Phil Scott has vetoed a bill that would have updated Act 250, Vermont’s broad land use and development law, over concerns that it would impede efforts to alleviate the state’s severe housing crisis.

Proponents of the bill said it struck a balance, relaxing Act 250 in designated areas while installing protections for natural areas, such as forest blocks, to prevent sprawling development there. Organizations such as the Vermont Natural Resources Council, Audubon Vermont, the Vermont Land Trust and the Nature Conservancy had advocated for its passage.

“This bill makes Act 250 even more cumbersome than it is today and it will make it harder to build the housing we desperately need,” Scott wrote in a letter to lawmakers last week. “These concerns were raised by elected leaders on both sides of the aisle, though were not addressed by the Legislature.”

The bill, S.234, saw a number of last-minute changes on the Senate floor on the final day of the legislative session. Anticipating the bill’s likely death, lawmakers funneled its housing-related provisions into the more favorable omnibus housing bill, S.226, which passed both chambers and has yet to be delivered to the governor. Scott signed S.226 on Tuesday.

The remaining Act 250 bill would have changed the law’s governance structure. Now, the Natural Resources Board administers Act 250, and appeals go to the Environmental Division of the Vermont Superior Court. Under the proposed legislation, a new, professionalized Environmental Review Board would administer the law and handle Act 250 appeals.

Had S.234 become law, it would have also included protections for connecting habitat and forest blocks.

Brian Shupe, executive director of the Vermont Natural Resources Council, criticized the governor’s veto Wednesday. “By vetoing this bill, the Governor has put at risk Vermont’s beloved landscape of compact community centers surrounded by intact forests and working lands,” he said, adding that S.234 would have safeguarded the state’s natural landscape from a Covid-related increase in real estate pressure.