Vermont officials outline how tax credits and bonds drive affordable housing, warn gains may be temporary

Laura Collins, executive director of the Vermont Housing Finance Agency, told the Senate Economic Development, Housing & General Affairs Committee that federal tax credits and state-directed bonding have become central to creating new affordable rental housing in Vermont.

"Both types of lie tech, both types of tax credits build the same house. The, it's rental housing. It is for people earning under 60% of the median income," Collins said, explaining the mechanics and distinctions between the 9% and 4% low-income housing tax credits (LIHTC). She said 9% awards generate roughly twice the equity of 4% awards and are competitive, while 4% credits are effectively unlimited but generate less equity per project.

The nut graf: Collins and other presenters described how a mix of federal LIHTC equity, private activity bonds, and state grants together form the capital stacks that make deeply affordable rental developments possible. They emphasized that recent one-time state and federal resources expanded the ability to use 4% credits for new construction — a change that may reverse if those funds are not sustained.

Collins walked the committee through how private activity bonds interact with LIHTC: when a project finances at least half of its development with…