Community Development and Neighborhood Revitalization Committee

Sharon Bushor Conference Room, 1st Floor City Hall 149 Church Street, Burlington Wednesday, June 18, 2025, 6:30 PM Join Zoom Meeting https://zoom.us/j/94933339492?pwd=UjwDuNGxRZJsXwhLOQk3CazpBamIx7.1 Meeting ID: 949 3333 9492 Passcode: 782232 --- One tap mobile +13092053325,,94933339492#,,,,*782232# US +13126266799,,94933339492#,,,,*782232# US (Chicago) --- Meeting ID: 949 3333 9492 Passcode: 782232 Find your local number: https://zoom.us/u/aeEkaXIBRO 1. Agenda 1.1. Motion to amend/adopt agenda 2. Adopt Minutes Subject 2.1. Approval of 5/1/25 Minutes Meeting June 18, 2025 - CDNR Committee Meeting - Wednesday, June 18, 2025, 6:30 PM, Sharon Bushor Conference Room, 1st Floor City Hall 149 Church Street, Burlington Category 2. Adopt Minutes Department Type Recommended Action Page 1 of 122 3. Public Forum Subject 3.1. PUBLIC FORUM - Verbal Comments Meeting June 18, 2025 - CDNR Committee Meeting - Wednesday, June 18, 2025, 6:30 PM, Sharon Bushor Conference Room, 1st Floor City Hall 149 Church Street, Burlington Category 3. Public Forum Department Type 4. Initial Discussion & Planning: Council on Aging Report referred by City Council (30 MIN) Subject 4.1. • Staff/departmental support for the Aging Council’s work • Next steps with the Aging Council / appointing members • Which recommendations from the report to focus on first Meeting June 18, 2025 - CDNR Committee Meeting - Wednesday, June 18, 2025, 6:30 PM, Sharon Bushor Conference Room, 1st Floor City Hall 149 Church Street, Burlington Category 4. Initial Discussion & Planning: Council on Aging Report referred by City Council (30 MIN) Department Community & Economic Development Office (CEDO) Type Recommended Action 5. HTF Reports & Update - Rebeka Lawrence-Gomez, CEDO (45 MIN) Subject 5.1. • Presentation overview from Rebeka with time for Committee questions, feedback, and next steps. Meeting June 18, 2025 - CDNR Committee Meeting - Wednesday, June 18, 2025, 6:30 PM, Sharon Bushor Conference Room, 1st Floor City Hall 149 Church Street, Burlington Category 5. HTF Reports & Update - Rebeka Lawrence-Gomez, CEDO (45 MIN) Department Community & Economic Development Office (CEDO) Type Recommended Action 6. Initial Discussion & Planning: Syringe Litter Report from Board of Health referred by City Council (45 MIN) Page 2 of 122  Subject 6.1. • Which recommendations from the report to focus on first • Developing a roadmap to our 9/1 reporting deadline • Identifying and Inviting stakeholders for comment and feedback on the report throughout our Summer work • Dividing responsibilities Meeting June 18, 2025 - CDNR Committee Meeting - Wednesday, June 18, 2025, 6:30 PM, Sharon Bushor Conference Room, 1st Floor City Hall 149 Church Street, Burlington Category 6. Initial Discussion & Planning: Syringe Litter Report from Board of Health referred by City Council (45 MIN) Department Community & Economic Development Office (CEDO) Type Recommended Action 7. Scheduling (5 MIN) 8. Adjournment Subject 8.1. Motion to adjourn Meeting June 18, 2025 - CDNR Committee Meeting - Wednesday, June 18, 2025, 6:30 PM, Sharon Bushor Conference Room, 1st Floor City Hall 149 Church Street, Burlington Category 8. Adjournment Department Council and Board Type Recommended Action Page 3 of 122  CITY OF BURLINGTON, VERMONT CITY COUNCIL COMMUNITY DEVELOPMENT & NEIGHBORHOOD REVITALIZATION COMMITTEE c/o Community & Economic Development Office City Hall, Room 32 • 149 Church Street • Burlington, VT 05401 802-865-7144 VOX • 802-865-7024 FAX • www.burlingtonvt.gov/cedo Councilor Evan Litwin (EL), Chair, Ward 7 Councilor Carter Neubieser (CN), Ward 1 Councilor Allie Schachter (AS), East District CDNR Committee Meeting Thursday, May 1st, 2025 6:00 – 7:30 PM Sharon Bushor Conference Room, 1st Floor – City Hall Committee members: Evan Litwin (EL), Carter Neubieser (CN), Allie Schachter (AS) City Staff: Christine Curtis, CEDO Other Attendees: Draft Minutes Meeting Started at 6:07 PM 1. Approve agenda MOTION by Councilor Schachter, SECOND by Councilor Neubieser, to approve the agenda VOTING: unanimous; motion carries. 