TAX CREDITS & TAX-EXEMPT BONDS: STATE-BY-STATE PREVIEW

VERMONT

BY BENDIX ANDERSON

AFFORDABLE HOUSING FINANCE • DECEMBER 2007

BURLINGTON—Applicants for low-income housing tax credits (LIHTCs) in Vermont next year will have to meet tough new green design standards, according to the draft 2008 qualified allocation plan (QAP).

Standards for the conservation of resources and the creation of healthy living space fill 40 pages of the state’s draft QAP and address issues ranging from landscaping to energy efficiency to indoor air quality.

The 2007-2008 QAP will become final in December, after a public comment period. But Vermont officials expect little complaint from their development community, which is dominated by nonprofits.

"The current draft policy is essentially a compilation of the practices already put in place by most affordable housing developers in Vermont," said Joe Erdelyi, director of development for the Vermont Housing Finance Agency (VHFA). The draft QAP is available at VHFA’s Web site.

Vermont’s unique tax credit competition has no deadlines. Applications aren’t scored by a point system. Instead, projects win credits based on how well they meet the program’s threshold requirements and their readiness to proceed. Almost every project that applies is eventually funded, according to Erdelyi.

Officials expect to reserve $2.3 million in 2008 LIHTCs. Developers applied for $2.3 million in 2007 LIHTCs, only slightly more than officials had to reserve. All of these were reserved for projects sponsored by nonprofit developers. The projects average just 18 units in size.

Affordable housing projects can also receive gap financing in the form of soft loans from the state’s affordable housing trust fund, administered by the Vermont Housing and Conservation Board. The fund provided $7.8 million to housing projects in 2007.

VHFA will also reserve $400,000 in state housing tax credits, up from $300,000 in 2007.

Vermont will also have a total of about $230 million in 2008 tax-exempt bond cap, none of which is formally set aside to finance affordable housing projects. However, VHFA takes applications from rental projects to use this bond cap throughout the year.

2008 LIHTC PROGRAM: