of the Board shall be entitled to receive per diem compensation and reimbursement of expenses as permitted under 32 V.S.A. § 1010, which shall be paid by the Agency.

  (e) No person who receives a significant portion of his or her income directly or indirectly from the community development activities governed by this subchapter shall be a member of the Board.

  (f) The Agency shall provide staff assistance and administrative support to the Board.

  (g) Prior to January 15 of each year, the Board shall submit a report of its activities and grants for the preceding year to the Governor and General Assembly. (Added 1983, No. 10, § 1, eff. March 18, 1983; amended 1995, No. 190 (Adj. Sess.), § 1(a); 2019, No. 61, § 7.)

• § 686. Eligibility, application, allocation of funds

  (a) All funds allocated to the State, except for an amount not exceeding the maximum allowable under the Federal Act available to the State for administrative costs, shall be allocated to municipalities in an equitable and efficient manner.

  (b) All municipalities, except for entitlement municipalities, shall be eligible to apply for and receive funds under this subchapter.

  (c) Entitlement municipalities shall not be eligible to apply for and receive funds under this subchapter. Entitlement municipalities shall, however, have the authority to apply for and receive funds and to implement and administer a community development program as otherwise provided in the Federal Act, and this subchapter shall not be construed in any way to limit that authority.

  (d) The Agency shall solicit applications from eligible municipalities. Any eligible municipality desiring to receive funds under this subchapter shall complete and submit an application in a manner as shall be prescribed by the Secretary. The Agency may require a third party credit analysis as part of the application. The applicant municipality shall pay a fee to cover the actual cost of the analysis to be deposited in a special fund that shall be managed pursuant to 32 V.S.A. subchapter 5 of chapter 7 and be available to the Agency to pay the actual cost of the analysis.

  (e) The Board shall evaluate the relative merits of the applications using the allocation system established under this subchapter and make recommendations to the Secretary as to which applications merit funding.

  (f) The Secretary shall review the recommendations of the board and make the final awards for grants-in-aid. (Added 1983, No. 10, § 1, eff. March 18, 1983; amended 2009, No. 47, § 7, eff. May 28, 2009.)

• § 687. Allocation system

  The Secretary, with the advice and assistance of the Board, shall establish a system for the allocation of community development program funds.

  (1) The allocation system shall be based on the intent, purpose, goal, and objectives of this subchapter.

  (2) The allocation system shall be competitive and shall provide the opportunity for any eligible municipality or municipalities to compete for funding for community development projects.

  (3) The system shall ensure that a wide range of community development activities shall be eligible for funding. These may include:

  (A) the acquisition, rehabilitation, or expansion of housing;

  (B) the creation, expansion, or retention of employment through the stimulation of private investment and community revitalization;

  (C) the installation, rehabilitation, or replacement of public facilities;

  (D) activities that test the feasibility of innovative approaches to community development;

  (E) activities that provide timely responses to unpredictable circumstances or special development opportunities.

  (4) The allocation system shall include a method through which the need for, and impact of, the projects proposed by municipalities shall be measured and shall establish a process for evaluation of the applications. (Added 1983, No. 10, § 1, eff. March 18, 1983.)

• § 688. Authority to make rules

  The Secretary is hereby granted the authority to issue rules in accordance with 3 V.S.A. chapter 25 for the purpose of administering the provisions of this subchapter. (Added 1983, No. 10, § 1, eff. March 18, 1983.)

• § 689. Multi-year commitments

  (a) Those municipalities that received commitments of multi-year funds in federal fiscal year 1981 under the provisions of the Federal Act shall be assured of funding to the extent of such commitments, provided such municipalities request the State to honor such funding commitments and the Secretary of the U.S. Department of Housing and Urban Development has provided the Secretary with a determination that any such municipality has performed adequately with respect to such previously distributed funds.

  (b) Those municipalities eligible to receive funding under the provisions of this section and so requesting such funding shall make application to the Agency in a manner as shall be determined by the Secretary.

