 Good morning everybody. Good morning members of the public committee members. We're going to start on the new proposed home ownership. I don't have the exact title down or in front of me, but more Collins is my housing finance agency. Is charged with implementing and running that program, which I understand was proposed by the governor in. A budget adjustment, I think, but was not put in the budget. Just act as it came over to the Senate. So that brief introduction. We'd like to learn more about it. I don't think we, I don't think we've heard a lot about it at this point. And I guess a preview. For me anyhow, and for other folks is where. I think it's a little bit outside the boundaries of a typical budget adjustment act that usually tweaks what happens. What happened in the last budget. For changes in spending or need for more money. And doing potentially starting new programs within the budget. Adjustment act. And we're doing that, I guess, it's being suggested in a couple of areas and housing because. There's so much pressing need for housing. I think it's in my own feeling. We need to go judiciously in that direction where the substantive committees don't get to do a thorough review. We're told that the budget adjustment act has to be out by Friday, at least on the money issues. So with that pessimistic note, I'm turning it over to you. Thank you. I'm up for the challenge. My name is more Collins. I'm the director of the Vermont housing finance agency. Thank you for squeezing me into what looks like a very full agenda. So I'm going to move quickly. Senator Sarkin was right that. The governor proposed $5 million for a new home ownership construction program in the budget adjustment act. I think it didn't, didn't vote against it, but thought that as Senator Sarkin said, proposing new programs in the budget adjustment is unusual. And they wanted to take more time and think about the implications of starting a new program. The governor has proposed another $10 million in FY 23 budget. I believe his overall goal is however, is to make sure that we have a new program. Whichever vehicle it comes to be that there be $15 million spent on home ownership construction through ARPA funding. And I believe the reason the first bit was proposed in budget adjustment was in recognition of the pipeline of projects that developers and builders have underway or available coming forward. So I'm going to send a signal to the building industry that there was funding available, which I can speak to what the program is next. I'm going to share my screen very quickly to show you that there are, there have been many investments in home ownership over the years from the state. I'm going to show you some examples. I'll run through a few projects that we have long with the support of the legislature through the state home ownership tax credit program. We have long run a home ownership development program. East branch farms are 20 newly constructed duplexes in Manchester within walking distance of a shopping center that they have the shared equity model. But we're funded through the state home ownership tax credit program. And we're brought online over several years. You can see that we've funded homes in Cavendish several in Chittenden County. We've in total done $18 million of construction loans. We've also funded the state home ownership tax credit program that the state has to nonprofit and for-profit builders and developers in our state. The legislature expanded the state's tax credit program from just being a rental development program to home ownership in 2009. And over that time since then we've overseen and expanded the state's tax credit program. A lot of those have been manufactured homes that Champlain housing trusted ministers through their manufactured home replacement program. But the balance of the money, just over 6.6 million has been in stick built homes in 25 different communities. You can see this is a very old picture of Stafford Commons and Woodstock that is notorious for its decade long permit that does house many homeowners in Woodstock, which was a great success. And Dalton Drive is on the Essex Colchester line and it's the historic rehabilitation of Officer's Row, which is on bus service close to healthcare and amenities. I just want to remind the committee that there's a lot of programs VHF runs with federal dollars that frankly doesn't blow through the legislature and we don't get in, frankly, we don't spend enough time talking about and informing you of an example was after the last financial crisis, there was federal funds that VHFA administered in total about $10 million where we would purchase foreclosures from lenders work with homeownership centers and builders and trades folks to rehabilitate them with an eye on energy efficiency and then sell them to income qualified buyers and those homes remain affordable going forward. The initial program ran from 2009 through 2015, but once we used up all the money, now our role switches to one of monitor and we produce regular reports and watch the resale of these homes over time. This was really designed to be a neighborhood stabilization program from the feds, which was administered through VHFA. Again, the tax credit program expanded, you added homeownership as an eligible activity in 2009, but then in response tropical storm Irene, it expanded again to cover the manufactured home replacement program. I do think this is a program you hear about often and so I won't spend a lot of time on it, but you can see that it's gone to help 263 manufactured homes so far, which are all energy star rated, if not net zero. I'm going to stop my screen share there so I can see your lovely faces. There is a handout in your files under my testimony. It does show, actually, you know what? I'm going to share my screen one more second. I apologize. But you're right, Laura. It's all posted on our website under today's date, the documents. Yeah, and you'll see this chart on there. This shows I've showed this to you so many times. You're probably sick of it, but I can't tell you how important it is. When I get asked by reporters, as I was again last week by VPR, doing another brave little state story on housing, they keep saying, why do we have this housing crisis? And I keep pointing to, because we aren't keeping up with producing the homes that we need. You can see here, the 1980s weren't even one of our biggest growth decades, but you can see then, even then we were adding just about 3200 primary homes a year to our housing stock. And every