Senate committee advances S.328 discussions on VHFA tax-credit extension, VIDA lending and HOA provisions

The Senate Economic Development, Housing & General Affairs committee continued work on S.328 on Feb. 10 at the Vermont State House, taking testimony on several provisions that members said are central to accelerating housing production and preserving affordable homeownership.

Maura ("Laura") Collins, executive director of the Vermont Housing Finance Agency, urged the committee to extend VHFA's authority to sell five-year tax credits for another five years and to increase the annual cap on credits available for sale from the historical $250,000 to $350,000 per year for the next five years. Collins said the change is intended to sustain VHFA's down-payment assistance program, which she said "helped roughly 2,100 Vermont households buy their first home," and described the program as a revolving loan model rather than grants. Collins told the panel VHFA has invested about $11.1 million in those households and that approximately $3.0 million had been repaid into the fund; she said five-year repayment rates that previously reached roughly 14% have fallen to about 5.5% amid higher market interest rates, a drop she said the credit extension would help cushion.

The committee also discussed language in section 8 that would permit the Treasury and other parties to consider a loan guarantee to support an off-site construction accelerator pilot. Collins cautioned that a guarantee must be callable and flagged legal and accounting questions about whether using certain state deposit programs as a backstop would convert those deposits into appropriations.

Members reviewed proposed changes to VIDA's statute that would allow the agency to lend on multiunit projects (five or more units) when invited by a financing lender, with VIDA required to consult and give deference to VHFA in cases that involve low- and moderate-income financing. Collins said the intention is for VHFA to remain the primary public lender on complex deals so as not to introduce duplicative public financing in projects already layered with tax credits, bonds and other public subsidies.

Stakeholders then turned to common-interest communities, condominiums and homeowner-association issues in sections 4 and 5. Peter Pucker of the Vermont Association of Realtors said municipalities and small-town select boards may need more support to implement planning targets and suggested leaning on regional planning commissions and the municipal planning resilience fund. The committee discussed accessory dwelling units (ADUs), proposing a possible quarter-acre lot-size threshold for HOAs as a compromise, and debated duplexing and density protections in state-funded projects.

Chris Donnelly of Champlain Housing Trust told the committee his organization supports extending the down-payment tax-credit authority and the bill's VHIP appropriation but warned section 5's drafting could unintentionally conflict with shared-equity homeownership covenants. Donnelly explained his group's model uses resale restrictions and occupancy requirements to keep homes affordable "forever" and said blanket prohibitions on covenants that limit leasing could undermine stewardship of publicly subsidized units. He and committee staff agreed Donnelly would work with staff (Cam/Cameron) to propose redrafted language and exemptions to preserve shared-equity protections while meeting the bill's intent.

No formal motions or floor votes were recorded during the session. The chair said members aim to check off sections of S.328 through the week and asked stakeholders to provide drafting language and data where requested; the committee reconvened the next morning to continue debate.

The committee asked stakeholders and staff to refine statutory language on planning targets, the scope and funding of the tax-credit extension, VIDA lending carve-outs, ADU/HOA thresholds and the leasing/covenant exemptions so that the bill can move toward a clean committee report.