Champlain Housing Trust explains shared-equity model to General and Housing Committee to preserve long-term affordability

Champlain Housing Trust director of community relations Chris Donnelly told the General and Housing Committee on Friday that the trust’s shared-equity homeownership model preserves affordability by keeping a large portion of market appreciation in the property when a home is resold. The presentation, delivered during the committee’s Jan. 24 session, walked members through how subsidies, resale formulas and legal covenants work together to make ownership possible for buyers priced out of the open market.

The explanation matters because the model attempts to balance two policy goals: giving individual households access to homeownership while preserving units as affordable housing for future buyers and protecting public subsidy. Donnelly called the arrangement “a compromise,” saying it lets owners build some equity while keeping the unit affordable for the next buyer.

Under the Champlain Housing Trust model Donnelly described, the trust often brings public subsidy into a purchase to reduce a home’s sale price for an eligible buyer and briefly holds title at closing so it can place a deed covenant or land-lease restriction to preserve affordability on future resale. In a repeated numeric example used during testimony, a home initially valued at $220,000 receives roughly $60,000 in subsidy to lower the purchase price to about $160,000. If the market later values the home at $300,000, the $80,000 of appreciation is shared under the trust’s formula: 75% of that appreciation is retained by the stewardship mechanism to keep the resale price reduced, and 25% of the appreciation goes to the seller. After applying the retained appreciation and the original subsidy, the illustrative resale price for the new buyer in Donnelly’s example was about $180,000.

Donnelly emphasized that the original buyer also retains any mortgage principal they paid down during ownership and receives full credit for documented, appraiser-confirmed improvements (for example, a kitchen remodel) when the home is sold. He said renovations do not require prior permission but should be reported so appraisers can reflect their value at resale.

The trust requires buyers to complete homebuyer education, demonstrate mortgage readiness with a bank or credit union and meet an income threshold. Donnelly said the trust recently raised eligibility from 100% of area median income (AMI) to 120% of AMI to expand access in a tight market. He also said the program includes a transparent buyer-selection process that attempts to match household size to unit size and awards points for documented time on wait lists.

Committee members asked about practical issues the trust has faced: whether owners must clear changes such as adding an accessory dwelling unit (ADU) with the trust (Donnelly said no owners had requested ADUs yet and staff are discussing appropriate rules), how tax or insurance increases that raise housing costs are handled (the trust offers counseling, refinancing help and exit options but cannot fully shield owners from external market forces), and what happens if market values fall (Donnelly said such cases are rare in the trust’s experience and would be handled case by case). He also described the legal mechanism for ensuring resale restrictions: covenants or land-lease terms “that run with the land” so the affordability restrictions continue with subsequent owners.

Donnelly gave several program-scale details: he said the trust has about 1,200 shared-equity homes statewide and noted a current development in Shelburne that will include 26 shared-equity condominium units and 68 rental apartments on a five-acre site that previously held the Harborplace motel. He highlighted other funding sources the trust uses or coordinates with, naming state tax credits, the Federal Home Loan Bank, HFA down-payment programs and local subsidy. He also said earlier deals required smaller public subsidies (an initial program share of 10% in early years was increased over time to 25%) and that resale share percentages have been studied nationally to find a balance that preserves affordability while still allowing sellers to receive a portion of appreciation.

On performance, Donnelly cited national research and the trust’s experience showing lower foreclosure rates among shared-equity homeowners, attributing the resilience to lower mortgage burdens, counseling and a stable organizational relationship owners can turn to for help. He also said the trust sometimes charges a resale fee to support program operations, which may modestly raise the resale price but helps sustain the program without constant new appropriations.

No formal action or vote was taken by the committee during the presentation; members asked clarifying questions and requested follow-up on specific issues such as municipal tax impacts, developer concerns raised earlier, and the tax treatment of certain grants. Donnelly offered to provide examples and follow-up materials the committee could review.

The trust’s presentation framed the shared-equity program as one production tool among many — alongside rental subsidies, rehabilitation programs and middle-income development — that together seek to increase housing supply and preserve affordability over time. Donnelly urged the committee to view the programs as complementary tools rather than single solutions.