by Don Keelan

For the past decade, Vermont news has been inundated with stories about the State’s housing needs to accommodate its workforce, seniors, and those who cannot afford market-rate housing, either to purchase or rent. 

All indications suggest Northwestern Vermont communities are addressing the housing issue more aggressively than in Southwestern Vermont. Outside of ski area housing, the few housing developments that have occurred were affordable housing projects, developed by nonprofit housing agencies with substantial underwriting by federal, state, and other housing tax credit-issuing organizations.

The affordable housing recently built throughout Vermont communities comes with a staggering cost per unit, exceeding $500,000 and reaching over $600,000. What is puzzling is that many of these projects already have the necessary infrastructure on site—public roads, potable water, storm drainage, wastewater handling, and electric and communication utilities.

The Alice Holway Drive Apartments, in the village of Putney, delivered 25 units recently. According to Carly Berlin’s September 30 VTDigger article, the project ultimately cost $15.3 million or $612,000 per unit. The project also faced four lawsuits from neighbors who objected for a host of reasons, delaying the start date by two years.

All of the above brings me to what is taking place in Dorset, Manchester, and Bennington, Vermont. The Town of Dorset has held numerous meetings to determine what should happen at Raptor Lane, currently home to the town’s municipal offices. 

The Article before the Dorset voters in November is “Shall the voters authorize the conveyance of up to 30 acres (out of the 308-acre parcel) of Town-owned land at Raptor Lane to support the development of up to 35 units of housing?”  

According to the September 25 Manchester Journal, “Residents also favored a phased-in approach.” According to a fact sheet distributed by the Town, if the Article passes, the town anticipates a pre-development phase running through 2030, with home construction scheduled to start in 2031 and to be ready for occupancy by 2033. 

The handout material also noted, “Private Developers: None interested in a smaller unit count so far.’ The handout went on, ‘By Who: Non-Profit Developers: Habitat for Humanity and /or Cornerstone Housing Partners, etc.”

If today’s construction cost per unit is $500,000 and annual construction escalation is 5% per year, that same unit could cost about $638,000 in 2031.  

Do the math: a $500,000 unit cost with a $100,000 down payment and a $400,000 mortgage at today’s 7.40% annual interest rate, a 30-year amortization, plus real estate taxes and insurance, means most lenders would require the borrower to have a household income of $184,800. This doesn’t account for whether the borrower has a car/truck loan or college debt. If so, household income would have to be greater.

A residential housing project is also currently being discussed in the Town of Manchester at the town-owned 53-acre site near the airport. In some instances, the project’s circumstances are similar to Raptor Lane.  At the airport parcel, a private developer is working with the town to purchase the site for $1million. This site has no infrastructure to support housing. 

The seller, the Town of Manchester, has proposed an unusual purchase stipulation: the developer must pay the Town 5% of each unit’s selling price, an unprecedented requirement that could make the project financially infeasible from the outset.  

What seems to be coming into focus is that the Town of Bennington will soon be the bedroom community for workers across Bennington County. It has about 400 housing units in various stages of development, with more coming online. 

If towns in Bennington County recognize there is a crisis in workforce housing, then deal with it in crisis mode. Otherwise, let’s stop pretending.

In residential real estate development, five parties have a seat at the table: the town’s residents, the municipal/state governments, the developer, the lenders, and the buyer/renter. I know it is a big ask, but unless everyone works together to make housing possible for the workforce, seniors, and others, the required housing will never materialize.

The author is a U.S. Marine (retired), CPA, and columnist living in Arlington, VT.