Vermont Legislature SmartTranscripts:

[Emilie Kornheiser (Chair)]: Well, hope everyone had a meaningful time on the floor. I got to pull the baby the whole time, so I'm feeling pretty great about the day. It is 10:40, and our next witness is Chittenden at fifteen. And so we have, like, thirty minutes to talk through some stuff. And I'd love to start with pre K, if that's okay with both. It's hard to have a discussion when no one's looking. Okay.

[Mark Higley (Member)]: Mark.

[Rebecca Holcombe (Member)]: Jim, we're talking about pre K.

[James Masland (Member)]: Okay. Trying to complete a test.

[Emilie Kornheiser (Chair)]: Thank you

[James Masland (Member)]: very much, madam chair.

[Emilie Kornheiser (Chair)]: Hi, Carolyn. We're talking about pre k. So the topic is huge and a small part of what we're doing in the grand scheme of all the things we're doing. We spend some time trying to understand how things fit together in current law. And we ideally need to make some decisions about future law. And I'm wondering if folks have thoughts on sort of how we should navigate that conversation and then what further testimony people are interested in with regards to it. Where I'm leaning is to put essentially a hypothetical scenario on the table for us to work through in the form of something legislative language. So we can just have something tangible that we say, Okay, we make the weight one, what are the impacts of it? Because that seems like an easier way to have the conversation than all of the hypothetical implications that we were talking through the other day. If I do that, I want to be clear it's not a policy proposal I'm making. Because generally, when language goes on the table, it's perceived as the chair's policy proposal. Is that okay? So I'm going to put a hypothetical on the table probably next week, if that sounds like a good idea to folks. And it'll be something like a weight of one, essentially treating four year olds, maybe three year olds, as if they're kindergarteners.

[Mark Higley (Member)]: Yeah. Why a one? I thought the way it is now, it's a 0.46.

[Emilie Kornheiser (Chair)]: Well, we know that point four six makes no sense, and one is what kindergarteners are. And then so we would work walk through from there.

[Mark Higley (Member)]: Right. What

[Rebecca Holcombe (Member)]: do you mean by point four six makes no sense?

[Emilie Kornheiser (Chair)]: Well, it was, my understanding, a totally arbitrary decision. But I think you were more involved when it became 0.46 than I was. So if you have more info on that,

[Rebecca Holcombe (Member)]: be happy to. It was just tied to the particular way we are constructing it. So when you say one, are you assuming that there are other changes in health programs?

[Emilie Kornheiser (Chair)]: Yeah, then we'd have to figure out what those other changes that we need to make are.

[Rebecca Holcombe (Member)]: And is that what we do or is that what This is where I'm confused, because that feels like Ed policy.

[Emilie Kornheiser (Chair)]: I think we'd have to name what sort of decisions still need to be made. That would be other committees' jurisdiction as we're working through it. And what are ours?

[Rebecca Holcombe (Member)]: And I would just observe that for me, how you weight it is very dependent on what that policy decision is. We

[Emilie Kornheiser (Chair)]: could also say, what if we weight it? What are the policy decisions that need to be made? That might be

[William Canfield (Vice Chair)]: a good way to be

[Carolyn Branagan (Member)]: able type. Let me say that again.

[Emilie Kornheiser (Chair)]: If we wait it, what are the other decisions that need to be made? And then we can send those decisions off to the two committees they'd most likely go to.

[Carolyn Branagan (Member)]: I like the idea.

[William Canfield (Vice Chair)]: But other decisions to be made, you're talking about the school district, what do they have to pay for that we don't have on the table yet?

[Emilie Kornheiser (Chair)]: So that would be one thing. It would also be, would we change the number of hours that the state is officially covering? Things like that. How is it delivered? Those would be decisions we would then send off and say, here are the implications of those decisions. Do you want to make them? Then it would come back

[Carolyn Branagan (Member)]: to us again. I think Yeah, go ahead.

[William Canfield (Vice Chair)]: Okay. What about these instances where communities are not running their preschool inside the school? They're funding it out to private.

[Emilie Kornheiser (Chair)]: We would have to say, like, Okay, so in that scenario, what are the decisions that need to be made from there? What are the fiscal implications of it? So when Emilie and the entire JFO staff team came in and talked through the implications for individual, fair families, the implications for centers, the implications for schools, It was a little for me, it was a little abstracted. And so I wonder if we said, if we make a weight of one, if we change to a weight of one, what would be the implications for this party, this party, and this party in these different scenarios? It seems like an easier way to understand the decisions we need to make. I don't know, Mark?

[Mark Higley (Member)]: So, know, again, I'm trying to get my

[William Canfield (Vice Chair)]: head around all of it.

[Mark Higley (Member)]: One would be that $15,033 figure

[Emilie Kornheiser (Chair)]: From the foundation formula?

[Mark Higley (Member)]: Yeah.

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: Maybe, yeah. With weights, yeah. It would

[Emilie Kornheiser (Chair)]: be treating them like kindergartners.

[Mark Higley (Member)]: I've got a lot to understand about the whole process.

[Emilie Kornheiser (Chair)]: Does it seem easier to understand if we make it that much more tangible, though?

[Carolyn Branagan (Member)]: Yeah. Okay. Yeah. I just wanna say, I love it. I guess then we can say, oh, what happens with the families? What happens with centers? What happens with the schools? What are their incentives to do this and that? So I like it, it gives us a starting point.

[Mark Higley (Member)]: And

[Carolyn Branagan (Member)]: then I like that we can say to the policy committees, you think about X, we're not going to make that choice.

[Mark Higley (Member)]: Go ahead. I

[Rebecca Holcombe (Member)]: think this is a case where universal state policy has very, very different implications in different regions of the state. So for example, schools aren't deciding to farm this out. It is a mandatory voucher program, and we actually closed some rural public school programs because if you lose enough scale, you actually can't operate. So that's just a fiscal decision that they're making locally. It's a very different dynamic in remote rural, near rural and urban. It's a very different impact. So I think we should look at different regions of the state, and I think we should also look at the price to the state overall of different policy choices, which is very, very different from the price to local communities, because the impact locally, what makes sense financially locally, may actually cost the state more overall. And I think we have been a little slack about paying attention to that.

[James Masland (Member)]: Yeah, I think at some point we need to hear from tax on where that payroll deduction tax is and what's the balance and how much is going

[Mark Higley (Member)]: to schools.

[Emilie Kornheiser (Chair)]: Sometimes when I do regions of the state, purposely pick regions that are not well represented in this room, and then sometimes pick regions that are very well represented in this room, so we're hearing from our people. Do folks have a preference on that?

[Carolyn Branagan (Member)]: Carol? I thinking that maybe we have different ways and different ways try that. Okay, that is, you're taking a leaf. Yeah, I am leafing. You're talking about looking at different regions and what impacts in one place is going to be completely different from another place. So, all right, fine then, what would the, what would, which, how would we break out the regions to look at them depending on that impact and then look at what one point zero does in each of the regions? I mean, maybe that.

