10 V.S.A. § 699 Vermont Rental Housing Improvement Program
699. Vermont Rental Housing Improvement Program
(a) Creation of Program.
(1) The Department of Housing and Community Development shall design and implement the Vermont Rental Housing Improvement Program, through which the Department shall award funding to statewide or regional nonprofit housing organizations, or both, to provide competitive grants and forgivable loans to private landlords for the rehabilitation, including weatherization and accessibility improvements, of eligible rental housing units.
(2) The Department shall develop statewide standards for the Program, including factors that partner organizations shall use to evaluate applications and award grants and forgivable loans.
(3) A landlord shall not offer a unit created through the Program as a short-term rental, as defined in 18 V.S.A. § 4301, for the period a grant or loan agreement is in effect.
(4) The Department may utilize a reasonable percentage, up to a cap of five percent, of appropriations made to the Department for the Program to administer the Program.
(5)(A) The Department may cooperate with and subgrant funds to State agencies and governmental subdivisions and public and private organizations in order to carry out the purposes of this section.
(B) Solely with regards to actions undertaken pursuant to this subdivision (5), entities carrying out the provisions of this section, including grantees, subgrantees, and contractors of the State, shall be exempt from the provisions of 8 V.S.A. chapter 73 (licensed lenders, mortgage brokers, mortgage loan originators, sales finance companies, and loan solicitation companies).
(b) Eligible rental housing units. The following units are eligible for a grant or forgivable loan through the Program:
(1) Non-code compliant.
(A) The unit is an existing unit, whether or not occupied, that does not comply with the requirements of applicable building, housing, or health laws.
(B) If the unit is occupied, the grant or forgivable loan agreement shall include terms:
(i) that prohibit permanent, involuntary displacement of the current residents;
(ii) that provide for the temporary relocation of the current residents if necessary to perform the rehabilitation; and
(iii) that ensure that the landlord complies with the affordability requirements of the Program following the rehabilitation.
(2) New units. The unit will be:
(A) a newly created accessory dwelling unit that meets the requirements of 24 V.S.A. § 4412(1)(E);
(B) a newly created unit within an existing structure;
(C) a newly created residential structure that is a single unit; or
(D) a newly created unit within a newly created structure that contains five or fewer residential units.
(c) Administration. The Department shall require a housing organization that receives funding under the Program to adopt:
(1) a standard application form that describes the application process and includes instructions and examples to help landlords apply;
(2) an award process that ensures equitable selection of landlords, subject to a housing organization’s exercise of discretion based on the factors adopted by the Department pursuant to subsection (a) of this section; and
(3) a grant and loan management system that ensures accountability for funds awarded.
(d) Program requirements applicable to grants and forgivable loans.
(1)(A) A grant or loan shall not exceed $50,000.00 per unit, for rehabilitation or creation of any other eligible rental housing unit. Up to an additional $20,000.00 per unit may be made available for specific elements that collectively bring the unit to the visitable standard outlined in the rules adopted by the Vermont Access Board.
(B) In determining the amount of a grant or loan, a housing organization shall consider the number of bedrooms in the unit, whether the unit is being rehabilitated or newly created, whether the project includes accessibility improvements, and whether the unit is being converted from nonresidential to residential purposes.
(2) A landlord shall contribute matching funds or in-kind services that equal or exceed 20 percent of the value of the grant or loan.
(3) A project may include a weatherization component.
(4) A project shall comply with applicable building, housing, and health laws.
(5) The terms and conditions of a grant or loan agreement apply to the original recipient and to a successor in interest for the period the grant or loan agreement is in effect.
(6) The identity of a recipient, the amount of a grant or forgivable loan, the year in which the grant or forgivable loan was extended, and the year in which any affordability covenant ends are public records that shall be available for public copying and inspection, and the Department shall publish this information at least quarterly on its website.
(7) A project for rehabilitation or creation of an accessible unit may apply funds to the creation of a parking spot for individuals with disabilities.
(e) Program requirements applicable to grants and five-year forgivable loans. For a grant or five-year forgivable loan awarded through the Program, the following requirements apply for a minimum period of five years:
(1) A landlord shall coordinate with nonprofit housing partners and local homelessness service organizations approved by the Department to identify potential tenants.
(2)(A) Except as provided in subdivision (B) of this subdivision (e)(2), a landlord shall lease the unit to a household that is:
(i) exiting homelessness, including any individual under 25 years of age who secures housing through a master lease held by a youth service provider on behalf of individuals under 25 years of age;
(ii) actively working with an immigrant or refugee resettlement program;
(iii) composed of at least one individual with a disability who receives or is approved to receive Medicaid-funded home- and community-based services or Social Security Disability Insurance;
(iv) displaced due to a natural disaster; or
(v) with approval from the Department in writing, an organization that will hold a master lease that explicitly states the unit will be used in service of the populations described in this subsection (e).