2. Public Forum • No one spoke at public forum 3. Councilor Neubieser overview and status update on NPA Resolution • CN updated the committee on past work on the NPA resolution • Draft resolution gives NPAs input on who gets hired for the NPA support position in CEDO The programs and services of the City of Burlington are accessible to people with disabilities. For accessibility information, call 865-7144. For questions about the meeting, contact Christine Curtis at ccurtis@burlingtonvt.gov Page 4 of 122  • Defines requirements of the NPAs – CEDO will help train steering committee members on their roles • CEDO to come up with a standardized process to keep the NPAs informed on major city decisions and items that are going to City Council 4. CDNR Planning Session and Priorities Discussion including meeting schedule • NPA resolution • Financial disclosures for City Councilors and Mayor • HTF resolution • Housing agenda – tenant rights, funding, HTF, IZ, UVM quality housing – dorms • How to encourage strong neighborhoods? Find more ways to come together • Graffiti clean-up • Housing team to attend meetings • Bill Ward to talk about enforcement of problem properties • Draft Resolution: fire and police budget – increasing gross receipts tax on alcoholic beverages • Syringe resolution – report is coming • CDNR upcoming schedule: potentially the 3rd Wednesday of every month – 6:30-8:30 PM. Committee will finalize schedule over email 5. Adjournment • ADJOURN at 7:29 p.m. by Councilor Litwin with no objection Page 5 of 122 Comments to the Community Development and Neighborhood Revitalization Committee: Downtown Burlington is in trouble. The normalization of open drug use and anti-social behavior is threatening the future of the city. As a property owner in Ward 3, I believe the social programs operating downtown are acting without concern for the community and the hard- working tax payers who live and work in the downtown. Core to my concern as a property owner on Clarke St, is the ungoverned operation of the syringe distribution program situation on Clarke St. The situation on Clarke St is a disaster which overflows into the overall downtown area. Residents no longer feel safe. Neighbors avoid walking the street. Livability on the street has declined as residents and visitors are harassed by drug addicts. Used and unused syringes litter the city. The Howard Center has dug in its heals and refuses to acknowledge that it cannot safely operate its needle distribution program. It is supposed to be a gateway to treatment but it fails at that objective, with only 1 in 10 visitors entering treatment. Rather it enables drug abuse and attracts addicts and drug dealers to residential Clarke St and downtown Burlington. The negative impact of the program far outweighs its benefits. Residents and property owners of Ward 3 and other downtown districts appear unified in opposition to the current syringe distribution program and the concentration of ungoverned social services in the downtown area. The petition I started asking the Howard Center to move the program has 200 signatures. The Ward 3 NPA does not want the OPC and the Howard Center program located in downtown. The social support programs must be distributed to other parts of the city rather than concentrated in the economically vital downtown and in residential areas. Planner for the OPC recognize the need to involve the community and consider the impact the impact of the location. The City Council should require that the Howard Center regain approval for its current location or find a new location, proceeding in the same manner as the OPC siting project. The Clarke St residents and property owners will certainly oppose it continuing in its current location. Page 6 of 122 Page 7 of 122 Page 8 of 122 Page 9 of 122 Page 10 of 122 Page 11 of 122 Page 12 of 122 Page 13 of 122 Page 14 of 122 Page 15 of 122 Page 16 of 122 Page 17 of 122 Page 18 of 122 Page 19 of 122 Page 20 of 122 Page 21 of 122 Page 22 of 122 Page 23 of 122 Page 24 of 122 Page 25 of 122 Page 26 of 122 Page 27 of 122 Page 28 of 122 Page 29 of 122 Page 30 of 122 Page 31 of 122 Page 32 of 122 Page 33 of 122 Page 34 of 122 Page 35 of 122 Page 36 of 122 Page 37 of 122 Page 38 of 122 Page 39 of 122 Page 40 of 122 Page 41 of 122 Page 42 of 122 Page 43 of 122 Page 44 of 122 Page 45 of 122 Page 46 of 122 Page 47 of 122 Page 48 of 122 Page 49 of 122 Page 50 of 122 Page 51 of 122 Page 52 of 122 Page 53 of 122 Page 54 of 122 Page 55 of 122 Page 56 of 122 Page 57 of 122 Page 58 of 122 Page 59 of 122 Page 60 of 122 Page 61 of 122 Page 62 of 122 Page 63 of 122 Page 64 of 122 Page 65 of 122 Page 66 of 122 