[Rebecca Holcombe (Member)]: I would support taking the names off the regions. I think they're prototypes and I think we need to look objectively at this as a policy choice, independent of how we defend our own regions. And I also think this is a sector, it's actually interesting how parallel it is to our education conversation, where there are different expectations of the providers in different sectors. And so I think when you talk about using the same weight that you're fundamentally paying for different services and different contexts, I don't know if it's a regional instrument weight, I think it's a context issue of that weight.

[Mark Higley (Member)]: So

[Rebecca Holcombe (Member)]: does that work for kids to say something?

[Carolyn Branagan (Member)]: That

[Rebecca Holcombe (Member)]: would be the same conversation, but I'm not saying here's a hypothetical example that might exist in Vermont, it might be a real data. We often use, when we

[Emilie Kornheiser (Chair)]: And Julia has done that for us a bunch

[Rebecca Holcombe (Member)]: of times. And that's great, because then we don't get personally invested.

[Emilie Kornheiser (Chair)]: I was always grateful on sort of summer task forces when we were really sort of getting into spreadsheet wars a little bit, that Windham County was always on the fifth page. So I would tend to not look at my own district. And folks from Addison County were always in a hard spot because they couldn't help but immediately look to their own district. Are there any, as we're sort of putting together testimony for that, are there other things that immediately come to mind for folks? Yeah. In terms of how it's

[Rebecca Holcombe (Member)]: been, have you had conversations with Chair Conway about whether they're looking at different approaches to this. I mean, one approach that's been used in other places that have tried to do what we've done at scale is instead of having this entirely individual verification, individual this, that and the other, they have market managers who actually contract for immediate capacity. What we do know about a subsidy based approach is it tends to drive inflation in the sector, but necessarily create supply. And that's kind of where we are right now. The way people negotiate around that is they don't do a demand driven system, they do a market managed system. Is that something we're even talking about?

[Emilie Kornheiser (Chair)]: I have not talked to the two other chairs about this in a couple weeks. We talked about it before the session started, but we haven't talked about it since the session started. So I'm gonna check-in with them about like, as we've all had more time in committee to figure out how

[Carolyn Branagan (Member)]: we wanna divide it up better. That makes me think of different people who've approached me and said, yesterday at lunch, somebody, well, asked CPAs at the CPA lunch, do you hear anything or do you see anything different in households where they are over 595% of poverty and need childcare? And one CPA said, yes, I see one person in the two person household dropping out of workforce because they can't afford what is now an inflated childcare price, even higher than it was before. Then someone else said that when you have two healthcare workers, and we have healthcare workers. Do you mean doctors? No, not necessarily, might be two physical therapists. Not

[Emilie Kornheiser (Chair)]: like an LNA though, when you say healthcare workers?

[Carolyn Branagan (Member)]: No. Thank you. I don't know. Maybe there's an LNA married to a surgeon, and that just 75,000, whatever it is. And now there's a person who has to make a decision based on childcare costs, what to do. Not only do I not like that, but even a bigger, broader economic picture is we're trying to help people by giving scholarship help and all kinds of help, reducing what they owe to pay back loans and so forth. And then when we have them, if they are driven out of the workforce for many years. This is, I can't solve this, I'm looking at you because you're the chair. Is a situation,

[Rebecca Holcombe (Member)]: it's not

[Carolyn Branagan (Member)]: a good situation. So when I hear that subsidy can drive inflation, I think that happened.

[Emilie Kornheiser (Chair)]: Yeah, I think we need to be narrow enough that we're really only focused on pre K. Make sure that nothing we do to change anything in pre K is having a negative impact on birth to three. But I don't think we can go We don't have the capacity to go fully into rehashing the birth to three conversation. Just in the interest of finishing anything. Fine.

[Carolyn Branagan (Member)]: I will not. We're gonna begin to fight this one.

[Rebecca Holcombe (Member)]: Yeah, no. It's yeah. And

[William Canfield (Vice Chair)]: I've been slinged not in this room, but with this comment before, but I'm committed to it. Because one person in the household is dropping out of the workforce to be at home, that's not a bad decision. Sometimes people make that decision for the good of their family for personal reasons or for whatever. So anyway, in mind that, because I know I'm twice as old as anybody else around here.

[Emilie Kornheiser (Chair)]: I don't really don't think that's I

[Rebecca Holcombe (Member)]: mean, maybe Teddy, but I don't think you're twice as old as anyone else.

[Emilie Kornheiser (Chair)]: I don't think it's all mentioned. Think, personally, I want people to make those decisions based on what's best for their family and not what they feel absolutely forced to do, at risk of going hungry, right? That's I agree, yeah. Thing that hasn't come up yet is the overlap of the Child and Dependent Care Credit, which we're going to need to make decisions about in the context of the federal changes as well, because that credit is passing through. Right now, if we link up to federal tax law, that credit's going to go up.

[Rebecca Holcombe (Member)]: That was actually part of my question. Could we also I think we need to model the impact of some of the proposals we've been talking about. So if you move pre K into, for four year olds, into schools, which is one of the things people have been kicking around, it actually potentially could have an impact on the business model for the zero to three. But on the other hand, if you're not taking the three year olds, you might offset some of that. We just don't know. We don't know how that interacts. So we have to have to do some pretty significant modeling. The other thing is there are different cost structures in different settings that we ought to be modeling the impact of. And there are also huge costs associated with dual regulation. And if we remove dual regulation, what we're talking about is avoidable costs. It is much harder to model, but it is very, very real. And I know that many schools, and one of the reasons we lost after school was there was a change made that no one paid any attention to that required schools that ran after school programs that were child cares to get dual regulated. They were just like, forget it, we're done. And so we just collapsed. Yes, absolutely. I think there's a

[Emilie Kornheiser (Chair)]: question of whether or not dual regulation is our jurisdiction or another committee's jurisdiction. And it's interesting because even the question of dual regulation, we have two committees, right?

[Rebecca Holcombe (Member)]: It's basically committees, and it's driven by the fund. Absolutely. If the Ed Fund is only used for school based programs, then you can end the dual regulation. If you're using Ed Fund to support by the childcare providers, then you have to have dual regulation.

[Emilie Kornheiser (Chair)]: And if you don't have dual regulation, I think you then wind up with just an important question that needs to be solved of the transition from families making transition from one system to another,

[Rebecca Holcombe (Member)]: It's certainly which is something going anywhere else. Absolutely. And rules are not consistent now. There are different rules in different settings, even with dual regulation.

[Mark Higley (Member)]: The thing that, you know, part of it isn't in our arena, I guess, but I was looking at the Building Bright Futures education outcomes in Vermont, which concerned me, we didn't have an opportunity to talk about them. I'm sure there's a tie into the amount of money spent, maybe, and the outcomes, because, you know, I'd certainly like to understand the outcomes a little better, what they need, and it doesn't look good to me, and the kind of money we're spending, how are we spending it to get those proficiency ratings. It's not good to me.

[Emilie Kornheiser (Chair)]: I do think that's outside of our jurisdiction, because it's less because to understand what sort of quality and adequacy ratings measurement looks like is actually an incredibly, deeply complex issue. Because every region prioritizes and measures something else to some degree.

