House committee reviews draft changes to Vermont Rental Housing Improvement Program

The House Committee on General and Housing reviewed a preliminary draft committee bill on Feb. 19 that would change how the Vermont Rental Housing Improvement Program (VHIP) provides funds to bring rental units online, legislative counsel Cameron Wood said.

The draft request (25-0838) replaces the program's current mix of grants and two forgivable-loan terms by eliminating the five-year forgivable loan and keeping only grants and 10-year forgivable loans, Wood said. The draft also changes maximum per-unit assistance from $70,000 under current language to a $50,000 cap per unit with an additional up to $20,000 available specifically for bringing a unit to Vermont access standards.

That $20,000 accessibility increment would be available only after a project first qualifies for the $50,000 award, Wood said. "My understanding of the change is no," he said when asked whether the $20,000 could be obtained without the $50,000; "the 20 would be part of the 50." He flagged the point for future clarification with the department.

The draft adds language allowing the Department of Housing and Community Development (DHCD) to subgrant funds to other state agencies, governmental subdivisions and nonprofit partners and would exempt entities carrying out that subsection from certain licensed-lender requirements, Wood said. It also replaces an existing requirement that a landlord coordinate with "a nonprofit housing partner" with coordination with an entity "approved by the department."

Under current program text, grant recipients must lease rehabilitated units to prioritized populations (for example, people exiting homelessness). The draft keeps those targeted leasing requirements for grants but removes them for 10-year forgivable loans, which would instead require that the landlord charge an applicable fair market rent and maintain that term for the loan period.

The draft also changes forgiveness mechanics for loans: where a prior provision provided a 10% forgiveness credit per year, the draft replaces it with a prorated credit (language to be clarified), and it creates a revolving fund so loan repayments that return to the department can be reused for future awards.

Committee members pressed for clarifications on eligibility and intent. One member asked whether an inhabited accessory unit (for example, a mother-in-law unit already in use) could access the accessibility increment; Wood said the current drafting appears aimed at bringing units "online" and that the committee should flag language if it does not match their policy intent.

Why it matters: VHIP is a primary state tool to subsidize rehabilitation or creation of rental units. Changes to loan terms, qualifying populations and per-unit caps affect how quickly units can come to market and which households are prioritized.

Next steps: Cameron Wood told members the draft is iterative and that legislators will be asked to identify sections they want to "report on" and work with legislative counsel and the administration on clarifying language before the committee marks up the bill.