Vermont Legislature SmartTranscripts:

[Marc Mihaly (Chair)]: Welcome

[Marc Mihaly (Chair)]: everybody to the General and Housing Committee. Thank you for coming. Thank you in advance for your patience, which I'm sure will be tested at one point or another. Today is Thursday, January 8 of the New Year twenty twenty six. And we are now free to, this is our third day of testimony in which we're trying to set for ourselves a kind of a set the scene, and the question that we are asking is, it has to do with housing, and with respect to housing, from the legislative perspective, given what we have done and can do, what is working, what is not working, and why, and what direction should we go in? And our first witnesses today are Gus Seeling and Polly Major from the Vermont Housing and Conservation Board. Please take it away.

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: Well, first of for the record, CEO of the Executive Director of Housing and Holly Major's Policy Director will be in the building more than I will be, but we're both available to you both during the session and off session. In terms of the topic and the challenge you've given us, I want to say a few things as an overview. And I've had the great opportunity Blake Bissell to provide an overview and orientations three years prior to this one. And some of the things that I've talked about, you've actually taken care of or made big steps on. So my message has definitely to encourage density, and you did that in the Homes Act in a big way, that we need to grow vertically, and the Homes Act did that. We need to use smart growth principles, and I think last year's legislation moved us in that direction, and that we need to provide infrastructure assistance. We need to take that off the backs of developers. We did that with the chip spill. And we need you to provide resources, which over the last five years of the pandemic, which we'll get into in a few minutes, you've done a huge amount of. Some of the things that I think we still need to think about and work on, I know you recently got a report, I haven't seen it yet, is the problem of the timeline of getting corrective action plans approved by the state is way too slow. The appeals process is still one that when you go to court and if you go to the Supreme Court, you're probably two to three years away from breaking ground. We'll talk about that as we move through this presentation. This opening slide really speaks to that. This is what we call the dual gold project. It's right in the village of Putney. It is a designated village. And what that means is that the community decided to seek the status of having a designated village in a public process. It was approved by the Regional Planning Commission. And then it went to a state board and got further approval. And yet it ended up in court for three years. And so the message I gave the last time I had is the opportunity to speak at the orientation is let's have our fights in the planning process. And once we've done the planning, let's not keep fighting. We give a lot of rights. This is not really specifically an Act two fifty issue. It can be any issue. We have lots of rights to anybody to appeal, And appeal and in this case, the appellant appealed twice, first on a whole range of concerns that got narrowed down to two or three issues by the courts. And then Act two fifty said, We don't have jurisdiction here. And she appealed that law. So Act two fifty was not the problem, but that it was a designated village, she was not willing to recognize. And that ended up in the Supreme Court, and they affirmed it, project is under construction and will be completed this spring and still will provide the community with an acre of community garden space. So we think that's a wonderful outcome. So those are big picture, some of the things that he done, I think really well and that are working for us. I just wanna give you this slide, which I came across at a regional conference to say that the problem in Vermont is not unique to Vermont. I know a number of you know this. This is Zillow data about how much the cost of home ownership has gone up. But I think what this reflects is that less and less renters can afford to get into the home ownership market. And that's part of why the rental market is so constrained today. So if the average cost of a home, this is not a new home, but the cost of a home in Vermont is now almost $400,000 That leaves a lot of people who make a good wage out of the home ownership market, unless they have family that can help them in a big way with a down payment or whatever. And new construction has always been more expensive than buying something existing on the market. And we can talk maybe not in-depth today, but talk about the cost. But the chief issues driving costs are wavering materials.

[Marc Mihaly (Chair)]: Yes, question about this, it's a really interesting slide. First of all, do we have these slides? Yes, we do.

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: Yes, okay. Second of all,

[Marc Mihaly (Chair)]: there are various things I've seen where Vermont is like right at the top of the list or maybe second in terms of increases in cost. And this makes us like not too bad compared to some of New England. What do you think? Any thoughts on that?

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: This comes from Zillow. So is that the most reliable source? I can't tell you that, but it is. I think if you're looking, and this is like homes on the market. So if you're looking at what is the cost structure in unit, yes, we're gonna be very high there in part because our labor force is so constrained. We actually had a panel on costs at our board retreat this year that brought in well established architect, two builders. And one of the things I said that was really interesting, and I think Joe Parsons said this to me when the first time I appeared in the committee in front of him was, You can't find labor because they're busy building really high end houses. And I think that because we have such a small market of people in this business, that's part of what drives our costs. But we've generally seen a doubling of the cost over the last eight or nine years in terms of what it costs to build anything new. So when we did the housing revenue bond with Governor Scott, most of our projects were somewhere between $2.35 and $2.80 as I thought back in 2017. And now we're not seeing anything newly built under a half $1,000,000 even higher than that.