[Mark Higley (Member)]: Again, I guess at the end of the day

[Emilie Kornheiser (Chair)]: You're like, what are we getting for money?

[William Canfield (Vice Chair)]: A bunch more money.

[Mark Higley (Member)]: Totally. I have to understand whether or it's going to be worth. Yeah.

[Bridget Burkhardt (Clerk)]: But I'm sorry, I came in late. Did you talk about trying to identify the actual cost?

[Emilie Kornheiser (Chair)]: Yes, we talked about the cost to the state and the cost to communities and the cost to schools and the yes. Yeah.

[Bridget Burkhardt (Clerk)]: It's interesting to look through all the reports and varies anywhere from 10,000 to $14,000 for the cost of pre K delivered in the public setting, but our tuition amount is only about $3,800

[Emilie Kornheiser (Chair)]: And that's for right and like how many hours do each of those things Exactly. Equate

[Rebecca Holcombe (Member)]: Thank you for pointing that out because some of those programs are full time programs, they're just not weighted for it and they're eating it out of their budget. That's often used as a comparison, You cannot This is apples to oranges. And I thought that slide on performance was so irresponsible. I do think that we can look at impact of investments, but you can't do it using the data that you use. And I could design a test that everybody in this room would fail, and I could design a test that everybody in this room would pass. You can't compare proficiency rates across assessments like that. It's just not done. But we did have data at one point where you can look at dosage in pre kindergarten and look at, for kids who had different rates of exposure by different demographics, what was the impact on third grade performance and look at the bump. And that has been done, but no one's done that model in ten years, but I'm aware.

[James Masland (Member)]: Yeah, years?

[Rebecca Holcombe (Member)]: I don't have. Yeah, it was done in 2014.

[Bridget Burkhardt (Clerk)]: Okay, thank you. Do the schools have any better accounting than they had years ago, where every report says it's impossible to figure out what the total cost is for pre K because of coding, because of different accounting

[Emilie Kornheiser (Chair)]: So what Building Bright Futures, I think mentioned sort of in passing, is that they received this pre K grant from the feds, and they are going to use a portion of that grant to I mean, on some level, someone could really drive around to each district and create their We don't have that many districts that it would be such an incredible lift to get this data. And so they're gonna use part of that grant to actually just firmly answer the question.

[Rebecca Holcombe (Member)]: But you've gotta control. I mean, some of our prekindergartens have fully trained qualified teachers, some of them don't. And unless you're controlling for all those variables, it's really hard to know what's making the difference, or whether we're even seeing a difference. So we just don't know, because our implementation did not collect baseline data, and we did not have consistent expectations for the same designation.

[Emilie Kornheiser (Chair)]: And you're talking about costs, not quality measures.

[Bridget Burkhardt (Clerk)]: Cost, I'm talking about the Uniform Chart of Attendance, which still isn't implemented equally across the system.

[Rebecca Holcombe (Member)]: No. We don't have a consistent they're having issues with the e finance system. They should I mean, I don't know why. They're not using the chart of accounts because they agreed on it.

[Bridget Burkhardt (Clerk)]: Yes. It's not consistent. Huge.

[James Masland (Member)]: It's a thing.

[Emilie Kornheiser (Chair)]: Anything else on this?

[Mark Higley (Member)]: Okay.

[Rebecca Holcombe (Member)]: Yeah, sorry. I really think we need to take seriously the potential loss of CPAP subsidies. Mean, I think we need to look at the

[Emilie Kornheiser (Chair)]: Like the loss from the Feds?

[Rebecca Holcombe (Member)]: Yes. There has been some expression of intentionality about ending that program. If that program is ending, that's a loss of money.

[Mark Higley (Member)]: It's

[Rebecca Holcombe (Member)]: actually not as much money as people think of it. I think it's only about 15,000,000. And we probably put 15,000,000 into administration just because we chose to do a very complicated compensatory model. So that if we do lose that money, there might be some thinking now about what happens if we do to rethink the system. Is

[Mark Higley (Member)]: that the Head Start money or are they?

[Rebecca Holcombe (Member)]: It's a separate money. Well, we may lose Head Start too.

[Emilie Kornheiser (Chair)]: But it is separate money from Head Start. So way we so CCFAP in Vermont, which is child care financial assistance, some of it is federal dollars in a pot. And then we add general fund dollars to the pot, and we add the payroll tax dollars to the pot. It's more complicated than that, but that's the basic outline. And so if the federal money went away, how would things change? Head Start money is more focused and slightly differently managed.

[Rebecca Holcombe (Member)]: But it's a risk. We made a policy choice as a state to treat Head Starts as a standalone pre kindergarten for the state funding as well. The risk is it creates an incentive to have programs that are highly economically disadvantaged and other programs that aren't. But it's not true all over the state. Not true all over the state, but it is in some places. My point is those are the most vulnerable programs right now. And so part of our conversation has to be how do we protect those kids? Because those are actually the kids for whom investment in pre kindergarten makes the most difference. So we to be chewing gum and walking here.

[Bridget Burkhardt (Clerk)]: Ultimately, our goal is to really come up with a weight.

[Emilie Kornheiser (Chair)]: And the rules that would be attached to that weight to some, the questions about the rules that would be attached to that weight. So if we make a weight, so when we make weights for the K-twelve system, there's an assumption of

[Bridget Burkhardt (Clerk)]: What the basis of what the services are.

[Carolyn Branagan (Member)]: Yes. And so that would need to

[Emilie Kornheiser (Chair)]: be attached to pre K, and some of those decisions we can make here, and some of them we would need

[Carolyn Branagan (Member)]: to send off to other committees.

[Mark Higley (Member)]: Yeah. Yeah, thank you.

[James Masland (Member)]: I'm remembering a comment that Candy Coffey made downstairs in our other room when we were talking about weights, original weights. Miss that room. She said, Me too. Miss you in the room, but She said that the original weights weren't based on empirical data, just kind of made up. And so now, this discussion is instrumental in trying to figure out where we're going, because essentially, what I'm picking up from around the room is we have a variety of ways to apply empirical data and we haven't settled on it. At least that's what it seems to me. And so I'm waiting to hear some consensus emerge around the table, and I haven't heard it yet. And that's just facts on the ground. That's not a disparaging remark about anyone. It's just there's a lot to consider before we settle on something.

[Emilie Kornheiser (Chair)]: That's all. Yes. And I think one thing that is convenient timing wise is if we put sort of standards attached to it and the suggestion of a weight, then it can be validated with the contractor that's going to look at the weight. I don't know. Don't know if the contract's signed. They haven't figured it out Last week, JFO

[Carolyn Branagan (Member)]: excited. I was thinking we need this to be done.

[Emilie Kornheiser (Chair)]: So someone, maybe Julia Richter, talked about it in the chair last week, the week before. Right? Is that familiar to anyone? Okay. Great. Okay. Cool. So they sent out an RFP based on language in Act 73, and they received a bunch of proposals, and they evaluate the proposals, and I think they're in the middle of contracting for it. And so they we don't know who it is because they're

[Mark Higley (Member)]: in the

[Emilie Kornheiser (Chair)]: middle of contracting. Someone's about to have a contract Yes. Going to look at this. They're gonna look at all of the weights to sort of revalidate them, since the ones that we put in Act 73 were based on older data. But will they specifically do a lot

[Carolyn Branagan (Member)]: of work on this one? I was thinking no.

