An Act 250 Bill Would Fast-Track Approval of Downtown Housing While Protecting Natural Areas

For the past four years, whenever lawmakers sought to make significant reforms to the land-use and development regulations in Act 250, their efforts have gone nowhere. Various bills seeking to modernize the 1970 law have stalled in committee, died when efforts to reconcile competing House and Senate versions fizzled, or been vetoed by Gov. Phil Scott.

This year, however, following months of work by three different study committees, optimism for a breakthrough is growing. A bill gaining traction would marry the sweeping reforms that environmental groups have long wanted with a suite of measures to boost housing production.

The reforms would streamline the construction permitting process; increase protections for forests, headwaters and river corridors; and slash red tape for new housing near downtowns.

Those closely following the progress of the bill, H.687, say it could incentivize housing construction around downtowns while making it harder to build sprawl that threatens sensitive natural areas.

“My sense is that it will make it across the finish line, one way or another,” Chris Cochran, director of Community Planning & Revitalization at the Department of Housing and Community Development, told Seven Days.

Gov. Scott remains skeptical. He would prefer that the housing incentives, which he supports, be kept separate from efforts to expand environmental protections, which he does not.

“It should be a surprise to no one that I will not accept any bill that makes it harder, slower or more expensive to build housing,” he said during a press conference last month.

The Senate Natural Resources and Energy Committee has merged major elements of an Act 250 reform bill that passed the House in March with a housing production bill, S.311, that stalled in the Senate. The result is H.687, a mammoth bill that takes up 182 pages.

“It’s head-spinning,” Sen. Alison Clarkson (D-Windsor) acknowledged to colleagues.

The pressure to act is intense. Responding to last year’s devastating floods and addressing the housing crisis are among the top legislative priorities this session. The bill attempts to tackle aspects of both.

Advocates say that despite Scott’s veto threats, his deputies are working behind the scenes to solve both technical and philosophical issues, an indication that a compromise can be hammered out.

“I think we’re pretty close,” said Jon Groveman, policy and water program director of the Vermont Natural Resources Council. “If you just look at the facts, there are only a couple of issues that I see that are really in dispute.”

Under the bill, some housing projects would be exempt from Act 250 review, but for how long remains an issue. Developers complain that Act 250 is an expensive, time-consuming impediment to construction and that it’s often coupled with a local review that covers much of the same ground.

The bill Scott backed, S.311, proposed sweeping exemptions for new housing development through mid-2029. The massive H.687, meanwhile, contains narrower exemptions that only run until mid-2027. The time frame is shorter because the bill is only meant to bridge the gap until areas targeted for development can qualify for permanent exemptions from Act 250 review.

As written, the bill would allow housing projects of up to 75 units to skirt review until July 1, 2027 — if they are located within half a mile of a state-designated downtown or development district, areas that have been designated as ripe for additional development.

Projects of up to 50 units would also be exempted from Act 250 if they are on less than 10 acres and fall within a quarter mile of an approved village center, a common designation meant to keep communities vibrant. Projects with affordable units, which the state considers a priority, would continue to be exempt in appropriate areas, regardless of their size.

Currently, Act 250 review is triggered depending on the type or size of project proposed, such as the number of homes. Act 250 supporters argue that approach has helped preserve the state’s rural character by limiting large-scale development. Critics charge that it has contributed to the housing shortage.

The location, not the size, of a project should be what triggers Act 250 review, according to a 2023 study commissioned by lawmakers. It recommends that local review processes be considered, too.

“If towns can prove they have good zoning and planning programs and infrastructure to support development, we don’t need Act 250 to apply there,” said Groveman, who served on the 17-member committee that drafted the report.

The group proposed dividing the state into three tiers. Tier 1, the least restrictive, would be the designation for places where the state wants to encourage development, such as downtowns and areas with the water and sewer capacity to handle growth. Act 250 review would be eliminated in such places.

Tier 2 would encompass most of the state. The permit process would remain largely as it is today, though new rules would require review of projects that include construction of roads.

Tier 3 would be the most restrictive designation, reserved for ecologically sensitive places such as headwaters, wetlands and intact forest blocks. Any project, regardless of size, would trigger an Act 250 review.

This tension between relaxing Act 250 in developed areas while toughening it elsewhere is at the heart of the fight over the land-use law.

