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Introduced by   Senator Condos of Chittenden District

Referred to Committee on


Subject:  Vermont Housing Finance Agency; board membership; authority

Statement of purpose:  This bill would increase the membership of the board of the Vermont Housing Finance Agency (VHFA) from seven to nine members, expand the authority of the agency in order to provide a wider variety of housing finance programs, and retain indefinitely (repeal the sunset) the VHFA borrower exemption from a portion of the property transfer tax.


It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1.  10 V.S.A. § 601 (7), (8), (9), (10), (11), (14), and (19) are amended to read:

(7)  “Housing sponsor” or “sponsor” means a person who is organized on a nonprofit or limited profit basis or agrees to appropriate conditions as described in subdivision 624(b)(5) of this title and who is approved by the agency as qualified either to own, construct, acquire, rehabilitate, operate, manage, or maintain residential housing;

(8)  “Mortgage” means a mortgage deed, deed of trust, or other instrument which shall constitute a lien on real property in fee simple or on a leasehold under a lease having a remaining term, at the time such mortgage is acquired, which does not expire for at least that number of years beyond prior to the maturity date of the obligation secured by the mortgage as is equal to the number of years remaining until the maturity date of the obligation or on a cooperative interest or on an interest in a mobile home.  “Mortgage” shall also include any mortgage or obligation guaranteed by the Vermont home mortgage guarantee board or its successor;

(9)  “Mortgage lender” means any bank or trust company, federal national mortgage association approved mortgage banker, mortgage bank approved by any government-sponsored entity, savings bank, savings and loan association, industrial bank, credit union, national banking association, federal savings and loan association, federal credit union, or other financial institution or governmental agency or instrumentality which customarily provides or otherwise aids in the financing of mortgage loans on residential housing located in the state;

(10)  “Mortgage loan” means and includes:

(A)  an interest-bearing or noninterest bearing obligation secured by either a mortgage or note or bond other security instrument constituting a lien on land and improvements in the state;

(B)  an interest-bearing or noninterest bearing obligation secured by a pledge of a cooperative interest and a conditional assignment of the proprietary lease incidental thereto;

(C)  an interest-bearing or noninterest bearing obligation secured by the owner-occupant’s interest in a mobile home, provided that:

(i)  the mobile home is to be sited in a manner intended for continuous residential occupancy by the owner on land owned by the owner of the mobile home and shall be secured by a mortgage that shall constitute a first lien on the mobile home and the real property to which it is affixed; or

(ii)  the mobile home is to be sited in a manner intended for continuous residential occupancy on land leased by the owner of the mobile home and shall be secured by a note or otherwise and collateral assignment of a lease of real property that shall constitute a first lien upon the mobile home.  Notwithstanding any other provision of this chapter, the lease of the land upon which the mobile home is sited shall be for a term of at least one year, shall be renewable for periods of at least one year, and shall comply with the requirements of 10 V.S.A. § 6236.  This definition shall not preclude the requirement of security in addition to that specified in this subsection for any mortgage loan.

(11)  “Persons and families of low and moderate income” means persons and families irrespective of race, creed, national origin, sex, or sexual orientation deemed by the agency to require such assistance as is made available by this chapter on account of insufficient personal or family income, taking into consideration, without limitation, such factors as:

(A)  The amount of the total income of such persons and families available for housing needs;

(B)  The size of the family;

(C)  The cost and condition of residential housing available;

(D)  The cost and availability of mortgage loans on residential housing in the state;

(E)  The eligibility of such persons and families for federal housing assistance of any type predicated upon a low-income basis or upon the basis of the age of such persons; including, without regard to personal or family income, persons who are employed by the state, the state or federal military services, a local political subdivision, a town school district, a supervisory or unified school district, or an entity providing public services or services deemed to be for the public good as determined by the agency or are seniors or persons with a handicap or disability and their families;

(F)  The ability of such persons and families to compete successfully in the normal housing market and to pay the amounts at which private enterprise is providing decent, safe, and sanitary housing, and deemed by the agency therefore to be eligible to occupy residential housing constructed and financed, wholly or in part, with insured or guaranteed construction loans or insured or guaranteed mortgages, or with other public or private assistance other than as provided by this chapter.

(14)  “Residential housing” means residential housing units designed primarily to provide principal dwelling accommodations whether on a permanent or temporary basis for persons or families, which may include the land and improvements thereon and such nonhousing facilities or services considered necessary or convenient or part of a community development plan by the agency in connection with the residential housing, including commercial enterprises and government functions within the same building.  “Residential housing” includes, but is not limited to, single or multi-family dwellings, congregate homes, residential care homes as defined in 33 V.S.A. § 7102, nursing homes, transitional housing, emergency shelters for the homeless or displaced, mobile homes, single room occupancy dwellings, and group homes for the mentally ill or developmentally disabled.  “Residential housing” also means cooperative interests, and mobile home parks as defined in section 6201 of this title;

(19)  “Equity loan” means a mortgage loan to a housing sponsor secured by a mortgage on property constituting residential housing in an amount that, when added to the amount of any prior mortgages on the property, does not exceed ninety 90 percent of the value of the property plus the value of additional collateral deemed appropriate and as determined by the agency, provided the agency has made a finding that the effect of such loan will be to maintain or increase the supply of residential housing in the state for persons and families of low and moderate income.

