Business & Economy

Bond will invest in affordable housing at record levels

The Vermont Housing and Conservation Board is beginning to seek applications for housing projects to be built with a major bond the Legislature approved in June.

The board, which is a quasi-governmental agency, says up to $34 million will be available to nonprofits, municipalities and developers partnering with them to bring affordable housing to various regions of the state.

The $34 million sum is the most state money the board has been able to oversee as part of a single bond since its inception in the 1980s. The other large bond was in 2004, when the state allowed the board to use $20 million in bonded money for affordable housing.

Eileen Peltier, left, is executive director of Downstreet Housing and Community Development, which plans to apply for funding under the bond. File photo by Erin Mansfield/VTDigger

Jennifer Hollar, the director of policy and special projects for the board, said the money will go toward building or refurbishing about 600 housing units across the state that benefit people with low and middle incomes.

Hollar said that many homes can be built or refurbished because the board is trying to leverage an additional $70 million to $100 million from both the federal government and private capital that the nonprofits, municipalities and developers line up for the projects by themselves.

“We’re delighted to be able to make the funding available to create more housing across the state,” Hollar said. “It’s an investment at a level the state hasn’t seen in decades in affordable housing.”

“It’s going to create jobs, and it’s going to increase the grand lists in cities and towns across the state, so this is a significant investment on the state’s part, and the primary goal and result will be new homes,” she said.

Under the legislation passed in June, at least 25 percent of the bond must be spent on units that would be affordable for a family of four making $34,650 or less, and an additional 25 percent on units affordable for a family of four making between $55,440 and $83,160.

The remaining parts of the bond can be spent on housing that is affordable for residents at any income level at or below $83,160 for a family of four. That means the money cannot be used to build high-end properties for high-income families.

Hollar said the idea of the bond is to build affordable housing that the private sector would not otherwise be able to build because the construction cost would not be offset by the rents people can afford to pay.

“It’s always been the case since the (Great Depression) that the federal and state government need to be involved in some way for creating housing for low-income folks,” she said.

“In the more recent past, the sort of moderate-income housing could be done (and) it didn’t need some additional assistance in order for the numbers to work,” Hollar said.

That’s not true anymore, she said, and middle-class families in Vermont feel squeezed when trying to afford housing.

Vermonters struggle to afford housing

The U.S. Department of Housing and Urban Development considers a household “cost-burdened” if it spends more than 30 percent of income on housing costs.

The U.S. Census Bureau reports that, in 2015, 50.5 percent of renters spent more than 30 percent of their income on housing, and 25 percent spent more than 50 percent of their income on housing, making them “severely cost-burdened.”

Among homeowners that same year, 29.9 percent spent more than 30 percent of their income on housing, and 11.7 percent spent more than 50 percent of their income on housing, according to the U.S. Census Bureau.

A person or household seeking to rent a two-bedroom house in Vermont in 2017 would need to have total wages of $21.90 an hour, or about $45,500 a year, according to the 2017 annual “Out of Reach” report from the National Low-Income Housing Coalition.

And homelessness continues.

Morgan Brown, a longtime advocate for the homeless, at a Statehouse protest. File photo by Roger Crowley
An annual report released in June showed that the number of people without homes last winter was 1,225 — including 306 children. The total number of homeless people represents an increase of 11 percent over 2016.

Nearly one-quarter, or 267 of those people, said they had been subject to domestic violence. That number, which does not include children, represents an increase of 40 people since the 2016 report.

In fiscal year 2017, the Department for Children and Families went nearly $1 million over its $3.3 million annual budget for an emergency housing program because so many homeless families needed transitional housing.

The Agency of Human Services is planning to allow the department to overshoot that program’s budget again in 2018 to avoid kicking families out of emergency housing during the winter.

“What we’re seeing in our programs is one of a lack of housing and a lack of affordable housing in the state,” said Sean Brown, a deputy commissioner for the Department for Children and Families.