  (c) The Secretary, with the advice and assistance of the Board, may allow the municipalities making application under this section to amend their programs to the extent that the program so amended meets the intent and purpose of this subchapter.

  (d) Notwithstanding the provisions of sections 686 and 687 of this title, the Secretary may adopt separate rules for the expeditious consideration of applications and allocations made under this section. (Added 1983, No. 10, § 1, eff. March 18, 1983.)

• § 690. Remedies for noncompliance

  (a) If the Secretary finds, after reasonable notice and opportunity for hearing, that a grantee under this subchapter has failed to comply substantially with the provisions of this subchapter, the rules adopted under the provisions of this subchapter, or of applicable provisions of federal law, the Secretary, until he or she is satisfied that there is no longer any such failure to comply, may:

  (1) terminate payments to the grantee under this subchapter; or

  (2) limit the availability of payments under this subchapter under such conditions as may be established by the Secretary.

  (b) In lieu of, or in addition to, any action authorized in subsection (a) of this section, the Secretary may refer the matter to the Office of the Attorney General of the State of Vermont with a recommendation that an appropriate civil action be instituted. (Added 1983, No. 10, § 1, eff. March 18, 1983; amended 2019, No. 14, § 15, eff. April 30, 2019.)

• § 690a. Nonprofit revolving loan funds

  (a) Any revolving loan fund lender not required to be licensed pursuant to 8 V.S.A. § 2201(d)(9) shall register and maintain its registration with the Commissioner of Economic Development, on forms and by policy and methods prescribed by the Commissioner. The Commissioner shall require such lenders to pay an annual fee of not more than $50.00 to maintain their registration.

  (b) Fees collected under this section shall be credited to a special fund established and managed pursuant to 32 V.S.A chapter 7, subchapter 5, and shall be available to the Department of Economic Development to offset the costs of providing those services. (Added 1995, No. 162 (Adj. Sess.), § 40, eff. Jan. 1, 1997; amended 1997, No. 59, § 32, eff. June 30, 1997.)

• Subchapter 002: JOB DEVELOPMENT ZONE

• § 691. Title

  This subchapter may be cited as the “Vermont Job Development Zone Act.” (Added 1985, No. 172 (Adj. Sess.), § 1.)

• § 692. Policy and purpose

  Recognizing that some communities in Vermont have failed to benefit from general economic progress and that innovative and intensive approaches to economic development should be tried and developed in up to three communities, this subchapter provides for the designation of up to three job development zones and for special economic development programs that will apply in these job development zones. (Added 1985, No. 172 (Adj. Sess.), § 1.)

• § 693. Definitions

  As used in this subchapter:

  (1) “Municipality” means a town or city. It also means an incorporated village the charter of which enables it to function as a general purpose unit of local government.

  (2) “Agency” means the Vermont Agency of Commerce and Community Development.

  (3) “Secretary” means the Secretary of the Agency.

  (4) “Population” means the most recent population of a municipality as determined by the Vermont Department of Health.

  (5) “Per capita income” means the total adjusted gross incomes of residents of a municipality divided by total exemptions claimed by residents of that municipality, as reported to the Vermont Department of Taxes in the most recent year for which data is available.

  (6) “Employment loss” means the absolute decline in the annual average number of insured private sector employees in the municipality during the most recent 12-month period for which data is reported by the Vermont Department of Labor compared to the same 12-month period five years earlier.

  (7) “Area unemployment rate” means the average monthly unemployment rate over the most recent two-year period for which data is available, of the labor market area of which a municipality is a part, as reported by the Vermont Department of Labor. (Added 1985, No. 172 (Adj. Sess.), § 1; amended 1995, No. 190 (Adj. Sess.), § 1(a); 2005, No. 103 (Adj. Sess.), § 3, eff. April 5, 2006.)

