Federal and state tax credits worth $4 million are being made available to support the development of 251 apartments in eight communities across the state over the next several years.
On Monday, April 16 the Vermont Housing Finance Agency (VHFA) board of commissioners committed federal housing tax credits and Vermont affordable housing credits to construct new housing for low-income Vermonters. The awards, made to housing trusts and public housing authorities, includes $3.5 million in 10-year federal capped credits; $319,000 in 10-year federal uncapped “bond” credits; and $173,000 in five-year state credits.
VHFA permanent and construction financing totaling $19 million was also approved for five of the projects.
VHFA also awarded federal bond credits and Vermont state tax credits to two projects that will significantly rehabilitate older buildings. Appletree Apartments in Fair Haven has 40 affordable apartments, about half of which are set aside for senior residents. Renovations by Housing Trust of Rutland County will bring the building up to current codes and significantly improve accessibility and energy efficiency. In Bristol, Housing Vermont will similarly renovate nine affordable apartments at Bristol Family Housing.
Housing tax credits are the single largest source of funding for the development of affordable rental housing. The equity raised when investors buy the tax credits awarded to projects is used to pay construction and renovation costs for subsidized apartments rented to qualifying low-income Vermonters. This system allows affordable housing developers to raise far more start-up capital than the face value of the tax credits.
This year’s credit awards are expected to create $37 million in up-front equity to pay for the costs of developing the apartments. Together with VHFA loans, this is likely to cover 69 percent of all development costs for the eight upcoming projects. Many of these projects will be developed through partnerships between regional housing organizations and Housing Vermont, a statewide, non-profit developer and tax credit syndicator.
“This year’s project applicants saw the benefits of a 12.5 percent increase in the housing credit allocation approved by Congress in March,” remarked Sarah Carpenter, executive director of VHFA. “However, VHFA still received twice as many applications for tax credits as we were able to approve. Limits on the amount of federal and state credits available each year continue to prevent Vermont from more fully addressing the severe, long-standing shortage of affordable housing throughout the state.”
The investments made by VHFA this week will fund the construction of new, high-quality apartments, most of which will reserved for Vermont households earning below 60 percent of the area median. Median income in Vermont in 2016 was $57,677, according to the latest estimates from the U.S. Census Bureau. Several projects will offer much deeper subsidies for the lowest-income households and for those at risk of homelessness.
As a condition of funding, these new projects must keep rents affordable for at least 30 years, though most of the projects have committed to remaining affordable in perpetuity.
New construction includes City Center, South Burlington; East Allen Apartments, Winooski;
Oliva Place, Lyndon; Snow Block, Brattleboro; Sykes Mountain Avenue, Hartford; and Taylor Street, Montpelier.