“So if that housing bond expands capacity and some of that is dedicated to low-income housing, we believe we would see a benefit to people in our programs in finding a place they can live that they can afford,” Brown said.

Housing that will be built

The Vermont Housing and Conservation Board will begin accepting applications in the fall, and expects around 100 of the units to be completed by the end of 2017, Hollar said.

The board will continue allocating the money for the next three years. Because of permit and construction time, all the units should be completed within five to six years, Hollar said.

The board has been holding presentations around the state encouraging nonprofits, municipalities and developers to apply for funding. The board wants the majority of the bond money — $20 million — to go toward building apartments.

An additional $4 million would go toward permanent supportive housing for people who need housing with extremely low rental prices but also social services to help with issues such as a disability, mental health diagnosis or addiction.

The remainder will be used for homes targeted toward buyers ($6 million), a housing innovation fund that could pay for creative nontraditional projects ($3.4 million), and a home access program ($600,000).

Eileen Peltier, the executive director of Downstreet Housing and Community Development in Barre, said her organization would “definitely” apply for funding, for at least one project.

Peltier said Downstreet Housing generally puts together seven to 12 financing sources for each project, and the organization would be able to leverage those sources using the housing bond.

The organization has already started planning to build 30 apartments over a new transit center in downtown Montpelier, Peltier said. The apartments would target middle-income people — such as a family of four making between $55,440 and $83,160 a year.

Peltier said the organization wants to start construction on the apartments in the spring, and families could start moving in during early 2019.

Chris Donnelly, the director of community relations for Champlain Housing Trust in Burlington, said his organization plans to apply for funding to build 30 homeownership condos as part of a major private development on land formerly owned by Burlington College.

The homes will be available to a family of four making up to about $83,000, he said. Champlain Housing Trust hopes to break ground on the condos in the spring and have them available to families by early 2019.

“The bond will allow us to provide downpayment assistance for folks so they can access the market, and then we make sure that the homes remain affordable over time from one owner to the next,” he said.

“This is exciting for us,” Donnelly said. “We haven’t had any new construction homeownership for a number of years, so this is a great opportunity.”

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Erin Mansfield

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  • Gary Murdock

    This is a textbook example of what’s wrong with Vermont, a progressive government attempting to solve the results of it’s policy with more progressive policy, and the heads of well connected non profits line up at the trough for the cash that will sustain them to retirement. Rather than address the cause of the housing affordability problem, non profits are going to be handed millions of tax dollars to create nothing more than housing units that qualify for Section 8 vouchers. This does nothing to solve the problem, it only perpetuates it. This does nothing to create an environment where individuals purchase and renovate the outdated housing stock themselves, or re-populate the dying small towns a villages with people that see opportunity in their new surroundings. This will not stop the exodus of young people that are looking for an opportunity to excel and prosper. What this will do is expand the list of renters and perhaps a few homeowners that will collect education tax rebates that a dwindling few of us have to pay for. There would be no shortage of affordable housing if the state economy supported good paying jobs, and the progressive state government got out of the way.

    • Neil Johnson

      Such a breath of fresh air. Yes this is really a scam and total waste of money, that supports the rich with huge tax credits, has Vermonters footing the bill to pay for their rental properties on top of that!

      We could allow people to build homes in most of Vermont that are $80-$90k, genuinely affordable to either rent or buy. Most of these projects are actually high end properties subsidized by the tax payers and converted to high end condominiums at the end of 30 years.

      Rental properties are not affordable housing!! Rental properties are really good for the land lord, specifically when they are GIVEN millions of dollars, given tax credits, and the renters are subsidized by Vermont tax payers to live in condominiums nicer than all the tax payers own.

      Vermont zoning doesn’t allow affordable homes for people to actually OWN……and it’s an easy change.