Page 67 of 122 Page 68 of 122 Page 69 of 122 Page 70 of 122 Page 71 of 122 Page 72 of 122 Page 73 of 122 Page 74 of 122 Page 75 of 122 Page 76 of 122 Page 77 of 122 Page 78 of 122 Page 79 of 122 Page 80 of 122 Page 81 of 122 Page 82 of 122 Page 83 of 122 Page 84 of 122 Page 85 of 122 Page 86 of 122 Page 87 of 122 Page 88 of 122 Page 89 of 122 Page 90 of 122 Page 91 of 122  A Report on Increasing Burlington Housing Trust Fund Annual Revenue Prepared by the Community & Economic Development Office May 15, 2025 Report on Increasing BHTF Annual Revenue 1 Page 92 of 122 Introduction The Burlington Housing Trust Fund (BHTF) provides grants and loans for the promotion, retention, and creation of long-term affordable housing within the city. Funds support the creation and rehabilitation of homes for households with limited financial resources, and the capacity of non-profit organizations who create or preserve affordable housing. On February 10, 2025 the City Council of the City of Burlington adopted a resolution requesting the Community & Economic Development Office (CEDO), in collaboration with the City’s Chief Administrative Officer, Assessor’s Office, and other city staff identify ways in which the money dedicated to the Burlington Housing Trust Fund could increase by at least $1 million annually. History and Purpose The Burlington Housing Trust Fund (BHTF) was established for the promotion, retention, and creation of long-term affordable housing for very low, low, and moderate income households. BHTF funds may be used for the retention or creation of affordable housing (project funding) or to support the operations of non-profit organizations who are creating or preserving affordable housing (capacity funding). On June 27, 1988, the Burlington City Council approved an ordinance (Chapter 18 Article VI in the City of Burlington’s Code of Ordinances) creating the BHTF. The idea of a Housing Trust Fund had initially been proposed, four years prior, by the City’s Community & Economic Development Office (CEDO). The BHTF made its first disbursement in November of 1989. A full history of the inception of the Burlington Housing Trust Fund is captured in a 2020 report entitled Ten-Year Report for the Burlington Housing Trust Fund. Non-profit corporations, municipal corporations, limited equity housing cooperatives, for-profit corporations, partnerships, and individuals are eligible to apply for project funding. Capacity grants are made for the staffing, training, planning, fundraising, and ongoing operations of non- profit organizations creating or preserving housing for very low, low, and moderate-income households. At least 50% of BHTF funds is expended on affordable housing projects – the creation of new affordable housing, restoration of existing affordable housing or the transformation of existing market-rate housing to affordable housing. Up to 35% of funds can be distributed as capacity grants to nonprofits who are creating or preserving affordable housing. Up to 15% of the funds can be expended on the City’s Community & Economic Development Office’s (CEDO) operation of the trust fund and activities within CEDO that directly benefit the housing needs of households with very low and low incomes. The majority of BHTF funding has assisted the City’s nonprofit housing organizations in building affordable housing. The Burlington Housing Trust Fund is a restricted municipal account, established outside of the general budget. Created to provide grants and loans for the preservation and development of low-income housing, any assets it receives do not revert to the General Fund at the end of the fiscal year. In cities across the country, housing trust funds are administered either by an established city agency or by an independent board of trustees. Report on Increasing BHTF Annual Revenue 2 Page 93 of 122 Funding for a housing trust fund can come through dedicated income streams, such as repayments of loans, property taxes, or property transfer taxes; impact fees; sale of city property, the sale of height or density bonuses, and payments in lieu of actual production of housing units through linkage programs; inclusionary zoning; or demolition/replacement programs. Details on how the Burlington Housing Trust Fund is funded are provided below. Sources of Funding The Burlington Housing Trust Fund is a special revenue account that is separate from the