This apartment house at 33 Oak St. in Brattleboro is in the process of being renovated with funds through the Vermont Housing Improvement Program. When finished, there will be a total of 13 new units available for rent.
Ellen Pratt/The Commons
This apartment house at 33 Oak St. in Brattleboro is in the process of being renovated with funds through the Vermont Housing Improvement Program. When finished, there will be a total of 13 new units available for rent.

‘Nobody needs a 7,000 square foot house anymore’

A state program encourages ‘mom and pop’ landlords to develop affordable housing

BRATTLEBORO-A state pandemic-era program aimed at encouraging "mom-and-pop landlords" to create affordable housing is set to launch a second round of grant funding this spring.

With millions of dollars to be awarded statewide, the Vermont Housing Improvement Program (VHIP) provides these local housing developers up to $50,000 per unit for the rehabilitation and construction of rental apartments.

VHIP was launched in 2022 to address the state's declining quality of rental units and to provide suitable housing for Vermonters experiencing homelessness.

The program requires landlords to rent at affordable, fair market prices as established by the U.S. Department of Housing and Urban Development, and to work with local coordinated entry lead organizations, such as Groundworks Collaborative in Brattleboro, to identify suitable tenants exiting homelessness. Applicants who create accessory dwelling units - think "grandmother apartments" - on an owner-occupied property are exempt from this requirement.

Since 2022, VHIP has funded the creation of more than 500 housing units statewide, many for people experiencing homelessness.

Windham & Windsor Housing Trust (WWHT), which administers the VHIP program for Windham and Windsor counties, has completed more projects than organizations in any other region in the state, according to WWHT Executive Director Elizabeth Bridgewater. Since 2022, WWHT has awarded or approved more than $3.3 million in VHIP grants for Windham County projects, which will result in 75 new apartments.

The Commons spoke to three housing developers whose local VHIP-funded projects are in various stages of completion. While they all praised the program for its intent to lift Vermonters out of homelessness, they agreed that navigating the grant program, in addition to dealing with the complexities of housing development, is a challenge.

'This would be completely crazy for a first-timer to take on'

A single mom of two, Megan Talbot lives in Chittenden County, where she is a teacher at Colchester Middle School. Calling her investment properties her "golden egg," her goal is to retire from teaching in a year or two and work full-time in real estate development.

Talbot is using VHIP grant funds, along with loans, tax credits, and personal funds, to renovate 33 Oak St. When she bought the building in June 2023, it was "in a full state of disrepair," Talbot said, with drugs reportedly being sold out of one of the apartments. After spending much of the past year evicting tenants, Talbot hopes to break ground on May 1.

Talbot estimates the total project cost at $1.1 million. Half of the $510,000 in VHIP grants will be used to rehab eight existing apartments in the house. Additional funds will be used to build five more units in the building.

"I want to keep the bones of the building because it's quite beautiful, like a lot of places in town," Talbot said.

Talbot said the skills she gained in her first three years of investing in real estate prepped her to tackle the Oak Street project, which is the largest "gut renovation" she's done.

"I don't know that I would have been able to navigate all the checks and balances along the way that it's taken to get to this point, if I didn't have the professional drive to do this, if I was just Megan Talbot, mom, trying to do my own property," she said.

She believes the VHIP program could be improved if the state funded a consultant to assist program participants who aren't experienced in real estate development.

"I definitely would say that it would be completely crazy for a first-timer to take on," Talbot said.

Talbot had what she calls a "traditional money upbringing": raised to go to college, get a good job, and work really hard to save money until retirement. But she saw a different future for herself, one that could pair her interest in social justice with a stable income.

"Part of my vision for investing, besides making money," Talbot said, "is to provide clean, safe, affordable housing for people because the cost of living in Vermont is outrageous right now."

Talbot found the Oak Street property by networking with local real estate investors. Since she doesn't live locally, she hired Bob Lyons of Southern Vermont Property Management to manage the property.

Talbot will work with Groundworks Collaborative to choose tenants from a list of people experiencing homelessness. "It's going to be a learning experience for me," Talbot said, "but anytime we can provide opportunity for folks who need it, it's just going to build a stronger community."

When it comes to choosing tenants, Talbot said, "I'm less concerned about things like credit scores, and more concerned about finding somebody who is going to take care of the property, has stable work, or the ability to provide some income to pay for it."

"Just a good, honest, hardworking person who needs a place to live," she added. "I'm looking for quality of character almost more than what's in their bank account."

Talbot believes small-scale, local development is one part of the multifaceted approach to creating the housing that is needed in the state.

"My opinion - probably because I'm a developer - is to maximize use of the existing infrastructure before breaking ground on new builds. We have a ton of old, aging housing stock. If I had enough help with funding I could turn some of the big old properties in town into smaller, affordable places to live. Nobody needs a 7,000 square foot house anymore."