• § 694. Eligibility; application procedure

  (a) A municipality shall be eligible to apply for job development zone status if it has a population of at least 2,000 and meets two of the following three criteria:

  (1) it has a per capita income at least ten percent lower than the statewide per capita income;

  (2) it has had an employment loss;

  (3) it has an area unemployment rate at least 33 percent higher than the statewide rate.

  (b) The Agency shall solicit applications from eligible municipalities. Any eligible municipality desiring to receive designation as the job development zone shall complete and submit an application in a manner as shall be prescribed by the Secretary.

  (c) Applications for job development zone status will be rated by the Vermont Community Development Board established by section 685 of this title on the basis of applicants’ ability to implement and administer a successful job development zone program, the quality of applicants’ plans for conducting a job zone program, the level of support and commitment of resources demonstrated by the applicant during the application process, and the need of the applicant community for job development zone status.

  (d) The job development zone may geographically include a municipality or a portion of a municipality, or a combination of contiguous municipalities or portions of municipalities if so approved by the Secretary.

  (e) The Secretary shall review the recommendations of the Vermont Community Development Board and make the final designation of the job development zones. (Added 1985, No. 172 (Adj. Sess.), § 1.)

• § 695. Authority to make rules

  The Secretary is hereby granted the authority to issue rules in accordance with 3 V.S.A. chapter 25 for the purpose of administering the provisions of this subchapter. (Added 1985, No. 172 (Adj. Sess.), § 1.)

• § 696. Reporting and expiration

  (a) Designation as job development zone under this subchapter will apply until December 31, 1992.

  (b) Prior to January 15 of each year, the Secretary of Commerce and Community Development shall submit a report on job development zone activities for the preceding year to the Governor and General Assembly. Prior to January 15, 1992, the Secretary of Commerce and Community Development shall submit a comprehensive evaluation of the performance of the job development zone program to the Governor and General Assembly. (Added 1985, No. 172 (Adj. Sess.), § 1; amended 1987, No. 213 (Adj. Sess.); 1995, No. 190 (Adj. Sess.), § 1(b).)

• § 697. Incentives and initiatives

  The following incentives and initiatives shall be available to new or expanding business entities located within the job development zones:

  (1) [Repealed.]

  (2) Preferential consideration from the Vermont Economic Development Authority as set forth in sections 233, 253, and 263 of this title.

  (3) Targeted assistance under the Job Training Partnership Act, to the extent allowable by federal law.

  (4) Targeted assistance under the Vermont Training Program as set forth in chapter 22 of this title.

  (5) Funding for the purpose of program implementation to the regional development corporation which includes a job zone. The funding shall be through increased grants to economic development corporations provided for in 24 V.S.A. § 2784(a).

  (6) Infrastructure assistance as set forth in section 698 of this title.

  (7) Technical assistance from the Agency of Commerce and Community Development to develop applications for community development block grant and urban development action grants, rural development action grants, and other community improvement and economic development grants and to assist businesses with permits and licenses.

  (8) Direct, localized assistance from small business development center. (Added 1985, No. 172 (Adj. Sess.), § 1; amended 1993, No. 89, § 3(a), eff. June 15, 1993; 1995, No. 190 (Adj. Sess.), § 1(a); 2015, No. 57, § 98.)

• § 698. Infrastructure improvement program

  (a) A municipality that is within a designated job development zone shall be eligible to receive a payment each year from the Agency of Commerce and Community Development to reimburse annual interest costs on indebtedness for economic development related infrastructure projects approved after July 1, 1986. Annual reimbursement payments shall be limited to $1,000,000 of indebtedness in a designated job development zone. The Agency shall require the municipality to submit an amortization schedule and proof of payment of its annual interest payment on bonds. The Agency shall not reimburse a municipality for infrastructure projects unless requests for payment are received within three months after the end of the fiscal year.