decade, that annual rate of increase drops off. And so in the most recent decade, I'm showing on this chart, we were adding just about 400 homes a year. And I'm excluding vacation homes. There was more construction happening then, but I think this program and this committee and definitely VHV, as an agency, is mostly focused on primary homes for Vermonters who can purchase them. And this is not just a Vermont problem. This is a national problem. We know that America is short between five and 7 million homes nationwide, but you can also see what this has done on this map. That Vermont has one of the highest in the top 10 small bottom 10 states, however you say that, of having the greatest home price appreciation in the nation. And so this pandemic has proposed unique challenges and we've come up with what we think is the best solution to this problem for this particular crisis that's been thrown at Vermont. So the problem is, is that it's too expensive to build a modest home that's affordable to Vermonters. We have a strong framework for new investments that builds off historical and ongoing success of state investments into building home ownership opportunities, which is what I just ran through quickly in those slides. So we know how to meet the home ownership needs in Vermont. We're building off these existing models and adjusting them to today's market, which is what this program proposes. This program was spurred by the survey and the forum that we held this summer with builders and developers that I spoke about a week or two ago when I was last in front of this committee, they really talked a lot about the barriers to home production. And so the approach in this pilot program was informed by conversations with Vermont's builder and banker communities and continues on as they frankly hear us testifying about it and get excited about learning more about the program. Although this is designed to be a pilot and a new set of approaches, we will be engaging even more with a broad audience of home builders and banks and credit unions to continue to shape the final mechanics of the program. And I think that that is where, if I had to say, you know, why the house appropriations committees was thinking that this wasn't done being developed was that they wanted all the answers of how big will the homes be? What will they cost? How will it work? What will the profit limits be? And we've been talking about how we will be setting all those limits through a public process. That is the way VHFA typically designs our programs. We administer $36 million a year that doesn't go through the state house through federal tax credits. And in doing so, we do that through a very transparent public process. We have to have a public document, which is in a nerd terminology called the qualified allocation plan. And in that we have to publicly propose what the priorities are going to be, how the priorities of the funding are in alignment with the state's housing policies and plans, how we're going to define downtown developments. Does that just mean in a designated area? Or does that mean within a half mile walking radius of a designated area? Which of the five designated areas counts? And should they all count equally? Or do we really want to treat village centers and designated downtowns as different from new town centers and growth areas? These are the detailed conversations that I think are best had in a public forum where builders, developers, nonprofits and advocates can grapple with these conversations so that we can come out with the best outcome. In the end, there are two elements of what is being proposed. One is proposed to be funded through the BAA. The other is currently a request to VHCB, they have a board meeting tomorrow and their staff has recommended $2 million to go to VHFA so that we can support banks and credit unions who provide construction loans for home builders. And we would look through various formats to guarantee those loans, we would look at the cost of those loans, maybe through deposit access or participating in construction loans with the lenders so they don't have to take on all the risk. But somehow to backstop those construction loans, which carry some risk with home ownership development. And because VHFA would put this $2 million to work in this way, it would lower the cost of the construction loan and that would lower the cost of the construction loan. And that would lower the cost of the construction loan and lower the cost on to the home buyer. That is not a part of the BAA request, but it's an important component so that you know that when we were hearing from builders, this was one thing that they really raised was that they had to set aside too much money upfront cash, deposit it with the bank just to backstop and protect the construction loan. And so the BAA request is for a subsidy program that's going to address two kinds of gaps we see in building homes. One is the value gap. The reality that one can't do that, but it's not going to reduce the cost of the construction loan costs. The BAA request is for a subsidy program that's going to address two kinds of gaps we see in building homes. One is the value gap. One can in many communities in our state build a home, but it will cost so much that the minute the last nail is hammered in or the paint dries, that home may not appraise for the full amount that it costs to build it. That's a reality that in some of our communities costs in the example on my one pager that your committee has, it costs $425,000 to build a modest home, but it's only going to appraise for $375,000. That value gap needs to be covered if we're going to bring more affordable homes to market, and this program would pay for that. Additionally, $375,000 may be too expensive for some of the targeted households we're trying to serve. And so we can choose to also cover an affordability subsidy that could buy down that purchase price even farther to serve a lower income Vermont household. That affordability subsidy we're proposing would stay with the home in the form of a land covenant, which Vermont has many decades of using, and it would be a silent subsidy at the home that would stay there and could be available to future buyers if they're income eligible. It would not grow with time. It is different from the shared equity model. So the home buyer, when they go to sell, they would not share in the appreciation. They would take the appreciation, but the public funds would stay with the home and be available for the next buyer. There's