The U.S. Treasury Department recently announced new guidelines that will significantly increase Vermont’s ability to use pandemic recovery funding to directly support the development of affordable housing and reduce costs for Vermonters.
Vermont had identified affordable housing as a key priory for its allocation of pandemic relief funds from the federal American Rescue Plan Act (ARPA), intending to pair ARPA with the federal Low Income Housing Tax credits (LIHTC) awarded by VHFA. However, due to a previous Treasury interpretation of how these two programs could work together under the Act, Vermont and other states were at risk of being unable to maximize the impact of the federal funding.
Vermont’s congressional delegation was the first to recognize this problem and jointly led national efforts to seek a solution. Senator Leahy led a bipartisan group to introduce legislation that would allow states to more efficiently make long-term loans using ARPA funds, with strong support from Senator Sanders and Representative Peter Welch.
Ultimately, due to groundwork laid by Vermont’s delegation and other supporters, the Treasury Department released new guidance permitting ARPA funds to be used for loans to housing projects with long-term affordability requirements, like the ones financed by LIHTC. The Treasury and the U.S. Department of Housing and Urban Development (HUD) have published a guide for how states and local governments can use recovery funds for affordable housing development.
“In Vermont, there is simply not enough housing, and during the pandemic, we saw how this shortage has a detrimental impact on the lives of too many Vermonters.... [Treasury’s] new guidance, the result of a close partnership with Congress and housing practitioners, will direct additional dollars toward needed housing production and help ensure that families across Vermont and the country can live and thrive in safe, decent and affordable homes,” said Senator Leahy in an announcement last week.
Earlier in 2022, VHFA awarded federal credits to several projects that also use ARPA investments from the Vermont Housing & Conservation Board (VHCB). Projects that received awards in the spring that combine LIHTC and ARPA will generate approximately $58 million in equity for construction from the LIHTC program. Affordable housing projects across the state will benefit from the new Treasury guidance, substantially increasing the impact of Vermont’s affordable housing resources.