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Champlain Housing Trust shows how CHIP increment could fit capital stacks, urges perpetual affordability covenants
Summary
Champlain Housing Trust presented project-level capital‑stack examples and recommended changes to CHIP language to ensure long‑term affordability. The nonprofit said increment financing could replace some public subsidies but would typically cover only a portion of infrastructure costs on recent projects.
Chris Donnelly, Champlain Housing Trust, told the House Ways & Means committee on May 7 that his organization supports the concept of CHIP but urged several changes to make the program more effective for affordable housing developments.
"I would suggest renaming the lower moderate income housing development to mixed income because that's what we're really talking about," Donnelly said, recommending language that preserves affordability covenants in perpetuity for units designated affordable.
Nut graf: Donnelly walked lawmakers through a real redevelopment in Shelburne — about 26 permanently affordable condominiums and 68 apartments — and showed how many discrete funding sources are typically needed. He said CHIP financing could substitute for some public dollars but would not fully replace larger subsidy sources for typical affordable projects.
Donnelly described the Shelburne project’s capital stack and said the site required roughly $5 million of infrastructure (roads, sewer, demolition and related costs). Using his modeling, he estimated CHIP increment financing might be able to service about $2 million of that $5 million in that example, leaving the remaining costs to other public or private subsidies.
"The increments — the financing from CHIP — would replace some of those funding sources and allow us to build more elsewhere," Donnelly said.
Donnelly recommended three changes to the draft bill: rename the “lower moderate income” development category to “mixed income,” require perpetual affordability covenants for affordable units, and consider but‑for tests for projects receiving CHIP financing. He also warned about placing a hard statewide cap on the education fund increment available to CHIP projects, saying an absolute cap could create a rush to file applications and skew which projects are funded.
Donnelly walked committee members through model spreadsheets comparing homeownership and rental scenarios under different increment retention percentages and affordability mixes. He told the committee the numbers showed a modest difference between a 70 percent and 80 percent retention split for market versus mixed‑income projects and that policymakers could adjust retention percentages to change incentives for inclusionary housing.
Ending: Champlain Housing Trust said increment financing is a valuable tool that can stretch public subsidy dollars, but urged statutory changes to secure long‑term affordability and recommended careful calibration of retention percentages and any statewide cap so the program remains useful in project capital stacks.
