Housing package: tax‑credit increase, VHIP and manufactured home funding, infrastructure fund and two VHFA middle‑income asks

Commissioner Alex Farrell of the Department of Housing and Community Development outlined multiple budget requests on Feb. 20 that the department said are designed to accelerate housing production and preserve existing units across Vermont.

Key requests and rationale: Farrell told the House Commerce & Economic Development Committee that the department seeks to raise the annual allocation for the downtown and village center tax credit program from $3 million to $5 million as permanent forgone revenue, citing the program’s leverage. “By its very nature, these tax credits require a high level of private investment,” Farrell said, adding the most recent leverage figure the department has seen is “about 17 to 1.”

Permanent programs and staffing: Farrell also asked to convert successful programs from one‑time to base funding. For the Vermont Home Improvement Program (VHIP), a program that rehabilitates and repurposes existing housing stock and rehoused people experiencing homelessness, the department requested $4 million for grants plus $300,000 to fund two permanent positions to administer the program (the department said the $300,000 is budgeted at $150,000 per position). Farrell said VHIP has produced more than 1,000 units in roughly four years and that the average grant award is about $39,000.

Manufactured homes: For the Manufactured Home Improvement and Repair Program (MRR), which funds repairs, infrastructure improvements and expansion in manufactured home communities, the department requested $2 million in annual grants and $150,000 for one permanent staff position to sustain administration.

Infrastructure gap and VISF: The department proposed a Vermont Infrastructure Sustainability Fund (VISF) — a revolving, low‑interest loan fund run through the Vermont Bond Bank and targeted to projects that directly generate housing units. Farrell described VISF as a gap‑filling source for municipal infrastructure needs that are not easily covered by existing federal or state programs; he cautioned the proposed initial tranche will need to leverage other sources and said “9.1 on its own doesn’t go far,” indicating staff anticipate additional capital over time.

VHFA middle‑income programs: The hearing also covered two VHFA programs that received one‑time funding previously and for which the department asked new one‑time capital: a middle‑income homeownership subsidy ($15,000,000) and a middle‑income rental revolving loan fund ($15,000,000). Both are aimed at “middle income” households (income targets described as roughly 60% to 150% of area median income) and intend to relieve pressure on lower‑income rental housing by creating market‑appropriate alternatives.

Extensions and data work: Farrell closed by requesting $300,000 in one‑time funding to extend limited‑service staff for another year while the department builds capacity for Homes for All training cohorts, pre‑approved design kits for municipal permitting, and housing data dashboards. Farrell said the department’s small staffing — three permanent employees in the housing division plus several limited‑service staff — makes these conversions and extensions important to maintain program delivery.

Committee response: Members asked about program administration, coordination with VHFA and VEDA/VITA, reach to rural towns and how VISF would be structured to be accessible to small municipalities. The department said program designs prioritize low barriers for small towns and that they are coordinating with the bond bank, ANR and regional partners; no formal vote or action was recorded.

What to watch: The requests appear in the governor’s recommended budget and will move through appropriations and committee review. Staff said they will supply one‑page summaries and more detailed program guidance to the committee.