[Emilie Kornheiser (Chair)]: They couldn't, given our existing rules and system, and so we need to give them a little more fodder to be working You

[Carolyn Branagan (Member)]: mean that we're gonna talk about this session, and then they'll do more work over the summer or more direction?

[Emilie Kornheiser (Chair)]: Yeah, so if we can make pre K more consistent, then they'll have more to work with. Right now it's too disparate.

[Carolyn Branagan (Member)]: So, and who would what role does the education committee have in that? What role would we have in that?

[Emilie Kornheiser (Chair)]: I think that I think when we go a little further down this road that we just described, we can name the pieces that still need to be figured out and answered that are outside of our jurisdiction. We can pass those off to the two committees. Or five, I don't know, maybe the Commerce Committee is getting involved, I no idea.

[Carolyn Branagan (Member)]: Just described, which I thought was great. That will be used by whoever's going to be contracted to do the

[Emilie Kornheiser (Chair)]: Yeah, they're going to look at whatever we have in statute. Yeah. Are

[Carolyn Branagan (Member)]: you expecting to pass a bill on this I was hoping so, yeah. So then they'll look at that and then they'll say, okay, well, here's the weight based on that bill, or will they say like, that's a good start, but, really, this is what we think.

[Emilie Kornheiser (Chair)]: I feel like I've reached the limit of my ability to predict future. Alright. Okay. Our witnesses arrived. I just wanna do a few other things. So we now have a committee bill number on miscellaneous tax. When we do things that are smaller pieces, the health care IT sunset, I'm gonna try to Suresh is gonna try to label them as within miscellaneous and then miscellaneous tax on our agenda. And ask folks, really, if you do have something small that is revenue neutral that would fit into that bill, just bring it to the table so we can be collecting things as we go along. For instance, the bill that we heard about the local option tax this morning. Is the gov ops liaison? You're the gov ops liaison. Can you just keep an eye on that with representative Walker for us? Thank you.

[Mark Higley (Member)]: What's the bill number for which the miscellaneous tax bill?

[Rebecca Holcombe (Member)]: It's a draft. It's a draft request for me right now. We don't have

[Emilie Kornheiser (Chair)]: 20Six-seven27 is our miscellaneous tax bill, and Representative Walkersville 47. I think we're gonna hear from Maura now unless anyone has anything else. Are you joining the Zoom, Maura?

[Carolyn Branagan (Member)]: I am. I also should

[Rebecca Holcombe (Member)]: have released a survey about that.

[Emilie Kornheiser (Chair)]: It's really absolutely fine. Did you want the time while you were early to get yourself settled?

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: No, I'm Okay. I mean, it's never met.

[Emilie Kornheiser (Chair)]: Never? No. It's a little early in the session for it. Thanks for joining us. Good

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: morning. Hi.

[Rebecca Holcombe (Member)]: Morning. So folks, we are stretching

[Emilie Kornheiser (Chair)]: gears fully. I invited Laura Collins in from BHFA to talk about a tax credit that might need some renewal. This is something that would go into the miscellaneous tax bill. Floor is yours. Thank you.

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: Thank you very much. Hi, all. I'm Mark Collins. I am the executive director of the Vermont Housing Finance Agency. And you know that we're a fifty one year old organization that has mortgages and funds the creation of rental housing. And, about eleven years ago, well, let me even step back further. In the late eighties, the federal government created a federal tax credit, and it has been wildly successful, creating millions of homes, affordable rentals all across the nation. And about 9,000 of them are in Vermont, housing very low income Vermonters. Smartly, the legislature in 2000 saw what the federal government was doing with their tax credit, and the legislature in 2000 said, we should have a state tax credit. And you all created one, and that too has been wildly successful, and I'd be happy to talk about it. It has been creating rental housing since 2000. You were ahead of your time because now when I go to conferences, states are realizing that tax credits are a good way of funding housing, and they're all starting up not all, but there's more than a half dozen. That's right. Eight states now looking at creating state tax credit programs, to which I'm like, please, people. We've been doing this for twenty five years, and it's excellent. So in your wisdom, your collective I don't know how long you've been here. But in 2000, it was created for rental housing. In 2009, You got really smart, and you said, let's build some for sale homes that are affordable to people. And so that's been happening for many years. In 2013, it was right after tropical storm Irene. You all expanded that homeownership credit to include the repair and renovation and purchase of manufactured homes that we could buy old inefficient manufactured homes, largely by Riverside's, and relocate them and have them be highly efficient. And in 2014, starting for 2015, you all expanded the program again to allow VHFA to sell these tax credits so that we could fund a down payment assistance program. I call it DPA, but it's down payment assistance. In 2014, like today, having a down payment is a big burden and barrier. And renting at the prices we see now and having being able to save up, ideally 20%, but let's be honest, 5% to put down just so a bank will work with you and you can get mortgage insurance for the rest, is really hard. And so this gives you up to $10,000 to buy your first home. Your first home. We don't do this is just for first time homebuyers. So that's saying that we have $2,000,000 a year to build affordable rental. Look at this. I don't even have to look at my notes. So VHFA's program has been around for those eleven years we've been selling tax credits. There was always gonna be a sunset to this because it was designed to be a revolving loan fund. This is what we want. Because let me explain to you how it works, and it makes sense that when we give people $10,000, we actually don't lose $10,000. Every year we've been selling these tax credits. Actually, let me tell you what that is. Banks have deposits. Let's say I'm a bank and I have a million dollars of other people's money. I actually have to pay a bank franchise fee on that deposit. And that's a, I'm gonna call it a tax, you probably wouldn't, but a fee. And they want to not pay that. So they're gonna buy these tax credits and invest in affordable housing in this way. And therefore they don't have to pay so much on that tax. That's the tax credit part, which is why, yes, I'm asking for this to go into miscellaneous tax. So they give VHFA about $1,100,000 a year is how much cash we're having to put into this program. What we do is we take that 1 ish million dollars and work with our participating lenders who have our mortgage program. And if you get a VHFA mortgage through your participating lender, could be a a mortgage company, a credit union, a bank, then they'll say, oh, look at your income. Look at your purchase price. This all qualifies for VHFA. That's great. Oh, you're a first timer. We can give you up to $10,000 because you don't have enough down payment already. And that becomes what fella, silent second mortgage. It's a 0% subordinated loan, and you don't make any payments. You don't do anything about it until you refinance, because VHFA doesn't do refinances. So if you have the kind of equity that you can pull equity out and refinance, great, but you can now pay us back. Thank you very much. Or if you move or sell or die or whatever, we get paid back the 5,000 or $10,000 that we gave you. I say $5,000 because when we started the program, we were giving people $5,000 When prices have gone up, we did increase it to $10,000 a few years ago. So that's how it works. I'm gonna tell you in a minute. So anyway, so not only do we have the tax credits that we're selling every year and we're handing out that money, but over time, people refinance, they move, things happen. And so we also are getting repayments on the program. This has been a very effective tool. And I will go quickly, because I could talk about this forever. We have hit two forty nine of I our but I'm also a New Yorker, I talk fast. So why would we want people to become homeowners? I wanna be very clear. Don't think everyone should be. Don't think it's always the right time for everyone to be a homeowner. I am not like silver bullet. Everyone needs to follow one path to their housing solutions. But I do think that having opportunities along the rung of the ladder, is important. And why do I think that homeownership's important? It's because it addresses a wealth gap that we have in this country and in this state. You see here, this is national information, that homeowners' net worth is about $400,000, whereas a renter's median is $10,000. So when you exclude the home, which is important factor here we're talking about, take that out of the mix, you still have 78% of homeowners who have some kind of appreciating asset, meaning they can be hard at work laboring, but there's something earning money for them quietly in the background that they can benefit from. Whereas less than half of renters have that kind of passive income. And we're not even talking about the home's value. Here, we're talking about the home's value. Look at this chart. You can see that the equity that people have in real estate is just going up and up and up, which is good. When people have equity in their homes, they have financial stability. I'm not saying they shouldn't have equity, but we want more people to be able to reach in and gain such equity.

