Vermont Business Magazine The Vermont Housing Finance Agency (VHFA) Board of Commissioners announced this week that its annual award of federal housing tax credits will support the construction of 109 permanently affordable apartments in four communities across the state. The sale of this year’s tax credits to investors is expected to yield nearly $25 million in funding, which will cover an estimated 55 percent of total project development costs.
Vermont's housing funders will be able to leverage the impact of the tax credits and overcome pandemic-related increases in the cost of development by pairing the credits with an estimated $11.6 million in funding from the federal American Rescue Plan Act (ARPA), awarded through the Vermont Housing & Conversation Board.
Photo: Rendering of Central and Main in Windsor, courtesy of Windham & Windsor Housing Trust and Evernorth. Courtesy photo.
“Housing will play an essential role in allowing Vermont to fully recover from the pandemic,” said Senator Patrick Leahy. "The leveraging of private equity with public pandemic relief funds will help the funding go farther and be instrumental in addressing our severe shortage of affordable homes.”
Vermont always envisioned pairing ARPA funds with federal Low Income Housing Tax credits (LIHTC). However, due to a federal interpretation of how these programs could work together, Vermont was at risk of losing this opportunity to put federal dollars to their best use. Vermont’s congressional delegation was the first to recognize this problem and jointly led national efforts to seek a solution. Senator Leahy led bipartisan efforts to introduce the LIFELINE Act to allow states to make long-term loans with ARPA funds to tax credit developments, with strong support from Senator Sanders and Representative Peter Welch. Together, Vermont’s congressional delegation will continue to work with their colleagues in the House and Senate to solve this challenge.
“Safe, quality, affordable housing is a human right, period,” said Senator Bernie Sanders. “At a time when we are experiencing nothing short of a crisis of affordable housing in Vermont and across the country, we must make sure that federal funding to address this crisis is put to work quickly and efficiently to serve working families, seniors, and all those lacking stable housing. The good news is that when we invest in affordable housing, entire communities benefit. I look forward to seeing all the good that comes of these critically important projects across our state for years to come.”
Projects receiving federal tax credits this year include Central & Main, a new 30-unit building developed by Windham & Windsor Housing Trust and Evernorth with 23 affordable units, including six for households experiencing homelessness. The building will fill in a vacant lot in the heart of the historic town center in Windsor.
Also in the Upper Valley is Prospect Place in Hartford, developed by Twin Pines Housing Trust and Evernorth. They will build 30 affordable apartments in a new 42-unit mixed-income building, eight of which are reserved for households experiencing homelessness. The two projects will help address a desperate need for affordable housing in the area.
O’Brien Farms will be developed and managed by Summit Properties. The O’Brien Hillside project is a large master development in South Burlington, including both homeownership and rental homes. The O’Brien Farms building that received tax credits this week is a 47-unit mixed-income building with 32 affordable units, including eight reserved for households experiencing homelessness. The project will also include a second mixed-income, 47-unit building next door, which will apply separately for federal bond tax credits next month.
Downstreet Housing & Community Development and Evernorth will develop Fox Run Apartments in Berlin. The Town of Berlin received a New Town Center Designation for the neighborhood to allow for additional public infrastructure and redevelopment of the area. The project will include 30 new apartments, 24 of which will be affordable, and six of which be set aside for households experiencing homelessness. The project was partially funded by tax credits last year, with the understanding that the sponsors might need to apply for additional funding to move the project forward.
Firehouse Apartments in Bristol, which also received tax credits last year, received an additional supplement of tax credits in recognition of the escalating development costs seen during the pandemic.
For the fourth year in a row, every project sponsor will reserve at least 25 percent of the new tax credit apartments for households that are either experiencing or at risk of homelessness. To date, state and federal housing tax credits have helped develop 434 affordable apartments paired with supportive clinical and social services devoted to Vermonters experiencing homelessness. The 28 new apartments for households experiencing homelessness developed with this year’s awards will provide an important resource to help shift families from temporary emergency housing into permanent affordable homes.
“It is increasingly clear that an investment in housing is an investment in our economy and the health of our communities,” said Representative Welch. “We will continue to work to ensure that all Vermonters have a safe and affordable home.”
In addition to the housing credits awarded by VHFA, other funding sources for these developments include grants and loans from the Vermont Housing and Conservation Board, the federal HOME program, the Vermont Community Development Program, the Upper Valley Loan Fund and NeighborWorks. When the apartments come online, the Vermont State Housing Authority and several local Public Housing Authorities will provide project based rental assistance, which will further reduce rent for several units, allowing the projects to provide deep affordability.
VHFA is a non-profit agency created in 1974 by the Vermont Legislature to finance and promote affordable housing opportunities for low- and moderate-income Vermonters. Since its inception, the Agency has helped approximately 29,000 Vermont households with affordable mortgages and financed the development of approximately 8,800 affordable rental apartments.