[B]URLINGTON — A $5 million purchase by People’s United Bank will help the state sell $37 million in bonds to fuel one of the largest expansions of low-income housing in Vermont’s history.
Lawmakers approved the bond sale earlier this year after wrangling over how to add to the state’s low-income housing stock. The Vermont Housing Finance Agency, a nonprofit established by the Legislature to finance affordable housing initiatives, will sell the bonds. The Vermont Housing and Conservation Board will distribute the income, mainly to housing nonprofits.
The state will pay off the debt with an increase in the property transfer tax.
Brokers from Morgan Stanley and Raymond James are already working with investors interested in buying the bonds, said VHFA Executive Director Sarah Carpenter.
They have already secured a $5 million commitment from People’s United Bank, and many of the bond purchases will come from institutional-type investors such as pension funds or endowments. The agency intends to start selling the bonds Jan. 8 and hopes to finish by the next day, Carpenter said.
The agency is offering what’s called sustainability bonds, a new type that targets proceeds exclusively to environmentally or socially sustainable projects.
“A lot of the public is saying, ‘If I’m going to invest my money, particularly long term, I want to make sure it goes to good things,’” Carpenter said.
The Legislature mandated that a quarter of the proceeds go to housing that’s considered affordable for low-income Vermonters and another quarter to projects affordable for middle-income Vermonters.
But Carpenter said most of the projects will benefit people on the lower end of the income spectrum.
“We really expect the vast majority to be targeted at people 80 percent or lower than median income,” she said. “(Lawmakers) wanted to be sure that if they were to make this type of substantial commitment, that it would really reach a wide group of Vermonters.”
One effort the money will help fund is Champlain Housing Trust’s part in the Cambrian Rise mixed-use development on the former Burlington College land. Work is to start soon on the private development, with more than 700 apartments and condominiums planned. The trust will buy 30 condos and sell them at below-market rates.
Additional affordable housing is needed throughout Vermont. Projects will be built mainly in town centers, Carpenter said.
“It’s complicated. It’s expensive to build, and our salaries and wages don’t match what it costs you to build a property — that’s the biggest bottom line,” Carpenter said.
“We need government support to make it work for lots of folks,” she said.
