Housing, Land Use and Permitting
Housing and land use policy centered on the Legislature’s reassessment of Act 181 and its continued effort to increase housing production. Under pressure, lawmakers rolled back several controversial Act 250 provisions, preserved the core Tier 1A and Tier 1B growth-area framework, and expanded financing, infrastructure, and planning tools intended to support new housing.
S.325 – Act 250 / Act 181 Reforms and Rollbacks
The Legislature revisited several major provisions of Act 181 less than two years after enactment, reflecting growing concerns from municipalities, landowners, farmers, and rural communities about the practical impacts of the state’s sweeping land-use reforms. S.325 repeals the controversial “road rule,” eliminates the planned Tier 3 designation process, and narrows eligibility for certain housing exemptions. The bill preserves the temporary Act 250 housing exemptions through 2028, but rejects proposals to extend those exemptions through 2030. The bill also streamlines regional planning processes, creates a new Joint Legislative Environmental Oversight Committee, and directs additional study of natural resource protections, agricultural impacts, and Act 250’s role in commercial development.
Coming only two years after passage of Act 181, the legislation represents a significant course correction in Vermont’s approach to land-use regulation. Lawmakers retained Act 181’s core strategy of directing housing and development toward designated growth areas through the Tier 1A and Tier 1B framework, but scaled back several of the law’s most controversial provisions in response to sustained pushback from rural communities, local officials, farmers, and property owners. The bill stands as one of the clearest examples of the Legislature’s broader 2026 reassessment of major policies enacted during the previous supermajority era.
S.328 / H.775 – Housing Production and Development Tools
Much of the Legislature’s housing agenda ultimately converged into S.328, which incorporated many of the concepts that had previously advanced through H.775. The legislation expands housing financing and infrastructure tools, including increasing the State Treasurer’s “10% for Vermont” investment authority from 10 percent to 12.5 percent of available funds, creating additional capacity for state-supported loans and investments in housing and related infrastructure projects. The bill also expands VEDA’s ability to finance certain housing projects, authorizes special assessment bonds, and extends down payment assistance programs.
S.328 further creates an Off-Site Construction Accelerator Pilot Program to encourage the use of modular, panelized, and other factory-built housing methods intended to reduce construction costs, address labor shortages, and speed project delivery. The bill allows VHIP grants to be distributed upfront and includes additional provisions supporting manufactured housing, common interest communities, and service-supported housing.
The legislation also continues the state’s shift toward greater housing accountability at the local level. Municipal plans must more explicitly identify housing needs, barriers to development, and progress toward meeting regional housing targets. Together, the reforms reflect the Legislature’s continued effort to increase housing production through a combination of financing, infrastructure investment, alternative construction methods, and local planning reforms.
