An Act Relating to Creation and Preservation of Affordable Housing and Smart Growth Development

AS PASSED BY HOUSEH.863

2008Page 1

H.863

AN ACT RELATING TO CREATION AND PRESERVATION OF AFFORDABLE HOUSING AND SMART GROWTH DEVELOPMENT

It is hereby enacted by the General Assembly of the State of Vermont:

* * * Vermont Neighborhoods Program * * *

Sec. 1. 24 V.S.A. § 2791(15) is added to read:

(15) “Vermont neighborhood” means an area of land that is in a municipality with an approved plan, a confirmed planning process, zoning bylaws, and subdivision regulations, and:

(A) that is located in one of the following:

(i) A designated downtown, village center, new town center, or growth center; or

(ii) An area of land that is within the municipality and outside but contiguous to a designated downtown, village center, or new town center, and is not more than 100 percent of the total acreage of the designated downtown, village center, or new town center; and

(B) that contains substantially the following characteristics:

(i) Its contiguous land, if any, complements the existing downtown district, village center, or new town center by integrating new housing units with existing residential neighborhoods, commercial and civic services and facilities, and transportation networks, and is consistent with smart growth principles.

(ii) It is served by either a municipal sewer infrastructure or a community or alternative wastewater system approved by the agency of natural resources.

(iii) It incorporates minimum residential densities of no fewer than four units of single-family, detached dwelling units per acre, and higher densities for duplexes and multi-family housing.

(iv) It incorporates neighborhood design standards that promote compact, pedestrian-oriented development patterns and networks of sidewalks or paths for both pedestrians and bicycles that connect with adjacent development areas.

Sec. 2. 24 V.S.A. § 2793d is added to read:
§ 2793d. DESIGNATION OF VERMONT NEIGHBORHOODS

(a) A municipality that has a duly adopted and approved plan and a planning process that is confirmed in accordance with section 4350 of this title, has adopted zoning bylaws and subdivision regulations in accordance with section 4442 of this title, and has a designated downtown district, a designated village center, a designated new town center, or a designated growth center served by municipal sewer infrastructure or a community or alternative

wastewater system approved by the agency of natural resources, is authorized to apply for designation of a Vermont neighborhood. A municipal decision to apply for designation shall be developed according to the procedures established in sections 4441 and 4442 of this title, with regard to the development by the planning commission of a proposed bylaw, and its adoption or rejection by the municipal legislative body. Designation is possible in two different situations:

(1) If an application is submitted in compliance with this subsection for a designated Vermont neighborhood that would have boundaries that are entirely within the boundaries of a designated downtown district, designated village center, designated new town center, or designated growth center, the downtown board shall issue the designation.

(2) If an application is submitted in compliance with this subsection, by a municipality that does not have a designated growth center and that proposes to create a Vermont neighborhood that has boundaries that include land that is not within its designated downtown, village center, or new town center, the downtown board, in its expanded configuration in which it considers growth center applications, shall consider the application. This application may be for approval of one or more Vermont neighborhoods that is outside but contiguous to a designated downtown district, designated village center, or designated new town center. The application for designation shall include a map of the boundaries of the proposed Vermont neighborhood, including the property outside but contiguous to a designated downtown district, village center, or new town center and evidence that the municipality has notified the regional planning commission and the regional development corporation of its application for this designation.

(b) Within 45 days of receipt of a completed application, the expanded downtown board shall designate a Vermont neighborhood if the board finds the applicant has met the requirements of subsections (a) and (c) of this section. When designating a Vermont neighborhood, the board may change the boundaries that were contained in the application by reducing the size of the area proposed to be included in the designated neighborhood, but may not include in the designation land that was not included in the application for designation. Any Vermont neighborhood designation shall terminate when the underlying downtown, village center, new town center, or growth center designation terminates.

(c) The applicant shall demonstrate all of the following:

(1) The municipality has a duly adopted and approved plan and a planning process that is confirmed in accordance with section 4350 of this title, and has adopted zoning bylaws and subdivision regulations in accordance with section 4442 of this title.