“For the first time since its inception, we seek to permanently relax Act 250 jurisdiction in significant parts of the state of Vermont.” Rep. Seth Bongartz

Julie Moore, secretary of the Agency of Natural Resources, agrees that Act 250 needs an update but says the bill fails to strike the right balance, given the housing crisis.

“I think the current version is too heavy on conservation and not heavy enough on housing,” Moore said.

Lawmakers stress that scaling back Act 250 review in developed areas is a significant concession and would represent a historic regulatory rollback.

“This bill has been years in the making,” Rep. Seth Bongartz (D-Manchester) told colleagues. “For the first time since its inception, we seek to permanently relax Act 250 jurisdiction in significant parts of the state of Vermont.”

Communities with the appropriate infrastructure, robust local zoning and environmental protections could win permanent exemption from Act 250 for all development. Smaller communities meeting certain criteria could get limited exemptions from Act 250.

Dozens of communities could qualify for the permanent exemptions, while nearly 100 would qualify for the more limited ones, according to data from the Vermont Natural Resources Council.

To boost housing immediately, interim exemptions in the bill open the door to substantial new housing, said Sen. Chris Bray (D-Addison). Under the bill, a town such as Bristol could see a “very significant expansion” of the amount of land covered by such exemptions.

“It goes from being a couple blocks downtown to being the entire village,” Bray told colleagues.

Bray said he has spent a lot of time looking at maps to get a sense of the bill’s impact and has concluded that the interim exemptions would dramatically increase the areas where projects of up to 75 units could be developed without Act 250 review.

“There’s a very large opportunity for towns that are interested to take on and support and facilitate and move faster on more housing,” he said.

The bill would also change how the Act 250 program is administered and how appeals are handled.

Act 250 applications are each vetted by one of nine volunteer district commissions. Since 2004, appeals of decisions are heard in the environmental division of the Superior Court.

Before then, appeals were heard by a statewide board made up of a paid chair and eight volunteers. The bill proposes a return to that system, except with a smaller, professional board. The five-member body would operate more like the Public Utility Commission than a court.

Bongartz argues that moving appeals out of the court and back to a dedicated, quasi-judicial board would speed up the process and restore Act 250 to its roots as a “citizen-friendly process.” Instead of a judge on a bench, Vermonters “sitting a table at a local grange hall” would consider cases, he said.

Scott worries that change would only complicate the process, increasing uncertainty and driving up the cost of housing, his spokesperson Jason Maulucci said. Bongartz counters that professionalizing the board would enable it to make precedent-setting decisions on complex environmental policies.

The environmental court judges today don’t do that, but the former board did, and its decisions resonate to this day. They include rulings, such as one addressing a resort in Quechee, that clarified what the law means when it describes “undue adverse impact on the scenic, natural beauty and aesthetics of the area.” Similar decisions have upheld key principles regarding the preservation of open space and protection of wildlife habitat.

Since it no longer hears appeals, the existing Natural Resources Board is largely administrative and, Bongartz said, inconsequential. Enabling it to issue rulings that clarify the law would bring badly needed consistency to the process, Bongartz said.

“I want a board that goes to bed thinking about this and wakes up thinking about this,” he told Seven Days.

Whether the professional board should handle appeals remains a key sticking point, however. Bray said on Tuesday he is open to an amendment to study what would be the ideal appellate venue.

Reforming Act 250 wouldn’t, by itself, solve the housing crisis. Workforce shortages, high costs of land and building materials, and local zoning restrictions all contribute to high costs. That’s why the bill contains provisions unrelated to Act 250, including tax incentives and zoning changes.

One that would require denser zoning — up to 12 units per acre in areas with utilities — is raising concerns among planners and other municipal officials that the state is effectively stripping local control, said Ted Brady, executive director of the influential Vermont League of Cities & Towns. Similar provisions limiting local say over parking requirements and the conversion of motels and hotels to permanent housing are also worrisome, because they override local planning efforts, Brady said.

But in the end, the bill would help get housing built, and Brady said it’s clear that opposing it at this juncture is futile.

“You don’t want to get in front of that bus and get run over when we’re trying to address a humanitarian crisis,” he said.

The original print version of this article was headlined “House Rules | An Act 250 bill would fast-track approval of downtown housing while protecting natural areas”