BRATTLEBORO-Chloe Learey, executive director of the Winston Prouty Center for Child and Family Development in West Brattleboro, has a vision to build 300 units of diverse housing on the center's 180-acre campus.
Guided by the belief that an inclusive community is ultimately healthier for everyone, Learey's goal is to provide housing that is affordable to many people with different needs.
"I imagine a neighborhood where you don't say, 'Oh, there's the poor people's building. There's the old people's building,'" Learey said. "We're trying to build a neighborhood that reflects our community, where anybody can live and it's not segregated."
Learey has spent the past year and a half focused on realizing this dream. She's gotten buy-in from the Prouty board of directors, the town of Brattleboro, and community members.
Secretaries of multiple state agencies and federal staffers participated in a funders' site tour, and the campus was included in Brattleboro's state-recognized neighborhood development area in order to fast-track permitting.
Site constraints have been mapped and evaluated; wetlands, flagged.
Now Learey is looking for financing. That part hasn't been easy.
Building workforce housing is challenging
Learey and others in the housing field acknowledge that traditional financing mechanisms don't necessarily work for a project like this one, where a nonprofit without much development experience plans to build hundreds of mixed-income housing units.
She looked into using low-income housing tax credits (LIHTC) as one funding stream. The federal LIHTC program provides up to 70% of development costs and is the largest single resource available for the development of affordable rental housing in the U.S.
The Vermont Housing Finance Agency (VHFA) administers the program in Vermont.
But LIHTC isn't necessarily a good fit for projects such as Learey's, said Seth Leonard, managing director of community development at VHFA.
"LIHTC works really well in developments where the majority of units in a building are program-eligible, that target household incomes below 60% of area median income," Leonard said. "Putting little sprinkles of that funding into different buildings is not something the program does well."
Additionally, these tax credits are typically awarded to affordable housing developers with experience in the program and who are very efficient in this line of business, Leonard said.
Windham & Windsor Housing Trust and other regional housing groups are examples of experienced nonprofits that use these tax credits to build affordable housing around the state.
While there are some "first-time LIHTC developers" in Vermont, Leonard said that it can be challenging to take on a project as a first-timer.
Sometimes project developers team up with more experienced housing developers to access the LIHTC program, but that can involve selling the portion of the property that relies on LIHTC and giving up control of the project.
Vermont lacks incentives to build workforce housing
Josh Hanford, director of intergovernmental relations at the Vermont League of Cities and Towns (VLCT) and a former commissioner of the Vermont Department of Housing and Community Development, believes Vermont needs incentives to build more "missing middle" workforce housing like that proposed for the Winston Prouty campus.
The majority of low-cost funding such as grants and tax credits goes to the development of capital "A" affordable housing, where Hanford says the most pressing need is.
"And that's not bad," he adds.
But the result is that large-scale, sophisticated developers capable of building workforce housing have been driven out of the state because they can't make their projects in Vermont work.
Hanford thinks one solution would be project-based tax-increment financing (TIF), which would serve smaller regions than the current TIF program serves.
He says that with project-based TIF, Winston Prouty could finance the necessary upgrades to water, sewer, and roads that would entice a developer to take on the project, which would then bring in additional tax revenue to the state.
'We're just a little quirky'
Learey is undaunted by the challenges she faces.
"We're just a little quirky," she said.
People might wonder why a small nonprofit that supports kids and families might want to build housing, but Learey argues that housing helps kids and families by providing stability that is essential to child development.
And it helps the community, which, according to the town's 2021 Housing Action Plan, has a "pressing need" for more than 500 housing units.
"We have this asset [of 180 acres]. And it's our responsibility to be part of the solution," Learey said.
She thinks that the addition of 300 mixed-income housing units will help stabilize the local housing market, known for its scarce and expensive options.
Learey has scaled back the original plan for the campus in order to bring down the project budget. Using modular construction and a row-house design of fourplexes, construction costs are currently estimated to average $263,000 per unit.
The total cost for the housing component of the project would be less than $100 million.
Learey is now looking at a financing model that would include traditional debt and private equity. She thinks "impact investment" - whereby investors accept a lower rate of return in exchange for helping to create beneficial social or environmental effects - would be a good fit for the project.
Learey pointed to the development of middle-market, workforce housing in St. Johnsbury by the Northern Forest Center as an example of this type of financing.
Using impact investment funds, as well as private gifts and grants and a $500,000 low-interest loan from State Treasurer Mike Pieciak's "10% for Vermont" fund, the center is developing 10 apartments and two commercial spaces in a 1906 building downtown.
"We're big fans of that approach," said Leonard, and according to him the VHFA has been prioritizing projects that have been able to access low-interest debt and attract private capital.
A model from Middlebury?
Learey wonders whether large, local employers could also help fund the project.
She cited Middlebury College's 2022 purchase of 35 acres for the development of a mix of housing ranging from affordable to market-rate. In between will be workforce housing units, available to those who meet the income requirements of $50,000 to $80,000 per year for a two-person household.
While the college is partnering in developing the project, tenants will not have to be employees of the college to qualify for the workforce housing units.
"We think that trying to find creative ways of leveraging private investments for this project could potentially be a positive model for the rest of the state," said Leonard. "I think the work they're doing to try to activate that type of capital is something that we should applaud from an ingenuity standpoint."
Meanwhile, Learey perseveres.
"I will talk to anybody who is doing this type of development or has thought about doing it," she said. "I don't know how many people I've spoken to over the past year and a half trying to find out how to make it work."
She's come to accept that "no one is going to save us," but says that's OK.
"Maybe it's better," she said. "This is our community, and we can figure it out."
A commentary from Learey appears in this week's Voices section.
This News item by Ellen Pratt was written for The Commons.