Housing costs in Vermont have become such a pressing problem that they’re now part of the policy conversation about business growth, jobs, and the state’s declining population.
Last year, Vermont lawmakers authorized a $37 million revenue bond for affordable housing. Sen. Michael Sirotkin, who leads the Senate committee on Economic Development, Housing, and General Affairs, said Tuesday he’d like the state to do more.
“Everybody and his brother and sister is saying housing is a problem,” Sirotkin said Tuesday at a hearing about affordable housing proposals and projects.
“It’s a solution to a lot of things,” Sirotkin said. “If there’s a way of doing more and we can think of it, I’d like to jump on that. I’d like to do something big in housing.”
Gov. Phil Scott has proposed adding $1 million to the Vermont Housing Incentive Program, or VHIP, a rental housing rehabilitation program that pays apartment owners incentives to fix up and weatherize their properties. He also proposed eliminating the land gains tax and adding $200,000 to a program that encourages downtown housing development.
Housing advocates said the most pressing need is restoring the budget of the Vermont Housing Conservation Board, a nonprofit created with the dual goals of affordable housing construction and land conservation. By statute, VHCB is supported by half of the money collected through the property transfer tax, which is 1.45 percent of the property sale price. But in recent years, much of that money has been used for other purposes, reducing VHCB’s share.
The Scott administration’s FY 2020 budget included a $1 million cut to VHCB’s FY 2019 budget, to $14.4 million.
VHCB Executive Director Gus Seelig told Senate Economic Development Committee members Tuesday that it was important to restore at least that $1 million to VHCB. VHCB has been level-funded between $14 million and $15 million for the last five or six years, said Chris Donnelly, director of community relations for Champlain Housing Trust. Under state statute, VHCB should get $21.8 million from property transfer tax revenues, Donnelly said.
“We’re seeing more and more research that housing is critical to peoples’ well-being and health overall in the long term,” Seelig said. “Diverting this money elsewhere, I know it always goes to important things, but I doubt that you would get the lasting benefit and the high return on investment that you get from all the VHCB-funded projects.”
Sen. Alison Clarkson, D-Windsor, said she was committed to restoring VHCB’s share of the tax revenues.
“That’s where we step in, fully funding you,” she said.
Josh Hanford, the state’s deputy commissioner of housing, outlined the governor’s other housing proposals. Hanford said the $1 million for the VHIP would enable property owners to rehabilitate at least 122 units of housing that are now vacant. Grants from the state would have to be matched at 200 percent by the developer.
“I see it in communities all over the state,” Hanford told committee members. “Right now their options are to borrow against that property, and they’re just not doing it. We think the government being part of the solution here, a small incentive, if we can get that sort of impact, is worth a try.”
Increasing the Downtown and Village Center Tax Credit Program would help developers put apartments in vacant historic downtown buildings, increasing density and improving downtowns, Hanford said.
“We have to bring our existing units that are off-line into use,” he said. “We’re not making progress there. We need some new innovative ways to try to turn this around.”
Clarkson said a recent rental housing study in Woodstock found an immediate need for 300 units.
“We have vacant second- and third-floor space in our wonderful historic downtown going unused for a variety of reasons that would be significantly affected by this kind of program,” she said. “My concern is, is this enough? These units are unused for reasons; is this incentive enough for the problems they’re going to have to be addressing?”
Seelig also gave lawmakers a status report on the $37 million housing revenue bond passed last year. VHCB has committed $24.8 million that will leverage another $140 million through programs like the low-income housing tax credit and public-private partnerships, he said. The rest of the money will be allocated by the end of 2019.
VHCB’s goal is to build 550 to 650 homes with the bond. So far, Seelig said, the money has gone toward 21 projects including about 550 homes in nine counties. The first 86 families have moved into three developments, and 240 homes are now under construction, he said. Another 200 will start construction in the summer and fall.
Seelig said the governor’s office and lawmakers had asked VHCB to focus the bond money on providing housing for the most vulnerable members of society.
“The bond has enabled us to develop more units for that group between above 60 percent of median and up to 120 percent, which we have generally served to a much lesser degree,” he said.
Brenda Torpy, CEO of Champlain Housing Trust, said research shows the leading cause of stress and anxiety in Vermont families is housing costs. She asked lawmakers to make sure the bond isn’t seen as a replacement for the money VHCB isn’t getting from property transfer tax revenue.
“The purpose of the bond, as we understood it, was because we are falling so far behind and needed to catch up,” she said. “The bond has worked very, very well and has engaged, it seems, larger developments that are public-private partnerships. Don’t make it a replacement.”
