Vermont Legislature SmartTranscripts:

[Michael Marcotte (Chair)]: Good afternoon, everyone. This is the Lamoille House, CEO of Economics and Economic Development. It is Wednesday, 01/28/2026, at 03:04 in the afternoon. So for our last twenty five minutes or so, had more callers with us from BHFA, talked a little bit about the program it has, some thoughts that she had. Laura, welcome. Thank you for joining us.

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: You always have thoughts. Thank you very much for having me again. Yes. Laura Collins with Vermont Housing Finance Agency. I'm here to give a program update. This is a program I call a DPA program, down payment assistance. Technically, if you go to our website, you'd call it the assist program because our marketing people don't wanna call things acronyms. I don't know. But, it assists home buyers to buy their first home. This, has been supported for the last eleven years through the sale of state tax credits. And way back when in 2014, it was actually born in this committee. It was the Lake Champlain Chamber of Commerce. It was in a economic development program where employers were clamoring for ways to have their employees be able to buy a home so that they could feel more rooted and stable and stay in their jobs longer. And through a series of conversations, I'm gonna tell you how the program came to be. I'm gonna tell you what's been happening for the last several years with it. I'm gonna tell you that this year is the last year that we're able to sell credits just to support the program, and that's fine. That's by design. Because what we were doing is for the last eleven years, we were capitalizing a revolving loan fund. But I'm also gonna tell you about the way the housing market is right now and why that's not performing the way we designed. And so I am asking for the ability to be able to sell these credits for five more years to grow that revolving loan fund a little bigger than we had originally modeled and why we need that. And I'm hoping to do that today even though you don't see that in legislation in front of you right now. Because I've been in this building a few times, and I have a feeling you're gonna see this in the miscellaneous tax bill. I also think you may see it in a senate housing bill. And in a few weeks, when these bills cross your desk, I'm probably gonna be out of the office for a little bit. And so I was hoping that I could come talk about it now so that when you have questions, you can ask my staff, but you've gotten the glossy sales pitch from me now. So that's what we're doing. So back in 1987, the federal government came up with federal tax credits. Brilliant idea. Largest creator of affordable rental housing in the nation. It's the fifth largest tax credit program that our country has. It's created millions of homes affordable across the country. And in 2000, the state of Vermont said, hey. That's a pretty good looking program. Why don't we do the same thing and have state tax credits fund something similar and create affordable rental housing? And that was well above ahead of your time because it's now twenty five, twenty six years later, And other states are saying, we should create a state tax credit program modeled after the federal one. This is a good idea. And I'm like, yeah, we did that twenty five years ago. But it's the hot new topic at conferences that I go to, and I tell them how we did that a long time ago. So in 2000, we started selling these tax credits to create rental housing. And then in 2009, the state said, home ownership's important too. Let's create for sale homes, stick built homes that could be sold and sell these tax credits as a way of helping fund and lower the cost on these for sale homes. Then we know the tropical storm Irene came through, and a lot of our manufactured home communities or mobile home parks got devastated. And so we expanded the program again and allowed manufactured homes to be able to be purchased when they were inefficient or in a floodway or something like that. And new ones up to code more energy efficient now can be bought and you can get a big $35,000 down payment to help support that part of our market. You sometimes hear the Champlain Housing Trust come in and talk about that manufactured home replacement program. So these are all part of the state tax credit program. But in 2014, that's when this committee started hearing from employers, the state tax credit program was expanded again to fund us in funding down payment assistance. So the money you see here is about developing housing. What I'm talking about is not building homes, but it's financing them and making them more affordable. And how it works is that a home buyer who's a first time home buyer, so they're renting, they go into a participating lender of one of the community banks, credit unions, mortgage companies, and they say, here's my income. Here's the kind of house I wanna buy. Here's my