(2) The cumulative total of all Vermont neighborhood land located within the municipality but outside a designated downtown district, designated village center, or designated new town center is not more than 100 percent of the total acreage of the designated downtown district, village center, or new town center.

(3) The contiguous land of the Vermont neighborhood complements the existing designated downtown district, village center, or new town center by integrating new housing units with existing residential neighborhoods, commercial and civic services and facilities, and transportation networks, and the contiguous land, in combination with the designated downtown development district, village center, or new town center, is consistent with smart growth principles established under subdivision 2791(13) of this title.

(4) The Vermont neighborhood will be served by either:

(A) a municipal sewer infrastructure; or

(B) a community or alternative wastewater system approved by the agency of natural resources.

(5) The municipal zoning bylaw requires both of the following:

(A) Minimum residential densities that may be calculated by excluding land occupied by community wastewater systems, flood hazard areas, wetlands, rare and irreplaceable natural areas, necessary wildlife habitat, or other resource lands that are not able to be developed due to state or federal regulation, and that shall require the following:

(i) No fewer than four units of single-family, detached dwelling units per acre, exclusive of accessory apartments.

(ii) Higher density for duplexes and multi-family housing.

(B) Neighborhood design standards that promote compact, pedestrian-oriented development patterns that include the following:

(i) Pedestrian scale and orientation of development. Networks of sidewalks or paths, or both, are provided and available to the public to connect the Vermont neighborhood with adjacent development areas, existing and planned adjacent sidewalks, paths, and public streets and the designated downtown, village center, or new town center.

(ii) Interconnected and pedestrian-friendly street networks. Street networks are designed to safely accommodate both pedestrians and bicycles through the provisions of sidewalks on at least one side of the street, on-street parking, and traffic-calming features.

(d) Incentives for Vermont neighborhoods include the following:

(1) The agency of natural resources shall charge no more than a $50.00 fee for wastewater applications under 3 V.S.A. § 2822(j)(4) where the applicant has received an allocation for sewer capacity from an approved municipal system. Act 250 fees under 10 V.S.A. § 6083a for residential developments in Vermont neighborhoods shall be 50 percent of the fee otherwise applicable.

(2) Fifty percent of Act 250 fees under 10 V.S.A. § 6083a for proposed development in Vermont neighborhoods shall be paid upon application, and 50 percent shall be paid within 30 days of the issuance or denial of the permit.

(3) No land gains tax under chapter 236 of Title 32 shall be levied on a transfer of land in a Vermont neighborhood.

(e) Initial designation shall be for a period of three years. After that time has expired, the expanded state board shall review a Vermont neighborhood concurrently with the next periodic review conducted of the underlying designated entity, even if the underlying designated entity was not designated originally by the expanded state board. However, the expanded board may review compliance with the designation requirements at more frequent intervals. If at any time the expanded state board determines that the designated Vermont neighborhood no longer meets the standards for designation established in this section, it may take any of the following actions:

(1) require corrective action;

(2) remove the Vermont neighborhood designation, with that removal not affecting any of the benefits previously awarded to the designated Vermont neighborhood; or

(3) limit eligibility for the benefits established in this chapter, with the limitation not affecting any of the benefits previously awarded to the designated Vermont neighborhood.

(f) Designation decisions made under this section may be appealed to the environmental court pursuant to Rule 5 of the Vermont Rules for Environmental Proceedings by an interested person as defined in subsection 4465(b) of this title. Review by the environmental court shall be de novo.

* * * Agency of Natural Resources Fees * * *

Sec. 3. 3 V.S.A. § 2822(j)(4)(D) is amended to read:

(D) Notwithstanding the other provisions of this subdivision,:

* * *

(ii) when a potable water supply is subject to the fee provisions of this subdivision and subdivision (j)(7)(A) of this section, only the fee required by subdivision (j)(7)(A) shall be assessed; and

(iii) when a project is subject to the fee provision for the subdivision of land and the fee provision for potable water supplies and wastewater systems of this subdivision, only the higher of the two fees shall be assessed; and

(iv) when a project is located in a Vermont neighborhood, as designated under 24 V.S.A. chapter 76A, the fee shall be no more than $50.00 in situations in which the application has received an allocation for sewer capacity from an approved municipal system.

