Montpelier, Vt. – Governor Phil Scott today announced the successful sale by Vermont Housing Finance Agency (VHFA) of Vermont’s first Sustainability Bonds. The bond sale raised $37 million in proceeds for affordable housing, exceeding the expected amount by $2 million.
The bonds will fund the “Housing for All” initiative proposed by the Governor and enacted by the Vermont Legislature in 2017. Proceeds from the sale of the bonds will be awarded by the Vermont Housing Conservation Board (VHCB) to construct 550-650 homes statewide over the next two to three years. Vermont investors played a critical role in the success of the bond sale.
“As we work to create greater opportunity for Vermonters and attract more families to Vermont, decent housing Vermonters can afford is critical. The ‘housing bond’ initiative we passed last year is an important step toward addressing that need,” Gov. Scott said. “We appreciate the hard work of our partners in ensuring a successful bond sale, and those individuals and institutions who chose to invest in Vermont communities.”
This will represent the largest state investment in housing in several decades. The transaction included publicly offered bonds and bonds directly placed with local banks. The 20-year bonds are funded from revenue from the Vermont Property Transfer Tax, proceeds of which will be used to repay investors through the term of the bond.
"We were very pleased to use our experience working with our financial partners and investors to maximize the funds raised for this important initiative," remarked VHFA's Executive Director Sarah Carpenter.
VHFA and VHCB chose the Sustainability Bonds designation to allow institutions and individuals to invest directly in bonds that finance socially beneficial affordable housing, promote environmentally friendly development, stimulate economic growth, and revitalize Vermont communities.
“The bonds received a very positive response from the market with seven times the amount of orders than the amount of offered bonds,” said Geoff Proulx, Executive Director and Head of Public Finance Housing at Morgan Stanley. “And the mission of VHFA and VHCB really resonated with investors both locally and beyond Vermont’s borders.”
People's United Bank was the first institutional investor to commit to purchasing the Sustainability Bonds. Arne Hammarlund, who leads the bank’s community development efforts in Vermont, commented that People's United Bank was pleased to invest in these bonds as they represent another important way to bring capital to the process of building affordable housing in Vermont. “It is gratifying to work on public/private partnerships that enhance community well-being and serve all of our communities. These affordable housing bonds really meet all of our objectives and will help close housing gaps,” he said.
The Vermont State Employees Credit Union (VSECU) also purchased bonds. Terence Field, Senior Vice President of Finance, commented on how excited VSECU was as an organization to have invested in the Sustainability Bonds in support of Housing for All. “This initiative is directly in line with our mission and will create environmentally friendly housing stock for which Vermont has a desperate need. We are very pleased to share this news with our members and believe they will be proud to be a part of creating positive change for Vermonters.”
“The bond sale exceeded expectations due to the VHFA’s hard work, the support of the Legislature and commitment of the Scott Administration,” said Gus Seelig, Executive Director of VHCB. “The $37 million is already creating more homes for workers and housing for vulnerable Vermonters in communities across the state. We are reviewing a stream of applications and encourage those with potential projects to contact us soon.”
VHCB will target proceeds from the bonds towards eligible projects that rehabilitate or construct housing for low- and moderate-income Vermonters while conserving Vermont’s natural resources and history. VHCB will ensure that at least 25 percent of the housing will be affordable to very low-income households with incomes below 50 percent of the area median and at least 25 percent to households with incomes between 80 percent and 120 percent of the area median. Median income in Vermont in 2017 was $69,300 for a family of four, according to estimates from the U.S. Department for Housing and Urban Development.