Affordable-housing developers urge restoration of VHCB funding as project pipeline faces pause

Angie Harbin, executive director of Downstreet Housing and Community Development, and Andrew Winter, executive director of Twin Pines Housing Trust, told the House Committee on General & Housing on Jan. 13 that ongoing state funding and federal tax-credit financing are essential to building permanently affordable housing across central and northern Vermont.

Harbin said Downstreet operates about 450 apartment homes and 85 manufactured-housing lots across Orange, Washington and Lamoille counties and currently has 69 perpetually affordable units under construction representing roughly a $38,000,000 investment. She said roughly one quarter of that recent project financing came from Vermont Housing and Conservation Board (VHCB) state funds and that those state funds are leveraged to access federal dollars. “We have a crisis level shortage of housing in Vermont, and the only way to address this is to build more housing,” Harbin said.

The organization warned the committee that an anticipated redirection of $30,000,000 in ARPA “sweeps” dollars to VHCB did not materialize late last year, creating a potential pause in VHCB-funded activity. Harbin said that pause threatens projects in predevelopment and could slow the multi-year housing development pipeline. She also told the committee that recent non-homestead property tax increases and rising operating costs are squeezing margins for affordable housing providers.

Winter described Twin Pines’ portfolio and recent projects in the Upper Valley, including conversions and new construction that serve seniors, families, veterans and people experiencing homelessness. He said Twin Pines recently converted a 67-room hotel into 40 units at an estimated development cost of about $12,000,000 (approximately $331,000 per unit) and that hard construction costs for some recent multifamily projects have been about $480,000 per unit. Winter noted that the organization and its regional partners rely on a mix of federal low-income housing tax credits, VHCB and housing finance agency dollars, and private low-cost capital from employer-led funds.

Both presenters explained how the federal low-income housing tax credit (LIHTC) program works in practice: states award competitive 9% and noncompetitive 4% credits through the state housing finance agency; developers sell credits to investors or syndicators to raise equity for projects; and the equity is paired with other subsidies to close project financing. Harbin said VHCB gap funding is often the decisive subsidy that allows developers to close on LIHTC-financed projects.

Committee members asked about specific cost drivers and accessibility. Harbin estimated an all-in per-unit development cost of about $550,000 (including hard and soft costs) and said newer projects are being built to higher energy-efficiency and accessibility standards. Winter said virtually all of Twin Pines’ new construction is designed to be accessible, with a typical set-aside of roughly 10% of units fully ADA-accessible and broader commitments to universal design where feasible.

Both speakers also raised non-financial barriers: the cost of extending municipal water and sewer to remote sites (Harbin gave an example of an infrastructure connection estimated at about $5,000,000 for a site in Barre) and appeal processes under Act 250 and local zoning that can delay projects. Harbin referred to Act 250, the 2023 Home Act, and Act 68’s property-tax formula in explaining how statutory and tax changes affect project feasibility.

Neither presentation proposed specific legislation to the committee during the hearing; the witnesses asked lawmakers to preserve and restore predictable state funding for VHCB and to consider infrastructure and tax policy impacts on affordable-housing development.

Downstreet and Twin Pines also described several specific programs and projects: Downstreet’s Foundation House recovery housing, its role managing the Welcome Center emergency shelter in Berlin, ongoing predevelopment for flood-impacted communities (Barre, Johnson, Plainfield), a planned homeless-services hotel acquisition in Barre, and a planned merger arrangement with Lamoille Housing Partnership. Twin Pines highlighted recent openings in White River Junction and Hartford, use of the Upper Valley Housing Fund (a $10,000,000 local employer capital pool), and a Woodstock redevelopment that leverages 2023 density/parking rule changes to increase units on an existing site.

Harbin and Winter both urged continued support for VHCB and the state housing finance agency, saying interruption of state gap funds would reduce the ability of nonprofits to leverage federal tax credits and other financing. The committee did not take votes; members indicated they will review an upcoming housing report from the Agency of Commerce and Community Development and the administration’s legislative package in coming days.