[Unidentified Committee Member]: I was just going to comment on that as well. On the housing conference in Massachusetts, I was talking to the senator from Maine, who is the chair of their joint housing committee, and he was complaining that to build a new unit of housing was 300,000 in Maine, and how unattainable that is. And I was like, For what? Like, just one unit? And he goes, Well, yeah. I was like, Try $500,000 He goes, What? That doesn't make any sense. So even other states that are, it's the new units that I think are really just absolutely choking

[Elizabeth Burrows (Member)]: us.

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: Yes, yeah. And again, if you're a renter and the cost of entry into the homeownership park used to be $300,000 and now it's $400,000 and interest rates have doubled from when it was 300,000. It leaves lots of people out and makes the rental market just that much tighter. One of the things that we think has been working for Vermont for a long time and it's embedded in our statute is a policy of permanent affordability. And what that means when we help people into home ownership is they get a huge amount of assistance to get into home ownership, but they take a lesser return when it's time to sell. This is what we call a dual gold project in Morrisville, where we're conserving 150 acres of land, and there were eight vacation homes that are now going to be converted back to permanent year round residences. Six of them will be permanently affordable. So we think this is a system and an approach that works well. We've used it in more than 1,400 homes across the state. They've been home to more than 2,100 buyers over the years that we've been at this program. And we think it has great value for us. And in the next couple of slides, I'll try to demonstrate that a little bit. I walked into the offices of the Champlain Housing Trust last spring and they had a flyer and each of these three homes that we had subsidized with them some years ago were up for sale. Former owner had been ready to move on to just use the condominium at Dalton Drive. This is what was called Officer's Row back in the day. It was owned by the University of Vermont in its last iteration before it got turned into housing. It was married student housing for them. They put it on the market in the late 80s. Governor Kuhnen insisted that they make it, that they do a deal and make it affordable. And we were able to help buy the site at a discounted rate and built about 70 condominiums out of them. Half are permanently affordable. If you were the owner of this condo who bought it back in the early 90s, you bought it about $90,000 with a $15,000 subsidy. If you were selling this year, you walked away with over $200,000 because you've paid over thirty years your mortgage off, and the new buyer is getting in at less than half the value that it would have been on the market. So our $15,000 subsidy, or I would say your $15,000 investment estate funds became this year a $70,000 subsidy without the state having to put more money in. Over the last little bit over a year, have been 55 resales of these homes. Our original average investment was $27,000 The investment had grown to $136,000 The average buyer was at 83% of median. I think that was in the low $80,000 range for a family of three. There were people who were below 60% of median who were able to buy these homes and 16% of them went to buy properties. Yes, you

[Thomas "Tom" Charlton (Member)]: got a question? Yes. Is there a specific turnover rate as far as the sale?

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: The people who have moved that we've tracked the last time we did a study were like any Americans, which is to say they moved after being there six, seven years. Two thirds of the buyers were able to jump into the traditional home ownership market. The reasons people moved as best we could determine them were the same reasons anybody moves. They got married, they got divorced, they moved for a job, they decided to downsize, but they're like any home buyers with their own motivations for why they may need to relocate.

[Thomas "Tom" Charlton (Member)]: Can you remind us again how, when it's sold, what is the percentage that stays back as far as keeping it affordable?

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: You get a quarter of the gain in value, but you also get to keep, if you pay down your $90,000 of your original mortgage, that you get all of that as well. You walk away, depending on how long you stay, you walk away with cash in your pocket. I think last time we evaluated, people were getting about a 6% return on investment. Maybe it was seven, I can check the numbers from the study and I can get it for you.

[Thomas "Tom" Charlton (Member)]: So it makes sense for them to stay the six to nine years.

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: They were getting a good return there. It was not like a traditional homeowner who bought at the beginning of the pandemic and four years later sold for double what they bought it for. But if your goal is to be in a particular community, to have stability in your housing costs, it's a very good deal. And given the subsidies that we're providing, but for this program, people would have been renters rather than homeowners.

[Marc Mihaly (Chair)]: Yes, go ahead, Elizabeth.

[Elizabeth Burrows (Member)]: Thanks. I've got a question about your top data point there, 16% sold to BIPOC homeowners. I want to know how you have I see it in bold, I assume that's just because it's a data point, but you and we know that the rate of homeownership among BIPOC Vermonters is extremely disproportionately low. And so I don't think 16% sold to BIPOC homeowners is really showing a whole picture of the problem. And I want to know what you're doing to help alleviate that problem.

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: Well, think there's several things we're doing, and we can't do it all, but I don't need to give a lot of credit to the Champlain Housing Trust, who has taken some private funds that they've received, which I don't think we could do with public funds and made it available both for their own home buyers and a million dollars across the state to specifically help subsidize people who have been historically marginalized from home ownership.

[Elizabeth Burrows (Member)]: And how successful has that been?

