State divided into three ‘tiers’ for Act 250 review purposes

by Austin Davis, Lake Champlain Chamber

Housing is the limiting factor in the Vermont economy right now, holding back every element of our state’s economy. Reform of Vermont’s 55-year-old land-use law was on the priority list since Act 250 was written on a typewriter, when the Agency of Natural Resources did not exist. 

H.687, passed by the Legislature on the last day of the session Friday May 10, represents a tectonic shift in Act 250 as the program moves to “place-based” jurisdiction and subsides as a barrier in some areas while becoming omnipresent and omnipotent in others.  The bill, which may face a veto by Gov. Phil Scott:

• Removes from Act 250 jurisdiction of well-developed areas where Act 250 was duplicative and detrimental (something LCC has pushed for years).  

• Allows the conversion of commercial units to residential units without an Act 250 permit or permit amendment, made it to the finish line without much worry or fanfare.

• Adds language for inventorying housing stock production for the purposes of transparency and accountability. 

This nearly 200-page bill represents a massive shift in Vermont’s development and land-use policy, the full gravity of which we may not appreciate for some time. They include:

• Transitions to place-based jurisdiction,
• Interim exemptions until the new jurisdictional regime is in place,
• New Act 250 criteria around forest fragmentation and a road rule, and 
• an increase in the property transfer tax on second homes. 

The bill transitions Act 250 to place-based jurisdiction instead of the traditional size-based jurisdiction by creating three tiers of jurisdiction, with Act 250 jurisdiction most intense in Tier 3 and non-existent in Tier 1a. This looks like the following; 

• Tier 1
  • Tier 1a – 20 to 50 municipalities could fit into this tier and leave Act 250 altogether, though they would need to incorporate that criteria into their municipal zoning. 
  • Tier 1b – most municipalities could fit into this for their core, so long as they do not opt-out. This tier would exempt housing development under 50 units on less than 10 acres.  
•  Establishes exemptions for any development in Tier 1A areas and in Tier 1B areas up to 49 units of housing, including those part of a mixed-use development, and exemptions for hotels or motels converted to permanently affordable housing.

For a second, we’ll skip from Tier 1 to Tier 3 for the sake of making an explanation easier; 

• Tier 3 – consists of “critical resource areas” where any activity within will more than likely trigger Act 250 jurisdiction and would, by some estimates, cover about 18% of the state’s land mass. 
• Tier 2 – is essentially anything we have not described yet, which will closely resemble the existing Act 250 program.
  • The bill adds a “road rule” that triggers Act 250 if a road is more than 800 feet.
  • New criteria exists in the bill for “forest fragmentation.” 

H.687 does include interim exemptions until July 2027 (if vetoed, this early date will be a contributing factor and if signed, will need advocacy to push it back the sunset to make the exemptions useful) to accommodate the time it will take to stand up the new tiers, however, it is scaled back from what was offered in S.311. The interim Act 250 thresholds for triggers are pushed to: 

• No permits for housing within downtowns.  
• 75 or fewer units in new town centers, growth centers, and neighborhood development areas in the areas with permanent zoning and subdivision bylaws and sewer, water, or appropriate soils
• 50 units within a quarter-mile along transit corridors or census-designated urbanized areas with 50,000 residents.  These are contingent on not being in floodplains or river corridors.
• No permit amendment is required for the construction of improvements to convert a commercial structure to 29 or fewer housing units.

None of the units built under these interim guidelines count towards triggering Act 250 threshold. 

Despite how promising the bill is, there is a lot to be nervous about in this final version.

The tier system will need to go through rulemaking, and as the saying goes, and everyone knows, “the devil is in the details.”
“Critical resource areas” will need to be mapped, municipalities will need to apply for these tier statuses, and developers will need to navigate the new road rule and forest fragmentation language.

This legislation isn’t isolated; the critical resource areas still to be understood and defined will potentially represent a quarter of the state that will likely not be able to see development.

At the same time, S.213, which regulates river corridors, could result in some 45,000 parcels of land being pulled into a new permitting system in 2028. Due to our historical development patterns, many of these might be in areas otherwise classified as Tier 1. This will all be occurring while the state works towards its goals of conserving 30% of the state by 2030 and 50% by 2050.

These efforts are laudable and important; however, one is justified in wondering whether scrutiny might overlap between these areas of conservation and development. If a large amount of the 50% of the state conserved is not in river corridors or critical resource areas, then it’s possible to imagine a Vermont where much more than 50% of the state is undevelopable.