Vermont Housing Conservation Board warns of tighter FY26 state funding, outlines projects and conservation gains

The Vermont Housing Conservation Board told the Senate Appropriations Committee on March 11 that state housing funding is entering a leaner phase after several years of unusually large infusions, and that even modest additional state support would help preserve momentum on projects and conservation work.

"We're here because you put a lot of trust in us, and you've given us a lot of priorities for you to report on what we've been doing with the funding you provided," said Gus Sealy, director of the board, opening the presentation.

Sealy and VHCB staff told senators the board has committed to projects that, when built out, will serve more than 5,000 households and that over the last four years the board helped house about 1,600 people who had been unhoused. The board estimated that housing people directly has saved the state millions compared with emergency motel placements: using figures discussed in the hearing, Sealy illustrated the savings range by noting that $150 a night for motel placements at the pandemic peak would multiply into roughly $24 million over the period cited, while a contemporary rate of $80 a night yields a roughly $10 million comparison for the same population and span.

Why it matters: VHCB said state dollars leverage other public and private capital and tax credits to build and preserve housing and conserved lands. The board showed that its state investments typically attract federal low-income housing tax credits, historic tax credits and private equity; Sealy and staff emphasized that the state share helps unlock roughly $700 million in broader investment into Vermont projects over the past years.

Key funding and program details

- VHCB reported the governor's FY26 proposal includes $37.9 million for the board's trust fund. The board said its overall resource picture will shrink in the coming year and that a pending budget adjustment could add $11 million if signed.

- Funding sources cited in the presentation included the property transfer tax, bond dollars, general funds, federal ARPA swaps and federal tax-credit equity. Staff described two types of federal tax credits commonly used: the 9% low-income housing tax credit (limited supply; cited as producing much larger equity per award) and the 4% bond credit (unlimited supply). The board said the state contribution commonly pays a portion of development costs and leverages those credits and private debt.

- VHCB staff said operating costs are under 5% of the board's budget; operating requests in the FY26 packet contained no new staff positions.

Housing types, projects and permanent affordability

The presentation cataloged a range of building types VHCB supports: new construction, condominium homeownership with shared-appreciation rules, manufactured-home infill, supportive and recovery housing, hotel conversions to apartments, emergency shelters and senior units. Examples highlighted by Sealy included a recent groundbreaking in Waterbury for residences for people with intellectual and developmental disabilities; two recovery residences in Bennington; the Holy Cross housing project in Colchester; new construction and rehabilitation in St. Johnsbury and Shelburne; and a cluster of projects in the Saint Albans TIF district (VHCB said 270 apartments are built or under construction there and that VHCB funded 49 of those units).

Sealy emphasized VHCB's policy preference for permanent affordability, saying it protects mixed-income neighborhoods and preserves the public investment over time. He used Northgate Apartments — a large, long-standing rental complex — as an example of how permanently affordable stock avoids future displacement and large replacement subsidies.

Conservation, farmland and farm viability

VHCB also described its conservation work and programs to preserve working farmland. The board said buying development rights can reduce acquisition costs by about 60% on average and allow farm transfers and expansions that sustain production. Sealy cited the Chapet brothers as an example: VHCB helped secure development rights enabling their expansion; the brothers now operate what VHCB described as roughly 3,500 acres of conserved farmland and about 28 employees. The board said it has used conservation funding for water-quality, flood resilience and public-access projects and noted a recent transfer of conserved land to the Department of Fish and Wildlife.

Rural technical assistance and grant-writing

VHCB described a rural economic development initiative — a grant-writing program for towns under 5,000 — that it said has cost roughly $1 million in staff time and contracts and has helped bring approximately $23 million in outside grants to small businesses and community projects. Sealy also highlighted a business-planning program for farms that the board funds at about $2 million a year.

Costs and construction market pressures

Committee members and VHCB staff discussed sharply rising construction and development costs. The board said full development costs for trauma-informed shelters and some apartment projects routinely reach high levels (presented examples placed many shelter and apartment projects in the hundreds of thousands of dollars per unit when all funding sources are counted). VHCB staff said they pursue lower-cost models where possible — hotel conversions, mobile-home replacements and varied building types — but that public bidding and market conditions drive costs.

Questions and next steps

Senators asked about senior housing, village-center infrastructure (water/sewer), and the long-term timeline on a housing revenue bond cited by committee members; staff said the bond has roughly 12 years remaining on its 17-year schedule. VHCB staff offered to supply detailed budget crosswalks and to meet with individual senators for follow-up on specific proposals and local projects.

No formal committee action was recorded during the VHCB presentation. VHCB staff told the committee the FY26 request and the board's financial packet were submitted electronically and that printed copies were available on request.

Ending

VHCB urged continued state support so it can complete projects in the pipeline and maintain the leverage the board says state dollars provide. "We know you'll do the best you can on the budget, and we're happy to answer more questions," Sealy said as the presentation closed.