City’s general account. Revenue is generated through a dedicated property tax of one cent per hundred dollars ($.01 per $100.00) of assessed property value, Inclusionary Zoning payment in-lieu for projects that opt to pay a one-time fee to meet requirements rather than including affordable units in a project, a dedicated tax on short-term rental properties, some impact fees, fees charged for the conversion of rental properties to condominiums, donations, and any other revenues that may be specifically dedicated to the Housing Trust Fund (this could come through an update to the City Charter, an ordinance, or by direction of the City Council). The revenue for the Burlington Burlington Housing Trust Fund FY25 Revenue Housing Trust Fund will vary annually Funding Source FY25 Revenue – in the 2000s annual revenues rarely Dedicated Tax $563,316 exceeded $250,000. With the Short-Term Rental Tax* $640,000 implementation of the short-term Inclusionary Zoning Payment-in-lieu $140,000 rental tax and a significant number of payments-in-lieu from the Conversion of rental property to ownership $48,400 inclusionary zoning ordinance, BHTF Replacement Housing Fee $1,186 annual revenue has exceeded Total Anticipated 2025 Revenue $1,392,902.23 $1,000,000 in recent years. *Estimate based on revenue to date Report on Increasing BHTF Annual Revenue 3 Page 94 of 122 Funding Prioritization Funding prioritization is determined by the BHTF ordinance. As noted above funds must be expended on affordable housing projects making this the priority for the funding; funds may also be expended on capacity grants for local non-profits and CEDO’s work administering the funds and activities that directly benefit the housing needs of households with very low and low incomes. Project funding for the acquisition, construction, rehabilitation and/or financing of housing units is prioritized by projects that guarantee: 1. Perpetual affordability of units for very low, low, or moderate income households 2. A term of affordability for very low, low, or moderate income households between ten to forty years with the eventual recapture and return of funds to BHTF. Grants and Awards By ordinance, BHTF funding decisions are made through the Housing Trust Fund Administrative Committee. This committee is composed of the Chair of the Community Development and Neighborhood Revitalization (CDNR) Committee, CEDO Director, and an appointee of the mayor; the CEDO Director also serves as the Housing Trust Fund Manager. CEDO solicits applications for the BHTF awards through an annual request for proposals that is usually posted in the fall and sent via email to previous applicants, community partners, and anyone who has indicated interest in the funding. Applications are collected and scored using a matrix developed by the administrative committee that includes prioritizations from the ordinance. Committee members review applications and scoring matrices and meet at a public meeting held at City Hall and online. Applicants are encouraged to join the meeting to answer questions from committee members and/or elaborate on their projects. Report on Increasing BHTF Annual Revenue 4 Page 95 of 122 Awards may be granted at requested funding levels or decreased depending on fund availability and the prioritization process. Project applications have ranged from several thousand dollars to assist with repairs to existing units to more than $1 million to support a large multi-unit building in the City. Capacity grants are prioritized to organizations that are engaged in the construction of new affordable housing. Capacity grants for programs or organizations not engaged in the construction of new housing is currently limited to $10,000 per year. Report on Increasing BHTF Annual Revenue 5 Page 96 of 122 Impact Since its creation in 1989, the Burlington Housing Trust Fund has provided financial assistance to more than 2200 units. This means that one out of every ten housing units in Burlington has been supported by the BHTF Burlington Housing Trust Fund monies have been awarded to a variety of non-profit and affordable housing developers within the City. The majority of project funds have supported the construction of new units (838 units); BHTF grants have also created affordable units through the acquisition of market rate or at-risk units within the City (630 units) and BHTF has funded the rehabilitation