An act relating to housing and common interest communities

New section requiring municipal plans to include a detailed analysis of regulatory and physical constraints preventing development of sufficient housing to meet regional targets. Municipalities must quantify existing and projected housing needs, inventory available sites, analyze constraints (zoning, infrastructure), describe actions to accommodate needed housing types, and document progress toward construction over the 20-year planning period at each plan adoption or renewal.

New provision making it void and unenforceable for common interest communities (condos, co-ops) to prohibit or unreasonably restrict unit owners from leasing their units for residential purposes. Exceptions preserve the ability to restrict short-term rentals and transient occupancy subject to lodging tax.

New provision making it void and unenforceable for common interest communities to prohibit unit owners from operating a family child care home within their unit, subject to compliance with applicable federal and state child care regulations.

New comprehensive section on electric vehicle supply equipment (EVSE) in common interest communities. Makes it void and unenforceable to prohibit or unreasonably restrict EVSE installation in a unit owner's unit or designated parking space. Includes a 60-day deemed approval process, cost responsibility rules for the unit owner, and a civil penalty of up to $1,000 for intentional violations by the association.

The Vermont Economic Development Authority's definition of eligible project is modified to allow joint financing with a financing lender for multiunit housing developments of five or more units, removing the prior exceptions that excluded projects primarily developed for low and moderate income occupancy or utilizing Agency funding (debt or tax credits).

Mobile home lot rent dispute process changed from a cap on increases (tied to CPI) to a mediation-based system. When a proposed increase exceeds CPI by more than one percentage point and leaseholders file a petition within 15 business days, the Commissioner sends a list of qualified mediators. The park owner bears the burden of showing the increase is reasonable. Mediation must conclude 10 days before the effective date of the increase.

New section codifying the Rental Housing Revolving Loan Program in statute, authorizing the Vermont Housing Finance Agency to provide subsidized loans for rental housing developments serving middle-income households. Loans capped at $150,000 per unit for units affordable to households up to 80% of area median income and $100,000 per unit for 81-150% AMI. Requires at least 25% of units in a project to be affordable.

New section authorizing municipalities to issue special assessment revenue bonds for public improvements benefiting a limited area. Bonds are payable solely from special assessments on benefited properties and do not constitute general indebtedness of the municipality.

The Down Payment Assistance Program tax credit allocation of up to $250,000 per year is extended from expiring in fiscal year 2026 to fiscal year 2031, adding five additional years of funding authority.

The Off-Site Construction Accelerator Pilot is transferred from the Office of the State Treasurer to the Agency of Commerce and Community Development (in collaboration with the Department of Buildings and General Services). The report deadline moves from January 15, 2027 to November 15, 2028. New elements added include preapproved modular designs, aligning state and local permitting, and creation of off-site building codes. A willing municipality must participate in regulatory reforms, and a municipal planning grant is provided to assist.

The Service-Supported Housing Advisory Council's annual report language is revised to reference 'individuals with developmental disabilities' and 'Medicaid-funded home- and community-based services' rather than 'Medicaid-funded Developmental Disability Services.' Per diem compensation for unpaid members is capped at 12 meetings per year.

New 24 V.S.A. section 4388 requires municipal plans to include a detailed analysis of regulatory and physical constraints preventing housing development, including quantification of needed housing types, inventory of available sites, identification of market-based incentives, and specific zoning or infrastructure actions. If a municipality determines targets cannot be met due to documented constraints, it must establish a minimum number of units to be developed over the 20-year planning period.

Mobile home lot rent increases are now capped at one percentage point above the U.S. Consumer Price Index for all Urban Consumers, Housing Component. The park owner bears the burden of proving the proposed increase is reasonable during mediation.

The Service-Supported Housing Advisory Council now has authority to provide per diem compensation to members not otherwise compensated, for up to 12 meetings per year under 32 V.S.A. section 1010.