situation. And the lender would say, you know, you qualify for VHFA. Let me show you what their rates are. They're probably a little cheaper. And with them, you could get some down payment assistance, and that may be the best deal for you. And so they get a VHFA loan. And if they're a first time home buyer and they don't have enough down payment to close on their loan, they can get up to $10,000 from us. That is a 0%, what I would call a silent second loan. They make no payments on interest is charged. No fees. And that $10,000 sits there so that they have they have $10,000 less of a mortgage, meaning their mortgage payments a little cheaper. It just sits there silently. And then someday when they go to refinance the loan because their home prices have gone up or interest rates have gone down or whatever their situation is, we don't do refinancing at VHFA. So if they wanna refinance their loan, they pay us back that $10. Or if they move or if they die or something happened, we get paid back. So yes, we're handing out $10,000 at a pop, but yes, we get it back. That's why it's a revolving loan fund. And so you can combine this with other programs that we have. The first gen program, where not only are you a first time home buyer, but your parents didn't own a home, we'll give a grant for that. That's a different program, but you can layer them together and really have your down payment be more robust. You can see the map that we've covered the state pretty well, helping over 2,100 home buyers in the last eleven years. This just says that this is efficient and wonderful. I'll tell you, since this is limited to VHFA loans, and since by design, we embedded it into the home buying process, it means you're not applying to us. It's not a prioritization of who's most vulnerable or needy. There's not an open window of application and then we close it and all that. It's embedded into the home buying process structurally, which makes it very efficient to run, which means the state of Vermont is getting the benefit of this program for 0 admin dollars. Okay? Because honestly, we're making a little money off that mortgage. We don't need to make more off of this resource. The only thing that comes out of it is a $6 per page recording fee that we have to record these loans so people know. So why would we create a program like this? Why is homeownership important? Well, we do know that there's a wealth gap between renters and owners. If you exclude these are national numbers. But if you exclude the value of someone's home, homeowners still have a median net worth $400,000 compared to what renters have of $10,000. Half of renters own appreciating assets. They have that kind of I'm blanking on the term. Things that make money that you don't have to work at. I'm blanking. Anyway, moving on. Passive income. Thank you. Thank you. You know, like stocks, bonds, you know, things that are working for you when you're not laboring. Less than half of renters have those kind of appreciating assets, whereas 78% of homeowners have that, even when you take their home out of the equation. So we want to be able to reduce that wealth gap in some ways and have people be able to become homeowners. Because when you do look at the home's value, you can see here that home equity is going up and up and up. And so when you can become a homeowner and tap into the ability of a home appreciating, you have that ability to be here laboring like I am right now while my home, I think, is appreciating in Essex Junction while I'm here. And it's important to help people get into homeownership. The realtor showed that this year, if you look at the bottom orange line, this is the median age of when people are buying homes. And the bottom orange line shows the median age of first time homebuyers. And it hit 40 years old this year for the first time. It it popped out of the thirties. And you can see that just ten years ago when we created this program, it was down around thirty one years. Now I am not that old, but I was raised by parents who had some pretty standard old timey financial advice for me. And it was to own is good, to rent, you're paying someone else's bills. And they had a lot of somewhat outdated models, especially if someone wants to move for economic mobility. And I'm not saying that everyone needs to be a homeowner. But there was this idea that some of us are familiar with, even if we're not experiencing it ourselves, that you really kinda want your home paid off by the time you retire. There used to be mortgage burning parties back in the day. I'm really going back. And the idea was you could afford to live on a fixed income and be on Social Security maybe and all that because you didn't have your biggest expense of your home's payment. If someone is becoming a homeowner at 40 and they get a thirty year mortgage, this idea of ever being ahead in this game of housing becomes less and less likely. And so this really does create financial stability.

