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Housing agencies back a state-certified affordable-housing property class to protect low-cost units
Summary
The Vermont Housing Finance Agency and the Vermont Housing and Conservation Board told Ways & Means that creating a state-administered affordable-housing property classification (building on Act 68) would help preserve thin-margin rental properties, reduce operating uncertainty and support long-term production of permanently affordable units.
For the record, I'm Chad Simmons with the Vermont Housing Finance Agency, he said as he opened testimony on the proposed affordable-housing property classification.
Representatives of the Vermont Housing Finance Agency (VHFA) and the Vermont Housing and Conservation Board (VHCB) told the Ways & Means Committee that a state-certified classification for affordable housing would add predictability to the narrow operating margins of perpetually affordable rental properties and improve application of existing valuation adjustments under Act 68.
The Nut Graf: Chad Simmons (VHFA) and Polly Majer (policy director, VHCB) said an affordable-housing classification administered by a state agency — with VHFA helping maintain the directory of certified properties — would protect long-term affordability, help small operating budgets absorb tax costs, and expand the pool of projects that could safely carry private debt and leverage state funding to build more units.
Simmons summarized VHFA’s certification work and statistics: Act 68 created a mechanism to provide a reduced property assessment for eligible affordable developments, and VHFA historically handled recertification on a 10-year cycle (the agency successfully advocated in 2023 to remove a statutory sunset). He said that between 2002 and 2023 VHFA-certified properties numbered in the hundreds and that the program served “a little over 12,000 units” in the snapshot they analyzed.
Simmons and VHFA staff cited operating data they said showed the typical household in these properties had very low income (VHFA’s slide described an average household income around $18,000 and typical monthly rent near $445). They estimated property taxes accounted for about 11% of operating expenses in the buildings they assessed. For those reasons, VHFA supports certification by a state agency and regular inclusion of single-family year-round rentals (about 23% of single-family homes statewide are used as rentals) and certain manufactured-home stock in the classification.
Polly Majer of VHCB said a property that commits via a housing subsidy covenant to perpetual affordability cannot raise rents to cover unexpected costs; that constraint makes predictable property-tax treatment important for sustaining maintenance, lowering the cost-share for debt service, and enabling more construction. “When a property makes a commitment through a housing subsidy covenant to provide perpetual affordable rents, that means that those managers have to be very judicious in how they're managing their budgets because they cannot increase their rent to cover other expenses,” Majer said.
Administrability and scope: Witnesses acknowledged the certification workload would be significant if done annually and favored a single certifying entity (the draft initially named VHFA for annual work, but witnesses recommended the Legislature identify or empower a state agency and have VHFA continue in a supporting role). They noted some housing types currently outside standard classifications — refugee housing, recovery housing, VHFA’s rental-revolving loan fund projects, and certain manufactured-home settings — need explicit consideration if the Legislature adopts the classification.
Municipal implementation: VHFA described the current process in which property managers submit certification paperwork to VHFA and then provide that paperwork to municipalities for tax-processing; witnesses said municipalities vary in capacity and that standardization and regionalization of valuation processes would reduce repeated appeals and mismatches in application of the Act 68 adjustment.
Ending: Witnesses proposed the affordable-housing classification as a targeted policy lever to preserve affordable rentals, lower risk for owners and lenders, and allow state funding to be leveraged more effectively for new construction. They asked Ways & Means to consult VHFA and VHCB about which nontraditional or temporally subsidized properties should qualify and to consider the operational burden of annual recertification.