New Off-Site Construction Accelerator Pilot (Section 3) directs the Agency of Commerce and Community Development and the Department of Buildings to develop a pilot project exploring modular construction to reduce housing costs, including bulk purchasing, preapproved designs, loan loss reserves, statewide procurement consortium, and off-site building codes. A report is due November 15, 2028.

The Down Payment Assistance Program tax credit allocation period is extended from fiscal year 2026 to fiscal year 2031, maintaining the $250,000 annual first-year credit allocation cap.

VEDA's authority to finance multiunit housing developments of five or more units is modified: the prior restriction that VEDA shall not finance developments utilizing funding issued by the Vermont Housing Finance Agency is removed, and the language now simply requires joint financing with a financing lender when requested by that lender.

New appropriations for fiscal year 2027: $250,000 to the Municipal and Regional Planning and Resilience Fund for planning grants related to housing targets, $5,000,000 to the Department of Housing and Community Development for the Vermont Rental Housing Improvement Program, and $3,000,000 to the Vermont Housing and Conservation Board for permanently affordable housing for individuals with developmental disabilities.

New positions created: two full-time classified Grants Management Specialist positions and one full-time exempt position in the Department of Housing and Community Development, and one full-time classified position in the Department of Disabilities, Aging, and Independent Living.

The unofficial version contained a Vermont State Treasurer Credit Facility section (up to 12.5 percent of average cash balance plus an additional 2.5 percent for climate infrastructure) that is absent from the official version.

New 27A V.S.A. section 3-125 voids covenants or restrictions in common interest communities that prohibit or unreasonably restrict unit owners from leasing units for residential purposes (with exceptions for subleasing, transient occupancy, and short-term rentals) or from operating family child care homes within their units. Does not apply to leasehold communities or nonresidential communities.

New 27A V.S.A. section 3-126 protects the right of common interest community unit owners to install electric vehicle supply equipment in their units or designated parking spaces. Associations must process applications within 60 days (deemed approved if no written denial). Intentional violations carry a civil penalty up to $1,000 plus attorney's fees for prevailing plaintiffs.

New 24 V.S.A. section 4412a provides a density bonus of an additional 20 percent in zoning bylaws for residential housing construction that uses union labor.

The zoning protection for alternative housing types no longer includes 'manufactured housing' as a separately protected category; the list now reads 'mobile homes, modular housing, or prefabricated housing.'

The definition of 'served by municipal sewer and water infrastructure' is expanded to include areas within one-quarter mile of a road with water and sewer lines where capacity exists or is being added imminently to accommodate housing. The reference to fire districts is removed from the second prong.

The bill takes effect on July 1, 2026. The new common interest community leasing and EVSE provisions apply to preexisting communities (created before January 1, 1999) only for events occurring after June 30, 2026.

The standalone housing targets section (24 V.S.A. 4388) with its detailed analytical requirements was replaced by an amendment to the existing municipal plan statute (24 V.S.A. 4382(a)(10)) requiring a 'housing element' with a recommended program, constraint analysis, and progress documentation. The enacted version is less prescriptive about specific analytical steps.

The Off-Site Construction Accelerator Pilot was transferred from the Agency of Commerce and Community Development to the Office of the State Treasurer. The report deadline moved from November 15, 2028 to January 15, 2027. Several pilot elements were removed (preapproved modular designs, state-local permitting alignment, off-site building codes). The requirement for a willing municipality with a planning grant was removed. The Treasurer is exempted from procurement requirements in 3 V.S.A. chapter 14.

New zoning provisions in 24 V.S.A. 4412 require that no bylaw exclude mobile homes, modular housing, manufactured housing, or prefabricated housing from any district allowing year-round residential development, and that bylaws designate appropriate districts for multiunit or multifamily dwellings without excluding them.

The Down Payment Assistance Program tax credit allocation period was extended from fiscal year 2026 to fiscal year 2031.