[Unidentified Committee Member]: So do you have stats before 1981? Because it almost, I mean, it looks like we've gone, right, a long period, we've gone up quite a bit in the last couple of years. But I'm wondering if it actually even was lower as we go back.

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: I don't know.

[Michael Marcotte (Chair)]: We have

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: to ask the realtors. If they only publish back to '81, I'm guessing that's all this goes back to.

[Unidentified Committee Member]: I don't know if there's program. It's tough because we didn't have the HFA. Don't think mean,

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: this is at our

[Unidentified Committee Member]: middle school.

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: This is National Association of Realtors who I believe have been serving, you know, their realtors who would report and through probably MLS or something like that. I don't know how they're getting this data, but I don't know.

[Unidentified Committee Member]: I can certainly vouch that the data is very true.

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: VHFA, these are all VHFA borrowers because I don't know everyone's details about who's buying a house in Vermont, but I know what our borrowers look like. So what you see here is the people who got our down payment assistance or DPA and people who didn't get our DPA, but still got a VHFA mortgage because not everyone gets DPA. And what you can see is that people who are getting this program, they are buying cheaper homes, so they have lower mortgages. They have lower incomes. Their loan to value is higher, meaning that they're putting down less money, and so they have to borrow more of that percentage. Their closing costs are less. I'm guessing that's because their property transfer tax is less because they're buying a cheaper home. Otherwise, a lot of those costs are pretty standardized. Their credit scores are lower. They're a little younger. Household size is just a smidge over bigger. And you can see that actually they have a little less student debt. I'm guessing that's a qualifying outcome, meaning that we do look at total debt to income and all that. And so maybe some folks can't afford as much. But because this was an economic development program, again, starting in the you know, housing programs during the Commerce Committee was kind of unusual. And so we started asking these applicants, where do you work? Because we were curious about the types of companies that we were serving. And you can see here, of the 2,100 households, apparently, we've collected 1,700 of them, told us about where they work. Do we group them into type of industry? And you can see the types of wages that these industries pay. You also can see the top employers that have been served through this program, And it's pretty diverse.

[Unidentified Committee Member]: We are

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: tracking this and we hear good feedback from employers. And I think people have come to expect the existence of this program. Now to get a VHFA mortgage, people know you do that because you can get down payment with it.

[Unidentified Committee Member]: Do you think that that's a product of people knowing about the program?

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: Why these employers are The the main state of Vermont

[Unidentified Committee Member]: is super high, which I think they're the largest employer anyway.

