MONTPELIER -- Lawmakers are considering a bill that would make downtown development easier and urban sprawl more difficult.

The bill, H.823, is designed to encourage growth in downtown centers by exempting certain development from Act 250 review, the state's land use and development permitting process.

Rep. Tony Klein, D-East Montpelier, who chairs the Natural Resources and Energy Committee, says some developers are driven outside city limits where it is faster and cheaper to move projects forward.

The Shumlin administration supports a statutory mechanism that would foster the vitality of tight-knit downtowns and discourage strip development. To that end, state officials proposed a provision that would ease the Act 250 permitting process for developers seeking to build in the state's designated downtowns and growth centers.

Vermont Department of Housing and Community Development has been working with lawmakers to come up with a plan to "revitalize" the state's downtowns, as described in a 2013 legislative report on Act 59, which includes modifying triggers for Act 250 jurisdiction.

The legislation allows developers to build more downtown housing units, renovate existing development, and offset the impacts of building on agricultural land by paying an "off-site mitigation" fee for the purpose of preserving other agricultural soils. The exemptions only apply to select downtowns approved by the state.

State agencies would review the project's impact on historic sites, state land and roads, and natural resources - instead of environmental district commissions, which review Act 250 permit applications.

Businesses are on board with the proposal, according to Katie Taylor, government affairs specialist for the Lake Champlain Regional Chamber of Commerce.

"The chamber generally thinks this bill is a step in the right direction," she said. "We are in support of any way legislation can make development easier."

Taylor said projects must currently go through a menu of permitting processes at the state and municipal levels. She said a streamlined process could achieve the same environmental standards in less time, reduced cost and more certainty for developers.

Taylor supports a blanket exemption from Act 250 for towns and municipalities that already have a robust zoning process, she said.

Some warn that the bill would unravel one of the state's longest standing environmental protection policies.

Sandra Levine, senior attorney at the Conservation Law Foundation, says the incentives for downtown development could have environmental consequences.

"CLF agrees with the broader intent of the legislation to encourage development in downtowns. That's helpful for the broader environment," she said. "But that does not mean they should not have to meet environmental standards."

Levine said local zoning does not address environmental impacts in the same manner as an Act 250 permit.

"Large-scale projects will move forward in downtown areas without a review of the environmental impacts, and as a consequence, may have significant environmental impacts that people do not have any knowledge of," she said.

She said every year there is at least one proposal to re-evaluate the permit. "Most of them are requests to weaken Act 250. And for a state that is concerned about the environment, as it should be, that's the wrong direction to go," Levine said.

In order to cut back on strip development, the bill revises Act 250 criterion 9 (L) to explicitly regulate strip development. Under the bill, developers must adhere to Act 250 review if they plan to go beyond existing strip limits.

Kate McCarthy, sustainable communities program director for the Vermont Natural Resources Council, said slow but incremental strip development in Vermont is an issue Act 250 should address.

"Where it's time to modernize [Act 250], it's in this area of strip development," she said, adding that the provision should not be viewed as "anti-development."

"What it says is, 'where we have strip development, let's make those areas more approachable, let's make them more compact,'" McCarthy said.

She said the bill strikes a balance between development and land preservation. "We need to be looking at our downtowns and natural resources as two sides of the same coin," she said.

Klein said the committee will close an open vote on the bill next Tuesday. Rep. Bill Canfield, R/D-Fair Haven, is the only member opposing the bill.