  (b) Economic development related infrastructure projects shall include water supply, pollution abatement, and highway facilities and such other municipal facilities as may be established by rule under section 695 of this chapter. (Added 1985, No. 172 (Adj. Sess.), § 1; amended 1995, No. 190 (Adj. Sess.), § 1(a).)

• Subchapter 003: HOUSING; INVESTMENTS

• § 699. Vermont Rental Housing Improvement Program

  (a) Creation of Program.

  (1) The Department of Housing and Community Development shall design and implement the Vermont Rental Housing Improvement Program, through which the Department shall award funding to statewide or regional nonprofit housing organizations, or both, to provide competitive grants and forgivable loans to private landlords for the rehabilitation, including weatherization and accessibility improvements, of eligible rental housing units.

  (2) The Department shall develop statewide standards for the Program, including factors that partner organizations shall use to evaluate applications and award grants and forgivable loans.

  (3) A landlord shall not offer a unit created through the Program as a short-term rental, as defined in 18 V.S.A. § 4301, for the period a grant or loan agreement is in effect.

  (4) The Department may utilize a reasonable percentage, up to a cap of five percent, of appropriations made to the Department for the Program to administer the Program.

  (5) The Department may cooperate with and subgrant funds to State agencies and governmental subdivisions and public and private organizations in order to carry out the purposes of this subsection.

  (b) Eligible rental housing units. The following units are eligible for a grant or forgivable loan through the Program:

  (1) Non-code compliant.

  (A) The unit is an existing unit, whether or not occupied, that does not comply with the requirements of applicable building, housing, or health laws.

  (B) If the unit is occupied, the grant or forgivable loan agreement shall include terms:

  (i) that prohibit permanent, involuntary displacement of the current residents;

  (ii) that provide for the temporary relocation of the current residents if necessary to perform the rehabilitation; and

  (iii) that ensure that the landlord complies with the affordability requirements of the Program following the rehabilitation.

  (2) New units. The unit will be:

  (A) a newly created accessory dwelling unit that meets the requirements of 24 V.S.A. § 4412(1)(E);

  (B) a newly created unit within an existing structure;

  (C) a newly created residential structure that is a single unit; or

  (D) a newly created unit within a newly created structure that contains five or fewer residential units.

  (c) Administration. The Department shall require a housing organization that receives funding under the Program to adopt:

  (1) a standard application form that describes the application process and includes instructions and examples to help landlords apply;

  (2) an award process that ensures equitable selection of landlords, subject to a housing organization’s exercise of discretion based on the factors adopted by the Department pursuant to subsection (a) of this section; and

  (3) a grant and loan management system that ensures accountability for funds awarded.

  (d) Program requirements applicable to grants and forgivable loans.

  (1)(A) A grant or loan shall not exceed:

  (i) $70,000.00 per unit, for rehabilitation or creation of an eligible rental housing unit meeting the applicable building accessibility requirements under the Vermont Access Rules; or

  (ii) $50,000.00 per unit, for rehabilitation or creation of any other eligible rental housing unit.

  (B) In determining the amount of a grant or loan, a housing organization shall consider the number of bedrooms in the unit, whether the unit is being rehabilitated or newly created, whether the project includes accessibility improvements, and whether the unit is being converted from nonresidential to residential purposes.

  (2) A landlord shall contribute matching funds or in-kind services that equal or exceed 20 percent of the value of the grant or loan.

  (3) A project may include a weatherization component.

  (4) A project shall comply with applicable building, housing, and health laws.

  (5) The terms and conditions of a grant or loan agreement apply to the original recipient and to a successor in interest for the period the grant or loan agreement is in effect.

  (6) The identity of a recipient, the amount of a grant or forgivable loan, the year in which the grant or forgivable loan was extended, and the year in which any affordability covenant ends are public records that shall be available for public copying and inspection and the Department shall publish this information at least quarterly on its website.

  (7) A project for rehabilitation or creation of an accessible unit may apply funds to the creation of a parking spot for individuals with disabilities.