of 743 units in Burlington. In the last 30 years BHTF has supported a variety of housing projects throughout the city. A small sample of the projects supported by the BHTF includes: Report on Increasing BHTF Annual Revenue 6 Page 97 of 122  Transitioning Northgate Apartments to an affordable resident-owned rental housing community (ensuring the units were not sold as condominiums market-rate prices) Supporting the creation of 11 Green Mountin Habitat for Humanity homes in Burlington Providing funding for large multi-unit buildings such as the project currently under construction on South Winooski Avenue at the former VFW site Report on Increasing BHTF Annual Revenue 7 Page 98 of 122 Limitations and Concerns Despite the demonstrated value and benefits to the community of the BHTF, there are concerns about its future and the future of affordable housing development in Burlington. In particular, the future of federal funds, which many projects supported by the BHTF leverage, is uncertain and BHTF housing revenue is increasingly in flux. At this time, many federal programs that provide financial assistance for affordable housing are at risk of elimination or significant cuts. Many projects supported by BHTF rely on federal funds to cover a large proportion of their costs. In the absence of these federal funds, the City would be unable to sustain the current pace of affordable housing development without significant replacement funding. In terms of BHTF revenue specifically, two major sources – the short-term rental tax and the Inclusionary Zoning payment-in-lieu fee – are in flux. Since 2023 the City of Burlington has collected taxes from short- term rentals and has only allowed short-term rentals in properties that are owner-occupied or have an affordable unit on site. Income from the short-term rental tax generated more than $700,000 in housing trust fund revenue in fiscal year (FY) 2024 and is anticipated to generate around $600,000 in FY2025 (total short-term rental tax collected in FY2024 was more than $900,000 and $800,000 is anticipated in FY2025; the remaining portion of the tax ***). Although it is difficult to predict future revenue, this source has trended downwards since the city started collecting the tax (averaging $10,000 less a month in revenue for BHTF). If this trend continues, this would represent a substantial loss in BHTF revenue. Another major source of BHTF revenue is the Inclusionary Zoning payment-in-lieu (PIL) fee. Developments subject to the Inclusionary Zoning ordinance, which requires the inclusion of affordable units in new construction, can opt to pay a fee – the PIL – instead of constructing the units. Currently, fees range from $35,000 to $85,000, depending on the total number of units constructed. These figures are out of line with market construction costs – recent affordable housing projects have had development costs of approximately $500,000 per unit. An increase in the City’s payment-in-lieu fees is anticipated in the coming year. The impact this might have on BHTF revenue is uncertain. Although higher fees may result in increased BHTF revenue, it is also possible that developers would opt to construct the units, rather than to pay the higher fees. This would increase the number of Inclusionary Zoning units constructed in the city, but would reduce the revenue collected by the BHTF from PIL fees. In summary, funding for affordable housing development in Burlington is increasingly uncertain. At the same time, the need for affordable housing is ever greater. Housing remains unaffordable to many residing in Burlington, and the rental and housing market is inaccessible to others who would like to live in the city. In 2023, 25% of Burlington households were cost-burdened, meaning they expend between 30-49% of their income on housing, and an additional 19% were severely cost-burdened, meaning they spend over 50% of their income on housing. Among renters, these figures rise to 31% and 24%, respectively (source: U.S. Census Bureau American Community Survey 5-year estimates). Among low- moderate income (LMI) renters (i.e., those earning below 80% of Area Median Income (AMI)), these numbers are starker: 48% of LMI renters are cost-burdened and 76% of renter households earning below 30% of AMI are cost-burdened or severely cost-burdened (source: 2013-2017 CHAS). Report on Increasing BHTF Annual Revenue 