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: I think given this percentage, and I'm gonna show you another slide in a moment, where out of 28 homeowners, 26 homeowners in Shelburne, nine were people of color, households of color that it's working. I don't think it's something that we can do with public funds to specifically target people based on their ethnic background. But they've

[Marc Mihaly (Chair)]: been able to

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: do it with some private funds.

[Elizabeth Burrows (Member)]: I don't think you can necessarily specifically target people based on their ethnic background, but you can market and reach out to Yes, absolutely. And I

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: think that that's the other thing that is happening. But all I'm trying to say to you, Burrows, is if you have less resources and historically marginalized communities, people from those communities tend to have less resources and less wealth. Many need additional financial assistance sometimes to be able to get in. But yes, the marketing piece of the work I think has become more extensive overall.

[Polly Major (Policy Director, Vermont Housing & Conservation Board)]: And if I could add, I think what we're seeing in this program that is different than the conventional mortgage market is we're seeing those really low rates of BIPOC homeownership, and that's because the conventional mortgage market is really underserving that population. So the number of BIPOC homeowners is far less than the percentage of BIPOC Vermonters in the state. What we're seeing in the shared equity program is a reverse, that the percentage of BIPOC households served by this program is actually higher than the broader percentage of BIPOC for monarchs. So this is a way that we're able to start to bend that curve and really have a program that is meeting the needs of this population. And we really are continuing to try to find new ways to do

[Elizabeth Burrows (Member)]: that. And just may I ask one more question? How do you account for the mortgage problem?

[Polly Major (Policy Director, Vermont Housing & Conservation Board)]: I mean, I think we see a long history of discrimination that we've tried to make illegal in this country, and it goes back decades. And also, I think a really key piece as well is that lack of generational wealth that is not available to buy optimal loans. And so really in this expensive real estate market, decreasing their ability to get mortgages, conventional mortgages, for a conventionally priced home. These homes are more affordable.

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: The other thing I would say to you about the mortgage market in general is that it is much tougher to qualify for mortgage today than it would have been when I bought my first home in the late 70s, or that I saw lots of people do it through the 80s. So back then, it was not untypical that you could build a house and have a finished 1st Floor and an unfinished 2nd Floor, and that mortgage could be sold on the 2nd and could be that was available. Secondary market will not file those mortgages anymore. So maybe you get a credit union to finance that and maybe not. It's just different mortgage market that makes it harder, standards are higher. People pay them a lot more attention to credit scores today than they were a generation ago. And the cost of real estate is just much, much higher than when I bought my first home for $26,500 in 1978.

[Marc Mihaly (Chair)]: Go on.

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: Just the last thing I wanted to say, this is a development in Shelburne that's pictured here and there are 26 new condominiums along with 64 units of rental housing. The evolution of this site was that we first helped the state of Vermont because there was a hotel up here called Harbor Place that they wanted to help serve the GA population. The Champlain Housing Trust operated it for more than a decade, thinking five acres in Shelburne was of great value. The hotel kind of got worn out and replaced it in a different hotel across Route 7. And so there's now a new neighborhood built here. Of the 26 homeowners that got in, again, were people of color. It included a state trooper. It included a chef work at Shelton Farms. Two employees at Wake Robin were among the homeowners. And Kathleen, I think probably had something to do with this, maybe the very last rental, Section eight's a home ownership utilizer in the country. If there's that program on its way out, and that woman is a mother of a young child who works in childcare. So I think this program is serving the broad range of people that you would like us to be serving, which I'm just serving the workforce. And for Shelburne, when people who are working in town are able to live in town, that's great for everybody. This is what we've been able to do across the state over this decade, primarily with pandemic era funding. What you see here is the $80,000 per unit average, much less than the half $1,000,000 that you've sometimes heard from people. We have not ever invested a half million dollars in a single unit of housing. And we'll be talking in a moment about leverage. This reflects the startup of a number of new programs that Polly will get into in a few minutes. And it reflects our broad attempt to hit the whole range of need. And we'll also talk about in terms of legislative things that you've done. Provided funding for feasibility study to serve people with intellectual and developmental disabilities. And we've able to do five projects with that community over recent years, but we're trying to hit home ownership. We're hitting home ownership for people who live in manufactured communities with infrastructure investments. The farm worker housing program is a new program that began with pandemic era funding. We have doubled the number of shelter beds in the state. We're continuing to add there. And we've begun to attack the problem of people who need a place to go for recovery from addiction. We just presented to your colleagues in appropriations yesterday. They wanted an update on whether all the ARPA money was going get out the door. And I'm happy to say that the very last project funded with ARPA, which funded 1,000 units, is about to be completed in Burlington. It's a former DFW site, which happened to know it, 38 apartments, it will include the Community Justice Center, and it leveraged over $260,000,000 from other sources. ARPA funds. The ARPA funds did. This slide is about leverage and what you're seeing here is at the bottom you're seeing what the state investment was. At the top you're seeing tax credit investment and that means private equity. And in between are other things such as energy grants, must pay first mortgages, federal funds, some we administer some that people don't get or other kinds of investments. What you see on the right in the third column are shelter projects and shelters are not eligible for tax credits. There's a bunch of federal programs they are not eligible for to receive funding from. So there's much less leverage. And a question that we clearly need more shelter. And I think we will, in our one time request from the administration, asked for another 3,000,000 to support shelter. We asked for 3,000,000 for the IDD program to continue that work and 3,000,000 IDD? People with intellectual and developmental disabilities and 6,000,000 is just to do catalytic projects. Shelters, unless you're in a place like Hartford, the Upper Dallas, very hard to fundraise. So there's just much less leverage. And the question that I think you all have to think about is if it costs almost as much to build a shelter bed or create a shelter bed as does an apartment with safe funds. Are we better off trying to build more apartments over the long run? I think in the short run, we're gonna continue to need more shelter.

