VHFA urges flexibility, middle‑income program consolidation and continuation of first‑generation homebuyer grants

Laura Collins, executive director of the Vermont Housing Finance Agency, testified April 2 that state support remains essential to leverage federal tax credits and to preserve multiple housing programs the agency administers. Collins asked the committee for statutory and funding flexibility to deploy programs efficiently and to avoid losing federal tax credit opportunities.

Collins reviewed several items in the House budget text. She said the GovRec included $15,000,000 for two middle‑income programs — a homeownership program and a middle‑income rental program — but the House reduced the homeownership program to $10,000,000 and the rental program to $7,500,000. Collins recommended a contingency or “waterfall” approach (as used in prior budgets) that would allow VHFA to open one program if only a smaller sum were available, rather than opening two undersized programs that would not meet statutory program requirements.

Collins also urged retaining a first‑generation homebuyer grant program that VHFA has run for the past three years. That program has typically been funded through annual appropriations; Collins proposed using a sale of state tax credits as an alternative funding mechanism. She explained that the tax credit vehicle would permit VHFA to sell a five‑year block of credits (totaling $1,250,000 in tax credits that historically translates to roughly $1,100,000 in sale proceeds) to finance down‑payment grants for first‑generation buyers. Collins said the program has reached younger households and a higher share of borrowers of color than VHFA’s mortgage book overall, and she urged the committee to preserve funding by adding the mechanism or an appropriation in the budget.

On the rental revolving loan fund, Collins asked for policy flexibility in statute (a rental program rent cap and other eligibility rules) so VHFA can operate efficiently and scale projects with municipal and private partners. She described the rental revolving loan fund as an efficient subsidy: at current program parameters the VHFA subsidy averages under $40,000 per unit and, when blended with private and municipal contributions, can attract additional capital and reduce developers’ borrowing costs. The program requires minimum affordable‑use periods tied to loan terms (VHFA staff explained loans are structured as 30‑year loans with an additional three years of affordability after payoff in many cases; the statute requires at least seven years of affordability for some loans).

Collins asked legislators to consider merging the two middle‑income programs into a single program to simplify administration and maximize impact if available state funding is limited. She said VHFA and its partners have shown the agency can translate state one‑time investments into significantly larger federal and private investments when state program support is available.

Committee members asked technical questions about the tax‑credit sale mechanism and program thresholds. Collins said VHFA can provide statutory language and implementation details, and she requested earlier insertion of certain policy changes (already agreed to in other vehicles) so VHFA can proceed with pending closings and loan commitments.

Collins concluded by reiterating that VHFA’s work leverages state and federal tools to produce units or grants and that predictable state support increases the effectiveness of federal tax credits and private capital.