Senate committee hears VHFA on budget adjustment, requests authority on rent cap waivers and notes $3M reversion

Montpelier — The Vermont Senate Appropriations Committee on Feb. 14 heard testimony from the Vermont Housing Finance Agency and housing program representatives about changes in the Budget Adjustment Act and several state housing funds, including a request that VHFA be allowed to approve rent increases above a 3% statutory cap in limited cases.

Gus Selig, a staff member who presented the housing board’s update, told the committee that “they added $8,600,000” to the budget adjustment and that the housing pipeline already exceeds available funds. "We expect, in the way of applications, $37,000,000 in requests," Selig said, and he told senators the agency expects more than $60,000,000 in requests next year while available housing dollars would be “in the low $20,000,000" if additional funds are allocated.

The context: VHFA and affiliated housing programs manage multiple state appropriations and loan programs that support new construction, preservation, shelter expansions and services for people with intellectual and developmental disabilities. The testimony outlined how limited state funding and rising costs are straining projects ready to close and the need for administrative flexibility in a high-cost environment.

VHFA executive director Maura Collins described two specific BAA issues to the committee. First, VHFA’s rental revolving loan fund — originally funded by a $10 million state appropriation — has been heavily subscribed. "I don't know if it's good or bad news that we spent all the money in 1 board meeting and in 1 day spent the whole $10,000,000," Collins said, adding that the state allocation attracted more than $20,000,000 from municipalities and employers because the program provides preferred loan terms when local partners contribute. The program targets households earning above typical federal tax-credit limits and helps finance "middle-income" rental housing.

Second, Collins asked the committee to approve BAA language that would let VHFA consider petitions from property owners to exceed the program's 3% annual rent-increase limit when owners document cost increases beyond their control. "We want to keep a 3% target... but if they have evidence that their costs have gone up by more than that, then to allow VHFA the authority to allow a higher rent increase for that year that they can prove it if we are satisfied that that is truly beyond their control," she said. Collins emphasized VHFA’s compliance capacity, noting the agency monitors thousands of units and has a six-person compliance team that inspects units and enforces affordability terms.

Collins and Selig also discussed smaller, related budget items. The House language includes $2.8 million intended to complete pilot projects serving people with intellectual and developmental disabilities; Collins said that allocation would finish work on projects that will house about 27 people under a mix of group living and independent apartments with services. VHFA noted an uncommitted balance of about $13.7 million that would increase if the House funds are added.

Collins described a separate weatherization repayment assistance pilot (WRAP) that was funded with $9 million in 2021 but has seen slower uptake than expected. VHFA told the committee it plans to revert $3 million from that program back to the state because the pilot’s rollout has been slower than anticipated and the remaining funds are sufficient to keep WRAP operating through 2026. "Some of that [slow uptake] because of workforce constraints. Some of that because of other incentives that have been available for weatherization," Collins said. She said the Public Utility Commission extended the program through the end of 2026.

Committee members asked timing and process questions. Selig said VHFA has an application deadline coincident with the committee meeting and that the VHFA board is scheduled to act on underwriting in May and June, with allocations possible before or shortly after the July 1 fiscal year start if the legislature and governor finalize the budget.

The session did not record any formal Senate vote on the BAA language during the hearing. Presenters and senators discussed administrative authority, oversight and program details; VHFA requested the authority to grant case-by-case waivers to the 3% rent cap when documented cost hikes make the 3% limit infeasible.

Looking ahead, VHFA said additional appropriations would likely increase interest in its programs and that projects already in the pipeline may not proceed without timely state funding. The agency also offered to share a written analysis of the WRAP pilot with the committee.

The committee did not take formal action on the items at the hearing; senators asked staff to review bill text and return with updated copies for further consideration.