House committee hears H.757 on manufactured-home co-ops; witnesses cite aging infrastructure, titling and mortgage hurdles

On Jan. 27, the House Committee on General & Housing heard testimony on H.757, a bill addressing manufactured‑home communities and limited‑equity cooperatives (LECs). Witnesses described LECs as an important source of affordable housing in Vermont and told lawmakers that aging infrastructure, complex titling rules and limited access to mortgage markets threaten long‑term affordability.

Jeremiah Ward, Water Infrastructure Support Program Director at the Cooperative Development Institute, told the committee that to his knowledge there are 18 limited‑equity co‑ops in Vermont serving about 1,700 households and that ‘‘these limited equity co ops are a key source of affordable housing in the state.’’ Ward said most households in the co‑op portfolio are low- or moderate‑income, estimating roughly 84% are below 80% of area median income and about 60% below 50% of area median income.

Ward described infrastructure built in the 1960s and 1970s that is now at or past the end of its life cycle and said replacement is expensive. ‘‘We’re seeing on project budgets $50,000 to $60,000 per home,’’ he told the committee, adding that including electrical work could add another $10,000–$15,000 per unit. He cited the North Avenue project as an example: about $7 million to replace drinking water, wastewater, stormwater and roads for roughly 120 homes, or roughly $57,000 per unit.

Ward explained how LECs are structured and taxed in ways that can reduce their ability to finance large projects. He said some assessors use an income‑approach that treats cooperative land as if it were a for‑profit park, potentially inflating the land tax and reducing co‑op purchasing power for debt service. Ward argued adjusting how land tax is assessed could free up resources to repay infrastructure financing and preserve affordability.

The committee then heard from attorneys and lenders about titling and lending practices. Ed Fitzpatrick, an attorney who has worked with manufactured‑housing lenders, told lawmakers that some existing statutory conversion or ‘‘purge’’ provisions were rarely followed and that removing or simplifying them in the draft legislation was reasonable. ‘‘If you don’t need the statute, no one’s using it, you should take it out,’’ Fitzpatrick said.

A representative of East Rise Credit Union described the lender’s practice of treating manufactured homes in parks and cooperatives as real property for mortgage purposes, which requires a warranty deed. The witness said mortgages for homes on leased land typically have shorter maximum terms (commonly up to 20 years) and higher interest rates than 30‑year mortgages available on owned land. As an example, the witness cited a 20‑year product ‘‘more like 7.875%’’ versus ‘‘just below 6% on a 30‑year’’ fixed product for owned land, and attributed the spread to structural, appraisal and underwriting hurdles.

Witnesses and members discussed Fannie Mae’s cooperative pilot. The East Rise witness said Fannie Mae approval for co‑ops is complex: it requires special appraisals, structural inspections and a cooperative approval process that must be renewed every two years, creating administrative burdens for lenders and co‑op boards and limiting the number of saleable loans in the secondary market.

Alexander ‘‘Sandy’’ Shriver, a partner at Phillips, Dunn, Shriver & Carroll, spoke about TriPark Cooperative Housing Corporation in Brattleboro. He said the town taxes individual mobile homes but treats TriPark’s common land as tax‑exempt parcels, similar to condominium treatment, and noted TriPark files federal taxes in a homeowners‑association category. Shriver said TriPark still faces infrastructure needs — roads and a bridge — and that its corporate form has in some cases complicated direct eligibility for grants, requiring other nonprofit entities to receive funds and pass them through to TriPark projects.

Committee members discussed municipal capacity and incentives for towns or utilities to accept ownership of park infrastructure. Witnesses said some municipalities will sponsor grant or loan applications and may agree to take on limited billing responsibilities, but many towns are reluctant to assume full ownership for reasons including road dimensions, budget constraints and long‑term maintenance liability.

The committee scheduled a site visit to FactoHomes the next morning at 9:30 a.m. and said it would return after lunch for additional testimony, including from Samantha Sheehan of the Vermont League of Cities and Towns and the secretary of state. No formal vote on H.757 was recorded at the hearing.

What’s next: The committee will visit FactoHomes and continue testimony and bill introductions at the next session, where members are likely to ask further questions about titling, municipal takeovers of infrastructure and grant eligibility.