[Elizabeth Burrows (Member)]: What is the timeframe for this? So Gus, can I kind

[Polly Major (Policy Director, Vermont Housing & Conservation Board)]: of frame the data that went into this? We took a look at the last five years of projects that we funded. We segregated it out by which projects were rental funded with that 4% low income housing tax credit, which were funded with the 9% because there's different values to those. And so you need different gap financing. Then we took that basket of shelter projects and the basket of manufactured home. We then took the averages of the different sources that went into the different housing types. You had asked us for what does an average project look like in terms of the sources that go into it, how much those sources are, and what's leveraged? So as just a kind of generic rental project type, if you take, because the nine

[Marc Mihaly (Chair)]: percent It's hard to read the bottom there. What's it saying?

[Polly Major (Policy Director, Vermont Housing & Conservation Board)]: Yes, this one here, this column here is the 9% tax credit. So it's the most valuable tax credits. And so strategically, you put them into the most expensive homes. But this is a pretty representative rental unit. So it's a 400, it looks like 475,000 per unit to build this new 9% unit. And this in red is the state investment through VHCV. So you're seeing VHCV is putting about $125,000 of state funds into a unit of housing. What that is doing is that it's unlocking another maybe 35,000 of federal funds for housing production, the home fund, trust funds. And then it's unlocking private debt. It's unlocking other local sources. It's unlocking a really small amount of energy funding. And we can talk more about the need for more energy investment in housing. And then what it's really bringing into the state is those tax credits and the private equity that comes with it, that investment. So when we're talking about what does it take to build housing from a state policy perspective, it takes that initial investment of $125,000 and that unlocks these other sources, brings those dollars into Vermont, into our construction workforce, and ultimately results in housing. So yes, housing is expensive to build, and I'll talk about what developers need to contain that cost. Much of that cost is covered not by state dollars, but by these other dollars that we don't want to leave nationally on the table. We want to see them at work here in the Vermont economy.

[Elizabeth Burrows (Member)]: Yes. So this chart represents five years, right? Will you have a breakdown on future slides of what that has looked like over the five years?

[Polly Major (Policy Director, Vermont Housing & Conservation Board)]: I don't have that in this presentation, I can say. If you look at the average for a 2020 project and an average for the 2025 project, you see a lot of growth in expense because labor's gone up a lot, materials have gone up

[Elizabeth Burrows (Member)]: a lot. We're just in that inflationary environment. I'm really actually the reason that I'm asking is, and I don't want to take up too much of your time and I apologize, but the reason that I'm asking is that I did a deep dive into the influence of private equity in our housing market over the last six months. And I saw that in 2020 or 2019, was like 19% of our housing market was private equity ownership, and now it's up to 25%. And I just would like to see a trend data that would allow me to, like actual Vermont data that would allow me to understand that trend better, so that I can also understand what we can do.

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: This may be a little bit different than what you're referring to in terms of private equity ownership.

[Elizabeth Burrows (Member)]: It's not. I'm just trying to understand the influence of private equity on our general housing market.

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: Well, here's what I think may be different here than there are private equity investors buying neighborhoods around Atlanta now.

[Elizabeth Burrows (Member)]: Yeah, of course.

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: That's not what's happening here structurally. So the structure of these deals, again, going to this policy that's in our statute of permanent affordability is these projects are owned by nonprofit general partners, bring the private equity investors in to help get it built. When they've gotten their return, they exit the partnership and it continues to be owned by nonprofits. So unlike stories that we're reading about Atlanta and other suburbs, private equity investors are not having an influence on the market in terms of turning that often home ownership, into rental housing.

[Elizabeth Burrows (Member)]: No, I do understand that. I am just simply, I'm just simply learning, trying to gain more knowledge and understanding about private equity's influence and housing in Vermont. And the other question I have is for shelter projects, that is $100,000 over the last five years? That's per bed. Per bed. Okay. Okay. Thank you. If I may add one thing. Vermont Housing Finance Agency, I have met with them extensively about data, and so I'm happy at some point to talk about private equity data that Vermont does have with what you're discussing. Are you talking about ownership or the private equity? Because I just want to You're saying the proportion. I just want to better understand through information the influence of private equity in every aspect of our housing realm.

