VHFA Awards $10 Million In First Year of New Rental Revolving Loan Fund

Earlier this summer the Vermont Housing Finance Agency (VHFA) Board of Commissioners awarded just under $10 million from Vermont's newly launched Rental Revolving Loan Fund (RRLF). These awards will fund development of 265 apartments in nine Vermont communities across the state. 

The RRLF was created as part of Vermont's Housing Opportunities Made for Everyone (HOME) Act, which was signed into law on June 5, 2023. The Act created RRLF to incentivize the creation and preservation of rental housing for middle-income households earning between 65%-150% of the Area Median Income (AMI).  A middle-income two-person Vermont household making 100% AMI is currently defined as having annual income of $82,000-$95,000 depending on location. 

The program was funded with $10 million to provide housing developers and builders with a subordinate loan for up to 35% of the development cost per rental unit. The maximum award per home is between $100,000 and $125,000. 

VHFA began accepting applications for the RRLF in March 2024, after holding a series of public forums around the state and gathering public feedback. Interest in using the program has been consistently high.  VHFA received applications totaling more than twice the available funds. 

Several key drivers led to the creation of the RRLF, including that middle-income rental developments do not "pencil" due to elevated construction costs, interest rates, and general market factors in recent years. 

“This program is exciting for many reasons, especially for the ability to leverage community investments to ease the strain on the entire market of the shortage of apartments affordable to the average Vermonter,” explained VHFA’s Director of Development Megan Roush.  The projects that received RRLF awards are slated to draw $22 million in direct municipal and employer investment that would otherwise not likely be used for housing. 

VHFA was charged with developing program guidelines in a way that makes the program accessible to and targeted towards projects and/or project sponsors who do not have regular access to traditional housing development resources. The program prioritizes projects that receive investment from area employers or municipalities, those with a new or emerging developer, projects in underserved and rural communities, and projects not eligible for other sources of state and federal funding.  

One of the RRLF awards went to Travis Noyes, co-owner of Chapman's General in Fairlee.  "The RRLF program will allow us to renovate a dilapidated building across from the town hall and attached to Chapman's General store.  The end result will be 8 new apartments with 4 dedicated toward the local workforce, which will meet 80% of the Town of Fairlee's goal for new housing in 2025,” Noyes explained.  “Without this program we would never have been able to break ground, and the building would have been torn down," he added. 

The apartments created by the RRLF awards this year will be located in eight Vermont counties.  

The high level of interest in the RRLF from small and emerging developers in underserved Vermont communities has spurred a second financing innovation at VHFA that will be launched later this year called the Community Housing Accelerator.  Several of the applications for the RRLF will likely to be considered for awards from the Community Housing Accelerator that will be largely funded through the Vermont State Treasurer’s 10% in Vermont program, VHFA loans, and philanthropic investments.   

More information about the RRLF is available on VHFA’s website at https://vhfa.org/rentalhousing/developers/rrlf.

Pictured:  The Vermont Rental Revolving Loan Fund will enable rehabilitation of Bradford Mill and provide 24 much-needed apartments in Bennington.