[Rebecca Holcombe (Member)]: Just on this chart, what are the shaded tires? Recessions.

[James Masland (Member)]: And it's a recession.

[Mark Higley (Member)]: Yeah.

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: So the realtors have data, again, national, that show this year, lots of news a few months ago when their latest report came out. Look at the orange bottom line here. The average age of a first time home buyer has hit 40 years old. It was 31 years old just ten years ago. Why should we care? Well, besides those of us who have kids living in our basement and it's getting a little old to have them still there at 40. Additionally, the whole model of a thirty year fixed rate mortgage and how it all works is that the idea, some of us may remember, I'm actually a little young for this mantra, but I know it, which is you're supposed to have your house paid off by the time you retire. Now people don't do that, and there's financial reasons why that may not even be smart. But that was the idea, was that you could live on social security, you could have a fixed income, you could not have earnings income at that time because you didn't have one of your biggest housing costs at the time. You paid off your mortgage. Well, if you're not becoming a homeowner until you're 40, add 30 on to that, tell me where your financial position is and how that's working for you. So we do want, I would like to get back where first time homebuyers are, early thirties, late twenties. I mean, we really would like to move back, but late twenties was back in the eighties here. So even thirties, I'd take. So this chart tells you about VHFA's average customer. I don't know about all homeowners. No one tells me their income if they don't have to, but these people have to. So this shows that people who got our DPA, our down payment assistance through this program, versus the people who didn't, still worthy mortgage holders, wonderful people. But you can see that the people who get this assistance are buying cheaper homes with lower mortgages. They have lower incomes. They have to borrow more. They have less of a down payment. That's what loan to value is. They're having more of a mortgage in that regard. They've lowered closing costs probably because some of that's PTT and it's set by the purchase price. A lot of those costs are actually quite fixed. They have lower credit scores. They're younger, bigger households, and things like that. So who are we helping? This program in the way back time machine was actually really championed by the Lake Champlain Chamber of Commerce. And it got started in both this committee, because this is where you do tax credits, but in the Commerce Committee. It was seen as a real economic development tool. There's a lot of conversation about employers who are clamoring to have their workers be able to buy a home because they thought that they would be less transient and would be a more stable workforce. So we started asking people, where do you work when you get a mortgage? We don't always do that, but for this program we do, and that data has not been burdensome. And you can see here what kinds of industries we are serving through this program as well as the median wage reports. You can also see the actual employers listed here, the top 10. State of Vermont is the state's largest employer. I'm gonna give you that. But it is a bit outsized compared to the other employers that we see and who we're helping. It's a nice spread of types of employers and who is being seen.

[Emilie Kornheiser (Chair)]: Arlington feels very random on that. Sometimes

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: you I think we all know how it goes. When you know of a program and you talk about it at the water cooler in the lunchroom, people go, oh, well, I'm gonna do that too. I mean, this is good advertising. So what have we done? We have, again, run this program for the last eleven years. And I said it's like 1,100,000.0 a year that we're putting out there. And we have helped over 2,100 households already. 63% of them still live in that house and have that first, that mortgage that we gave them. I like to point that out because I know those are still Vermonters who are paying taxes and working and doing economic benefits in the state. So that $11,000,000 that we've invested in those folks is still here and supporting Vermonters. Those folks, when we look at what they bought their house for, whenever it was, and then we just generically say, in that town, how much have prices risen? So we roughly could estimate how much equity that household has now. It's an average of $78,000 per household. So we gave them $5,000, if it was an old which was long ago, or $10,000, and it, magic, turned into $78,000 that you all didn't have to foot the bill for. Additionally, another 500 people might still be Vermonters living in their homes because they refinanced and didn't go anywhere. But I don't really know. Like, they also could have died or moved or something else. But those 500 people paid us back. That was $3,000,000 that we took back, that we relent out. So those folks, their homes appreciate an average of $50,000. Still great, maybe because they it was a shorter time period. So if you add up the 2,100 folks and our rough estimate of what kind of equity we're talking about, this investment of this program for the last ten years, which is

[Carolyn Branagan (Member)]: about $1,000,000 a year,

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: has generated over a $137,000,000 of wealth, and that was through calendar year 2024 because I couldn't bring it up to today's dollars in this moment. You know?

[Emilie Kornheiser (Chair)]: But Is what you were gonna do if we'd given

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: you 5 more dollars? No. I'm good. I'm not there. So it and this is wealth creation for folks that they can do what they want with. You may not like what they do with it, but I think a lot of us know what we do with our home is equity. One, we just have financial stability. We don't even touch it, but it helps our credit scores. It helps us know that if times get tough, we have that equity we can tap into. Some of us have needed to tap into it. We've got to send our kids to college. We've got to invest in a business. We want to use that wealth and take advantage of it.

[Mark Higley (Member)]: I think this is wonderful. I'm curious, you're showing us the success of your organization. How many failures have you had with all these funds that have come before?

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: It's an excellent question I'm not prepared for, but I can get it for you. There have been some where people foreclosure has happened. Yep. I feel very confident that it is such a low number. It will be shocking because VHFA has also put some money into this program, and, like, we just haven't lost we haven't had to backfill for such losses. But I would like to follow-up with you on it because I

[Carolyn Branagan (Member)]: really can't tell you the number off top of my head.

[James Masland (Member)]: There is. Yep.

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: Also, somewhat relatedly, some of the success of why we don't see a lot of losses is that we do require pre purchase education counseling that comes with this. And so we do feel like our borrowers are well educated and informed. BHFA does not do any predatory lending. We only do a thirty year fixed rate and all that. So I do think that we have a good profile in that regard.

[James Masland (Member)]: You don't have to go

[Bridget Burkhardt (Clerk)]: back to the slide,

[James Masland (Member)]: but on the previous slide, was the credit scoring

[Carolyn Branagan (Member)]: box. Do you have a credit score threshold Yes, for 80.