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: So a different answer to your question as you're talking, understanding it is because there was so much money available to us over the last five years, the column that is marked 4% credits, if you looked at the previous five years, the number of units produced with 4% credits would have been much smaller. The reason for that is the 4% credit as opposed to the 9% credit generates about 30% of the cost of a development. So it takes more other money to make those deals pencil out, more soft, what we call soft debt. And so we were using that a whole lot less in the pre pandemic years than the pandemic years because we just didn't have the money to pull that private equity in. And that is one of the big things that changed over the course of the pandemic. And we'll change again as our budget, this is showing you annual investments averaging $90,000,000 and our budget this year for housing is gonna be more like 30,000,000. So we'll do less of the 4% deals unless there's one time or other funding available to keep them. Thank you.

[Unidentified Committee Member]: You mentioned asking developers, you know, you're talking to developers about what they can do to control some of these costs. Do we take insight from these developers as to what we can do to control the additional cost of the experience as a result of the additional criteria that either us or the federal government might place on the project?

[Polly Major (Policy Director, Vermont Housing & Conservation Board)]: We certainly hear from them and as we're having discussion with our board about costs, we're also talking to developers to get their input because they're the experts here, they're who are making the decisions. Happy to talk about this longer at another time, but I think some key things that are within the state's control are things like appeal reform that has a chilling effect on development or delays development, are things like the CAF process that lengthens that development process and time is money. So those are two places where this body really has some influence over cost.

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: You

[Thomas "Tom" Charlton (Member)]: were going to just hit that, correct?

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: Not with you having a question, so please ask it.

[Thomas "Tom" Charlton (Member)]: So the red state funds, VHCb, is that the only state funding that's available for manufactured housing and the federal funds from BHCB in green. Would that be

[Polly Major (Policy Director, Vermont Housing & Conservation Board)]: CHT? So the other thing we're looking at is a blue, white blue, that's local private energy grants. I'm guessing that might encompass other state sources as well. And I think we're really interested in how we can do more to support manufactured housing communities, especially in light of the number of communities that are coming up for sale and not being purchased and the sustainability of that housing. So I would say I'd love to come in and do a deeper dive into BHCb's role in this space, other critical pieces we see that could make a difference in better supporting these communities.

[Marc Mihaly (Chair)]: I think there'll be an opportunity for that. We will have on the wall, and I think it may come off the wall, we'll see a bill regarding mobile homes, excuse me, manufactured homes. Okay,

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: I think the other thing on this slide, Thomas, in terms of our manufactured home investment is most of our work, a big chunk of our federal funds has been to help parks over this period of time, upgrade their infrastructure as opposed to even buying new parks. One of the things that's happening this year, celebrations, is going to be Tri Park, which is the largest co op in the state is removing 18 people out of harm's way to take homes with a major investment.

[Thomas "Tom" Charlton (Member)]: That's mainly because of the flooding. There's no investment anywhere that has to do with, there just happens to be real estate?

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: In that instance, very much in response to the flooding they've had. At the Windham Mobile Home Park in Middlebury, we have made a big investment in their infrastructure upgrades as they've needed them. So that's most of the work we've done. We have not had very many. We've done a few deals with CDI to help them either with acquisition or post acquisition because they sometimes have underestimated what the park is gonna need. It's one of the difficulties with mobile hall parks is because all the systems are underground, it's hard to always assess them accurately.

[Thomas "Tom" Charlton (Member)]: I didn't mean to minimize the flooding.

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: No, no, I'm just, but you're right, in that case, their work is very much in response to flooding, and they need a few okay people, and that meant we remained in the garage, because that was the higher ground that you could go from. One other point that I'd like to make about all of the question of leverage and question of multiple goals. We were with representative Dodge this summer when we opened 65 apartments at Fort Ethan Allen in a project is now called Camp Calvary. It was sold to the Buffalo Soldiers. May Pulmurray, the deputy commissioner of housing pointed out at the ribbon cutting that there had been a huge contribution in that deal, which cost a little under 500,000 in what I think are beautiful apartments in a nice neighborhood from historic tax credits and for environmental cleanup. Sometimes people think that adding multiple goals is problematic. And I guess I would just say to you, in that instance, the wet paint program, the environmental cleanup funds and the historic tax credit funds contributed over a $100,000 per unit. To representative of Charlton's question, it slowed the process down, but we could not have built housing in a Greenfield for 395,000 units. So it was a good thing to bring those dollars in. It did make the project more complicated, but that neighborhood I think is a tremendous neighborhood. There's a lot of other people who live there. There are jobs there. St. Michael's College is right next door. So it's a great location. And I think sometimes you'll hear, well, we try to achieve too many goals with housing. And I think that was a great example of choosing to address a whole bunch of hurdles and getting those buildings back online in its place.