(B) If, upon petition of the landlord, the Department or the housing organization that issued the grant determines that a household under subdivision (A) of this subdivision (e)(2) is not available to lease the unit, then the landlord shall lease the unit:
(i) to a household with an income equal to or less than 80 percent of area median income; or
(ii) if such a household is unavailable, to another household with the approval of the Department or housing organization.
(3)(A) A landlord shall accept any housing vouchers that are available to pay all, or a portion of, the tenant’s rent and utilities.
(B) If no housing voucher or federal or State subsidy is available, the total cost of rent for the unit, including utilities not covered by rent payments, shall not exceed the applicable fair market rent established by the Department of Housing and Urban Development.
(4)(A) A landlord may convert a grant to a forgivable loan upon approval of the Department and the housing organization that approved the grant.
(B) A landlord who converts a grant to a forgivable loan shall receive a prorated credit for loan forgiveness for each year in which the landlord participates in the Program.
(f) Requirements applicable to 10-year forgivable loans. For a 10-year forgivable loan awarded through the Program, the following requirements apply for a minimum period of 10 years:
(1) The total cost of rent for the unit, including utilities not covered by rent payments, shall not exceed the applicable fair market rent established by the Department of Housing and Urban Development, except that a landlord may accept a housing voucher that exceeds fair market rent, if available.
(2) A landlord shall accept any housing vouchers that are available to pay all, or a portion of, the tenant’s rent and utilities.
(3) The Department shall forgive a prorated amount of a forgivable loan for each year a landlord participates in the loan program.
(g) Minimum funding for grants and five-year forgivable loans.
(1) Annually, the Department shall establish a minimum allocation of funding set aside to be used for five-year grants or forgivable loans to serve eligible households pursuant to subsection (e) of this section. Remaining funds may be used for either five-year grants or forgivable loans or 10-year forgivable loans pursuant to subsection (f) of this section. The set aside shall be a minimum of 30 percent of funds disbursed annually.
(2) The Department shall consult with the Agency of Human Services to evaluate factors in establishing the amount of the set aside, including:
(A) the availability of housing vouchers;
(B) the current need for housing for eligible households;
(C) the ability and desire of landlords to house eligible households;
(D) the support services available for landlords; and
(E) the prior uptake and success rates for participating landlords.
(3) The Department shall coordinate with the local Coordinated Entry Lead Agencies and Homeownership Centers to direct referrals for those individuals or families prioritized to be housed pursuant to the five-year grants or forgivable loans.
(4) Funds from the set aside not utilized after nine months shall become available for 10-year forgivable loans.
(5) The Department shall annually publish the amount of the set aside on its website.
(h) Lien priority. A lien for a grant converted to a loan or for a forgivable loan issued pursuant to this section is subordinate to:
(1) a lien on the property in existence at the time the lien for rehabilitation and weatherization of the rental housing unit is filed in the land records; and
(2) a first mortgage on the property that is refinanced and recorded after the lien for rehabilitation and weatherization of the rental housing unit is filed in the land records.
(i) Creation of the Vermont Rental Housing Improvement Program Fund. Funds repaid or returned to the Department from forgivable loans or grants funded by the Program shall return to the Vermont Rental Housing Improvement Program Fund to be used for Program expenditures and administrative costs at the discretion of the Department.
(j) Annual report. Annually, on or before November 15, the Department shall submit a report to the House Committees on Human Services and on General and Housing and the Senate Committee on Economic Development, Housing and General Affairs regarding the following:
(1) separately, the number of units funded and the number of units rehabilitated through grants, through a five-year forgivable loan, and through a 10-year forgivable loan;
(2) for grants and five-year forgivable loans, for the first year after the expiration of the lease requirements outlined in subdivision (e)(2)(A) of this section, whether the unit is still occupied by a tenant who meets the qualifications of that subdivision;
(3) for each program, for the first year after the expiration of the applicable lease requirements outlined in this section, the amount of rent charged by the landlord and how that rent compares to fair market rent established by the Department of Housing and Urban Development; and
(4) the rate of turnover for tenants housed utilizing grants or five-year forgivable loans and 10-year forgivable loans separately.
Added 2021, No. 181 (Adj. Sess.), § 6, eff. June 7, 2022; amended 2023, No. 47, § 40, eff. July 1, 2023; 2023, No. 113 (Adj. Sess.), § E.802, eff. July 1, 2024; 2023, No. 181 (Adj. Sess.), § 86, eff. June 17, 2024; 2025, No. 69, § 1, eff. July 1, 2025; 2025, No. 179 (Adj. Sess.), § 6, eff. July 1, 2026.