[Bridget Burkhardt (Clerk)]: So that's fine. Mean, you have experienced good repayment because you're underwriting each loan individually with some pretty strict standards.

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: Yeah, we're a good lender. Yep. And we've a relationship we fund the home ownership counselor home ownership centers in the state. There's five of them. They cover the entire states, the network of nonprofits. They double as the nonprofits that do housing development in your area a lot of times. So you'd know them as Windham and Windsor Housing Trust and Champlain Housing Trust and others. They also have homeownership centers. And so we fund them and try to, if someone is not yet credit worthy or something like that, then they will work with them to hopefully get them there at some point.

[James Masland (Member)]: So if someone comes to you at six seventy, you can work with them to try and get them?

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: I just wanna be clear, we don't work with them, but we fund the home worship centers to work with them. And then, yes, that's the goal. And usually it's a matter of then

[Rebecca Holcombe (Member)]: another year or something, and hopefully they work better.

[James Masland (Member)]: And does that get reviewed at all? Have we been six eighty forever?

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: We've been for a long time, and a lot of it has to do with the secondary market, in that we will securitize these and have them go to Freddie and Fannie. And so honestly, we don't pick that number. We are using Freddie

[Rebecca Holcombe (Member)]: and Fannie standards for good pricing. Yeah.

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: Representative Higley?

[Mark Higley (Member)]: Do you also have construction standards? I mean, like, you have to have central heat, you have to get all these

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: We use Freddie and Fannies. We don't have any overlay. We try not to have overlays above what other people tell us we have to have, because they're good and they're enough. But yes, there are. Absolutely, like

[Carolyn Branagan (Member)]: you have to have water and sewer. So

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: roughly, we've been helping about 150 households a year with this. I wanna be clear. This happens through the mortgage process. So you don't come to BHFA. We're not prioritizing applications. We're not looking at the need and saying you need it more than I need it, whatever. It is just happening when you go to your mortgage company, your credit union, your bank, who's a participating lender, and you get a VHFA mortgage and they say, oh, if you're getting VHFA and you're a first timer, then you're eligible if you need it. And it all happens. That's how the state gets away with offering this program for zero admin fees. We don't take anything for this. Okay? Because it's a part we're we're leveraging the mortgage closing process that happens anywhere. Trust me. There's enough lawyers involved. We don't need more. So they just there's an extra paper to design as a part of the closing process. There's a what is it? $6 page recording fee that we cover, but otherwise, that's it. So we don't have the ability to pick the winners and losers in this program the way it's been designed. So I keep saying eleven years selling these tax credits. This current fiscal year of FY '26 was the last year we could sell the tax credits that now we've sold them. We have money right now. The program is still open. Let make sure everyone knows. But last summer, our lenders confirmed that we had to ratchet back the program because the repayment part wasn't keeping up. And I'm gonna show you some charts in a second about that. So as the repayments slowed down, we had to shrink the credit box of who was eligible. And we want people to have some money in the bank when they buy a home. We want to set them up for success. So but we also have an asset limit, meaning you can't have $50,000 in the bank and then tell us that you need 10,000 of the state's money when when you could have put your money to that down payment. Okay? But we did allow people to have $30,000 because we're thinking, well, a roof would be 20. And we want people to have some cushion. So their bank account balances, their assets could be non retirement, dollars 30,000. We shrunk that to $20,000, not because we want people to be more financially precarious, but because we needed to shrink who is eligible, because we were running low on money. Lenders do not like or want programs that open and close. It's not the way their world works. They can't handle it, and they get very upset. So they would rather you curtail a program by characteristics. With the repayments being as slow as they are right now, I'm anticipating that we will need to somehow close the credit box to serve approximately 40 households a year. I don't know how I would do that. Please don't ask me what my ideas are, because the lenders would freak out if I started spitballing it here. I might close the program for a year and amass enough repayments and then reopen it. We could get creative. But instead, before I have to do that, let's be honest, I'm coming here and asking if you could put $350,000 of this DPA tax credit into miscellaneous tax for the next five years. So we have five more years to sell the credit. And then I'm hoping repayments are enough and the and the capital of the revolving loan fund is enough to be sustainable. Let me tell you what that looks like, though, because it's five year tax credit. So I'm going to hurt your brains in a minute. I was hoping you had this chart, which you usually have for a

[Emilie Kornheiser (Chair)]: few I do.

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: It's the final one. I like to charm you all for a few minutes and then make you think really hard about complicated things. First off, the chart on the left here is national. It's just showing you that total movers is dropping everywhere. We're down to 8%. If you haven't read the book Stuck by Yani Appelbaum, that's the next one. I saw you guys pass around abundance last year. Let's assign that to the book group. Because it really can trace just about all of our nation's shortcomings on the fact that we used to be a nation of tremendous economic mobility and how unique that was and how we could move to cities and jobs. And that was a very unique prospect. And now we are stuck, and that is limiting our economic and other upward mobility. The chart on the right is from this down payment program. Just look at the green bars. What this is telling you is that for the first seven years of the program, that some of these people paid us back in year two. They only had our money for two years. Why? Well, probably they're trying to avoid PMI. Maybe the job change they didn't expect. Well, it's not a lot of people, but some of the folks paid us back in year two. And you can see that as time goes on to year three, four, five, more people are paying us back because more people are likely to move or refinance the longer they're there. I mean, mortgages the rule of thumb used to be I need to see if this is still true. But mortgages really they're thirty years, but they really only are outstanding for about seven. You know? They just Very few of us have the same mortgage for thirty years. And actually, if anyone does right now, I'm concerned because you used to be able to get a 3% rate and you wanted to get that when you could have. So anyway, you can see in the early years that the green bars show that we were getting paid back. The orange bar shows what's been going on lately, which you see, we're not getting paid back, even though these people have had our money for five years. This is another way of showing the same thing. The line tells you what the average interest rates were for the year. And you can see in 2021, they dropped below 3%, and that green bar is telling you that we collected over $800,000 in repayments. Like, makes sense. We don't do refis. So they're gonna pay us back when they refinance. But as you see that those interest rates get high and stay high, you see that the repayments are stalling. This is why I don't have the churn, and we're a little stuck. I already told you that the amount of DPA has fluctuated. I'll point out to you that during the pandemic, everyone wanted everyone to take action. And so what this box is showing you is, I need to resize that graph. I'm sorry those dates don't show up well. From 2020 to 2023, we did increase all the way up to $15,000 how much we'd get, but only for low income Vermonters. We did have an income differential. So in that box, in that box, it's both 2020 and 2023, but it's telling you that if you earned more than 80% of the median income, you only got $10. And if you earn less than 80% of median, you could get $15. That was very short lived because then we started running out of money. And so you can see on the pie chart, we did not a lot of those bigger loans.

