Pairing Zoning and Environmental Review Reforms in Vermont

The Vermont Housing Finance Agency estimates that to meet new demand and stabilize unsustainably low vacancy rates, Vermont needs to build 30,000 to 40,000 additional year-round homes by 2030. Achieving that goal means building more than 5,000 homes annually through 2030, an ambitious target for a state that currently builds around 2,100 homes each year. Complicating matters further is Vermont’s aging housing stock, which ranks among the oldest in the nation. More than 25% of the state’s homes were built before 1940, with much of that housing requiring rehabilitation in the near future.

Recent Reform Efforts

On June 5, 2023, Gov. Phil Scott (R-VT) signed into law S. 100, the bipartisan “Housing Opportunities Made for Everyone (HOME) Act.” The law includes three categories of reforms aimed at increasing housing supply.

1) Zoning reforms

The HOME Act preempts municipal zoning ordinances to allow for more housing development through multiple provisions:

• Allowing for more multifamily housing: Municipalities must allow duplexes anywhere single-family homes are allowed and must allow four-unit residential buildings on lots served by water and sewer infrastructure.
• Allowing for more density: Municipal bylaws must allow at least five units per acre. Affordable housing developments may add additional units up to a 40% increase in existing density.
• Reducing parking thresholds: Municipalities may not require more than one parking unit per dwelling for lots served by water and sewer infrastructure.
• Allowing accessory dwelling units (ADUs): Municipalities may not subject ADUs to more stringent reviews or zoning criteria than single-family homes.

2) Reducing the burden of environmental reviews

The HOME Act also made several changes to Act 250, a statewide land use regulation. Act 250 “provides a public, quasi-judicial process” for reviewing the environmental and social impact of major developments.

Act 250 reviews can impose costly delays on housing development. The Vermont Department of Housing and Community Development commissioner estimated that an Act 250 review can add $2,000 to $6,000 to the cost of each new housing unit, and can prolong the development process, sometimes by months. The process usually involves soliciting feedback from the municipality, neighbors, state agencies, and interest groups before submitting an application to be reviewed by a commission of citizen volunteers appointed by the governor.

While more than 90% of large project applications are approved through the Act 250 process without a hearing, developers say the process discourages development by adding uncertainty to the process. Specifically, reviews are triggered by denser and quicker development—the kind of development needed to scale up the supply of affordable homes.

Previously, the process for an Act 250 review was always initiated when a developer proposed to build 10 or more units of housing within a 5-mile radius over five years. The HOME Act raised the threshold for an Act 250 review from 10 to 25 units in downtown areas and village centers, attempting to reduce the burden of reviews for development in denser areas. The new law also removed the cap on the number of developments that could be designated “priority housing projects” and thus exempted from Act 250 review.

3) Affordable housing construction

The HOME Act complemented its zoning and land use reforms with additional resources to support the construction of new affordable housing units for low-income families and expanded existing programs dedicated to rehabilitating existing housing.

Next Steps

Because the HOME Act was passed so recently, it is too soon to measure its overall impact. However, building on the new law, housing advocates have advanced further efforts to reform Act 250, the land use regulation requiring environmental reviews.

Because of disagreements about the best path forward, four bills were introduced that would make changes to Act 250—though some of the bills could potentially make those reviews more burdensome in much of Vermont. Of the four bills, only H. 687 and S. 213 are still under consideration this year. However, both bills face opposition from Gov. Scott, who argued, for example, that H. 687 could make it “harder to build housing units in most parts of the state.”

Bill	Description	Status
H.719	Permanently exempts housing development in “designated centers” from Act 250 reviews Raises the threshold for reviews to 30 units built within a municipality within two years of each other in areas “feasibly served by water and sewer infrastructure”	Stalled in the Committee on Environment and Energy, no longer under consideration this year.
H. 687	Creates a three-tier system segmenting Act 250 jurisdiction; downtown areas would receive exemptions from Act 250, more suburban areas would continue to use the current system, and more rural areas (90% of land in the state) would be subject to a more stringent process, requiring a full review for all development	Passed the House on 3/28/24. Received favorable reports with proposals of amendments by Committee on Natural Resources and Energy and the Committee on Finance on 4/30/2024.
S. 311	Proposes interim Act 250 exemptions for new housing developments in state-designated centers until mid-2029 Temporarily raises the cap in areas served by municipal water and sewer systems: depending on local zoning, 30 or 75 units of housing could be built within a municipality over two years without triggering Act 250	Stalled in the Committee on Natural Resources and Energy, no longer under consideration this year.
S. 213	Functionally expands Act 250’s jurisdiction by adding new requirements for permits within a flood hazard area or a mapped river corridor Creates a new statewide program to oversee river corridor development and increase dam safety	Passed the Senate in a vote on 3/21/2024. Referred to the Committee on Appropriations in the House on 4/25/2023.

Read more of the Terwilliger Center’s zoning and land use case studies here.