The advocates said there is no time like the present to take out a 20-year bond because interest rates for borrowing are near an all-time low, while Vermonters continue to struggle to find high-quality, affordable housing.
The proposal was a major part of Gov. Phil Scott’s original budget, which is no longer on the table in the Legislature. That budget relied largely on $50 million in savings through transferring expenses to the education fund, which gets revenue largely through property taxes.
Scott’s budget would have funded the $2.5 million in annual bond payments through Vermont’s existing property transfer tax. That tax is already the main annual revenue source for the quasi-public Vermont Housing and Conservation Board, which would be managing housing investments under the bond.
Scott’s budget would have given the board an additional $1 million in property transfer tax revenue each year, starting in fiscal 2018, and had the board use $1.5 million in existing annual revenue to make the $2.5 million in annual payments on the bond.
The House Appropriations Committee eliminated that additional $1 million for the bond in order to balance the budget. The Senate Economic Development, Housing and General Affairs Committee then passed a bill, S.100, to create the bond. The Senate Finance Committee decided to fund the entire $2.5 million in bond payments through a new hotel occupancy fee.
The House General, Housing and Military Affairs Committee has been taking testimony on whether to put the $35 million bond back into S.135. In order to pass a budget that doesn’t raise taxes or fees — as Scott has demanded — budget writers would need to find an additional $1 million in savings to fund the bond as Scott had planned.
“This is a smart idea,” said Sara Kobylenski, executive director of the Upper Valley Haven in White River Junction. “This is something that comes from folks with good business background, good sense of finance, knowing how to leverage the opportunities we have.”
Kobylenski said the bond also represents opportunity for low-income people. “They can’t have hope unless they have opportunity, and right now with limits to opportunity and the possibilities, there’s desperation, and there’s real anxiety and worry about what’s ahead,” she said.
Advocates estimate that the Vermont Housing and Conservation Board could use the $35 million to leverage between $70 million and $100 million in additional money. The total could fund between 550 and 650 new or renovated homes across Vermont.
The Agency of Commerce and Community Development estimates that $100 million in spending on construction and renovation would, over the 20-year term of the bond, build 500 homes, house 1,000 people, and increase property tax revenue by $20 million.
The agency also estimates that housing those people would reduce health care costs by $600,000 a year, education expenses by $400,000 a year, transportation expenses by $800,000 and state benefits spending by $250,000 a year, plus raise $500,000 a year in new income tax revenue.
“We cannot have too much housing, and we certainly have a dearth of housing across the entire income spectrum in Vermont today,” said Tom Torti, the chief executive officer of the Lake Champlain Regional Chamber of Commerce and a board member of the Committee on Temporary Shelter, or COTS.
Torti pointed to a survey of young professionals in Burlington the chamber did a few years ago. “What they’re looking for is housing along the entire continuum, from those initial houses where they can live in that condo or above that pizza parlor, to housing that they can afford when they begin to think about starting a family,” he said.
“What was so exciting about the governor’s proposal that we put forth this year was that we were going to be able to leverage incredibly low interest rates and begin building the housing stock that we desperately need in the state of Vermont,” Torti said.
Kenn Sassorossi, from Housing Vermont, said the bond proposal is designed to serve a variety of needs. One-quarter of the money would go to housing for low-income people; another quarter would go to housing for middle-income people; and the rest would go to meet the unique needs of local communities.
Chris Donnelly, from the Champlain Housing Trust, said state law says the Vermont Housing and Conservation Board should be getting half of all property transfer tax revenue raised in a given year. For years, the housing board has not been getting that money, he said.
Donnelly said currently about $9 million in revenue a year is being allocated to other parts of state government, instead of the housing board, but that paying for the bond only requires redirecting $1 million annually back to the housing board.
“If we just use more of the transfer tax to pay for the bond, then we’ll be all set,” Donnelly said. “Why don’t we just follow the statute and fund VHCB through the property transfer tax?”
House Speaker Mitzi Johnson, D-South Hero, said of the status of the bond: “We’ve got a month to go. Anything can happen.”