'I'm learning on the fly here'

Chris Brown, owner of Cozy VT Properties in Wilmington, is using a $250,000 VHIP grant to create five apartments in a renovated paint store downtown. The building will also house a small retail space and a commercial space for his business.

Noting the paperwork involved in the project - four stacks of paper on his office floor - Brown said, "I sure as hell hope it's worth it."

But Brown said he couldn't have done the project without the VHIP grant.

The total project cost is estimated to be $600,000, excluding the purchase of the property. State tax credits are being used to restore the historic facade of the building, install new windows, and bring the building's electrical and plumbing systems up to code.

Brown's rents are in line with HUD's fair market prices. He charges $1,076 for his studio apartments, $1,200 for the one-bedroom, and $1,700 for the three-bedroom, including utilities.

"Finding applicants who best fit the project is the biggest hurdle," Brown said. "Just because there's a bunch of people that need housing doesn't mean they're a good fit."

Brown worked closely with Groundworks staff to identify his first two tenants, who are local to Wilmington.

"A lot of these folks who are coming through Coordinated Entry and in need of a home may or may not have a job, may or may not have the means to pay for rent," Brown said. "As generous as I like to be, ultimately the building costs money to operate."

Brown was able to secure project-based Section 8 housing vouchers, which cover most of the rental costs; tenants' payments are capped at 30 percent of their income.

Brown said that it wasn't his intent to build housing for people experiencing homelessness. "I needed a building to run my business out of," he said.

"But as my wife and I went through this project, we were kind of like, 'This is good. This is gonna help people. This is good all the way around.'"

Brown is a general contractor who also operates short-term rentals and a commercial property. Originally from Dover, he attended Wilmington High School and spent 20 years as a painter and contractor.

While Brown advises those interested in the VHIP program to "do their research early," he acknowledges that the only real way to get a good understanding of the program is to go through it. "I'm learning on the fly here," he said.

He's hopeful that in another month or two, once all of his units are occupied, things will smooth out.

"And then I might say, 'Wow! That was a lot of work but worth it. I was able to fill a void in the community by taking an old, run-down building and creating two retail spaces and providing housing to five folks who needed it.'"

'I can make a small apartment for somebody'

With a $50,000 VHIP grant and a home equity line of credit, Joann Erenhouse was able to create a one-bedroom apartment in the shed attached to the back of her 223-year-old Chester house.

Erenhouse is the community relations director for Senior Solutions, a nonprofit that provides services and support to senior citizens in southeast Vermont. Through her work, she saw that many older Vermonters were being displaced from their housing during the pandemic when the houses and apartments they were living in were bought by out-of-towners who didn't want tenants.

Many of these older people ended up in the state's emergency motel program.

"My concern was: if you're 85 years old, and you're put on a five-year waiting list for an apartment, what are the chances that you're going to end up in a casket before you get an apartment?" Erenhouse said.

Erenhouse saw the VHIP grant as a way to create much-needed senior housing. "I said to myself, 'I have a big old house, I have plenty of bedrooms for myself and I don't need to use the shed,'" she said. "I can't help everybody, but I can make a small apartment for somebody."

Her tenant, an 85-year-old woman who had been evicted from the state's motel housing program, moved into the small apartment in September. A Section 8 voucher pays for the majority of the rent and the tenant pays the remainder.

Erenhouse is a lawyer with some experience in commercial development. She says she's not afraid of construction and has renovated houses in the past, so she understands the process. These skills served her well as the project progressed.

"You really have to be a good project manager," she said. "Many people living in old houses can barely figure out their own buildings - utilities and everything - let alone handle a construction project."

Housing development involves many steps, including securing a building permit, getting a fire inspection, and identifying and working with contractors. She believes the VHIP process could be improved with a guide "in plain, simple English, not contract language" outlining the steps.

"I'm glad that I did it," Erenhouse says of her project. "It provided a really quiet, safe, clean place for an older person to be housed in an affordable manner."

Strong Demand for VHIP 2.0

The latest iteration of the program - VHIP 2.0 - introduces a 10-year forgivable loan alongside the existing 5-year grants. This new option requires landlords to rent units at HUD's fair market rates without the need for referrals from coordinated entry organizations.

Bridgewater of WWHT says VHIP 2.0 increases flexibility and options. It addresses concerns expressed by some program applicants about accepting tenants who are the hardest to serve - primarily people exiting homelessness who need supportive services focused on housing retention. Bridgewater says these services are hard to access in more rural towns due to the lack of transportation options.

Between VHIP's five- and ten-year options, housing can be created both for those in need of intensive services and for those who don't need these services. Either way, says Bridgewater, private property owners can help to address the structural crisis of not enough units, which results in a virtual musical chairs situation where the most vulnerable are left standing with no housing options.

WWHT will start accepting applications for VHIP 2.0 funding on April 15. The organization reports strong demand for grants, with 169 people inquiring about the next round of funding.

This News item by Ellen Pratt was written for The Commons.

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