Vermont Housing Finance Agency (VHFA) joined Representative Peter Welch in South Burlington yesterday to announce a $4 million award from the federal government that will support the development of over 300 affordable apartments across Vermont over a three-year period.
The source is the Capital Magnet Fund, a program of the U.S. Treasury. It is intended to create and preserve affordable housing for low-income families and revitalize distressed communities by attracting private capital. This year the program awarded $336.4 million in funding to nonprofits and financial institutions. The program is highly competitive, receiving requests for nearly three times the available funding each year. VHFA is one of only 59 organizations nationwide to receive an award this cycle.
VHFA applied for the award in coordination with its congressional delegation.
“We were proud to lend our support for VHFA’s application and for the Capital Magnet Fund program,” said Senator Patrick Leahy. “Now, more than ever, we need innovative financing approaches to build more affordable homes for Vermonters.”
VHFA’s success in obtaining the award was largely due to the agency’s ability to work with traditional and non-traditional funding sources and investors for community development. VHFA will invest the award in its Vermont Housing Investment Fund (VHIF). VHFA created the fund in 2020 in recognition of a growing need for more flexible financing opportunities for affordable housing development. The fund has already received $5.1 million in investments from the Federal Home Loan Bank (FHLB) of Boston, New England Federal Credit Union (NEFCU), the Vermont Community Foundation (VCF) and VHFA’s own reserves. These cornerstone investors recognized the potential of private capital to more effectively leverage scarce public housing resources. The fund has previously invested in over 350 affordable homes.
“Leveraging this Capital Magnet Fund award through the Vermont Housing Investment Fund demonstrates what a powerful tool the fund is for creating housing in Vermont. This award is another reason why non-traditional investors like employers, foundations, and even individuals seeking opportunities to be part of addressing Vermont’s housing needs should consider the Fund as a way of making an impact on housing,” said VHFA’s Executive Director Maura Collins.
The CMF award will be invested in affordable multifamily housing developments as predevelopment loans, short-term loans to bridge financing or to allow for preservation-focused acquisitions, and low-interest long-term loans to developers. These investments are intended to fill gaps in project budgets, allowing worthwhile housing projects to move forward despite complex and changing housing development conditions.
“At a time when more and more Americans are struggling to find a safe and affordable home, we must make sure that federal funding is quickly and effectively put to work in Vermont to help solve our housing crisis,” said Senator Bernie Sanders.
VHFA estimates that the award will help build or preserve 300 apartments across a minimum of 10 projects. VHFA anticipates that it will layer this funding with $80 million in private sources and $15 million in public sources, which will cover $100 million in eligible project costs. This means that every dollar of the award will help leverage 25 dollars in other public and private funding in a project. VHFA will reinvest loans back into the fund upon repayment, ensuring that the award will support housing development for years to come.
“This CMF award will help Vermont families and strengthen our local economy,” said Representative Peter Welch. “I will continue to work with my colleagues to create new opportunities for investment in Vermont communities.”
The award announcement was held at the future site of O’Brien Farms in South Burlington, developed by Summit Properties. The project, which has received a VHIF loan and other VHFA financing, will construct 94 mixed-income apartments in two building, including 20 for Vermonters experiencing homelessness.
VHFA is a non-profit agency created in 1974 by the Vermont Legislature to finance and promote affordable housing opportunities for low- and moderate-income Vermonters. Since its inception, the Agency has helped approximately 30,000 Vermont households with affordable mortgages and financed the development of approximately 8,800 affordable rental apartments.