by Don Keelan
A number of nonprofit agencies (and a for-profit company) develop a significant amount of affordable housing in the northwest and southwestern parts of Vermont. They are long-established, with outstanding track records for producing housing, but at what cost?
On July 29, 2024, in Burlington, there was a celebration for the opening of a 16-unit housing project. The units are available for families who are presently living in motels or other subsidized shelters. The new units are not meant to be permanent homes but transitional until the families can obtain income and employment stability, allowing them to have a more permanent settlement.
The reporting of WCAX-TV, the Burlington Free Press, and Vermont Biz did not highlight the cost per unit for the Main Street Family Housing multi-family apartments: $525,000.
It was reported that the project was financed with eight sources totaling $8,400,000: a mix of tax credits, State and Federal grant funds, donors to the nonprofit (COTS), a bank loan, and funds from the local electric company.
This is a “high-density project” on a small parcel of land with existing utilities outside its doors. Put another way, the project’s wastewater, potable water, electricity, internet, and storm drainage are all on-site and do not have to be built from far away. So why is there a half-million dollar plus cost per unit?
According to an executive of COTS who told this writer about it, it was a complex site, and even more complex and costly was navigating the approval process and financing.
The extraordinarily high cost per unit is not restricted to northwestern Vermont. In Arlington, as recently reported in the Bennington Banner, the 25 units of senior housing built by the Shires Housing nonprofit some twenty-plus years ago are now requiring renovations and upgrades that will cost $160,000 per unit, funded by a $4 million grant from the Vermont Housing and Conservation Board.
Farther south, in Bennington, a private developer has taken on the herculean task of converting the circa 1913, long-abandoned Bennington High School into a mix-use project at a cost forecasted to be $49 million.
The Benn-Hi project will contain 39 housing units (17 affordable and 22 at market rates), a senior center, a new home for the County’s Meals of Wheels operation, a daycare, and a gym for kids. If converting this century-old historic building was complicated enough, putting 30 layers of project financing in place must have been even more so.
According to a discussion with an executive of the Benn Hi developer, the housing units are estimated to cost just over $500,000 per unit.
To re-emphasize the complex nature of this site, last fall, the cost was reported on the Town’s website at $29,833,287 and earlier this year at $41,227,071. As of late July, the price is forecasted to be $49 million, partially attributed to environmental issues, asbestos and soil contamination.
Speaking with executives of several of the organizations providing affordable housing, one cannot deny their enthusiastic commitment to helping folks in need. Also noted was a commitment to making a positive statement concerning the neighborhoods where their projects are located.
However, what is missing here is at what cost and whether funds will be available to meet the goal of adding thousands of housing units for those seeking affordable and workforce housing. I sincerely doubt it when, in 2024, it will cost over $500,000 per unit.
All involved need to step back and ask the difficult question: does the course we are on make any sense? To build two units, 1,000 square feet each, of affordable housing over $1 million does not make sense and borders on the unfeasible.
One way to reduce costs would be to avoid building on contaminated sites and remove the cost constraints associated with historic preservation, archeological studies, and regulatory reviews that take not months but years to navigate.
If the State and other government/nonprofit agencies are to spend public funds on housing, they should get a hold of their sanity and look to develop five or six units for $1 million, not two. If they cannot do so, it may be time to reevaluate. Unless, of course, they believe the funding is limitless.
The author is a U.S. Marine (retired), CPA, and columnist living in Arlington, VT.