* * * Act 250 Provisions * * *

Sec. 4. 10 V.S.A. § 6001(3)(B) and (C) are amended to read:

(3)(A) “Development” means:

* * *

(B)(i) Notwithstanding the provisions of subdivision (3)(A) of this section, if a project consists exclusively of any combination of mixed income housing or mixed use and is located entirely within a growth center designated pursuant to 24 V.S.A. § 2793c or within a downtown development district designated pursuant to 24 V.S.A. § 2793, “development” means:

(i)(I) Construction of mixed income housing with 200 or more housing units or a mixed use project with 200 or more housing units, in a municipality with a population of 25,000 or more.

(II) Construction of mixed income housing with 100 or more housing units or a mixed use project with 100 or more housing units, in a municipality with a population of 20,00015,000 or more, but less than 25,000.

(ii)(III) Construction of mixed income housing with 50 or more housing units or a mixed use project with 50 or more housing units, in a municipality with a population of 10,0007,000 or more but less than 20,00015,000.

(iii)(IV) Construction of mixed income housing with 30 or more housing units or a mixed use project with 30 or more housing units, in a municipality with a population of 5,0003,000 or more and less than 10,0007,000.

(iv)(V) Construction of mixed income housing with 25 or more housing units or a mixed use project with 25 or more housing units, in a municipality with a population of less than 5,0003,000.

(v)(VI) Construction of 10 or more units of mixed income housing or a mixed use project with 10 or more housing units where the construction involves the demolition of one or more buildings that are listed on or eligible to be listed on the state or national register of historic places. However, demolition shall not be considered to create jurisdiction under this subdivision if the division for historic preservation has determined the proposed demolition will have no adverse effect, an effect that will not be adverse provided that specified conditions are met, or an adverse effect that will be adequately mitigated, and if any imposed conditions are enforceable through a grant condition, deed covenant, or other legally binding document.

(ii) Notwithstanding the provisions of subdivision (3)(A) of this section, if a project consists exclusively of mixed income housing located entirely within a Vermont neighborhood designated pursuant to 24 V.S.A.

§ 2793d, but outside of a growth center designated pursuant to 24 V.S.A.

§ 2793c or a downtown development district designated pursuant to 24 V.S.A. § 2793, “development" shall be determined in accordance with the numerical thresholds established in subdivision (3)(B)(i) of this section.

(C) For the purposes of determining jurisdiction under subdivisions (3)(A) and (3)(B) of this section:

(i) Housing units constructed by a person partially or completely outside a designated downtown development district or designated growth center shall not be counted to determine jurisdiction over housing units constructed by a person entirely within a designated downtown development district or designated growth center.

(ii) Within any continuous period of five years, housing units constructed by a person entirely within a designated downtown district,or designated growth center, or designated Vermont neighborhood shall be counted together with housing units constructed by a person partially or completely outside a designated downtown development district,or designated growth center, or designated Vermont neighborhood to determine jurisdiction over the housing units constructed by a person partially or completely outside the designated downtown development district,or designated growth center, or designated Vermont neighborhood and within a five-mile radius.

(iii) All housing units constructed by a person within a designated downtown development district,or designated growth center, or designated Vermont neighborhoodwithin any continuous period of five years, commencing on or after the effective date of this subdivision, shall be counted together, but only if they are part of a discrete project located on a single tract or multiple contiguous tracts of land.

(iv) In the case of a project undertaken by a railroad, no portion of a railroad line or railroad right-of-way that will not be physically altered as part of the project shall be included in computing the amount of land involved. In the case of a project undertaken by a person to construct a rail line or rail siding to connect to a railroad’s line or right-of-way, only the land used for the rail line or rail siding that will be physically altered as part of the project shall be included in computing the amount of land involved.

