Legislators back 30% set‑aside for homeless households in Vermont rental rehab program

Legislators and state housing officials on Monday reviewed proposed changes to the Vermont Rental Housing Improvement Program designed to preserve a pathway to housing for people exiting homelessness while keeping longer‑term incentives for landlords.

The committee discussed a compromise that keeps homelessness prioritization tied to the five‑year forgivable loan and allows landlords to choose a 10‑year forgivable loan that requires units be rented at the applicable U.S. Department of Housing and Urban Development (HUD) fair market rent. The proposal would require the Department of Housing to set aside at least 30% of annual VHIP appropriations each year for five‑year grants or forgivable loans that serve eligible households exiting homelessness.

The change matters because lawmakers said they worried landlords would shift to the 10‑year option if it removed the homelessness requirement, leaving fewer units prioritized for people leaving homelessness. “I was worried that there'd be this migration away from the five‑year program to the 10‑year program,” Representative Mark Mahalley, chair of the General and Housing Committee, said while summarizing the compromise.

Under the program as described to the committee, VHIP can fund either grants, five‑year forgivable loans or ten‑year forgivable loans to bring substandard rental units back online. The bill text discussed by the committee sets the base rehabilitation amount at up to $50,000 per unit, with up to an additional $20,000 available for accessibility or “visitable” upgrades that meet standards adopted by the state’s access board. That replaces an earlier $70,000 maximum tied to full accessibility work.

Committee members and staff said the department and nonprofit partners urged keeping coordinated entry as the pathway that connects prioritized households with available units. Language now on the table requires the Department of Housing to coordinate with local coordinated‑entry lead agencies and homeownership centers so referrals to five‑year units come through existing referral systems. Several committee members asked that the bill make clear there are no alternative “side channels” around coordinated entry for the five‑year set‑aside.

Department staff said the five‑year option requires landlords to lease to people from specific priority populations — including individuals exiting homelessness, people in refugee or immigrant resettlement programs, and people with qualifying disabilities receiving Medicaid home and community‑based services — while the 10‑year option would be limited to a rent cap (HUD fair market rent) but not the explicit leasing requirement for those groups. Officials acknowledged the statute for the 10‑year program already includes a homelessness priority but that the administration’s implementation practices had differed, prompting the legislative fix.

Officials also described operational details lawmakers asked to include in the bill: an annual recertification for property owners that attests the unit remains rented at or below HUD fair market rent and remains occupied by a qualifying tenant; spot checks and occasional site visits by the department; and a recorded covenant (a lien) on properties receiving forgivable loans that the department may continue to enforce if owners do not meet program obligations.

Lawmakers pushed for stronger reporting requirements. The chair and legislators said they want the department to report back to the committees on outcomes — for example, whether rents changed after compliance periods end and whether tenants remain housed after five or ten years — and to publish annual allocations and the amount reserved for the five‑year set‑aside on the department website.

Several committee members also sought clarity on how the department coordinates with the entities that actually make awards (often called homeownership centers or HOP providers). Department staff said the department intends to play the central role in ensuring those communication channels exist and meet regularly with coordinated‑entry lead agencies and homeownership centers.

The committee did not take a formal vote during the meeting. Lawmakers signaled broad support for the compromise language and asked staff to draft final bill text and reporting language for floor consideration.

The discussion also covered technical items — including definitions of “visitable” accessibility standards, prorated loan forgiveness credits for partial compliance periods, and an administrative revolving fund to collect any repayments — and reiterated that the set‑aside is a statutory floor, not a cap: if local need and referrals exceed 30% of an appropriation, the department may allocate more to five‑year awards.

Lawmakers said the department and committee will monitor the program’s outcomes and may revisit the policy in a future session if data suggests changes are needed.