[Gayle Pezzo (Member)]: Go ahead. Yeah,

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: do

[Gayle Pezzo (Member)]: you have some kind of flexibility in your decision making process as to whether, how do you weigh the pros and cons of getting, of accessing these other funds that have strings attached to them? Does that happen at the planning level, or do you end up getting horrible surprises? You say, yes, great, we'll take this historic preservation money, and then the person who comes to assess the building says, you can't destroy this ancient stairwell that leads to nowhere, that's just going to take up space that could have been a bedroom.

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: Well, we're less surprised by stuff like that than we used to be.

[Polly Major (Policy Director, Vermont Housing & Conservation Board)]: Is that because you've seen it all, or is that because you

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: I'm not sure that we've seen it all. I think it is an ongoing dialogue that we had both with the state historic preservation officer, with Commissioner Farrell, and with the National Park Service. Vermont was blessed for many years by having one guy at the National Park Service and for close to twenty years was the reviewer and we knew what to expect from him. And when that changed, when he was no longer assigned to Vermont, we began to get more surprises. So are we done getting surprises? I can't tell you that. Is it important to my I would much rather have 22 apartments above the Albishans than 19. So it would have been less expensive had we been able to build less expensive per unit had we been able to build 22 units than 19 units because you have all the fixed costs there. I'm glad that the 19 units are there because the location for somebody who needs to live without a car having a supermarket up the street, the life right down the other way.

[Marc Mihaly (Chair)]: You have another question from Gayle, but before we do that, I think we will have these people back. We've now are forty minutes into our time and we have two more witnesses before eleven, so I would say probably we're going to have about ten more minutes. Okay, well, can hand it over

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: to Polly, and actually has this.

[Elizabeth Burrows (Member)]: And so I would It's

[Polly Major (Policy Director, Vermont Housing & Conservation Board)]: only twenty seven more seconds.

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: Would just ask, I

[Marc Mihaly (Chair)]: am not saying to the members of the committee not to ask questions, but to realize that we will have, I am sure, more time with these guys.

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: I will be happy to come back.

[Polly Major (Policy Director, Vermont Housing & Conservation Board)]: Gonna be.

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: It should be my apologies. I don't know.

[Marc Mihaly (Chair)]: I will add that my own experience, which the committee knows, I was involved, and VHCb was involved with the renovation of the East Callis Community store, which turned into a $2,800,000 project for a store building and three units of housing. And our experience was that the goals of affordable housing and historic preservation costs added to the cost of the project, but that the funding sources that they'd opened up were more than the cost.

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: And that's our general experience with most historic preservation projects.

[Marc Mihaly (Chair)]: It didn't make it easy, because tax credits are, shall we say, brain damage, but it got us money we needed for the project.

[Polly Major (Policy Director, Vermont Housing & Conservation Board)]: Alright, so I've heard you say ten minutes, and maybe what I'll do is I'll kind of put a pin in the different points of each of these slides and maybe we'll return to some of them at a later date. In terms of things that were working, the investments of the last five years, the leverage it was able to bring in, was able to really catalyze neighborhood development and catalyze neighborhood development in partnership between affordable housing developers, both for profit and nonprofit, and then market rate units. So in both of these instances, in Morrisville and Middlebury, we saw the initial investment be for the affordable buildings, and that helped the private developers cash flow better and leverage those funds to build out the neighborhoods, adding much more homes in the community, so market rate and affordable. Fireworks of guests. You asked us to really focus on vulnerable populations in the appropriations language that you as ascribed to the one time funding the agency received over the last five years. One of the populations that you specifically named was farm worker housing. And this is a program that we really have seen have great success as we stood it up over the last four years with Champlain Housing Trust. This is a uniquely vulnerable population. The challenge here is there is a federal source that I used to work at USDA Rural Development and we could never figure out how to use it here in Vermont because the complexity of the program, the scale of farm it needed, that we just had a different agricultural economy here in Vermont, and because the legal status requirements that came with those federal dollars. And so using state dollars to really address the needs of vulnerable farm workers, address the needs of farm viability, we've really seen work, and that's something that we are hoping to continue because we see continued need. You asked about legislation and its impact. So I wanted to just revisit the HOME Act and some of the impacts we have seen from that legislation in the projects that we have helped to fund. We've seen it really paved the way for shelter projects across the state. The HOME Act said that a town could not zone out shelters. It had to allow somewhere in the town for shelters to be a permitted use. And that has helped ease the way for new shelter development. This is one in Hyde Park. There's a new shelter that is being built in Hartford that had faced a lot of opposition in its sighting. But when the HOME Act passed, the community was able to say, yes, we need this somewhere, and yes, the site is acceptable, and it's under construction now. And you can see it right as you enter White River Junction. And the dumpster was able to open the first year round shelter in the kingdom. That was a critical reason The for that Home Act allowed for duplexes and quadplexes by the right. And I was talking to a local developer in Bellows Falls this summer, said he and his brother are a team. And he said, this is allowing me to really renovate those old Victorians and turn them into four apartments. This is what's making those infill redevelopment opportunities cash flow in a way that can serve the local communities. And I don't want to build high end units, I want to serve my friends and neighbors, And this is allowing me to do it because of that added density. So that's really impactful. It also allowed for increased height and density. And we know that to meet Vermont's housing goals, we need to build densely, we need to build up. The challenge here is as we have less resources for housing development, as we're trying to meet the needs of communities around the state, have to spread those resources thinner, which means smaller projects. So it's going to be hard to take full advantage of the density provisions, the height provisions, without the resources we've seen in the last several years. And I think you had that conversation a little bit yesterday with Weinberger when you were talking about pairing regulatory reform with investment. We've absolutely seen in the last five years being able to take advantage of building those new neighborhoods like the one in Shelburne. We want to continue to do that. So you're saying