8 Page 99 of 122 Menu of HTF Revenue Options Housing Trust Funds are found throughout the country at state, county and local levels. In preparing this report, data was gathered by reviewing information from the Housing Trust Fund Project (a national resource for Housing Trust Funds throughout the county), researching other housing trust funds and municipalities and discussions with local experts and advocates who have been championing and supporting Burlington’s Housing Trust Fund and other affordable housing initiatives. While there are many possibilities for increasing revenue and support for BHTF, this report highlights six specific options that best aligned with the committee’s directive. These options create new revenue through progressive-taxation or tourists visiting the city and are revenue neutral on their impact to property taxpayers. Option Steps to Implement Potential Revenue Other Notes 1. City Council resolution Would create a for question on ballot Consistent revenue 2. Approval from voters Property transfer tax $1 million + annually stream based on sales 3. State legislative of properties within approval City 4. Gubernatorial approval Minimal impact on current property tax Transfer previously system. exempt municipal $1.5 million + Methodology for property tax to HTF 1. City Council ordinance annually tracking would be when no longer developed by CEDO exempt and Tax Assessors office. Increase the creation Creates additional $250,000 annually of new units for 1. City Council resolution housing units (STR increased 50%) short-term rental Time-limited Interest from TBD – likely Still determining unexpended BHTF 1. City Council resolution thousands (not $1 potential revenue and collected and million) value. reinvested in BHTF The state is exploring Higher tax-rate for Requires changes to the classification system TBD – depends on the non-homestead state’s property changes, but this would rate charged residential properties classification system not be implantable at this time. City income tax on Requires changes to TBD – depends on the Not possible at this individuals state law rate charged time Report on Increasing BHTF Annual Revenue 9 Page 100 of 122  Initiate a local property transfer tax A property transfer tax is a tax on the transfer of title to real property. The State of Vermont has a property transfer tax that is variable among principal and non-principal residences. The state property transfer tax includes a special tax rate (and clean water surcharge exemption) for the first $200,000 of value paid for a principal residence. A large proportion of the state property transfer tax is allocated to Vermont Housing and Conservation Board, which supports affordable housing development statewide. To initiate a local property transfer tax, the City of Burlington City Council would adopt a resolution adding the question to the ballot for voters. If the voters supported the transfer tax it would then go to state legislators for approval and would also require gubernatorial sign-off. Based on 2024 property sales a City Property Transfer Tax of 1.5% on sold property values above $500,000 would result in $1,000,000 in revenue. The median sale price for single-family homes in Burlington in the last 16 months (1/1/24 - 4/30/25) was $499,000. See below options for the implementation of a local property transfer tax: #1 Flat Rate Property Transfer Tax Based on 2024 property sales, the charts below show the revenue for a marginal property transfer tax at 1% or 1.5%. The tax percentage stays consistent for all sale prices AND the tax only applies to the portion of the property sale above the marginal tax value. Marginal Tax Marginal Tax Tax Percentage City Revenue Tax Percentage City Revenue Above Above 1% $300,000 $1.3 Million 1.5% $300,000 $1.9 Million 1% $500,000 $770,300 1.5% $500,000 $1.2 Million 1% $550,000 $684,300 1.5% $550,000 $1 Million #2 Modified Progressive Property Transfer Tax The charts below show the revenue for a tax rate that increases based on the sale price of the property, the revenue that would have been generated for the city based on the values of properties sold in recent years, and the proposed tax expense per property by sales price. Tax Percentage Sale Amount Sales Year City Revenue Property Value Proposed Tax 0% <$200,000 2022 $1.69 million $250,000 $250 .5% $200,001-$500,000 2023 $1.37 million $500,000 $1,500 1.5% >$500,000 2024 $1.74 million $750,000 $5,250 #3 Progressive tax rate at 50% of State Property Transfer Tax Transfer Tax Sale Amount Revenue generated: Tax Burden by Property Value: Percentage Year City Revenue Value Proposed 0% <$200,000 2022 $1.91 million Transfer Tax .5% $200,001-$400,000 $250,000 $250 2023 $1.57 million 1% $400,001-$600,000 $500,000 $2,000 2024 $2.04 million 1.5% $600,001-$800,000 $750,000 $5,250 2% >$800,000 $1,000,000 $10,000 Report on Increasing BHTF Annual Revenue 10 Page 101 of 122 Property Taxes for Formerly Exempt Properties Given to Housing Trust Fund Within the City of Burlington are multiple properties that are eligible for property tax exemption. In some jurisdictions, the net new revenue from tax-exempt properties converting to a taxable use is dedicated to the Housing Trust Fund. The rationale is that these new revenues are a “windfall” that were not assumed to be part of the municipal budget and so therefore can be allocated to a Housing Trust Fund. Below is a table of properties that currently have tax-exempt status and the possible new tax revenue generated if these properties were changed to multi-unit residential properties. Most of these properties are within the Downtown Tax Increment Financing district so the income generated by these properties would be available for Fiscal Year 2036 and beyond. These calculations are based on: 1. Properties that are exempt, but are currently for sale or exploring uses that would be taxable 2. The number of potential units at a property 3. An average value of $400,000 per new unit (based on current assessed values of a single unit) 4. Multiplied by $4,248.44 – an average per-unit tax rate from four large multi-unit properties constructed in Burlington in the last fifteen years. Expected value Possible New Potential Properties Potential Units (calculated at Municipal Tax End of TIF $400,000/unit) Revenue 176 South Winooski 38 $15,200,000.00 $56,504.22 6/30/35 266 College St. 79 $31,600,000.00 $117,469.31 6/30/35 108 Cherry St. 200 $80,000,000.00 $297,390.65 6/30/35 20 Pine St. 250 $100,000,000.00 $371,738.31 6/30/35 2 Cherry St. 100 $40,000,000.00 $148,695.33 6/30/35 St. Mark’s 200 $80,000,000.00 $297,390.65 n/a Memorial Auditorium 300 $120,000,000.00 $446,085.98 6/30/35 Total: $1,735,274.44 Short-term Rental Creation Burlington needs more housing. While several large-scale multi-unit projects are underway and in the planning stages smaller scale development (10-units or less) is limited. Despite recent changes to zoning that allows for multiple units on all properties and multiple freestanding structures very few projects have come into fruition. An option for creating additional units in the city and increasing BHTF revenue could be a time-limited exemption to components of the short-term rental ordinance for newly created housing only. Specifically placing a time-limited exemption to the owner-occupancy requirements for newly created housing to allow a proportion (1-unit or 20%, whichever is greater) of new housing units to be rented as short-term rentals for a finite period of time (perhaps 5, 10 or 15 years). It is difficult to know how much funds could be generated by this exemption, but a 50% increase in the number of short-term-rentals within the city would generate an additional $250,000 a year Add the interest generated by unexpended BHTF monies into BHTF On any given day BHTF has a balance of funds from newly received revenues and committed, but not yet disbursed, awards. While some projects request grant funds quickly, it is common for larger renovation or development projects to take several years before completion and funds to be fully drawn down Report on Increasing BHTF Annual Revenue 11 Page 102 of 122 (although the projects cannot start and receive their main funding without the guarantee of BHTF and other funds). While generated interest would not create the requested $1 Million annually, it may generate thousands or tens of thousands of dollars in interest. An approximation of potential interest income is in-process. Higher Tax Rate on Non-Homestead Residential Properties A future possibility for increasing BHTF revenue is a higher tax rate for non-homestead residential properties in the city – this would include second homes, vacation homes, homes occupied seasonally, etc. Vermont’s current property tax system only has