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VHFA awards millions in affordable housing tax credits for upcoming construction but rental housing proposals outweigh available credits 2 to 1

By: Leslie Black-Plumeau on 4/18/2017

On Monday, April 17, the Vermont Housing Finance Agency (VHFA) Board of Commissioners committed federal Low-Income Housing Tax Credits (LIHTC) and Vermont Affordable Housing Credits that will provide almost $37 million in upfront equity to construct and renovate housing for low-income Vermonters over the next several years.  The $2.5 million in ten-year federal capped credits, $610,000 in ten-year federal uncapped “bond” credits and $485,000 in five-year state credits will support the development of 272 affordable apartments in 11 communities across the state. VHFA permanent and construction financing totaling $7.2 million was also approved for 5 of the projects.

The equity raised when investors buy tax credits is used to pay construction and renovation costs for apartments rented to low-income Vermonters. Housing tax credits are the single largest source of funding for the development of affordable rental housing. This year’s credit awards are expected to cover 55 percent of all development costs for the 11 upcoming projects. 

“This year VHFA faced twice as many applications for tax credits as we could approve,” explained Sarah Carpenter, Executive Director of VHFA. “Although all of the projects under consideration would help expand Vermont’s extremely tight supply of affordable rental housing, limits on the amount of federal and state credits available each year hamper our state from more fully addressing this long-standing shortage.” One remedy would be passage of the $35 million housing bond proposed in Governor Scott’s 2018 budget and currently under consideration by the Vermont Legislature.

The investments made by VHFA this week will fund the construction of new apartments that will be affordable for the long-run in Burlington, Putney and South Burlington. They will also pay for complete renovations and secure the long-term affordability of existing apartments in Brattleboro, Bristol, Hardwick, Middlebury, Montpelier, Newport, Poultney and Springfield.  Many of these buildings will be developed through partnerships between regional housing organizations and Housing Vermont, a statewide, non-profit developer and tax credit syndicator.

Nineteen new Springfield apartments for low income renters will be constructed as part of the redevelopment of the historic, mixed-use Woolson Block building in the city’s downtown area. Currently in a state of disrepair, the building will be renovated to include 15 affordable apartments and 4 service-enriched, transitional housing units for youth between the ages of 18 and 24 who are homeless or at risk of homelessness. Springfield Housing Authority is the sponsor for this project.

Three historic buildings in Hardwick Village will be rehabilitated to maximize energy efficiency and ensure the long-run durability and affordability of 18 apartments for low income renters. This project is sponsored by Lamoille Housing Partnership.

The Putney Landing project will create 23 affordable apartments for low and very low income renters. Eighteen apartments will be constructed and five additional apartments created through renovations at the existing Noyes House. The project will be developed by Windham and Windsor Housing Trust.

South Burlington’s “City Center” (pictured) will be the location of a new service-enriched residential building providing 29 apartments for low income seniors and another 10 market rate units. Cathedral Square Corporation is developing the project with Snyder-Braverman Development Company. 

In Burlington's large “Cambrian Rise” project on North Avenue, housing credits will help create 52 apartments for low income Vermonters and 24 additional market rate apartments. Champlain Housing Trust is sponsoring this project.

At the same meeting VHFA’s Board of Commissioners awarded Vermont State Affordable Housing Credits to 7 affordable rental housing development projects across the state. One of these projects, City Center Senior in South Burlington, also received federal allocated housing credits. The other 6 projects are acquisition/rehabilitation efforts, almost all of which will receive federal bond credits to help cover costs. They will generate 94 affordable apartments in Brattleboro, Bristol, Middlebury, Montpelier, Newport and Poultney.

The VHFA Board also awarded $85,000 of Vermont State Affordable Housing Tax Credits to two homeownership developments in Colchester. This will generate about $390,000 to keep the sales price of 18 condominiums affordable for eligible buyers.

In addition to housing credits, other funding sources for these developments include permanent financing provided by VHFA as well as grants and loans from the Vermont Housing and Conservation Board, the federal HOME program, the National Housing Trust Fund, the Federal Home Loan Bank’s Affordable Housing Program, local housing trust funds, NeighborWorks, the Vermont Community Development Program and USDA Rural Development.

The Vermont Legislature created VHFA in 1974 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 8,600 affordable, safe and decent rental units.