Bond sale helps home buyers, renters
By Bruce Edwards
STAFF WRITER | December 30,2012
The Vermont Housing Finance Agency has completed a $26 million bond sale that helps refinance loans on affordable apartment units around the state, including the 15-unit Benson Heights apartment complex in Benson. The agency also completed a $50 million bond sale that will finance the purchase of 250-350 Vermont homes.
Affordable housing in the state received a boost this month with a bond sale that will help finance the purchase of up to 350 single-family homes.
The Vermont Housing Finance Agency closed on a $50 million bond sale that replenishes the agency’s loan funds. The money will provide 30-year mortgages at 3 percent interest on a government-backed mortgage and 3.25 percent on a conventional mortgage.
The bond sale will fund 250 to 350 home purchases.
A separate $26 million multifamily bond sale restructures certain existing VHFA loans that affect 907 apartments around the state.
VHFA Executive Director Sarah Carpenter said the agency took advantage of a program available only to state housing finance agencies. Under the program, the U.S. Treasury buys the mortgage securities backed by the housing bonds.
Carpenter said the VHFA was faced with an end of the year deadline to replenish its funding before the program expired.
“The program ends Dec. 31 so essentially we both needed to bond and wanted to bond before the end of the year to take advantage of the low rates we could get through that program,” she said.
The bond sale covering apartment complexes required restructuring loans with each project partner, Carpenter said.
Lower refinancing rates were aided by the State of Vermont Moral Obligation credit enhancement that allowed for long-term, fixed-rate financing. She said it also allows some apartment projects to use the savings for improvements.
Erhard Mahnke of the Vermont Affordable Housing Coalition said that as the economy gains strength and consumer confidence increases, the bond sale provides more home-buying opportunities.
“The single-family bond obviously provides a really attractive rate and attractive terms for first-term home buyers,” said Mahnke, the coalition’s executive director.
Although Vermont has one of the highest home-ownership rates in the country, Mahnke said the state still has a deficit in terms of meeting the demand for home ownership.
The housing deficit is especially acute when it comes to affordable apartments, he said, so the multifamily bond sale takes on added significance.
“What this does largely is preserve the affordability of some existing for-profit-owned properties, maybe reaching the end of their mortgage term and so (the owners) might have even been looking to do something else with the property,” Mahnke said.
In addition, he said proceeds from the bond will help finance several transfers of ownership from for-profit owners of affordable housing to nonprofit owners.
One transaction involves the transfer of Benson Heights, a 15-unit senior Section 8 development in Benson, from the United Church of Benson to the Housing Trust of Rutland County. The financing also provides for rehabilitation and other capital improvements.
According to the 2010 Vermont Housing Needs Assessment report, the state will need to build approximately 8,000 homes between 2009 and 2014 to meet demand.
When it comes to apartments, the report said Vermont will require an additional 5,000 rental units by 2014.
Based on an average monthly rent of $1,000 a month for a two-bedroom apartment in the state, Mahnke said, a worker needs to earn $19 an hour to afford it.
This year the VHFA has financed 401 home purchases.
Since its inception, the agency has provided financing for 27,000 homebuyers with low-interest mortgages, and financed the development of approximately 8,400 affordable rental units.