The final budget bill passed by the Senate Friday includes an increase to the low-income housing tax credit, which will provide $2 million for the creation of affordable housing in Vermont, more than doubling this year’s funding to Vermont. The president is expected to sign the bill.

"This tax credit is a big piece of the pie for affordable housing. An unfortunate side effect of our good economy is rising rents," said Sen. Patrick Leahy, who is a senior member of the housing appropriations subcommittee, which has jurisdiction over the federal housing budget. "We need to preserve our existing affordable housing and make investments in new affordable housing more attractive."

Despite the booming economy, the need for affordable housing continues to surge. A recent study found that Vermont is among the most expensive states in the nation for affordable housing.

The housing tax credit is an incentive for private investment in affordable rental housing. Since 1987, this tax credit has helped to renovate or build more than 2,900 affordable apartments in Vermont. Along with Leahy, Sen. Jim Jeffords has long supported this boost in the tax credit and he has sponsored several bills to increase the 14-year-old limit on the amount of tax credits and bonds states can use to finance affordable housing.

The demand for the tax credits has far exceeded their availability in Vermont. More than $2.5 million in tax credits were requested in Vermont this year but less than $1 million was available. The new legislation includes a $2 million small state minimum, which will double the existing available tax credits available in Vermont for low-income housing construction and rehabilitation. The bill raises the tax credit cap from $1.25 per capita to $1.75 per capita over two years.

"These funds are long overdue and they are desperately needed in Vermont to ease the affordable housing crisis. The funding available for affordable housing has not kept pace with the demand but this is certainly a step in the right direction," said Leahy.

This year-end bill also raises the amount of private activity bonds. Under the program, states may sell bonds to pay for affordable mortgages and construction. This bill increases the per capita bond limit from $50 to $75 – or a base minimum of $225 million. Other uses for the bond include higher education, job creation and economic development

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