[Marc Mihaly (Chair)]: here, that in terms of the density provisions, I just want to make sure I understand it, you're saying the density, really using the density provisions of the Home Act requires larger projects, which in turn require capital investment, and we had that with all the money we had coming in, and we face the problem now of less money, so that's going to be less able to take advantage of the density.

[Polly Major (Policy Director, Vermont Housing & Conservation Board)]: Yes, and I think we still need to lean into density. We need to make it more allowed or have it be more accepted by communities, absolutely, but just setting the expectations. Density alone cannot drive down the cost of housing enough to make it affordable to the average Vermonter. And so we're going to continue to need that investment paired with those regulatory reforms. Think Marsh House here, I'll get to specialized housing in second, but Marsh House is another example in Waterbury of a affordable housing project that faced some opposition by the DRV, the Home Act passed, and they realized that they needed legally to allow this building to go up, and it's nearly completed on Main Street in Waterbury. We have also been asked to really focus on providing housing for Vermonters with intellectual and developmental disabilities. And I believe 2023 passed Act 186 that created three pilot programs around the state saying, can we create three projects that serve people with intellectual and developmental disabilities? And it was just planning money from AHS. But that allowed these projects to come forward. We worked closely with the developers and future residents and their very active parents groups to help bring these three projects online. And it was a really successful pilot, I think, for a few reasons. You added homes for a vulnerable population. It tested out different models for housing people with intellectual and developmental disabilities. It's a population that needs these different models. So you have a group home model in Moncton. You have individual homes, apartments in March House and Waterbury, and you have individual homes with some shared space in Burlington. It then went on to seed other projects that didn't have this planning money, but they happened anyway. So there's, we recently funded a project in Brattleboro,

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: it

[Polly Major (Policy Director, Vermont Housing & Conservation Board)]: was one in Hartford as well. So these are continuing to go on. In Act 69 last year, that's the bill that also contained CHIP. You created a study group to look at how does Vermont create a plan to meet the 600 home need for this population. We were on that study group, I really would encourage this committee to hear from Susan Aronoff, who's in the room here, and Kristen Murphy, who chaired the committee from the Developmental Disabilities Council, hear about the very concrete plan that they come up with there because I think there's a lot of promise in doing that work. Regulatory reform. Act 181, I think we see a lot of potential in the tier one growth areas. The priority housing project provision that we've had for many years here in Vermont, we saw it be very effective. It was kind of a test case. What if we lived in Act two fifty jurisdiction and growth areas from housing? What does that do? Well, it creates housing. We saw that with affordable housing over the last decade. And I'm really hopeful that now that that's broadened all housing in the growth areas, we're going see that continued growth. Appeals reform, Gus touched on, this is really an issue of cost. This is an issue of unlocking housing, making developers willing to step forward. And I was really excited to hear Let's Build Homes testimony yesterday about looking at how can we empower the planning process and shift governmental decisions to the planning process earlier in the project phase so that we're eliminating a governmental decision and eliminating an opportunity for appeal. Once a community has said, we want housing, once they have an acceptable code for that housing, then it should be allowed to be built rather than needing to go back to the DRB for that additional opinion that can then be appealed. So lots of details to be worked out there, lots of stakeholders to talk to. I think we're really excited to be part of that conversation with them.

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: Let me just add one point to the appeal question related to Putney, which is when we funded it, we thought it could be built for about $11,000,000 When it got built, it became a $15,000,000 deal because of the delay of close to four years and change in cost of labor and materials over that time. So it does have a real impact and what drives people out of doing what are considered to be risky developments, developments where they're sure they're gonna be challenged is uncertainty. People just will not take it off. Our friends at Rural Edge were invited by the select port in Greensboro to convert the old building, the old town building into housing and build an adjacent building and they put a lot of effort and work into it. And when the community opposition roared, people asked for a vote and they lost sixty, forty. So a piece of our work is also changing parts and minds.