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: I think that's probably more of the correlation. Someone could do a quotient thing of looking at how big the employer is, and are there some where we're outsized? I mean, I don't usually see Killington ski resort on the top 10 list of employers. So that's one where I do think that maybe there's some water cooler talk of, hey, I got this program. I bought a house. And that's the case. But federal government, I think there's probably fewer water cooler conversations like that. And it's probably just more a matter of the size of that employer in the state. So over the course of this program's history, I keep saying we've served over 2,100 households. So this, though, is why I think that this program, on earlier slide, it says it's a superpower and it had a little Wonder Woman figure. I say that because 63% of these loans, people who got money from us are still living in those houses with those mortgages. Nothing has changed. So I can promise you that 63% of those 2,100 households are Vermont taxpayers paying property taxes and working in jobs. And I'm assuming eating at restaurants and buying gas and doing all the things that contributing to the state of Vermont because they still have that mortgage on that primary residence. And for those households, I know what they bought their house for. I don't know what it's worth today, but I know what has happened with appreciation in each town. So we did a little academic exercise of in this town, if the home sold for this price in this year, what's it worth at the 2024? And we did 2024 because bring it to current dollars, whatever, 2024. And we know that for each household, they have $78,000 more in equity because their home value has probably risen $78,000 That's pretty good return on investment, considering we only give people either 5 or $10,000 depending on when you got the money. We designed it to be you got $5, now we're giving $10 because home prices have gone up. Additionally, another 500 people might still be living in their homes and might still be Vermont taxpayers, but just moved to a different house in Vermont or refinance the home and is still living in that very same home. I just don't know. You know, they paid it back their loan. So that means they gave us back $3,000,000 that we loaned out to other Vermonters. That's what we want. That's why it's a revolving loan fund. And those people, we know that the median amount that their home appreciated was $50,000 It's a little less probably because they were there a little shorter amount of time, but that's pretty good. So in total, the money of this program, the eleven years we sold these tax credits, has generated over a $137,000,000 of wealth. And we're talking about a $14,000,000 program. So for every dollar that the state has invested, there has been $15 of equity that Vermonters are earning. It's a really good bang for the buck when you talk about efficient programs. And the money is not being lost. Okay? It's still out there. It's invested. It's revolving. It's moving. It's happening. It's not being drained of admin fees or anything else. It's in existence. The problem is is that people aren't moving the way they used to. It's two problems. One, we designed the program in 2014, and we thought we were gonna give people $5,000 Loan prices have shot up. We increased with them. We actually didn't keep up with inflation, but we did feel like at some point we had to pop up a little bit. But you can see here again on the left, that's a national chart. This isn't a VHFA number, but you can see that people are not moving the way they used to. If you haven't read Yani Applebaum's book, Stuck, which talks about it just about makes every societal ill in America the the problem is is that we're all stuck where we live. It's very convincing. And it talks about how from the founding of America that we were a nation that uniquely allowed people mobility. They did not have to register where they lived in a sense. They had the ability to move and follow the Gold West and move to the cities for opportunity and the Industrial Revolution, all these things. And it is a fascinating take on how it's the lack of mobility that is causing the divide in this nation and limiting economic opportunities for people. And so people are moving less. So this chart on the right, my staff loves it. I don't know if it's selling people, but I'll just explain it in case it works for you. The next chart will tell it in a different way. But if you just look at the green bars, you can see the green bars are the first part of the program from 2015 to 2022. And in those years, it was about 6% of the loans we made in that timeframe were paying us back the second year they had their mortgage. Why would they do that? I don't know. Maybe they were trying to avoid PMI, private mortgage insurance. Their home price popped up. Maybe they won the lottery. I don't know why. They were able to pay us back. They had to move for a job, something like that. But it's more likely that in years three, four, five, you see that the percentage people paying us back increased over time. And that's what we'd expect. Let's be honest. We all talk about thirty year fixed rate mortgage. I don't know if this stat is exactly true. It's an old number, but I remember that mortgages stay outstanding for more like an average of seven years. Is that about still about right? Yeah. So, you know, we all love the thirty years, but we refinance or we move or something happens. We get divorced. Things happen. So the orange bar shows just in the last few years what we're seeing. And you don't see that kinda increase over time. You actually see it's just stagnant. Like, we are not getting those payments. Here's another way of showing the same information. The line shows you what average interest rates are. Okay? So you can see that in 2021, we bottomed out. We've got under 3% on average, and then they shot up to seven, six percents in the last couple of years. And the green bars show you that in the first few years, no one was paying us back because it was a brand new program. They didn't have the money very long, and it took them a minute. But then as interest rates dropped, we had more refinancing, which meant we were getting more money. We had over $800,000 paid back to us that year. And this is not a typical government program where we get the money in 2018, we have to spend it by December 31 or something