The Vermont Housing Improvement Program (VHIP) 2.0:

Vermont has a problem.  There are way more folks that want to live here than available housing.  Any available housing is priced double what it should be considering Vermonters overall earn less for the same work.  If you guess that would lead to higher homeless and housing insecurity you’d be right.  Even many homeowners looking to build an apartment or ADU for additional rental income have been shut out due the crazy high building costs.  Somehow trees have increased their prices.  

To address all these problems at once Vermont launched  the Vermont Housing Improvement Program or VHIP.  Getting new developments in Vermont is hard and rightly so. Massive housing developments feels very un-Vermont and there are laws to be sure we don’t get overwhelmed by development.  VHIP recognized that to improve housing availability and affordability, we needed to work with what we already had. Instead of just focusing on building new units it focused on making the most of existing housing stock. 

 It offered property owners financial incentives to rehabilitate vacant or deteriorating units, or to create new Accessory Dwelling Units (ADUs). Grants of up to $50,000 per unit were available.  VHIP 1.0 was a good start. It recognized a problem—the decline in housing quality and availability—and offered a solution: incentivize property owners to rehabilitate or create housing units. But like all good starts, it wasn’t perfect. It left gaps, and it had room for improvement.  We were excited about the prospect of building a ADU, but the challenge for us was we weren’t shovel ready.  That seems to be a weakness, in most cases if you’re shovel ready you have already secured the funding needed to build or renovate.  Getting that extra $50k was just icing.

VHIP 2.0 which is launching shortly has expanded the scope. The flaws in the initial offering were apparent.  The updated programs includes not just vacant units and ADUs, VHIP 2.0 now includes occupied units needing repairs and new constructions.  Towns like my own have since lowered the bar of entry for building ADUs on our property or splitting existing homes to allow for an apartment.

Second, it offers choices. Property owners can now choose between grants and forgivable loans, a flexibility that acknowledges the diversity of needs and capabilities among property owners.  VHIP 2.0 recognizes that not all property owners are in the same boat. Some might need a quick boost to get a project off the ground, while others might need longer-term support which would be my case. And so, it offered a choice: a 5-year grant or a 10-year forgivable loan.

Let’s break it down.

The 5-year grant is pretty straightforward. It’s a sum of money given to the property owner to improve their housing unit, after agreeing to the requirements.. After 5 years, the grant is fully forgiven. It’s a great option for owners who need immediate funding and can commit to maintaining the improvements for at least 5 years.

The 10-year forgivable loan, on the other hand, is a bit more complex. It’s still money given to the owner, but it’s structured as a loan that is gradually forgiven over 10 years. Each year, a portion of the loan is forgiven, until at the end of the 10 years, the entire loan has been forgiven.

Why would someone choose a loan over a grant? Well, it might be a better fit for larger, long-term projects. The extended timeline gives owners more breathing room to complete substantial improvements and ensures a longer commitment to maintaining the quality of the housing unit.

This program has invested in education. By mandating landlord-tenant mediation training and fair housing education. It’s also helping Vermonters with strategic tenant placement, especially for those exiting homelessness, VHIP 2.0 ensures that the right help reaches those who need it most and not new residents.

So how do you get started?  There are seven steps.

Step 1: Eligibility. This is where you assess whether your housing unit qualifies for VHIP 2.0. Are you looking to rehabilitate a vacant unit, repair an occupied one, create an ADU, or build something new?

Step 2: Application.  You fill out the necessary forms, provide the required information, and make your case for why your project deserves support.

Step 3: Selection. The VHIP 2.0 team reviews your application. They’re looking for projects that align with the program’s goals, that have a clear plan, and that will make a real difference in the housing landscape.

Step 4: Financing. If your project is selected, this is where you choose your financial path. Do you opt for the 5-year grant or the 10-year forgivable loan? You weigh the options, consider your project’s scope and timeline, and make the choice that works best for you.  Don’t forget you’ll also need to have 20% of the Grant/Loan amount to match.

Step 5: Implementation. You take the funding and you put it into action. You rehabilitate, you repair, you construct.  Don’t forget there are deadlines.

Step 6: Maintenance. For the duration of your grant or loan, you maintain the improvements you’ve made. You ensure that the housing unit remains a quality, affordable option for renters under the program’s guidelines.

Step 7: Education. Engage in landlord-tenant mediation training and fair housing education.

For more information and updates check out https://accd.vermont.gov/vhip

Should my wife and I move forward with this we’ll keep you posted.