Low-Income Housing Tax Credits & Preservation in Vermont, 2018

Vermont's 2018 QAP prioritizes preservation of affordable housing developments. 

Low Income Housing Tax Credits (9%)

The Vermont Consolidated Plan highlights three guiding principles of which one is;

• Achieving the perpetual affordability of housing resources and investments.

Vermont’s QAP sets threshold criteria requiring perpetual affordability for all projects receiving Ceiling Credits. It also sets building in areas of historic settlement patterns as a threshold requirement and gives highest priority to projects that go beyond that and develop in state designated growth areas, particularly in historic downtowns and village centers.

Thresholds:

The application form has tables with the minimum rent and tenant income restrictions. According to the Code, at least 20% of the units must be restricted to tenants at or below 50% of Area Median Gross Income (AMGI) or 40% of the units must be restricted to tenants at 60% of AMGI. The restrictions are enforced with the Housing Subsidy Covenant (see “Compliance” section)

Extended Use:

Vermont’s QAP sets threshold criteria requiring perpetual affordability for all projects receiving Ceiling Credits. For projects receiving 9% (ceiling/allocated) credits, State affordable housing credits, or State housing trust funds, the extended use period is perpetual. A guiding principle of the State’s Consolidated Plan for the use of federal funds is achieving the perpetual affordability of housing resources and investments.

Basis Boost:

The tax credit program allows the state to provide a specific incentive called the “Basis Boost” for projects it deems of high priority and that otherwise might not be feasible. For projects using Ceiling Credits, the Basis Boost is available for two types of projects:

The first are projects in one or more buildings of 49 units or less which dedicates at least 10% of its units 1) as Supportive or Service-Enriched Housing; or 2) to be occupied by clients of a Human Service Agency as evidenced through a memorandum of understanding or master lease to provide Supportive Housing or Service-Enriched Housing as defined herein. (Boost is up to 130% based on staff determination of credit amount needed for financial feasibility.) A Sponsor can satisfy this requirement as to Supportive Housing by having the owner/Sponsor provide Supportive Housing services directly or by entering into a new memorandum of understanding or master lease with respect to other units already in its portfolio that are not already dedicated to Supportive Housing equal to 10% of the total units in the proposed project. Planned new developments which “come on-line” in the same year which provide Supportive Housing also can be used to satisfy this requirement.

The second type are projects that are mixed-use (i.e., a combination of multifamily rental units and a more-than-de minimise amount of commercial space, such as a ground floor of commercial space with apartments above) that are located in Downtowns or Village Centers, and use the Historic Rehabilitation Tax Credit as described in the Internal Revenue Code Section 47(a)(2). The Basis Boost for this type of project will be limited to one (1) project per year. Additionally, certain high priority projects designated by VHFA as requiring an increase in the credit amount to be financially feasible may be eligible for the Basis Boost.

The Basis Boost will not be automatically applied to projects using Ceiling Credits for buildings within a Qualified Census Tract or Difficult to Develop Area for Ceiling Credits, as in the past, but is available to any project meeting the 10% Supportive Housing test. Projects using Bond Credits are eligible for Basis Boost if within a QCT or DDA.

Contributed By: 
National Housing Trust

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