10% for Vermont Program - March 21, 2024

Treasurer Mike Pieciak spoke to the Senate Economic Development Committee on Thursday morning about “10% for Vermont,” a local investment program.

The program authorizes the Treasurer to invest up to 10% of the State’s average daily cash balance for economic development in Vermont.  As noted in an announcement from the Office of the State Treasurer “the State’s average daily cash balance has grown substantially in recent years due to increased state revenues allowing the program’s lending capacity to expand from $39M to $100M and then expanded to $115M.  In total, when combined with funds that were not committed from the original program, there is now $85M available to support local economic development. 

The Treasurer’s office and the Local investment Advisory Committee (LIAC) have identified housing, the reduction of Vermont’s carbon footprint, and social equity as lending priorities under the expanded program.  Projects in one, or multiple of these areas, will be given funding priority.   To ensure that the program supports economic development, credit facilities will be available at favorable interest rates to nonprofits, instrumentalities of the State, municipalities, or similarly situated organizations.”  There are short-term loans less than 5 years at 1% interest. They are also available in terms of 5 to 10 years at 1.5% and 10 to 20 years at 2%. Any loans over 20 years are at a 2.5% interest rate. Pieciak noted that the primary objected it to get the money back to the State.  The focus is on ‘low risk’ investments that meet the established priorities. 

As for climate action, Pieciak noted that the arrangements with the bond banks are focused within the housing designs themselves and in many cases, such as funding to move homes out of flood plains.

As for social equity, this again is blended into the housing projects that support community development, establishing pathways to ownership and housing. More on social equity will be coming later in 2024.  

Pieciak summarized the range of topics for the Committee to include senior housing, small unit housing projects, manufactured homes, economic and economic impact projects that can leverage the money.  He noted that there is quite a variety of projects ranging from $100K to $8M.

Seth Leonard (Managing Director of Community Development, Vermont Housing Finance Agency) spoke next to the Committee about 10% in Vermont Whole Community Housing Needs which, as he described, comes at the “perfect time.” $39M from this program is supporting projects with over $217M in development costs. As noted by the Treasurer, this funding will cover traditional affordable housing, economic impact housing, small & emerging developers, homeownership, manufactured home communities.

Leonard provided some insight into why subsidized debt makes such a difference:

  • Impacts key economic development and innovation projects across the state that are not candidates for traditional housing subsidies.
  • Provides roughly 30% improvement in Debt Coverage Ratio (DCR). A project with a DCR of 1.10 with LIAC would be 0.84 otherwise, for example.
  • WHFA’s deeply affordable projects typically range from 0.7% debt as a source of funding.
  • Investments as part of Traditional Affordable Housing deals can increase debt capacity, which in turn decreases demands on limited and scarce soft funds.

For example, medium term loans between 5 – 10 years will save an estimated $18,000 per $1M loan increment in the first 5 years.

Leonard reviewed current projects including:

  • Newport Crossing, Newport
  • Benn High, Bennington
  • Delt Campus, Brattleboro
  • Fonda property, St. Albans
  • Winooski Falls, Winooski
  • Milton Cooperative, Milton
  • Willows MHP, Bennington
  • Tri-Park Cooperative, Brattleboro

A Homeownership Development was covered with a discussion about the Stonecrop Meadows in Middlebury which included a $5M short-term construction loan to support construction of infrastructure and single-family owner-occupied homes.

During the next half hour, Bill Butler (Developer. Wisdom House Village) presented the concept for the project to the Committee. This project, which is located in Jericho and Underhill on the old sawmill/Tatro property, is focused on creating a senior oriented housing development.

Housing has been identified as the single most critical issue in Jericho.  An in-depth look at the housing issues identified the following needs:

 

  • Housing for seniors who wish to remain and grow old here.
  • Housing for our own children – the younger generation starting out.
  • Housing for the rest of us – teachers, town employees, service employees, aka ‘workforce housing’ for the workers on whom our economy turns; housing for the “missing middle”.

 

The vision is as follows:

  • 50-60 units
  • Mix of condo apartment and cottages (60/40)
  • Affordable market rate (missing middle)
  • Multigenerational housing with a senior emphasis, not assisted living.
  • Some services: village model
  • Supportive community
  • Stay in our community - family. and friends
  • Open up existing units for younger families.

 

Also part of the vision are plans for a “Great House”, which would consist of the following:

  • Multifamily localized density.
  • Free open space.
  • Community support and interaction.
  • Integrated services plus commercial (such as café(s)).
  • Parking under the building to allow for more open space and gardens and increased safety.
  • Reduced autos and auto circulation; proximity to surrounding services.
  • Keep affordable (middle income/market rate).
  • Example concept of an all-weather central atrium garden from Vancouver BC co-housing community.
  • Example of Red Lion Inn in Stockbridge MA demonstrated the ability of such a larger scale structure to enhance the village character.

 

Butler also reviewed the plan for Wisdom House at Riverside in Underhill Flats. The planning for Riverside began in earnest in 2004 with a series of public forums, planning fairs, ‘charrettes’ and professional input resulting in a vision for the area being developed.

 

Leanard’s wrapped up with the following “few thoughts.” Local land use policy is a more powerful tool for limiting housing than it is creating it, he stated. He cautioned legislators to “be careful” in the way they wield policy when it comes to housing. The single most impactful thing a community can do is add financial resources or reduced costs for housing, he claimed.

He directed them to:

  • Support projects leverage unique state/federal sources.
  • Establish a local ‘housing trust fund’ or a local/regional housing bond.
  • Reduce the costs associated with permitting and local processing.
  • Include housing and community development projects.

 

He closed by saying that incremental additions of housing in primarily market rate buildings can unlock resources for all types of housing.


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