(v) Notwithstanding subdivision (C)(iii) of this subdivision (3), any affordable housing units, as defined by this section,(3)(A)(iv) and subdivision (19) of this section, jurisdiction shall be determined exclusively by counting housing units, and when counting housing units to determine jurisdiction, only housing units in a discrete project on a single tract or multiple contiguous tracts of land shall be counted, regardless of whether located within an area designated under 24 V.S.A. chapter 76A, provided that the housing units are affordable housing units, as defined by this section, that are subject to housing subsidy covenants as defined in 27 V.S.A. § 610 that preserve their affordability for a period of 99 years or longer, and that are constructed by a person within a designated downtown development district, designated village center, or designated growth center, shall count toward the total number of housing units used to determine jurisdiction only if they wereconstructed within the previous 12-month period, commencing on or after the effective date of this subdivision.

Sec. 4a. 24 V.S.A. § 2793e is added to read:

§2793e. MUNICIPAL FEE FOR EXEMPT HOUSING UNIT IN A

VERMONT NEIGHBORHOOD

(a) The developer of a project in a Vermont neighborhood designated in accordance with 24 V.S.A. § 2793d and exempted from Act 250 review under the definition of “development” in 10 V.S.A. § 6001(3)(B) shall pay a municipal fee of $500.00 for each housing unit in the exempt project. The fee shall be paid to the municipality in which the development is located at the time of the closing of the initial sale of the unit. Municipalities shall have the authority to collect and enforce fees imposed by this section in the manner authorized for the collection of municipal impact fees under chapter 131 of Title 24.

(b) Revenues from the fees imposed by this section may be used by the municipality only to improve or create public infrastructure required by the Vermont neighborhoods program under 24 V.S.A. § 2793d; to cover the municipality’s expenses of the planning process relating to the Vermont neighborhoods program; or to create pedestrian and multimodal transportation infrastructure, recreation facilities, or other services deemed necessary by the municipality as a result of new housing units created under the Vermont neighborhoods program.

* * * Rules on Mixed Income Housing * * *

Sec. 4b. 3 V.S.A. § 2472(a) is amended to read:

(a) The department of housing and community affairs is created within the agency of commerce and community development. The department shall:

* * *

(4) In partnership with the division for historic preservation, direct, supervise, and administer the Vermont downtown program, and any other program designed to preserve the continued economic vitality of the state’s traditional commercial districts. By no later than May 1, 2009, the commissioner, in consultation with the Vermont housing finance agency and the Vermont housing and conservation trust, shall adopt rules that establish mechanisms and options for assuring affordability, which shall be used in determinations of jurisdiction over mixed income housing, under 10 V.S.A. chapter 151.

Sec. 4c. 10 V.S.A. § 6001(27) is amended to read:

(27) “Mixed income housing” means a housing project in which at least 1520 percent of the total housing units are affordable housing units:

(A) Owner-occupied housing, the purchase price of which does not exceed 80 percent of the new construction targeted area purchase price limits established by the Vermont housing finance agency. Owner household income shall meet Vermont housing finance agency income limits. The housing shall be in compliance with affordability requirements established in rules adopted by the commissioner of housing and community affairs, in consultation with the Vermont housing finance agency and the Vermont housing and conservation board, and shall have a duration of affordability of no less than 15 years; or

(B) Housing that is rented by the occupants whose gross annual household income does not exceed 60 percent of the county median income, or 60 percent of the standard metropolitan statistical area income if the municipality is located in such an area, as defined by the United States Department of Housing and Urban Development for use with the Housing Credit Program under Section 42(g) of the Internal Revenue Code, and the total annual cost of the housing, as defined at Section 42(g)(2)(B) is not more than 30 percent of the gross annual household income as defined at Section 42(g)(2)(C), and with a duration of affordability of no less than 15 years.

Sec. 4d. EFFECTIVE DATES

The following sections shall take effect upon May 1, 2009: Sec. 4, which amends the 10 V.S.A. § 6001(3), definition of “development”; Sec. 4c, which amends the 10 V.S.A. § 6001(27), definition of “mixed income housing”; and Sec. 4a, as proposed by the Committee on Ways and Means, which adds 24 V.S.A. § 2793e, municipal incentives.