House committee hears state proposal to preserve 5‑year homeless placement option in VHIP while carving a 10‑year affordability track

The House Committee on General & Housing on Feb. 20 heard testimony from Sean Gilpin, director of the Housing Division at the Vermont Department of Housing and Community Development, on changes to the state’s VHIP program (formerly referred to as BHIP) intended to preserve units reserved for people exiting homelessness while allowing a longer 10‑year affordability option for other landlords.

The proposal matters because VHIP uses relatively small public investments to bring rental units up to federal HUD standards so they can accept Housing Choice Vouchers. Gilpin said the program’s average public investment is about $47,000 per unit and that VHIP has relied on a succession of federal funds — CARES Act and American Rescue Plan — and is now being designed for state financing.

Gilpin told the committee the program originally offered two options to property owners: a 5‑year affordability commitment that includes support and placement priority for people exiting homelessness, and a 10‑year affordability option without the homelessness service requirement. He said the legislature’s last‑minute change that appeared to require homeless service provision for the 10‑year option was not the department’s intent and that the department has been granting waivers in practice so that 10‑year units can be filled from the Section 8/ housing choice voucher list when shelters or coordinated entry referrals are not available.

Gilpin described the operational problem the program addresses: voucher holders often have limited time to find a unit once assigned a voucher — commonly “between anywhere from 90 to occasionally a hundred and 20 days” — and many landlords will not accept vouchers if a unit must meet the additional federal HUD standards in addition to Vermont’s habitability rules. The VHIP grants are designed to bring units up to HUD code and then have those units rented at HUD maximum rents so voucher holders can use them.

Committee members pressed on how the 10‑year option has worked in practice and whether it reduces the pool of units available to people exiting homelessness. Gilpin said that even with a temporary universal waiver for the 10‑year option, roughly 30% of applicants still choose the 5‑year, homelessness‑focused option. He recommended a compromise: keep both options but codify an annual, published allocation process so the department, Agency of Human Services, continuum‑of‑care organizations and homeownership centers set a transparent percentage each year for how much funding is reserved for 5‑year grants vs. the remaining funds that may be used for either option.

Committee chair and members discussed settling on a concrete starting point in the statute. The committee asked Gilpin to draft statutory language that would set an initial first year set‑aside of 30 percent for the 5‑year homelessness option for state fiscal year 2026 and then require an annual published allocation and report back to the House and Senate committees. Gilpin agreed to supply revised language quickly and to provide the committee with the metrics and criteria the department would use to calculate the annual ratio.

Gilpin also told the committee the department will maintain several program features the committee had previously asked about: eligibility criteria that prioritize smaller “mom‑and‑pop” landlords (generally owners of four units or fewer), a statutory limit that funds not be used for new construction of buildings larger than five units, and the department’s plan to retain a forgivable‑loan option to reduce tax impacts for small owners. He said the department is working on a near‑real‑time dashboard to publish monthly updates about fund allocations and units coming online, and that it will continue annual reporting to the committees.

No formal vote was taken. Committee members asked for Gilpin’s revised statutory language, requested the department’s proposed metrics before 3:00 p.m. the same day, and indicated they would review the language in a subsequent meeting.

Ending: The committee directed the Department of Housing and Community Development to provide draft statutory language codifying a first‑year 30% set‑aside for the 5‑year option (state fiscal year ’26), to publish the annual allocation and to report back to the House Human Services Committee and the Senate Housing and Commerce Committee with data and proposed metrics for calculating future annual allocations.