In the last three years, the Legislature has appropriated roughly $370 million to address what may be Vermont’s biggest need: housing.
“The need is really immense,” said Chris Donnelly, director of community relations for the Champlain Housing Trust.
Pre-pandemic, the state estimated that Vermont needed another 5,800 homes, half for rental, half for purchase.
“We’re sure that was an undercount,” said Maura Collins, executive director of the Vermont Housing Finance Agency, because census surveys weren’t capturing all Vermonters.
Donnelly said the waiting list for a rental apartment offered by the Champlain Housing Trust is 11 months. “We have a lot in the pipeline because of the Legislature’s action, but there’s still this pent-up demand,” Donnelly said.
This past session the Legislature appropriated $85 million to housing for fiscal year 2023, which begins on July 1. It also made major investments in fiscal years 2021 and 2022, including $176 million for affordable housing and $12 million for rehabbing approximately 400 housing units.
“The purpose was to get housing done as quickly as possible and, initially, that had to be done by the end of that year, a crazy six- to nine-month deadline for creating housing,” said Jennifer Hollar, director of policy and special projects at the Vermont Housing and Conservation Board. “Typically, it takes two years, maybe three years, for housing to get permitted, financing assembled, permitted, and actually get the doors open.”
Between fiscal years 2022 and 2023, Hollar said, her organization will have received $240 million for additional housing, and so far has committed $106 million of that money. She said the projects funded last year are just finishing up construction now or will be under construction in the next year or two.
Hollar said the $240 million will create 609 apartments, 273 of them dedicated to people experiencing homeless, and an additional 80 shelter beds and 15 beds at recovery residences. In addition, she said, the organization has funded 51 homes for people to buy, and has paid for the rehabilitation of housing.
“We’re going to do quite a bit of good with that money, and it will take time to get there,” said Rep. Thomas Stevens, D-Waterbury, chair of the House Committee on General, Housing and Military Affairs. “We’re very excited and proud of being able to have this money primarily from the federal government, but not solely, and be able to invest it in housing in a way that is unprecedented. We’ll see the fruits of that over the next couple of years as these projects get built.”
Collins said that last year, just about all the money went to house people who had no housing. This year, the focus shifted to rehabilitating rental properties and investing in construction of new homes, which federal and state governments have historically not funded. In addition, Collins said, the Legislature changed permitting to make development easier, more predictable and more affordable.
“We can move that money in the next year or two and we can have those homes,” Collins said.
Pre-pandemic, the Legislature appropriated, on average, $45 million a year to increase the supply of housing.
“We are looking for a number of groundbreaking and ribbon-cutting ceremonies that show that these are dollars that are getting out into these communities,” Donnelly said.
This year, the Legislature appropriated $15 million in subsidies for contractors who build homes that cost more to construct than they will appraise for. If money is left over from that fund after grants are awarded to contractors, middle-income buyers would get subsidies.
“We are already hearing a lot from developers about their interest in the program, and so there is quite a pipeline that we anticipate,” Collins said.
Where the rubber meets the road
One of those developers, Thomas Getz Jr., is more cautious about the potential impact of the program.
“By itself, it won’t make a huge dent, but I think what it can do is show the potential for how this type of development can work,” Getz said.
Getz, the CEO of Summit Properties, said his company hopes to use the grants to build affordable units for sale in Middlebury on 35 acres acquired by Middlebury College.
“We’ll be able to take a house or a condo in Middlebury that might cost $420,000 to build and, if we can use this subsidy money, be able to sell that for $320,000,” Getz said. “It’s an exciting time to be in affordable housing in Vermont. I have a feeling that there is going to be a huge demand for this program, and you’re going to see a lot of cool proposals.”
Legislators also appropriated $1 million to assist first-generation home buyers in making down payments, and directed $4 million in grants to mobile-home and mobile-home park owners to fix homes and foundations.
They provided $20 million in grants or loans to landlords to fix housing that is not up to code so that it can be brought back on the rental market, and to create accessory dwelling units.
“People are living in houses that are bigger than they need as families become empty nesters,” said Sen. Michael Sirotkin, D-Chittenden, chair of the Senate Committee on Economic Development, Housing and General Affairs. “They can easily convert a garage or an upstairs or a basement into another unit without having to develop a whole new unit from scratch.”
Landlords receiving the grants or loans must give preference to people who recently experienced homelessness, or to refugees, or to people making less than 80% of median area income when they rent out the refurbished units. They may not charge more than fair market rent as defined by the U.S. Department of Housing and Urban Development. In the case of accessory dwelling units, they may rent to anyone at market rates.
Jim Bradley, president of the Vermont Builders and Remodelers Association, is skeptical that all this money alone will meet the state’s housing needs.
“Taking a big lump of money and applying it toward certain measures isn’t going to get the job done,” Bradley said. “You can go ahead and put a lot of money toward offsetting the cost of a house as far as the materials are concerned, but if there’s not the laborers to build it, who’s going to build it?”
Sirotkin agrees that labor is a challenge.
“Now comes the test of whether the rubber meets the road,” Sirotkin said. “Do we have the labor ability to do all this construction in a timely fashion? A lot of this money is federal money. It needs to be obligated in the next two years. The construction needs to be finished in the next four years.”
Want to stay on top of the latest business news? Sign up here to get a weekly email on all of VTDigger's reporting on local companies and economic trends. And check out our new Business section here.