Vermont Housing and Conservation Board details budget, warns rising costs and a frozen federal grant will constrain work

The Vermont Housing and Conservation Board told the House Appropriations Committee on Feb. 20 that the agency can expand housing and conservation work if the Legislature provides more funds, but officials warned higher construction costs and at least one frozen federal grant are constraining capacity.

“For the record, I’m Gus Seward. I’m the director for the Vermont Housing and Conservation Board,” Seward said at the start of the presentation, which ran about an hour. Holly Major, identified as the board’s director of policy and special projects, and Chris Banning, the board’s new chief financial officer, joined Seward to describe programs and spending trends.

The board recommended the committee support the governor’s budget proposals related to the property transfer tax and capital funding, saying state dollars continue to leverage additional public and private investment. Seward said VHCB’s long-term aim is “permanent affordability” — preserving apartments and homeownership that remain restricted to lower-income buyers or renters over generations — and that this approach yields long-term fiscal value.

Why it matters: VHCB is the state’s primary vehicle for financing affordable housing, farm and forest conservation and related technical assistance. The board reported it expects to serve more than 5,000 households through current and near-term projects and emphasized the broader system benefits of housing investments, including potential savings in emergency-room use and reduced shelter costs.

Key details and constraints

- Rising costs: Seward and Major said development costs have increased sharply. Seward noted one private-sector development with VHCB support had construction costs “a little over half million dollars per apartment,” and Major said total per-unit development costs now are “looking at 500,000 as a total development cost.” VHCB estimates its average state investment per unit across its portfolio is about $135,000 because state dollars are intended to leverage other sources.

- Leverage and tax credits: VHCB reported roughly $344 million came from tax-credit equity investors and about $85 million from project debt in the period cited; community-raised funds totaled about $32 million. Major explained the Low-Income Housing Tax Credit (9% and 4% credits) remain central to financing: the 9% credit yields substantially more equity but is limited in supply, while the 4% credit is more widely available.

- Frozen federal grant: Major told the committee that a roughly $1 million “America the Beautiful” grant administered through the National Fish and Wildlife Foundation is signed but currently frozen pending action by the federal funder, affecting VHCB’s planned 30-by-30 planning work. She said the board “does not know when those dollars will be released.”

- Program balance: VHCB said its statute requires a balance between housing and conservation spending but does not define an exact ratio. For the coming package, the board proposed allocating about two-thirds of grant/loan dollars to housing and about one-third to conservation programs; they said the split responds to housing demand but also to statutory responsibilities for working lands and rural economic vitality.

Programs and examples

Seward and Major highlighted examples across Vermont to illustrate how VHCB funds are used: buying development rights to keep farmland affordable (often reducing cost of land by roughly 60% on average), converting hotels to housing, supporting permanent supportive housing and preserving existing rental properties from conversion to market rate. Seward cited the Northgate Apartments investment in Burlington in 1990 as an example of long-term value: an original $2.9 million public investment that would cost roughly $170 million to replicate today.

The board also described conservation projects, including wetland restoration and farm purchases that both protect water quality and support farm viability. Major said VHCB spends about $2 million of transfer-tax revenue annually on the Farm and Forest Viability program and that the Rural Economic Development Initiative has spent “a little over a million dollars” in recent years and helped win about $22 million in grants for small communities and businesses.

Questions from legislators focused on the leverage ratio VHCB can achieve with additional PTT (property transfer tax) funds, the treatment of shelter projects (which are harder to leverage with tax-credit equity), and the risk that federal or earmarked funds could be reduced or frozen. When asked, Major said VHCB’s historical leverage across programs is roughly $3 of other funds for every $1 of state investment, but that leverage has declined recently because the board was required to expedite spending during the pandemic.

No formal actions were taken during the presentation. VHCB officials said they will continue to supply reports and materials to committee staff and are available for follow-up questions on specific budget items.

Ending

Seward closed by saying VHCB has a track record of moving large sums of money to projects — noting the board has not had a year with commitments below $50 million in recent years — and repeated that the agency could deploy more housing and conservation projects if the Legislature provides additional resources. Committee members scheduled a brief recess for lunch before a subsequent presentation on the tobacco settlement fund.