BRATTLEBORO—The Selectboard, having learned of potential alternatives to ease financial burdens for tenants and landlords, will reconsider an ordinance that would cap the up-front costs required to rent an apartment in town.
In December, the town will take up the proposal from the Tenants Union of Brattleboro (TUB) for a town ordinance that would prohibit landlords from collecting advance rent from a new tenant beyond the first month’s rent and a security deposit.
Most housing organizations cite a 5-percent vacancy rate as a sign of a healthy rental market. Brattleboro’s vacancy rate hovers around 0.5 to 1 percent. Supporters said capping these costs would increase tenants’ access to housing in the town’s tight rental market.
Opponents, however, worried the proposal would eventually increase costs for landlords and, therefore, hurt tenants who would presumably absorb these costs in the form of higher rents.
Special funds for landlords, tenants?
At the board’s Nov. 17 meeting, Planning Director Sue Fillion outlined programs that could support tenants with up-front costs or help landlords recoup lost income from tenants who leave without paying for their last month — a problem that many property owners claimed in defending the practice during a public hearing about the ordinance in October.
In a memo to the board, Fillion presented a form of insurance called landlord risk-mitigation funds or landlord guarantee funds.
Such funds can be structured in a variety of ways. Ultimately, they “expand housing options for individuals facing housing barriers” by guaranteeing that landlords enrolled in the program receive reimbursement for such expenses as property damage, non-payment of rent, or eviction costs, wrote Fillion.
A hallmark of the mitigation funds is that tenants receive “a letter of credit” that they can give to the landlord.
Examples of how the funds can be structured included programs that support households that meet certain criteria, such as ones with veterans, low-income wage-earners, or people with criminal records.
Money for these household-specific programs typically comes from a combination of public-sector sources, community organizations, and existing housing programs. Nonprofit organizations, municipalities, or charities operate the funds, according to Fillion.
The expenses such funds pay for are limited — for example, a fund might cover property damage and unpaid rent.
The funds can also be structured so that a tenant applies to the program or the landlord applies.
Fillion also outlined how a local housing voucher or grant program would work for income-eligible households to use in the private rental market. Landlords could also apply for insurance through the private insurance market.
In her memo, Fillion also highlighted her office’s work to update municipal regulations to encourage the creation of new rental housing.
On Sept. 1, the Selectboard approved an interim zoning bylaw that Fillion described as “a good illustration of the effect that regulations can have.”
According to Fillion, the interim bylaw accomplished two goals. First, it removed density standards for the town’s thickly developed parts of town. In areas of town zoned as Residential Neighborhood, the bylaw opened the door for multi-unit buildings.
Since its approval, permits have been issued for 18 new rental units, with 13 of those units possible only because of the bylaw, Fillion wrote in her memo.
The Planning Office’s review of town land-use regulations continues with an eye to identifying regulations that inadvertently increase development costs, she said.
Fillion hopes to hear by the end of December whether the town will receive a Municipal Planning Grant from the state Agency of Commerce and Community Development (ACCD) to create a housing action plan.
Can CDBG funding seed a fund?
As part of the board’s consideration of the ordinance to cap upfront rental costs, board members had asked Town Attorney Robert Fisher to return with information.
Fisher was tasked with investigating whether the town could use Community Development Block Grant (CDBG) monies to fund rental support programs.
CDBG funds — ultimately federally funded — come to communities through the state ACCD to support housing and economic development projects.
In a nutshell, no, answered Fisher.
Use of community development funds are restricted to developing housing and other economic programs and aren’t allowed for rental programs except in very limited situations (such as when tenants are displaced by other programming, like redeveloping an apartment complex).
Board member Daniel Quipp said that the state received federal funds through the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to help people access or stay in housing.
Lawmakers earlier this year allocated more than $80 million of the state’s $1.25 billion CARES funding to housing.
The problem, said Quipp, is that Vermont does not have enough housing.