Federal and state Housing Tax Credit programs
Federal allocated credits
Federal Low Income Housing Tax Credits (LIHTC) brings substantial equity investment into Vermont's housing market.
In calendar year 2008, Vermont received federal Tax Credit authority to allocate approximately $2.6 million ("Allocated Credits").
Since the inception of the program in 1987, VHFA has awarded approximately $28.8 million in federal allocated tax credits to developers of over 4,874 units of affordable rental housing that have been built or acquired and rehabilitated through private sector equity investments.
The equity this generated for affordable housing developments is estimated at $256 million dollars.
For a variety of reasons, Vermont had always enjoyed a relatively high yield that developers get when selling their tax credits to investors. Recently the market prices for tax credits has diminished considerably, which translates into fewer dollars for housing developers, for the same amount of credits allocated to a project. This lower level of investment in housing tax credit will probably mean fewer units being built to support the strong proven demand.
Federal Bond Credits
VHFA also administers Federal Bond Credits, which are similar to the Allocated Credits noted above, but which provide a lower level of credits and therefore lower equity investment to the project.
Bond Credits are automatically provided to eligible projects in conjunction with Private Activity Tax Exempt Bond Financing.
VHFA has awarded $6.1 million in Bond Credits, generating approximately $54 million in equity; although, like the Allocated Credits, we expect a significant drop in equity pricing.
State credits
Additionally, the State of Vermont made available $400,000 in State Housing Tax Credits for FY2008. This has remained a very popular resource.
The allocation of federal and state credits is highly competitive and continues to be oversubscribed in each allocation round.
The combined effect of the State and Federal tax credit programs was private equity investment of nearly $29 million dollars in the past fiscal year alone that has been used to acquire, rehabilitate and/construct affordable housing units.