      • Gary Murdock

        This is such a crock on so many levels. I’m so happy that I get to fund condo’s on the Burlington waterfront, apartments in Montpelier, and “extremely low rental prices” for the opioid addicted. But what bothers me the most is that this progressive big government, anti free market, non profit sustaining “Vermont Way” use of tax dollars is being celebrated by our so called Republicans.

        • Neil Johnson

          What was that article a couple of weeks ago where they are renovating hotel rooms for $195,000 each for homeless people? Talk about spending stupid amounts of money. You can get full size homes for less than that.. It’s an insane amount of money.

          People in general are so financially ignorant they don’t even know when they are getting ripped off. The waste and abuse in Vermont is staggering. Yet so many will stand by and say, “this is a great use of money”, meanwhile those involved are lining their pockets with rolls $1,000 bills.

          We have no press that investigates or questions the sheer stupidity of so many “good works” and waste of money. And every one screams if we don’t agree to the spending increases, year after year. It’s really insane.

  • jan van eck

    This is a really great project and we have Governor Phil Scott to thank for kick-starting it!

    I would point out that a solution used in Montreal, both the keep costs down and to make optimum use of scarce urban land, is to build houses with a “common wall” of stone and cement some three feet thick. They are totally soundproof, and have the advantage of removing one wall surface from heat loss, so the house is that much cheaper to heat. Each family owns their own house, and the property line runs down the middle of that thick stone wall. Driveways to rear garages are down the side, and each pair shares a driveway with the adjacent house on the next pair. You only snow-shovel one driveway! Works out just fine.

  • jan van eck

    Jennifer Hollar might wish to keep in mind that this project bears the seeds of a nascent new industry. Examine, for example, the prospects of developing three or four standard frame sizes: 1,200 ft, 1400 ft, 1600 ft, and (2-story) 2,400 ft [being the 1200 unit footprint, doubled vertical). Now, from the standard designs, a factory can build the houses in kit form, all the parts pre-cut and sub-sections pre-assembled, a bit like the old “trailer” concept of pre-fabricated houses. The kits would be trucked to a homesite and bolted together by local labor. More complex xections such as bathrooms and kitchens could be pre-assembled finished in the facgtory and shipped out by flatbed, lifgted into place by crane, and connected to the service pipes and wires. A house goes up in days, not months.

    Vermont has plenty of quality woods, and there is lots more available from New Hampshire, Maine, and Quebec. Properly organized, this new industry would employ thousands and these kit homes would be shipped across America. Hey, think big! Prosperity awaits those who dare.

    • Renée Carpenter

      This is excellent creative thinking.

      VHCB has already developed a similar model that includes lowering energy use. They call these pre-fabricated homes “Vermods.”

      Perhaps Erin can do a follow-up story on these! (If she hasn’t already). They’re manufactured down near WRJ….

  • It’s just another case of government throwing money at a problem without figuring why there is a problem and solving that. So they build new properties to own and rent. What does that do for the people already living in rundown places that get into a new place? $34M spent when the real solutions are lowering property taxes and protecting landlords from serial deadbeat and destructive tenants so rents could be lower. In the Springfield area there are plenty of inexpensive homes for sale but they still aren’t selling? Should the government spend its way to help sell these houses? Or should our elected officials figure out how to create good paying jobs so people can buy?

  • Edward Letourneau

    This is just working on the wrong end of the problem. Affordable housing can’t be developed in Vermont until we do something about Act 250, the excessive regulations, lack of jobs, and (drum roll) the excessive taxes and fees that add $400 a month to most mortgages. Not to mention breaking the multi-generational chain people on welfare. I could say more but Digger wouldn’t like the truths.

  • Joe Shannon

    Non profits are making fools out of Vermont.

  • Matt Young

    If the state of Vermont actually has a goal of more affordable housing…reduce the ridiculous amount of regulation and red tape. More available units=lower prices. It’s also very difficult for a family to get a “fixer upper” financed, so instead they stretch and buy something beyond what they can actually afford.