Vermont Business Magazine The Vermont Housing Finance Agency (VHFA) Board of Commissioners announced this week that its annual federal housing tax credit award 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 approximately 55% of the project’s total development costs.
Vermont housing funders will be able to leverage the impact of tax credits and weather pandemic-related development cost increases by matching the credits with an estimated $11.6 million in funding from the Federal American Rescue Plan Act (ARPA), granted through Vermont Housing Council and Conversations.
Photo: Rendered from Central and Main to Windsor, courtesy of Windham & Windsor Housing Trust and Evernorth. Courtesy picture.
“Housing will play a critical role in allowing Vermont to fully recover from the pandemic,” said Sen. Patrick Leahy. “Leveraging private equity with public pandemic relief funds will help fundraise go further and be instrumental in solving our dire affordable housing shortage.”
Vermont has always considered matching ARPA funds with federal low-income housing tax credits (LIHTC). However, due to a federal interpretation of how these programs might work together, Vermont risked losing this opportunity to make the best use of federal funds. The Vermont congressional delegation was the first to recognize this problem and jointly led nationwide 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 for tax credit developments, with strong support from Senator Sanders and of Representative Peter Welch. Together, the Vermont congressional delegation will continue to work with colleagues in the House and Senate to resolve this challenge.
“Safe, quality and affordable housing is a human right, period,” said Senator Bernie Sanders. “At a time when we are experiencing nothing less than an affordable housing crisis in Vermont and across the country, we must ensure that federal funding to address this crisis is implemented quickly and effectively to serve working families, the elderly and all those without 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 will come from these critically important projects in 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 homeless households. The building will occupy vacant land in the heart of historic downtown 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 mixed-use building with 42 units, eight of which are reserved for households experiencing homelessness. Both projects will help meet a critical need for affordable housing in the region.
O’Brien Farms will be developed and managed by Summit Properties. The O’Brien Hillside project is a large primary development in South Burlington, featuring both owner-occupied and rental housing. The O’Brien Farms building that received tax credits this week is a mixed-income building with 47 units, including 32 affordable units, eight of which are reserved for homeless households. The project will also include a second 47-unit mixed-income building next door, which will separately claim federal bond tax credits next month.
Downstreet Housing & Community Development and Evernorth will develop Fox Run Apartments in Berlin. The City of Berlin received a new downtown designation for the district 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 will be reserved for homeless households. The project was partially funded by tax credits last year, with the understanding that sponsors may need to apply for additional funding to move the project forward.
Firehouse Apartments in Bristol, which also received tax credits last year, has been awarded additional tax credits in recognition of escalating development costs seen during the pandemic.
For the fourth consecutive year, each project promoter will reserve at least 25% of new tax credit apartments for households that are homeless or at risk of becoming homeless. To date, state and federal housing tax credits have helped develop 434 affordable apartments coupled with supportive clinical and social services for Vermonters experiencing homelessness. The 28 new apartments for households experiencing homelessness developed with this year’s awards will provide an important resource to help families transition from temporary emergency housing to permanent affordable housing.
“It’s increasingly clear that an investment in housing is an investment in our economy and the health of our communities,” Rep. Welch said. “We will continue to work to ensure that all Vermonters have a safe and affordable home.”
In addition to housing credits provided by VHFA, other sources of funding 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 go live, the Vermont State Housing Authority and several local public housing authorities will provide project-based rental assistance, which will further reduce the rent of several units, allowing projects to provide high affordability. .
VHFA is a nonprofit agency established in 1974 by the Vermont Legislature to fund and promote affordable housing opportunities for low- and middle-income Vermonters. Since its inception, the Agency has helped approximately 29,000 Vermont households with affordable mortgages and funded the development of approximately 8,800 affordable rental apartments.