Part 2: How It Affects You
Vermont’s new land-use framework is not just a planning exercise. It is an economic sorting mechanism.
Once the state draws a Future Land Use (FLU) map and ties exemptions, designations, and “aligned” public investment to a narrow set of growth areas, it also steers where housing is built, where workers can live, where businesses can hire, and where tax bases can grow.
That outcome is not accidental or speculative. It follows directly from the stated purpose of the Act 181 methodology: to increase housing production while aligning public investment with areas planned for growth, emphasizing compact centers separated by rural countryside.
This is the point where land-use policy becomes economic policy.
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A small growth footprint is not neutral — and it is not evenly shared
The first economic fact is scale.
Draft Tier 1B eligibility maps presented to the Senate show that roughly 2.2 percent of Vermont’s land area is included statewide.
The second economic fact is distribution.
That limited footprint is not evenly shared across the state:
- Chittenden County RPC: 10.5 percent eligible
- Central Vermont RPC: 0.8 percent
- Northeastern Vermont Development Association (NEK): 0.6 percent
- Windham RPC: low single digits, far below Chittenden’s scale
This matters because the same methodology states that mapped growth areas “should” accommodate a substantial portion of the housing required to meet state housing targets.
In other words, the policy expectation is that most net new housing — and the labor force and economic activity that come with it — will occur inside the mapped envelope.
When one region’s envelope is an order of magnitude larger than another’s, the long-term implications are hard to avoid. Growth does not distribute itself evenly when capacity is deliberately constrained.
“The map doesn’t change zoning” is a technically true but economically incomplete claim
State officials and planning presentations emphasize that FLU maps “do not impact any local regulations” and “do not change the characteristics of parcels.”
That statement may be legally accurate in a narrow sense. It is economically incomplete.
Zoning text alone does not determine outcomes. What matters in practice are timelines, appeal exposure, transaction costs, and predictability — because those are what lenders, insurers, developers, and employers price.
The Senate hearing record makes the practical meaning of exemptions explicit: projects that qualify face shorter timelines and reduced appeal exposure. The Governor’s housing executive order reinforces this by describing Act 181 as creating a “restrictive and geographically narrow framework” for exemptions, while directing agencies to dramatically reduce permitting timelines.
In effect, the FLU map functions as a state-level feasibility map. It does not rewrite zoning, but it determines where the safest, fastest, and least risky development pathways exist.
For places outside the mapped growth areas, the default is longer timelines, higher costs, and greater uncertainty under full Act 250.
The Tier 1B “opt-in” is a choice with a loaded default
Municipalities are told they must vote to opt into Tier 1B status. That is accurate. The Act 181 framework requires a municipal resolution requesting Tier 1B designation, and planning presentations state plainly that individual municipalities must vote to opt in.
What is less often stated is the default.
The methodology also specifies that mapped growth areas become Tier 2 if a municipality does not opt in.
That structure matters.
A town declining to opt in does not simply preserve the status quo. It accepts higher permitting costs, longer timelines, and greater appeal exposure. For towns trying to add housing, stabilize enrollment, or broaden their tax base, that is not a neutral choice.
In practice, the vote is not between two equivalent paths. It is between participating in the state’s preferred framework or remaining in a demonstrably more burdensome regulatory lane.
Calling that “local choice” is procedurally accurate but substantively misleading.
Tier 3 is undefined — and uncertainty has economic consequences now
The most significant unresolved issue for property owners is Tier 3.
The state is advancing FLU maps and tiered permitting reform while the most restrictive tier overlay remains undefined. The methodology is explicit: Tier 3 rulemaking is not yet in place and will be conducted by the Land Use Review Board.
Yes, the documents attempt to reassure landowners by stating that inclusion in a Rural Conservation FLU category is “not meant to serve as an automatic basis” for Tier 3.
That reassurance misses the economic problem.
Property owners, towns, lenders, and builders cannot evaluate risk without knowing the rules. Even if Tier 3 ultimately proves narrow or modest, its undefined status creates uncertainty that affects behavior today.
Markets do not wait for rulemaking to conclude. Regulatory uncertainty alone delays projects, raises financing costs, and pushes capital toward geographies where rules are clearer and pathways are safer.
The sequencing failure matters — and it compounds risk
This uncertainty does not exist in isolation.
Act 59 required foundational conservation work before conservation-driven land-use constraints were integrated into other regulatory systems. It mandated:
- a statewide conserved-land inventory by July 1, 2024, and
- a comprehensive conservation plan by December 31, 2025.
Those steps were intended to define conservation categories, implementation methods, and landowner impacts first.
Yet Act 181 and the FLU mapping process are moving forward while Tier 3 remains undefined and the conservation plan is incomplete.
The result is a framework that asks towns and property owners to accept mapped designations and opt-in decisions without a clear explanation of future regulatory consequences.
This is a governance sequencing failure — and one with predictable economic effects.
FLU maps are “aspirational” — but aspiration sends signals
FLU maps are often described as aspirational. In theory, they show where growth could occur if communities choose to pursue it.
But aspiration itself sends a signal.
As covered in part 1, one regional planning commission director observed that the draft FLU map largely reflects existing development patterns. Taking that statement at face value has consequences.
If a map intended to guide future investment largely mirrors current conditions, it implicitly communicates that most places are expected to remain much as they are — while growth is channeled into a small number of centers.
Markets respond to those signals. Residents respond to them as well.
A map that signals limited future growth tells families where housing is expected to be built, tells employers where labor is likely to concentrate, and tells property owners where investment is less likely to be supported by state policy.
Those expectations shape decisions long before any regulation formally changes.
The long-run economic effect: divergence
Put these pieces together:
- a narrow and uneven growth envelope,
- an explicit expectation that mapped areas absorb a substantial share of housing demand,
- an opt-in structure where declining participation defaults to higher regulatory cost, and
- an undefined Tier 3 overlay injecting uncertainty into large portions of the state.
The likely outcome is not immediate collapse. It is tax-base divergence over time.
Communities that can add housing at scale are better positioned to attract workers, sustain employers, and spread rising municipal costs across a growing base. Communities that cannot do so face inflation, infrastructure demands, and service costs over a shrinking or aging population.
That pressure is amplified by Act 73’s education reforms, which emphasize “scale” and permit consolidation or tuitioning after repeated noncompliance with minimum class-size standards.
None of this happens overnight. But once the system is locked in, the direction of travel is difficult to reverse.
What this means for property owners
State officials can truthfully say FLU maps do not rewrite zoning. That does not mean the maps are economically neutral.
They shape expectations, route incentives, and define where regulatory certainty is most likely to exist. And because Tier 3 rules are still undefined, towns and landowners are being asked to make consequential decisions without a clear understanding of the system’s final form.
This is not conspiracy. It is a high-risk way to restructure land-use policy — and one whose economic impacts will be felt unevenly across Vermont.
Bottom line
By concentrating housing growth and investment into a small set of designated areas, Vermont’s framework increases the likelihood of tax-base divergence, labor shortages, and rising costs in non-hub communities.
That is not ideology. It is the predictable result of how incentives, uncertainty, and capital interact.
And it affects everyone.
In Part 3, we look at who backed this framework, who still holds office, and why lawmakers from regions likely to see limited growth supported a system that concentrates housing, investment, and tax-base expansion elsewhere. (stay tuned)
Dave Soulia | FYIVT
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