State tries to find money to expand new housing

Vermont agencies explore new ideas to address lack of housing stock and a crisis in homelessness

As unhoused people - some nursing children, some nursing pets - camp in tents during this rainy summer, they are deluged by more than water.

There is a sense of hopelessness, because even with the best of intentions - and with the Vermont Treasurer's Office making $85 million available for investment in housing, climate, and social equity initiatives - construction can not happen soon enough.

And as the state wrestles with homelessness within its borders, the number of the unhoused is growing.

Jess Graff, co-chair of Vermont Coalition to End Homelessness, speaking last month at a virtual policy forum on homelessness organized by State Treasurer Michael Pieciak, noted the Point-in-Time Count, the federal government's annual census that counts the number of unhoused people in the nation each year on the same day.

This year's results for Vermont "represented a 19% increase from the 2022 count and a sort of shocking 36% increase in families with children," she said.

Rents rising faster than paychecks

Incomes are not keeping up with rising housing costs.

"Over the last 20 years, our incomes in this state - not everyone individually, but overall - have gone up about 3.5% a year over the last 20 years," said Maura Collins, executive director of the Vermont Housing Finance Agency.

"It's been a good two decades for folks. But median rents went up 5.7% a year. And median home prices went up 7.4% a year," she said. "So you can imagine that growing divide that we're talking about."

Collins said that the rise in prices is "getting worse and worse every year, when our incomes can't keep up with the price of housing, and the price of housing is going up because that supply is too small."

"Back in the 1980s, we were building and adding about 3,200 homes a year to our housing stock," she said. "Those were just primary residences. I don't even count vacation homes. Now it's about 1,400 a year. But our population has grown by 26%."

This turns being housed into a game of musical chairs, said the chief speaker at the forum, Gregg Colburn, who recently published a book on the subject, Homelessness Is a Housing Problem.

Colburn, an assistant professor of real estate in the University of Washington's College of Built Environments, told the forum's approximately 280 attendees that a good way to look at the problem is to think about playing musical chairs when at least one player is on crutches. Eventually, he said, because of their vulnerabilities, these players will be out of chairs and out of the game.

The answer, he said, is more chairs. The answer is more housing.

Running to stand still

Social service agencies get to feel a sense of failing, Graff said, because they work so hard to provide resources.

"We have much success," Graff said. "We have thousands of households a year we support around the state and who are exiting homelessness into permanent supportive housing."

But often those conversations start at the local level, he said, as they ask questions like, "How are we going to get substance use treatment services on site? What can we do for vocational training and employment assistance?"

Homelessness is not a personal failure, he said. "It is communities', and the society's responsibility, to be able to provide the housing stock that is needed."

Pieciak's office is tackling the problem directly through the substantial expansion of the "10% in Vermont" local investment program, which authorizes the treasurer to invest up to 10% of the state's average daily cash balance for economic development in the state. Hence, his offer of $85 million in investment opportunities.

"We have a program that's that's existed for about 10 years in the treasurer's office," State Treasurer Michael Pieciak told The Commons. "It allows the treasurer to invest up to 10% of the state's cash on hand into economic development. The way they define economic development in the statute is basically something that will create jobs or support the economy."

The link between housing, economic growth

When Pieciak took office in January, he looked at the program in terms of finding solutions for social issues.

"We looked at this program and said, 'You know, this state's cash balance grew from a few hundred million dollars when this program was started to now, where it's a few billion dollars. It gave us about $85 million dollars of available funding for economic development and job creation.

"And as we worked through that, during February, March, April, we determined that housing was the single greatest thing we could do for economic development and job creation, because businesses and hospitals and municipalities - basically, every public and private entity that we could hear from across the state - said they were having trouble attracting and retaining employees because of the cost of housing or the availability of housing."

According to the stories Pieciak was hearing, organizations would hire people only to lose them before they started because they couldn't find housing.

"So, that was our focus," Pieciak said. "On that $85 million, housing was the top priority. We also had a climate action as another priority. And then overlaying those priorities was a focus on social equity. So we we started with the housing projects, we asked for applications, and those came in on June 1.

"We said in the application process that we were prioritizing municipalities, nonprofits, and instrumentalities of government. We weren't looking for private developers to come in and take advantage of these funds, because I should mention that it's not just that we had $85 million available, we had $85 million available at a low interest rate. We were offering these loans out for 20 years or more at a 2% or a 2.5% interest rate.

"Mostly, we were looking for entities like the Vermont Housing Finance Agency, or Champlain Housing Trust, or rural organizations in the housing space with specific projects, or general programs that they would apply this money toward. And we need to make sure that they're financially stable enough that we that we have trust in the risk profile. And then we also get a guarantee from them that they'll make good on the money."

Pieciak's office got 44 applications asking for a total dollar amount of more than $300 million. "We were set to approve $55 million on June 12, and then we put the program on pause because of the [July] flooding."

As of this date, the application process remains on hold.