A new Rental Housing Revolving Loan Program (10 V.S.A. 629) was codified in statute, providing subsidized loans for rental housing serving middle-income households. Loans are capped at 35% of affordable unit costs or $150,000 per unit (up to 80% AMI) / $100,000 per unit (81-150% AMI), adjusted annually for inflation. Projects must create at least 2 units with 25%+ affordable to up to 150% AMI. Affordability periods are 7 years or loan repayment plus 3 years, with a 3% annual rent increase cap.

The State Treasurer is authorized to establish a credit facility of up to 2.5% of the State's average cash balance specifically for climate infrastructure and resilience projects, with annual reporting to the Governor and legislative committees.

New special assessment bond authority (24 V.S.A. 3257) allows municipalities to issue revenue bonds for public improvements, payable solely from special assessments. Issuance requires either a commitment letter from the Vermont Bond Bank, a federally regulated bank, or a credit union, or a BBB-equivalent credit rating.

The mobile home lot rent provision was changed from a mediation/dispute process (triggered when increases exceeded CPI by more than one percentage point) to a flat prohibition: park owners shall not propose increases exceeding CPI by more than one percentage point. The entire mediation framework was removed.

The Vermont Rental Housing Improvement Program (VHIP) now requires detailed annual reporting including unit counts by funding type, tenant occupancy status after lease requirement expiration, rent comparisons to HUD fair market rent, and tenant turnover rates.

The Vermont Economic Development Authority's authority to finance multiunit housing was narrowed: it now requires the project be 'requested by' a financing lender, and the Authority is prohibited from financing portions primarily developed for low/moderate income households or those utilizing Agency funding (debt or tax credits).

A new section (3 V.S.A. 119) requires the Secretary of State to publish information about Vermont's common interest communities on its website, including governing statutes.

Housing target analysis requirements were moved from a new standalone section (4388) into an amendment of the existing municipal plan section (4382), making it part of the required 'housing element' of every municipal plan rather than a separate statutory obligation.

The entire Off-Site Construction Accelerator Pilot program (modular construction demonstration, bulk purchasing consortium, preapproved designs, and related regulatory reforms) was removed from the bill.

A new three-step designation system for downtowns and village centers was added to the State Community Investment Program, with Step Two as a mid-level village designation and Step Three joining the Vermont Downtown Program. Municipalities may appeal rejections to the State Board.

'Manufactured housing' was added alongside mobile homes, modular housing, and prefabricated housing in the prohibition against excluding these types from districts allowing year-round residential development.

The extension of Down Payment Assistance Program tax credits from fiscal year 2026 to 2031 was deleted entirely (Section 2 marked as [Deleted]).

A new section authorizes the Vermont State Treasurer to establish a credit facility of up to 12.5 percent of the State's average cash balance, with an additional 2.5 percent specifically restricted to financing climate infrastructure and resilience projects. Annual reporting to the Governor and legislative committees is required.

All appropriations were removed: $250,000 for municipal planning grants, $5,000,000 for the Vermont Rental Housing Improvement Program, and $3,000,000 for the Vermont Housing and Conservation Board's developmental disability housing capacity.

The detailed common interest community provisions (prohibiting restrictions on unit leasing, family child care homes, and EVSE installation) were removed and replaced with a report requirement for the Office of Legislative Counsel to analyze legal issues by November 15, 2026.

VEDA's authority to finance multiunit housing was narrowed: it now requires joint financing with a lender (not just a request from one) and explicitly prohibits VEDA from financing developments that use funding issued by the Vermont Housing Finance Agency.

The definition of 'served by municipal sewer and water infrastructure' was expanded to include areas served by a fire district in the second prong, broadening where multiunit dwellings must be permitted as a use.

The union labor density bonus provision (20 percent additional density for residential construction using union labor) was removed entirely.

The positions section (creating three new positions in Housing and Community Development and one in Disabilities, Aging, and Independent Living) was removed.

A new section requires the Vermont Housing and Conservation Board to provide an update to the Farmworker Housing Needs report by January 15, 2027.