also parts of the state where that value gap isn't so much a problem. And there's many parts of the state where we're focused much more on rehabilitation instead of new construction. And this program would cover both new construction or rehabilitation. I can appreciate this in all of your counties, but I'm looking at Senator Brock, knowing that there are some towns and cities that really need new construction. But then there are many communities that need money to repair and bring back to market, vacant housing stock. And so this would be available there too. The amounts of money that would be available to cover the value gap or the affordability gap would fluctuate and be nimble based on the needs of that development. Just like every application that BHCB or VHFA or DHCD funds, we would look at and do a full financial underwriting of that proposal and determine how much is, needs to go to the value gap, how much would be needed for the affordability subsidy. And that we would cap this assistance at 35% of the total development cost. We got that standard based on a federal tax credit program that was proposed in Build Back Better, but obviously has not passed yet because Build Back Better hasn't passed. But we are trying where we can to mirror this program to what we see developing at the federal level so that I'm a hopeful girl. If there's ever a day that federal tax credits or funds are available, we could use this to leverage with that and grow the program even more. Additionally, I think leverage is important. We do have existing programs in our state as I rolled through very quickly in my slides to support home ownership development. And we would like to see this program be developed so that it could complement other funding. It could maybe be paired with the state tax credit if we were going to try to reach really deep affordability. It could be a tool for the shared equity model to access so that there had to be less subsidy to buy down that affordability to the sweet spot of where their program serves. This pilot is designed as the governor has deemed it, a middle income, missing middle income proposal. So it's really saying that it would serve at the bottom and maybe 80% of median income up to 120% of area median income. I think 80% is going to be hard without leveraging those other subsidies. I think maybe starting at median income is probably going to be more realistic about what we see, but I never want to put a floor on an income limit. If there's some way we can serve very low income with a home ownership program, that's wonderful. I just want to recognize that it really would take other subsidies to pair with this to get to that point. Can I interrupt? Are you close to being done? Very close. The last thing I wanted to say was just the reviews that we would do as an agency in the administration would include reviewing land costs for reasonableness. Like I said, putting limits on the size of the homes, the cost per square foot and the profit that a builder developer could have and in that know that this would remain a flexible nimble program as markets change. I don't know what coming out of the pandemic is going to look like for the home building industry and this kind of flexible resource would be critical so that we can make sure that we're responding to that changing market. Thank you. We're really pressed for time. Have you presented to the Senate Appropriations Committee? Yes. I think that was last week. Okay. I guess overall, in addition to the concern that the house may have had about specifics of this program, I'm also, you know, if we were able to do full due diligence, I would want to know why we need another new program. It seems like we have other programs that are targeted similar things or could be tweaked or expanded to cover this as opposed to establishing a brand new program. One of the things you mentioned sounded very similar to what was suggested in S79 in the home ownership rehabilitation revolving program for a million dollars. I don't know that that's started and maybe this is, that's the governor's not still pushing for that, even though there's a million dollars sitting there in the house. But I just, I'm starting to feel like there's all this. I realize putting together deals for housing development is complicated and we just have to draw from a lot of sources, but it does start to seem that. I mean, just, I know it's too simplified, it's really a subsidy program to help somebody afford a house that they can't afford at the building costs right now. And why can't that be factored in some, in some other existing program as opposed to creating a whole new program. So I'm just expressing, I'm not expecting an answer or a very long answer, but I, I guess my feeling is that I have that concern as well as the specific concerns that the house appropriations committee have of specific parameters for the program. And finally, I would say that, you know, the difference between budget adjustment and the budget, if you make sections of the budget effective upon passage, maybe two to three months. And there is also, as you know, we're doing this omnibus housing bill. There's also that bill where something like this could potentially go in. So the, the delta between what you can get in better budget adjustment and what you can get from a separate standalone bill, maybe even less than two to three months. So I'm feeling that sense of discomfort at this point, but I'll stop there and ask if any committee members have questions. We have a very full agenda this morning. I'm not sure we can get more back, but if you have questions, we're going to have to make a recommendation. I think Jane has asked me for a recommendation on this program, which as you can imagine, based on a half hour testimony, it's a little unusual for a legislative. Do diligence committee. I can't see everybody. Let me check. Is any shout out if anybody wants to ask a question of more. Okay. More any last words? I'm, I'm, I'm sorry if there is, if you have some availability this week, there may be some more time, but I'm not, I can't guarantee it. Thank you for your time. I look forward to talking about this more under the budget request because, and it would be great to think about this under the omnibus and or the budget. And I can answer your questions at that point about how this is similar, different from that revolving loan fund you mentioned and the other programs that exist in Vermont. We can talk about that then. Good. Thank you. Okay. Thank you. Great. Thank you more.