"We are still surveying needs and considering the best use of the 10 percent in Vermont funds in light of the flood and discussing this with statewide leaders to ensure that we are doing all we can to help Vermonters," said David Kunin, the State Treasurer's director of outreach and communications. "We expect to have more news in the coming weeks."

Expanding housing, one unit at a time

One state program offers an accelerated way to add additional rental units to the Vermont housing stock. It's called the Vermont Housing Improvement Project (VHIP).

Remember the idea of the "grandmother apartment?" Where a family builds a small apartment on their property to house and care for an elderly relative? Called accessory dwelling units (ADU), they can either be an addition to a home or a separate apartment, like over a garage, on the property. They won't change the character of the neighborhood.

The state is now extending the idea to help with homelessness.

"It allows individuals that own homes to get a $50,000 grant from the state of Vermont if they're turning their home into a multifamily home," said Pieciak. "Or if they're fixing up a rental unit. Or if they have a home that is currently unable to be occupied."

He said that people are eligible for those $50,000 grants "over the next couple of years, if they commit to having someone rent those units who has recently experienced homelessness. That's another good recent legislative policy."

To qualify for the grant, the owner has to put some of their own money into the project.

"The Vermont Housing Improvement Program (VHIP) offers grants up to $50,000 per unit for repairs needed to bring vacant rental units up to Vermont Rental Housing Health Code guidelines, add new units to an existing building, or create an accessory dwelling unit on an owner-occupied property," says the website of the Vermont Agency of Commerce and Community Development (

According to the website, "Program participants are required to provide a 20 percent match for VHIP project grants and maintain HUD Fair Market Rent prices. Property owners who are rehabilitating existing units or creating a new unit that is not an ADU must work with Coordinated Entry Lead Organizations to identify suitable tenants exiting homelessness."

Bureaucrats with the best of intentions cannot wave a wand and create more affordable apartments. So, after the forum, The Commons asked Secretary Pieciak what comes next.

"Just to clearly identify the problem, I think we're No. 1 in the country with the lowest vacancy rate for rental units," Pieciak said. "And we're No. 2 for the lowest vacancy rate for single family homes. We need more housing stock."

His office has certain financial "levers" that it can pull to help create more housing, and Pieciak wants to pull as many as he can.

"The biggest lever that we have in our office is our local investment fund that we announced the expansion to $85 million," Pieciek said.

His office had received many applications for the money, but then Vermont got flooded and created an even greater need for housing.

"We actually were going to vote on some applications the day after the flooding, but we put a pause on that," Pieciek said. "We hope to get back to it in the next couple of weeks. But, you know, we'll have over $50 million available for lending to entities that are building workforce housing, affordable housing, and senior living. We need to continue to bring additional resources to the problem of building more units quickly."

The applications on pause are for all three things: affordable housing, workforce housing, and senior housing.

"Really, housing along the entire continuum is important," Pieciak said. "If we did more senior housing, then the hope is that individuals that are living in their homes that maybe they've lived in for decades now have a place to go.

"And those homes get opened up, and then the single-family starter home individuals have somewhere to move into. Someone who is renting has somewhere to move into. And so on and so forth.

"But we also are going to have to recognize that the housing crisis just got tougher from this flooding," Pieciak said. "We have to move manufactured homes out of the floodplain, for example."

Will zoning changes help?

During the last legislative session, significant steps were made to change local zoning, most specifically making it possible to put up multiple-family dwellings.

"So anywhere that has single-family-only zoning is prohibited," Pieciak said. "So if you're single-family zoned, you have to allow for duplexes. And if you have water and sewer, it has to be triplex or quadplexes."

The legislation allows for more density and more affordable housing to be built.

"It sort of overrides local municipal zoning," Pieciak said. "I think it is 20% of developers' building is going to be for affordable housing. And there is an even bigger incentive for density if developers also commit to having individuals that are exiting homelessness."

Those policies are just weeks old, he said - "but to be able to build housing throughout the state, these laws are necessary."

Given all these factors - the many groups working on homelessness issues, VHIP, the new zoning changes that allow multiple-family dwellings to be built, and Pieciak's $85 million, and other measures - towns like Brattleboro have an opportunity to design their own master plan, Pieciak said.

"There should also be a broader exemption for housing as it relates to Act 250," he said, referring to Vermont's significant planning law. "So that you don't have to go through what's required at the local level."

Pieciak believes that such a scenario "would give more incentive for development in our bigger cities, where we want there to be more homes, and more multi-family homes."

"That's something that's actively being discussed," he said. "I think it's another lever that the state of Vermont can pull to try to bring more homes on more quickly."

Pieciak said that during the virtual policy forum, Colburn had summed up the problem perfectly.

"He said that when he sees somebody on the street, he doesn't think that that individual has some sort of personal or individual failing," Pieciak said.

Colburn, he said, "thinks all of us as a society have failed to provide enough housing in our community so that that person can have shelter. And I think that was really kind of stinging, right?"

"It brings the problem home for all of us," Pieciak said. "And we have a real imperative to try to better focus on this as much as we can and all of our individual policies, positions and leadership positions."

This News item by Joyce Marcel was written for The Commons.

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