VHFA urges five-year extension of state tax credits to expand down-payment assistance

Laura Collins of the Vermont Housing Finance Agency told the Commerce & Economic Development committee on Jan. 28 that the agency is seeking legislative authority to continue selling state tax credits for five more years and to increase the annual credits it seeks to $350,000 to support its down-payment assistance program.

Collins, who identified the program as a DPA (down-payment assistance) program marketed on VHFA's site as the "Assist" program, said it has operated for 11 years using proceeds from state tax-credit sales and has helped over 2,100 households become homeowners. "I am asking if we could have the ability to sell them for 5 more years," she said during the presentation.

Why it matters: Collins said the DPA is structured as a revolving loan fund: VHFA provides a 0% "silent second" loan (typically up to $10,000) that reduces a borrower's mortgage principal without monthly payments and is repaid on sale, refinance, or payoff. Repayments are returned to the fund for new borrowers, which VHFA says multiplies program impact while keeping administrative costs low.

Collins presented program outcomes and fiscal figures: she said participating households have gained a median of roughly $78,000 in home equity (measured in 2024 dollars) and attributed about $137,000,000 in household wealth creation to roughly $14,000,000 in tax-credit-supported activity over the last 11 years. She also said roughly $3,000,000 has been repaid into the fund so far. All figures were presented by Collins as VHFA estimates drawn from agency borrower records.

Program history and recent changes: Collins traced the funding model to earlier state tax-credit programs and said the DPA feature was added in 2014 in response to employer demand for workforce stability. Award levels have changed over time: Collins said the program offered $5,000 in early years, rose to $7,500 in a mid-period change, and during the pandemic offered up to $10,000 or $15,000 for very low-income borrowers before returning to $10,000.

Legislative request and fiscal mechanics: Collins explained that Vermont's tax credits are commonly sold to banks (and sometimes other entities) that use them against a bank franchise fee. Because state credits are structured as five-year credits, a $250,000 annual credit sale represents a five-year schedule that can be purchased up front (roughly $1,250,000 in face value bought at a discount), producing an immediate cash infusion for VHFA to capitalize the program. Collins asked the committee to authorize five more years of credit sales and said she was requesting $350,000 in credits this cycle to account for higher award levels.

On budget impact, Collins presented a nine-year illustration she described as the "green-row" proposal and estimated the state cost at about $972,000 over that period. She said the Joint Fiscal Office has reviewed the chart and that she has already testified to Ways and Means and planned appearances before Senate Finance and other relevant committees. Collins said the change may appear in a miscellaneous tax bill or a Senate housing bill in the coming weeks.

Questions and next steps: Committee members thanked Collins and said they would examine the request when it appears in legislation. Collins offered to follow up with technical questions and said she would be out of the office for several weeks but available via staff.

Ending: The committee took no formal vote during the presentation; Collins' request was offered as a legislative proposal to be considered through the regular bill process.