by Don Keelan
In Vermont, no day goes by without another news story about the lack of affordability, workforce, and senior housing.
A colleague of mine, who developed over 3,000 housing units in five states, including more recently 50+ homes in Vermont, partially explained the lack of housing.
He noted that developing a housing project is similar to climbing an Egyptian or Mayan pyramid; to do so, you must climb over huge blocks from the base to the vertex.
He went on to say, metaphorically, to develop housing in Vermont, those blocks have increased and are much higher.
The first block, the base, is the regulations a developer must follow: the local and state bodies a developer must navigate consist of dozens of agencies, boards, or commissions. Many small housing developers are eliminated at this stage because they lack the personnel or financial resources to “make the climb.”
Filing with ACT 250 for 30 housing units, costing $15 million, requires up-front fees of $114,750 to document how a developer plans to mitigate the 37 provisions included in ACT 250’s 10 Criteria.
The second block to overcome is whether you will ever reach the vertex, not knowing how much time and money it will take to gain approvals. This is not measured in months but in years.
Assuming the developer has made it over the first two blocks, the third is euphemistically referred to as the “abutters block,” neighbors who object to the project and, for less than $100, bring a lawsuit to block the “climb.”
Having completed the first three blocks, the developer is ready to build, but is there a workforce available? As is often the case, will bringing in a skilled workforce from out-of-state to perform the 12 different trades and house them during the short construction window due to Vermont’s weather be necessary?
The fifth block is where the developer interfaces with the home buyer. The latter must be able to provide a $100,000 down payment and closing funds to acquire the $400,000 three-bedroom house.
The sixth obstacle is closing an 80% home mortgage, $320,000, with an annual interest rate of 7%. This is no longer just signing a note and mortgage deed. The lender requires the buyer to have a yearly income of at least $146,000 for the above before any student, car, and credit card payments that exceed one year.
Solutions.
To build the 36,000 units of housing Vermont needs by 2029, the following might be a way to meet this ambitious goal:
All local and state approvals must be granted within 90 days of filing the project’s final plans and specifications. If not addressed by then, the project is assumed to have been approved and permits issued.
Towns will have pre-designated housing sites that the towns and the State have reviewed for all site plan/regulatory requirements.
For abutters, at least ten joiners must wish to appeal the approvals. If their suit is denied, they must post a bond with the State large enough to cover the developer’s costs related to delays, fluctuations in interest rates, materials, labor, and legal fees. The State is currently addressing this issue.
The Agency of Education, along with local school districts and building trades associations, is ramping up tech school programs to teach students the construction trades locally. In doing so, it provides a stipend to each student during their enrollment in the apprenticeship programs.
To cover the funds required to buy, an organization could be created, funded with a revolving $500 million capitalization, to provide first-time buyers with the money they need. The funds would be secured by a second mortgage at an interest rate of 25% of the mortgage rate.
The WSJ reported on Feb.15, 2025, that California Gov. Gavin Newsome issued an executive order suspending all regulations on building houses. It was to build homes that the recent fires had destroyed. The question is being asked, “If the only way to rebuild was to suspend the regular rules, why were those rules there in the first place?” For purposes of full disclosure, the colleague noted above is this columnist.
The author is a U.S. Marine (retired), CPA, and columnist living in Arlington, VT.