This story, by Report for America corps member Carly Berlin, was produced through a partnership between VTDigger and Vermont Public.
In the final hours of the 2024 legislative session, lawmakers managed a considerable feat: They passed broad reforms to Act 250, a law that has governed and guided development in Vermont for half a century.
The bill cleared its last hurdle — a vote in the House — moments before midnight.
For years, legislators have attempted — and failed — to thread the needle on modernizing Act 250. Housing proponents have long argued the land use review law adds cost, time and risk to the development process, stifling housing growth, and environmentalists have contended that climate change and habitat loss due to development should require builders to think even more carefully about their projects.
H.687, which will now head to Gov. Phil Scott’s desk, represents something of a grand bargain between those interests. It relaxes Act 250’s reach in existing development centers, a move proponents hope will clear red tape and encourage compact housing development amid an acute housing shortage, and it tacks on a range of other housing policies intended to spur more building. It also lays the groundwork for extending Act 250’s protections over to-be-determined ecologically sensitive areas.
“I believe we’re really united in this proposal,” said Sen. Kesha Ram Hinsdale, D-Chittenden Southeast, on the Senate floor on Friday afternoon. “That’s a wonderful thing to see coming out of many, many years of trying to get the engine started on Act 250 reform.”
Yet the Republican governor has repeatedly voiced his criticism over earlier versions of H.687 as it wound its way through the Statehouse, at times calling it a “conservation bill” and arguing that it does not go far enough to promote housing development, particularly in rural areas.
He has signaled a potential veto. At a Wednesday press conference, asked whether he thought everyone would walk away empty-handed on Act 250 at the end of the session, Scott said the chances were “50-50.”
The bill passed largely along party lines, with Democrats generally voting in favor and Republicans against. It’s unclear whether both the House and the Senate could muster the two-thirds majority required to override a veto.
H.687 sets in motion a years-long process to chop Vermont into a series of “tiers” that will dictate how development is treated under Act 250, loosening the law’s reach in some already-developed areas and strengthening its protections over sensitive ecosystems.
While lawmakers agreed on that general framework early on in the legislative session, they found much to debate in the details. How should legislators determine the boundaries of what areas see exemptions from Act 250, or further scrutiny under the law?
Disagreements over those details — including whether housing along certain transit routes should be free from the law’s review — persisted until the very end. Some lawmakers speculated that they would have to delay adjournment to arrive at a compromise.
When the bill came up for its first vote in the House in March, some members of the rural caucus voted against it. Leaders of the influential, tri-partisan group argued the bill’s requirements for housing exemptions from Act 250 were too arduous for smaller towns to meet.
But after the Senate lowered some of those hurdles, many members of the rural caucus came around, including co-chair Rep. Katherine Sims, D-Craftsbury.
“I don’t think everybody loves everything in this bill,” said Sims. “But to me it feels like really meaningful compromise so that we can address our housing crisis, make Vermont more resilient in the face of climate change, and preserve and protect our natural resources in a way that works for communities of all sizes.”
The actual boundaries of the new Act 250 tiers would largely be left up to future mapping and rulemaking efforts. In the meantime, the bill sets up a number of interim exemptions from Act 250, including one for all housing projects within the state’s 24 designated downtown areas through January 2027, and for projects of up to 50 units around dozens of village centers around the state.
Those interim exemptions were a sell for the rural caucus, and they’re also favored by the Scott administration. The housing exemptions in the bill, both short and long term, are something of a sequel to last year’s HOME Act, which focused on loosening local zoning rules to allow for more density across Vermont.
The final back-and-forth between the House and Senate on the Act 250 portion of the bill focused on fairly marginal changes. The meatier debate in the last few days of the session centered on new taxes to fund housing programs.
Throughout this session, the House has pushed for new taxes on corporations, higher earners, and higher-value properties to fund a range of priorities, including affordable housing and emergency shelter. But the Senate has panned those ideas.
During its latest chance to amend the sprawling land use and housing bill, the House revived one of its favored tax proposals: an increase in property transfer taxes for property purchases exceeding $750,000, well above Vermont’s median home price.
The new tax was a sticking point for some key senators, including Sen. Ram Hinsdale, who argued it would hinder the development of multi-family apartments and conversions of commercial buildings into housing. She instead pushed for a new property transfer tax on second homes fit for year-round use, arguing that it could act as a deterrent to the proliferation of vacation homes in Vermont and open up more properties for long term residents.
House lawmakers ultimately agreed on the second-home tax, which will raise roughly the same amount of revenue as the tax on higher-value homes. Some of the roughly $15.7 million raised next year will fund eviction prevention programs favored by the House. The new tax hike is paired with a modest tax break on the purchases of owner-occupied homes.
The House also agreed to a property valuation freeze on some newly constructed and rehabbed homes in areas impacted by last year’s catastrophic flooding, despite concerns around how the policy would impact the imperiled education fund.
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