From the Field: Vermont Legislature Passes $35 Million Housing Bond

The Vermont state legislature wrapped up its business for the year on June 21, having resolved an impasse with Governor Phil Scott (R) over teachers’ health care benefits that resulted in a budget veto and the convening a special veto session.  The resolution of the impasse led to final passage of an FY18 state budget, which Governor Scott signed on June 27. The budget includes a $35 million bond for the production and rehabilitation of permanently affordable housing, both rental and homeownership. Mr. Scott first proposed the bond in his January state budget address, and the proposal quickly gained support in the state legislature. Passage of the bond represents Vermont’s largest allocation of funding for state housing programs in ten years.

The Vermont Housing Finance Agency (VHFA) will issue the bond, which is expected to leverage between $70 million and $100 million in state, federal, and private capital beyond the value of the bond itself. Revenue generated by the bond will be administered and awarded by the Vermont Housing and Conservation Board (VHCB).

VHCB Executive Director Gus Seelig expects 100 units to be under construction in Brattleboro by the end of 2017 with  revenue from the bond. These units will house 200 to 250 Vermont residents. He anticipates a development deal in Burlington for use of bond funds by winter. Middlebury is expected to construct workforce housing, while White River Junction will develop micro-apartments and other alternatives for people experiencing homelessness. The bond revenue will double Vermont’s housing production and redevelopment activities in the coming years. It will aid in developing and rehabilitating up to 650 homes across the state. Projects will receive funds based on community needs, applications received, and the availability of resources for leverage.

Vermont’s housing resources for FY18 remain unclear, though, given the precarious state of the federal appropriations process and proposed cuts to HUD, USDA, and essential HHS safety-net programs that would have catastrophic impacts on the lowest income Vermonters. “Even a small change could have a drastic effect (on the state),” Mr. Scott said. However, both he and Mr. Seelig hailed the housing bond as an economic stimulus for Vermont. Without safe, decent, and affordable housing for all the state’s residents, economic growth will stall. Housing construction creates jobs, spurs economic activity, and generates state and local revenue.

The bond will be paid for via $2.5 million in annual revenue from a property transfer tax over 20 years, through 2039. One and a half million dollars of that will come from VHCB’s annual base appropriation. The other $1 million will come from an increase in the transfer tax, thereby reducing the impact on VHCB’s base annual appropriation. At least a quarter of the homes created will go to households earning under 50% of area median income (AMI). Another quarter will go to more moderate income households earning between 80% and 120% of AMI. According to VHCB, these two groups “most lack housing options” in the state. The remaining half of bond funds can support housing for people earning less than 120% of AMI but will more likely go to lower income Vermonters below 80% and 100% of AMI, subject to the decisions of VHCB’s board. VHCB is already holding meetings across the state to identify the highest priority communities and potential projects.

The timing for the passage of the bond is critical, as homelessness and housing shortages are widespread across Vermont. According to NLIHC’s 2017 Housing Gap report, there is a shortage of 10,866 rental homes affordable and available to the state’s 18,138 extremely low income (ELI) renter households, defined at those with incomes at or below the poverty line or 30% of their area median income (AMI).  There are only 40 rental homes affordable and available for each 100 of the state’s ELI renter households. Vermont’s 2017 Housing Wage is $21.90 an hour. It has the 5th largest affordability gap for renters of any state in the nation and is the seventh most expensive state for rural (non-metro) areas.

Senate President Pro Tempore Tim Ashe (D/P) and Senators Kevin Mullin (R), Michael Sirotkin (D), Jane Kitchel (D), Ann Cummings (D), Becca Balint (D), Philip Baruth (D/P) and Alison Clarkson (D) played key roles in getting the new funds included in the state budget and raising the necessary new revenues, as did House Speaker Mitzi Johnson (D) and Representatives Helen Head (D), Janet Ancel (D), Kitty Toll (D), Fred Baser (R), and Sam Young (D).

“We are incredibly excited that the housing bond made it across the finish line this year,” said Vermont Affordable Housing Coalition Coordinator Erhard Mahnke. “This was a huge team effort from so many people -- from the governor and his team to key legislative leaders, mayors, VHCB’s dedicated staff, and all our community housing partners and homeless service providers. It will have a tremendous impact on Vermont’s long standing affordable housing needs, providing safe, stable homes for low and moderate income working Vermonters, people with special needs and those without homes.”

For more information, contact Erhard Mahnke at erhardm@vtaffordablehousin.org.