VHFA warns down‑payment assistance is running short as tax‑exempt bond capacity tightens
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Summary
Nora Collins, executive director of the Vermont Housing Finance Agency, told the committee VHFA has exhausted this year’s state tax‑credit sales that funded its Down Payment Assistance program and asked for a targeted extension; she also warned that declining bond cap and one‑time funding have put tax‑credit‑leveraged development capacity at risk.
Nora Collins, executive director of the Vermont Housing Finance Agency (VHFA), told the House committee that while many recent programs have produced homes, the agency faces limits in bond cap and tax‑credit resources that threaten ongoing programs — most immediately the Down Payment Assistance (DPA) program.
Collins framed the scale of need before the committee, saying the state needs roughly 30,000–40,000 homes and that about three quarters of the shortfall is for units affordable at under 80% of area median income. She described how tax‑exempt bond authority enables 4% tax‑credit deals (typically covering about 30–37% of development cost) while competitive 9% credits can cover about 65–75% of a deal, and warned the committee that unused bond volume has led to losses: “as of midnight, at the end of the year, we are now starting to lose some money again,” she said, noting an $11,000,000 reduction tied to bond cap allocation if not addressed.
On the Down Payment Assistance program — a state tax‑credit funded 0% loan that provided up to $10,000 to eligible first‑time buyers — Collins said VHFA has sold the last of the credits this fiscal year and repayments have fallen as refinances declined. She summarized program impact: VHFA financed roughly 2,100 DPA homes over 11 years and estimates the program helped generate about $137,000,000 in homeowner wealth statewide. Collins asked the committee to include language in the miscellaneous tax bill to allow VHFA to sell tax credits for an additional five years so the program can recover, saying, “I’ll give you till May before I do that,” about closing or winding down the program.
Collins also described the state’s middle‑income programs (a $10,000,000 rental revolving loan fund and a $24,000,000 middle‑income homeownership fund) and noted operational lessons — for example, how mortgage lenders and credit unions have stepped up with 20‑year products and how program rules are being adjusted for roommate and employer‑sponsored housing projects.
Next steps: VHFA said it will seek legislative language in the miscellaneous tax bill to extend its authority to sell tax credits; the committee may consider that request when it produces its recommendations to Ways and Means.