  (e) Program requirements applicable to grants and five-year forgivable loans. For a grant or five-year forgivable loan awarded through the Program, the following requirements apply for a minimum period of five years:

  (1) A landlord shall coordinate with nonprofit housing partners and local coordinated entry organizations to identify potential tenants.

  (2)(A) Except as provided in subdivision (2)(B) of this subsection (e), a landlord shall lease the unit to a household that is:

  (i) exiting homelessness, including any individual under 25 years of age who secures housing through a master lease held by a youth service provider on behalf of individuals under 25 years of age;

  (ii) actively working with an immigrant or refugee resettlement program; or

  (iii) composed of at least one individual with a disability who is eligible to receive Medicaid-funded home and community based services.

  (B) If, upon petition of the landlord, the Department or the housing organization that issued the grant determines that a household under subdivision (A) of this subdivision (e)(2) is not available to lease the unit, then the landlord shall lease the unit:

  (i) to a household with an income equal to or less than 80 percent of area median income; or

  (ii) if such a household is unavailable, to another household with the approval of the Department or housing organization.

  (3)(A) A landlord shall accept any housing vouchers that are available to pay all, or a portion of, the tenant’s rent and utilities.

  (B) If no housing voucher or federal or State subsidy is available, the total cost of rent for the unit, including utilities not covered by rent payments, shall not exceed the applicable fair market rent established by the Department of Housing and Urban Development.

  (4)(A) A landlord may convert a grant to a forgivable loan upon approval of the Department and the housing organization that approved the grant.

  (B) A landlord who converts a grant to a forgivable loan shall receive a 10-percent credit for loan forgiveness for each year in which the landlord participates in the Program.

  (f) Requirements applicable to 10-year forgivable loans. For a 10-year forgivable loan awarded through the Program, the following requirements apply for a minimum period of 10 years:

  (1) A landlord shall coordinate with nonprofit housing partners and local coordinated entry organizations to identify potential tenants.

  (2)(A) Except as provided in subdivision (2)(B) of this subsection (f), a landlord shall lease the unit to a household that is:

  (i) exiting homelessness, including any individual under 25 years of age who secures housing through a master lease held by a youth service provider on behalf of individuals under 25 years of age;

  (ii) actively working with an immigrant or refugee resettlement program; or

  (iii) composed of at least one individual with a disability who is eligible to receive Medicaid-funded home and community based services.

  (B) If, upon petition of the landlord, the Department or the housing organization that issued the grant determines that a household under subdivision (2)(A) of this subsection (f) is not available to lease the unit, then the landlord shall lease the unit:

  (i) to a household with an income equal to or less than 80 percent of area median income; or

  (ii) if such a household is unavailable, to another household with the approval of the Department or housing organization.

  (3)(A) A landlord shall accept any housing vouchers that are available to pay all, or a portion of, the tenant’s rent and utilities.

  (B) If no housing voucher or federal or State subsidy is available, the cost of rent for the unit, including utilities not covered by rent payments, shall not exceed the applicable fair market rent established by the Department of Housing and Urban Development.

  (4) The Department shall forgive 10 percent of the amount of a forgivable loan for each year a landlord participates in the loan program.

  (g) [Repealed.]

  (h) Lien priority. A lien for a grant converted to a loan or for a forgivable loan issued pursuant to this section is subordinate to:

  (1) a lien on the property in existence at the time the lien for rehabilitation and weatherization of the rental housing unit is filed in the land records; and

  (2) a first mortgage on the property that is refinanced and recorded after the lien for rehabilitation and weatherization of the rental housing unit is filed in the land records. (Added 2021, No. 181 (Adj. Sess.), § 6, eff. June 7, 2022; amended 2023, No. 47, § 40, eff. July 1, 2023; 2023, No. 113 (Adj. Sess.), § E.802, eff. July 1, 2024; 2023, No. 181 (Adj. Sess.), § 86, eff. June 17, 2024.)