like that. No. No. This is, like I said, this is a mortgage program. It's a revolving loan fund. So what happened that year? We just the the pool got bigger. We held it. We earned a little interest on it to fund the program. And then we started spending that money over 2023, 2425, that excess that we had. And so we knew, oh, here's just showing that we changed the amount that we would give people. And I apologize, I should have fixed this. What it shows here is that from 2015 to 2018, we were giving people $5,000 And then mid twenty eighteen until 2020, we were giving people $7,500 because again, home prices had risen. Pandemic until last summer. No, I'm sorry. Let me get this right. No. We changed it. It was 2020 to 2023. We gave people $10,000 if you were low in, I'm sorry, higher income and $15,000 if you were lower income. It was in the crunch of that pandemic. Everyone was like, what can you do? Get people into housing, do whatever it takes. So we said, you know what? If you're very low income, we're actually gonna give you $15. Then everyone stopped moving. Everyone stopped refinancing. Rates popped up. We're like, oh, we can't afford to give you $15,000 anymore, even if you're low income. We brought everyone back down to $10,000 So that's why you see that most of the loans outstanding are $5,000 loans. So when we get those repayments, it's half of what is going out the door today. So this year in 2026 was the last year we could sell these tax credits. I am asking if we could have the ability to sell them for five more years. Also, I've always asked for $250,000 in tax credits, and this year I'm asking for $350,000 because we're giving out more money with going up to $10,000. The confusing part and why this chart behind me makes people's eyes bleed is because it's a five year tax credit. So it really gets confusing very quickly. But I think I've got it down and I can explain it. The chart will help. Which is this year in 2026, we sold a five year tax credit. So that was $250,000 the bank who buys it let me tell you who buys it. It's banks, usually. Captive insurance companies can buy it, others can. But usually, it's banks who have a bank franchise fee that the state requires them to pay each year. And really, it's not a technical term, but I'm gonna call that a tax on their deposits. And if I have a million I'm a bank and I have a million dollars in deposits. I don't know how to calculate it, but somehow they have to pay something for that. And if they buy these tax credits, they pay less on that bank franchise fee. You can ask over here all the hard questions about this fee. I don't know enough about it. What I know is that they have to pay this fee. And if they instead invest in affordable housing in these employers, workers, and in helping people become first time homebuyers, they can pay less. And so that helps the state and we end up with that money. But it's a five year tax credit. So they get to write off $250,000 this year, $250,000 next year, and the next year, and the next year, and the next year. So what they're actually giving us is $1,250,000 all upfront right now because they bought a five year tax credit. If it was one bank buying the whole slog, which isn't how it works, but it does today. So they're giving us $1,250,000. They're also gonna discount it just a little bit because of the time value of money. I can't write off those taxes for five years and I could have invested that money for the five years. So we get roughly right now about like a 90¢ on the dollar for this. So it's a very good tax credit. We make sure that we're selling it for a good amount. So what I'm asking for, as you can see here, if you look just at the blue bar, the blue row down there is what you've already approved many years ago. So you can't touch that, which was that this year, there's 1,250,000.00 that's hitting the state's budget that you guys already approved. And that means this year's first year of tax credits and last year's second year of tax credits and the year before's third year tax credits. It's weird. Back in 2022, there was one more year of tax credits that hit this year's balance sheet of the state because it's a five year tax credit. So the blue bar is already done. Thank you very much. We're on the tail end of this program. The green row is the new money that I'm asking for, which is nothing for this current fiscal year we're in. But for next year, we'd sell the first of the tax credits, and it would be a $350,000 hit to the budget. And next year, it'd be the $3.50, the second year of this year's tax credits, and the first year of the next year's. So if you add up the numbers in that green row, you're gonna see that it's $8,750,000 spread over nine years. Meaning this costs the state $972,000 over that time. So it's less than 1,000,000 a year that we're asking for. The Joint Fiscal Office knows all about this. They've seen this chart. I know what they're ready to talk about it. I have testified on this two ways and means. And I'll be talking to Senate Finance this week. And I've spoken about this in House General as well as Senate Economic Development and Housing programs. Of course, I'm gonna characterize the reception to this program as overwhelmingly positive, but you are welcome to talk to your friends and family about that if I'm reading the room right. But I will say that this the legislature has often looked at this program as highly efficient, well run, helping people out, moving them into homeownership. I know that we're at time, so I'm happy to answer questions.

[Michael Marcotte (Chair)]: We're on the floor. Thank you, Mara.

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: Very much.

[Michael Marcotte (Chair)]: We appreciate it. And, yes, we'll when it comes up, we'll certainly take a look at it, I'll tell you it's something that I've through the years.

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: I've been vocal about that, and I appreciate it.

[Michael Marcotte (Chair)]: That's really the only one on the committee now that was there when we first started.

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: And I wanna be very clear that my team is very happy to answer questions if they come up technical or otherwise, and I'm not going anywhere for a few weeks. So please let me know if there's any follow-up needs Perfect. To be

[Michael Marcotte (Chair)]: Thank you.

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: Thank you.