Bond shelved in favor of study on affordable housing shortage, solutions

Sen. Michael Sirotkin, D-Chittenden, at the Statehouse in Montpelier on Jan. 16. Photo by Glenn Russell/VTDigger

Backers of a proposed affordable housing bond have shelved their plans for the year, opting instead to participate in a study to look at the state’s alternatives for addressing Vermont’s housing shortage.

Sen. Michael Sirotkin, D-Chittenden, decided to stop pressing for the bond after he heard recent testimony from opponents such as State Treasurer Beth Pearce. Pearce said last month that after a recent state bond rating downgrade, it would not be the right time to take on major debt for housing.

“The treasurer’s opinion is important,” Sirotkin said Thursday. “The second major housing bond we were proposing was not until 2021, so we have another year to work with the treasurer to come up with the best plan possible.”

Senate Democrats had hoped to invest about $50 million over the next 20 years to build up to 1,000 apartment units in Vermont. Lawmakers passed a similar $37 million bond in 2017 that is being used to build an estimated 550 homes and leverage $140 million in additional tax credits and other money.

“There were some issues with doing bonding right away and its impact on our net tax-supported debt,” Pearce said Thursday. “If there are other ways we can invest our dollars to get the same results, I would rather invest than borrow.”

One way to come up with investment ideas, Pearce said, is the study, which she said will help state and private housing officials work together on a proposal that is more acceptable to lawmakers.

“I am a big supporter of housing, but what are the most cost-effective ways to get to our goals?” Pearce said.

Beth Pearce is sworn in as state treasurer in January. Photo by Glenn Russell/VTDigger

Sirotkin, chairman of the Senate Committee on Economic Development, Housing and General Affairs, had proposed to fund the new bond by expanding enforcement of the property transfer tax, and broadening rooms and meals tax collection to short-term rental services other than Airbnb.

He estimated that this new revenue would come to about $4 million annually and could be harnessed to pay off the $38 million bond and roughly $14 million in interest over the next two decades.

Because the bond didn’t pass, lawmakers will have to talk about the same housing issues next year, said Chris Donnelly, communications director for Champlain Housing Trust, which had supported the bond. He added that Massachusetts passed a $1.8 billion housing bond last year.

“We’re going to have the same conversations every year about housing being unaffordable until we actually do something about it,” he said. “I think there are just competing priorities, and it seems like there is a lack of will to create the resources to fund all the priorities. It’s as simple as that.”

Jennifer Hollar,director of policy and special projects at the Vermont Housing Conservation Board. Courtesy photo

The study will cover new ground by examining what other states have done recently to pay for housing, said Pearce and Jennifer Hollar, director of policy and special projects at the Vermont Housing Conservation Board.

“I can’t open my email without seeing a headline about what another state or municipality is doing to address their housing crunch,” Hollar said. Those things include revenue bonds and general obligation bonds, she said. Hollar noted that the mayor of Nashville, Tennessee, announced in March that the city will commit $500 million for an estimated 10,000 units of affordable housing. The city, which has a population close to Vermont’s 625,000, will use different avenues, including grants to affordable housing developers.

“Other states are taking really bold action around this,” she said. “The Senate tried to do that, and it turned out to be more complicated than they had anticipated.

“This is going to require that everyone work together with the treasurer to come back with alternatives,” Hollar said.

“Other states have done repeated bonds without adverse impacts on their ratings,” Sirotkin said. “We need to dig deeper and move forward.”

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