[Carolyn Branagan (Member)]: There's one chart. So

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: this is a five year tax credit, which means that when I'm asking for 350,000, it means that the bank, if they choose to buy it, they're going to take 350 and multiply it by five and give us that much money. Because they get to write off $350,000 every year for five years. So someone help me. Three fifty times five is that much money they would give us. But too smart for your own bit. So it's that much money. And then they would discount it a little bit because of the time value of money. They're not able to take that tax credit for four or five years, and they could have invested and earned on it in the meantime. So there is a small discount. We've kept our pricing over 90¢ on the dollar, though. So I feel very good about that. It's a very, very good tax credit. So what you see on this chart gets a little confusing. But you see a column for FY '26, which is where we are today, and you see a row for 2026. And that's telling you that this year, what hit the state's financials was actually a $1,250,000 hit. Because it wasn't just the $250,000 we sold this year, but it was the second year of last year's, and the third year, the year before, and all that. So you have to look at it cumulatively. So this year, we didn't cost you any extra money in that bottom green route. But next year, if we have our way, we're asking for an increase from $2.50 to $3.50, and that's because we're now giving people $10,000 And so we are hoping that this will be more sustainable and we don't have to come back to you anytime soon. And there will be a million dollar hit to the state budget because of tax credits we've already sold and you've already approved. And please don't hold that against me because that's already done. But if we get to sell a tax credits, then we would add $3.50 in the green row to the the hit on the state's budget. Next year, we'd have another year of selling those tax credits, and I'm asking for the ability to sell this for 5 years. And it's a five year tax credit, which is why I need this visual to show you that there's a tail on it. We'll stop selling the credits in FY '31, but you will see a financial impact through FY '35 because of years two, three, 04/05 of these credits. You can see in the green row what the annual impact on the state budget would be. I'm gonna be bold and call it modest. If you looked, the total impact, we added up that whole row, it would be $8,750,000. Spread over the nine years means that's less than $1,000,000 a year. It's 972,000 a year. You'd be helping these households generate $137,000,000 of wealth with this investment. Welcome your questions.

[Mark Higley (Member)]: So

[Bridget Burkhardt (Clerk)]: a couple. I know it's a commitment for five years to sell, so it's about what do you get? About 1 and a half million to sell the $3.50, yeah, for five years? Do you need the full 8 and a half million?

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: I think I do. So we I mean, first off, in statute, and it's always been set up as a five year tax credit. Could you change it to a one year tax credit? The down payment I'm sorry. The downtown tax credit is a one year tax credit. But I still need the same amount of money to help people, so I'm gonna have my ask go from $3.50 to whatever $3.50 times five is, and I'm gonna need more money. But you could swallow your medicine faster and then have the impact be just over five fiscal years and not have that tail. But it would be a bigger hit because you'd be taking it all at once. Why we're going from two fifty to three fifty is looking at the demand for the program and expectations of wanting to keep up with $10,000 per home. I was asked in house general, well, wait a minute. By 2,035, we don't know what home prices are gonna be. What if people need 15,000? I mean, to say you're giving someone $5 now sounds like a eleven year old number. You know? 10,000 sounds more of the market. And so won't you be in a position in the future to need to give someone 12,000 or something? That may be the case, but I'm a lender, and I'm financially prudent. And I'm not gonna ask you for more than I need because I might need it in the future. I think we can try to manage this program. And ten years from now, if we're still giving out $10,000 and that's not enough to keep the program running, I'll come tell you about it, and you'll decide then if that's a priority or not. But that's ten years from now. I hope you've built enough homes. We've built enough homes in partnership that home prices have leveled, and actually, this is sufficient.

[Bridget Burkhardt (Clerk)]: The biggest indicator would be on repayment would be interest rates dropping. So in your crystal ball, where is your rate now? Was it at 6% Or is it

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: Oh, our interest rate right now? About 6%. Yep. Mora Collins, who went to college to be a journalist. If we're comparing prognosis here, I think you have the training to look into the future better than I do even. But I do think that rates I mean, Eastrise yesterday was at five eight seven five. I mean, it's they they are dropping some. I do not go to conferences or read articles that tells me that we're going back to Three or four. 5% even. You know, I think people would like, I'm aware that there's certain leaders in this nation who would definitely like those rates to drop considerably. And I'm gonna stop talking about that topic.

[Mark Higley (Member)]: I actually remember when they

[James Masland (Member)]: were 11.

[Carolyn Branagan (Member)]: Yeah. Yeah.

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: Oh, my in laws bought their house at 18. 18. Yeah. Yeah. I mean, it does change. And so, yeah, I can't really predict.

[Rebecca Holcombe (Member)]: Anyone else?

[Emilie Kornheiser (Chair)]: Thank you. It's a fantastic program, and appreciate you coming in and telling us about it. And we will put it into our miscellaneous tax conversation. Thank you. Thank you.

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: I just should say, I have spoken to House General about this, and I'm hoping I'll speak to House Commerce. And so I would hope that maybe those committees might chime in on their feelings about it as well. Thank you.

[Emilie Kornheiser (Chair)]: Appreciate that.

[Rebecca Holcombe (Member)]: Thank you also for amazing. All the housing data. There's so much valuable data there, so I really appreciate it.

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: Yeah. This is a lot of hubris for me to just ask, but I am not gonna be around the building a ton in the next few weeks. So was there any other questions people had for me just while I'm here just for a moment? Because I did talk fast.

[Emilie Kornheiser (Chair)]: Well, we've already the interest rates are doing.

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: Yeah. Well, that's fine. I do and I have lots of opinions on how the world should work. But I just I'm sorry if you have other things you wanna accomplish. No. Just look at the clock there. Fifteen minutes. Yeah.

[Carolyn Branagan (Member)]: Everybody's asking for debt payments.

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: Well, it's still the standard 20% is the rule of thumb, and you need the private mortgage insurance or something. But there's government programs, FHA, rural development that can cover that. But our borrowers pay about 5% down. That's typical. What

[Bridget Burkhardt (Clerk)]: are other states doing?

[Mark Higley (Member)]: Hampshire, your Yep.

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: I can't name the states that are doing it. I can tell you that we are very unusual. I don't know any other state that's funding it with a state tax credit. Some states are now getting into what this state has done, which is having a first generation homebuyer grant program that is an appropriation, and and Vermont has done that. We've had a first gen program since 2022. That means you have to be a first time homebuyer like this program. And your parents can't have owned a home when you were growing up, or you were a child in the foster care system. And so if you're a first gen buyer, like first gen college kids or something like that, we will give you up to $25,000 of a grant. And so that's where there's some state support that more and more states are doing. But most states that have down payment assistance through agencies like ours, they price it into the mortgage. This is why this is unique. You get the regular interest rate from us. I don't have to ask the borrower to pay for their own DPA. We're using the state's money for that. So that's why that wealth generation is so powerful. Most states will say, my interest rate is 6%. If you want down payment assistance to qualify for this mortgage, you need to pay me 6.15 or 6.25 for your mortgage over thirty years. So sometimes the lender makes out on that. They end up earning more than the homeowner benefited from it.

[Bridget Burkhardt (Clerk)]: Because when you go to sell it, you get a premium, so that's how you pay for the extra money?

[Carolyn Branagan (Member)]: Say that again, didn't follow-up.

