By Dave Fidlin | The Center Square

Fresh off the heels of a pivotal announcement, Vermont’s state treasurer on Tuesday went before a legislative panel and discussed the framework for a reinvigorated program to bolster the economy.

State Treasurer Michael Pieciak

State Treasurer Michael Pieciak, in a meeting of the House Committee on Appropriations, delved into the next stage of 10% in Vermont, a nearly decade-old economic development initiative.

First established in 2014, 10% in Vermont gives the state treasurer’s office the statutory authority to invest that threshold of the state’s average daily cash balance into projects designed to grow the economy.

When the program was first established, Pieciak said 10% in Vermont had a balance in the range of $400 million, but it has since grown to about $1.5 billion.

“Fast forward to today, and the state’s cash on hand has grown considerably,” Pieciak said.

A number of reasons were attributed to the sizable increase, including large taxpayers that have taken root in Vermont since the program’s establishment.

With new figures on hand, Pieciak outlined with the House committee how his office plans to market the availability of new loan funds via the program in the upcoming fiscal year – particularly in the area of housing, which has been an ongoing need in Vermont.

The program can serve as a lending mechanism, with funds borrowed to applicants at below-market interest rates. Some of the specific provisions – such as collateral, letters of credit, and guarantees on mortgages – would still have to be provided in exchange for loaned funds.

“We are willing to be more flexible on terms like the interest rate or the length of the loan,” Pieciak said.

As 10% in Vermont is relaunched, Pieciak said the intent is to doll out loan dollars in small portions every quarter, meaning the fund would not be extinguished in one fell swoop.

Regarding housing developments, he said loans could be distributed for various projects, including new construction and rehabbing existing residential structures.

“Really, the sky can be the limit in terms of what organizations can think about for projects,” Pieciak said.

While the state is willing to be generous with interest rates to spur additional economic development, Pieciak said there would be parameters in place so the funds are paid back.

“We’re going to have to have obvious, articulable goals that each project is set out to achieve, and we’re going to have to measure those over time,” he said. “That’s the consequence of giving a more favorable interest rate.”

When asked by the committee who can participate in the loan program, Pieciak said there are no hard and fast barriers. However, he did indicate preliminary preferences in the next round of funding availability.

“Statutorily, anybody can apply, but we have identified some entities that we are going to give prioritization to,” he said. “They would be entities like nonprofits, instrumentalities of government, or municipalities.”

Pieciak added, “It is possible that a private company or for-profit developer could qualify, but in that instance, I think there would be more scrutiny on what the money’s being used for and potentially deviating from our below-market interest rate.”

With the new round of funding announced, Pieciak said his office intends to promote the program in the next month and a half.

The first round of applications will be due June 1, and decisions on successful applicants are planned by early July. Moving forward, Pieciak said applicants would be accepted every quarter.