[Polly Major (Policy Director, Vermont Housing & Conservation Board)]: Touched on the corrective action plan process a little bit. This is getting approval from ANR for the plan to clean up contaminated sites. I think we really need to do more tangible work in shortening that food and whole process and looking at the standards to which we are cleaning up sites. I'm not a scientist, I don't know where the standards should be, but I think it's time to revisit that and really have that conversation. A couple of questions about that. As part of our legislation last year, we asked them to produce a report on how to substantially improve the process. Have you had a chance to

[Marc Mihaly (Chair)]: look at that report?

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: I have not.

[Marc Mihaly (Chair)]: We've not seen it. I think it would be a request. I'm not sure how or where that we're going to tackle that, but the 57 page report is a beginning, but that's all it is. And I think that it would be very valuable to have from BHCb thoughts and recommendations on exactly what ought to change.

[Polly Major (Policy Director, Vermont Housing & Conservation Board)]: We're happy to also talk to developers we work with, because I think they're the key voice here and key perspective, so we can continue that and report back to you.

[Marc Mihaly (Chair)]: Thank you.

[Polly Major (Policy Director, Vermont Housing & Conservation Board)]: Cost containment, a hard conversation to have in ten minutes. I think kind of the top line here is that affordable housing developers, whether they're nonprofit or for profit, are the most motivated developers in the industry to contain costs because they cannot recoup them by raising grants on the back end. And so we see that these developers are using a lot of strategies to contain costs and they're up against huge inflation in labor and in material costs. All projects are competitively bid, and that's helping to ensure they're getting that best price, but we have a small labor pool, and as Gus spoke to earlier, all housing developers are using the same contractors, the same builders. Having additional growth in the labor industry would be helpful there. A key thing the developers have been doing is making hard design choices. What you're seeing here is two projects, let's see, Cut New Landing, we probably did in 2018 or 2019. Very attractive townhouse design. This is something we're getting asked for a lot from communities. They want to see something that's fitting in with the look and feel of the local communities. But that is more expensive to build than a 30 unit double loaded corridor building like this building in Baccarat, which I will say is more attractive from the other side. This is just the picture I scanned last night. It has a nice playground. But we're really seeing a shift in design, and while it is good to try to contain costs, we also need to think about community acceptance and being welcomed into communities. Within this design, there's a lot of value engineering that's going on. So that's looking line by line at the pieces and elements going into the building and saying, do we need that? Or is that a place we can cut? I think a place I think about is interior sound insulation. It costs money to do, but if you're housing families, someone whose child was crying at 2AM last night, it's really important for quality of living. And those are the hard decisions these developers have to make to say, we're gonna have to cut costs there. And we know there's going to be an impact. And they're always trying to balance that on every line in the budget.

[Marc Mihaly (Chair)]: We're sort of near the end here, you should think about wrapping up.

[Polly Major (Policy Director, Vermont Housing & Conservation Board)]: Yes, let's use 10:00. Leverage is important. Happy to talk about this more. We talked a lot about how labor is driving up the cost of housing, how we need more labor force in the state. We were asked to stand up a program in partnership with Career Technical Education Centers get students onto job sites building housing. The Community Loan Fund is running this program. And it's really small but mighty and well loved by the students that get to participate in it and by the governor here that was helping with the first house in Newport.

[Gus Seelig (Executive Director, Vermont Housing & Conservation Board)]: So just to finish up this last slide, we're looking here at what the need is and where the need is for housing. And I know you hear from the employer community all the time and have doctors who can't find housing. We're beginning to see some signs, I think in some parts of the state of some softening in the market. But what the data is telling us is that of the rental homes that we need, three quarters of them need to be affordable people who are under 80% of median and two thirds of that housing actually needs to be deeply affordable for people who are at half the median income. So I think that that's the challenge that we all face. Kathleen is up next and is gonna be talking I'm sure among other things about rental assistance and you've already heard from her in the off session about problems of maintaining rental assistance, whatever you can do to support her programs and support the housing authorities in keeping our current rental assistance level and increasing it is gonna be really important because even with deep capital subsidies, if you're living on $20,000 a year, if you're a disabled person living on a little over 1,000 a month, it is really critical to have as much rental assistance in the state as we can possibly generate. And our capital dollars will go further with rental assistance than they will without them. We also have a national program, the National Housing Trust Fund that specifically targets people at 30% of median. When we compare that up with Kathleen's program, it's easy to spend as her resources shrink, it's going get harder to spend. We don't want to spend both pets and pets. But I would leave you with a chart for more discussion about where the challenge is. And I know that people who make $120,000 a year are not finding the choice they want in the housing market. But if they're not finding the choice, if you're somebody making 40,000 a year, 20,000 a year, or you're really gonna be troubled in this housing market. So with that, I think we should stop talking, but we're happy to come back.

[Marc Mihaly (Chair)]: Well, thank you so much for coming. Appreciate your slides as well. And I know we will have you back in various contexts.