[Bridget Burkhardt (Clerk)]: Saying it's a higher interest rate, it has a higher premium in the market when you go to sell it, so that's where you get a premium from whoever's buying securitized.

[Rebecca Holcombe (Member)]: It's nice to take advantage of your presence. We've made very, very significant investments, we also live in a constrained labor environment, and we still have just a desperate need for increased supply. When you look across all the investments, we're making which of them are making they each have different ROI. Which ones are making the biggest difference for the value that

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: we're investing? I have three children, so I struggle to pick favorites. Can I tell you two stories? Because I don't know that I could pick there's two things that are coming to mind that I would say. I like financially efficient investments. So I would consider this I'm not using the term perfectly, but I would consider this like a micro loan program. We're giving them 5,010 thousand dollars and they're getting $75,000 of wealth. That's $15 for every dollar we gave them. So I like when the state can invest a little bit of money and get a big return. So I've been very impressed with the success of the VHIP program that is and I know that's in the governor's budget to move into base, and I support that. I think that that's not a lot of money, and we're getting a whole housing unit out of it. And I think it's redeveloping communities. I also the state housing authority, started up a mobile home manufactured home infill program with the state. And they bulk purchased 100 homes in the last year and have been selling them for 97,000 to $110,000 I will tell you, I was suspicious of that program. Not because I don't like mobile homes or any of the folks involved. It was I didn't think that the lenders were going to lend on a homeownership home that's on a rented lot, because that's tricky. What if the rent goes up for that pad? Or what if you lose your lease or something like that? I didn't think the lenders were going to be able to overcome that hurdle. But we have such amazing community lenders in this state, community banks and credit unions, that they have done that. And they've created twenty year mortgages for those products. Thirty years should be better, but we're working on it. So those are both programs where it's a relatively small amount of money that has created a housing opportunity. So I like that because then our dollars go farther. I also will say,

[Rebecca Holcombe (Member)]: I noticed

[Emilie Kornheiser (Chair)]: that they're very they're also you don't have sort of one administrative model either, though. Like, the tax credits that you came in talking about have a very low administrative cost. And the manufactured home purchase program is actually pretty complex for the state to be administering. So I think it's interesting you're seeing that kind of return with two very different types of state involved. That's a good point.

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: Yeah, I wasn't thinking about that. But you're right. And I was just in Senate housing this morning, and I was talking about, the investments made in VHCb, to fund traditional affordable housing do cost a lot because you get a lot in return. And what some of those one time investments have done is they've allowed VHFA to access more money for housing in Vermont. So this is a different way of being efficient with our dollars. We could look at traditional affordable housing and say, gosh, it costs a lot of money to build that. But what that investment did and I'm going to try to be high level, but the federal tax credits that are the biggest source of building rental housing in the state, there are certain ones where we have pretty much an unlimited ability to give projects tax credits. The other ones that are more valuable, they're very limited. We can only do like four a year statewide. So it's very competitive. But there's another kind where we don't give you quite as much money, but we have you can we have lots of this money to give out. How do you get those tax credits then? That's the question. What do you mean you have it and you're not giving it all out? Well, to get those tax credits, the developer has to come to VHFA and finance a big chunk of that project with private activity bonds. And so they do that through a construction loan. They come to us. They say, can I have $10,000,000 to build this building? That happens. Just using that source of money triggers us to be able to give them tax credits, and the tax credits will pay if this is a pie chart, it's gonna pay for 35% of the development cost. Then they gotta go to HUD. They gotta go to VHCb for state money. They gotta do other things to fill in the rest of that pie chart. So it doesn't happen very often because filling in sixty five, seventy percent of a pie chart is hard and expensive. And for new construction, it's just out of reach. It's not gonna happen. So we use those credits mostly on rehabs, renovations, keeping housing affordable, preserving it, perpetuating it. But when the legislature made massive investments in VHCb, all of a sudden VHCb could fill in more of that 70% of the pie chart because they had the money. So all of a sudden, we could use these tax credits for new construction. So that means we were finally tapping into this largely untapped resource. Federal resource. Federal resource. And so from, let me give you an example. When I say we have, it's unlimited, it's not really unlimited, it's limited. But let me tell you the numbers. Between 2013 and 2021 or '2, I don't have my slides open, I think 2022, 2013 and 2022, VHFA did not use $300,000,000 of that private activity bonds that we were awarded. It just expired, it went away. Then, I think it was 2021, because then in 2022, we started using all of what we were allocated.

[Bridget Burkhardt (Clerk)]: Because of the COVID money or the other money.

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: Because VHCb could make the deals work, people would come to us and ask for this money, and we could spend all that we had. Last year, it's a calendar year thing. And on literally midnight December 31, it expires like Cinderella. And we lost $11,000,000 last year for the first time in three years. So that money, when I say it expires on December 31, we actually can roll it forward for three years. So what expired on December 31 was three year old money expired. I'm telling you, we are sitting on hundreds of millions of dollars right now that I want to spend and lend. I'm a lender. I make money off that. Like, we want the housing and all that. I'm sitting on hundreds of millions of dollars that I want people to apply to us for so that it triggers these tax credits so that we can give them their 35%. I want to do this. But they are not wrong to not ask for it because the numbers don't work with this kind of lending alone. Because what am I offering people? Like, a 6% construction 6% interest construction loan. Like, that's cheaper than you'd get from a bank, and so that it's good, but it's not free. You know what I mean? It's not like the treasurer's 10% money. It's not any

[Rebecca Holcombe (Member)]: of that. You still have

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: to pay 6% on the money, we don't have enough money to fill in the rest of that pie chart. So there are different ways to measure the efficiency of the dollars we spend. So efficiency is one of my five core values I can tell you. So what are my favorite programs? It's ones that look at efficiency. But I define that differently in different ways.

[Emilie Kornheiser (Chair)]: Representative Masland.

[James Masland (Member)]: Yes, thank you, fascinating. Can you make us an example of your pie chart that you've been talking about? I mean, I I realized there may be different ways to draw

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

[James Masland (Member)]: Somewhat generic or something. Of us are visually oriented. It helps to see the picture.

[Maura Collins (Executive Director, Vermont Housing Finance Agency)]: I've done it before. Yeah. It's and it's changed since the pandemic for the reasons I was just saying. But, you know, yeah, the state money used to be about 10%, and then it grew to being about 20% of the pie and the feds and all. But, yeah, I can provide that, and I'll follow-up with the losses.

[James Masland (Member)]: Very helpful. Thank you.

[Emilie Kornheiser (Chair)]: Thank you so much for your time. Really appreciate it.

[James Masland (Member)]: Thank You bet.

[Rebecca Holcombe (Member)]: Yeah. August, we are

[Emilie Kornheiser (Chair)]: done with testimony for the day. This afternoon, if folks can finish reading reports, let me know if there's reports that you think we should hear testimony on. And both the education the Education Committee and the Senate Finance Committee have heard testimony that might be relevant to us. So if you're scrolling through agendas and watching YouTube videos, let me know if there are things we should be duplicating here or just sending people links on. Thanks. See you Tuesday.