two categories – primary residence and non- homestead everything else. The state is exploring more categories and this could allow the city to tax non-homestead residential properties at a higher rate. Local income Tax Another future possibility for increasing BHTF revenue is a local income tax. This is currently not an option in Vermont, but several locales utilize income tax to support funding for their affordable housing and support services. In 2020 the city of Portland Oregon started taxing personal income above $125,000 at 1% ($200,000 for a couple) and also collects a 1% business income tax on net income for businesses with gross receipts above $5 million. In Seattle Washington voters approved a 5% tax in 2023 for any Seattle-based employee with annual compensation exceeding $1 million. Report on Increasing BHTF Annual Revenue 12 Page 103 of 122 TO: City Council Community Development & Neighborhood Revitalization Committee FROM: Brian Pine, CEDO Director Rebeka Lawrence-Gomez, Housing Programs Manager DATE: May 19, 2025 RE: Report on Increasing Burlington Housing Trust Fund Annual Revenue This memo is intended as a preface to the above-captioned report prepared by CEDO. On February 10, 2025, the City Council adopted a resolution tasking the Community & Economic Development Office (CEDO), in collaboration with the City’s Chief Administrative Officer, Assessor’s Office, and other city staff, to identify pathways to increase the money dedicated to the Burlington Housing Trust Fund by at least $1 million annually. While Burlington has pioneered the use of a Housing Trust Fund at the local level for perpetually affordable housing since 1990, HTFs are found throughout the country at state, county and local levels. In preparing this report, data was gathered by reviewing information from the Housing Trust Fund Project (a national resource for Housing Trust Funds throughout the county), researching other housing trust funds and municipalities, and discussions with local experts and advocates who have been championing and supporting Burlington’s Housing Trust Fund and other affordable housing initiatives. While there are many possibilities for increasing revenue and support for BHTF, this report highlights six options that we believe are best aligned with the directive of the Council Resolution. The options offered in this report are intended to offer potential pathways to increase the BHTF by $1M, but we are not making recommendations about the advisability and suitability for each option. Once the Council decides which options to pursue, the CEDO team will assist in taking a deeper dive in the process of bringing forward the preferred option(s). The Council resolution called for offering a variety of pathways to increase BHTF revenue guided by the following policy objectives: • Generate new revenue only through progressive-taxation, meaning that those residents and businesses with the highest incomes and largest amount of wealth pay more than Burlington’s working and middle class; and • Revenue may also be generated from tourists visiting our city; and Page 104 of 122  • Be revenue-neutral in relation to their impact on property taxpayers. The six options that are discussed in the attached report form the basis of ways to enhance the BHTF revenue in a manner that is consistent with the above-referenced goals of the Council resolution. The report focuses on the following options: 1. Property transfer tax 2. Transfer net new revenue when a tax-exempt property is converted to a taxable use 3. Increase the creation of new units for short-term rental as a means of generating new HTF revenue 4. Dedicate the interest income earned on BHTF funds back into the BHTF 5. Higher tax-rate for non-homestead residential properties 6. Levy taxes from businesses for individual compensation of more than $1M For 35 years the Burlington Housing Trust Fund has supported the creation, retention and rehabilitation of affordable homes in the city. One in ten Burlington homes have benefited from this resource. New revenue sources have multiplied the BHTF in recent years increasing its impact and benefits to the community. Exploring options to expand BHTF offers additional resources to leverage other public and private funding so badly needed to advance the City’s ongoing commitment to affordable housing. 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