Sec. 2.  10 V.S.A. § 611(b), (c), (d), (e), (g), and (h) are amended to read:

(b)  The agency shall consist of seven nine commissioners, including ex officio the commissioner of banking, insurance, securities, and health care administration, the state treasurer, the secretary of commerce and community development, the executive director of the Vermont housing and conservation board or their designees, and four five commissioners, who shall be residents of the state, and who shall in the opinion of the governor with consideration of statewide geographic representation be knowledgeable in housing, finance, and financial planning or other related areas, to be appointed by the governor with the advice and consent of the senate for terms of four years.  The terms of the four commissioners initially appointed by the governor, however, shall end on the first day of February in 1975, 1976, 1977 and 1978.  Any vacancies in the membership of the agency shall be filled in like manner but only for the remainder of an unexpired term.  Each commissioner shall hold office for the term of his or her appointment and until his or her successor is appointed and qualified.  A commissioner appointed by the governor may be removed from office by the governor for misfeasance, malfeasance, or willful neglect of duty or other cause after notice and public hearing unless such notice or hearing is expressly waived in writing.

(c)  The governor shall designate annually a chairman chair of the agency from among the commissioners.  The commissioners shall elect from among their number a vice-chairman vice chair annually and such other officers as they may determine.  Meetings shall be held at the call of the chairman chair or whenever two commissioners so request.  Four Five commissioners of the agency shall constitute a quorum, and any action taken by the agency under the provisions of this chapter may be authorized by resolution approved by a majority but not less than three four of the commissioners present at any regular or special meeting.  Resolutions of the agency shall be made available to the public.  No vacancy in the membership of the agency shall impair the right of a quorum to exercise all the rights and perform all the duties of the agency.

(d)  Commissioners other than ex officio members shall receive $30.00 per day compensation authorized under section 1010 of Title 32 for each day spent in the performance of their duties and each such commissioner shall be reimbursed from the funds of the agency for his or her reasonable expenses incurred in carrying out his or her duties under this chapter.

(e)  Notwithstanding the provisions of any other law, no officer or employee of this state shall be deemed to have forfeited or shall forfeit his or her office or employment by reason of his or her acceptance of membership of the agency or his or her service thereto.

(g)  The secretary shall keep a record of the proceedings of the agency and shall be custodian of all books, documents and papers filed with the agency and of its minute book and seal.  He The secretary shall have authority to cause to be made copies of all minutes and other records and documents of the agency and to give certificates under the seal of the agency to the effect that the copies are true copies and all persons dealing with the agency may rely upon those certificates.

(h)  Before entering into his or her duties, each commissioner of the agency shall take and subscribe an oath to perform the duties of his or her office faithfully, impartially, and justly to the best of his or her ability.  A record of the oath shall be filed in the office of the secretary of state.

Sec. 3.  10 V.S.A. § 621 is amended to read:


The agency shall have all of the powers necessary and convenient to carry out and effectuate the purposes and provisions of this chapter, including without limitation those general powers provided a business corporation by section 1852 of Title 11 and those general powers provided a nonprofit corporation by section 2352 of Title 11 and including, without limiting the generality of the foregoing, the power to:

(1)  Make and execute contracts and all other instruments necessary or convenient for the exercise of its powers and functions under this chapter, including contracts and instruments which may be made and executed with the state or the United States or any agency or instrumentality of either of them or with private corporations or individuals, including contracts with mortgage lenders or other qualified entities for the servicing of mortgages made or acquired by the agency pursuant to this chapter or for assistance rendered the agency in the location of all eligible mortgagees or to pay the reasonable value of services rendered to the agency pursuant to these contracts;

* * *

(4)  Provide, contract, or arrange for consolidated processing of any aspect of the financing of residential housing under this chapter in order to avoid duplication thereof by either undertaking the processing in whole or in part on behalf of any department, agency, or instrumentality of the United States or of this state, or, in the alternative, to delegate or contract for the processing in whole or in part to any department, agency, or instrumentality of the United States or of this state, or to a private contractor acceptable to the agency;

(5)  Provide advice, technical information, assistance in obtaining federal and state aid, and make such grants, loans, or advances as will assist the planning, construction, rehabilitation, and operation of residential housing primarily for persons of low and moderate income, including but not limited to assistance in community development and organization, advisory services, the formation of cooperative housing corporations and to encourage community organizations to assist in developing same;

* * *

(18)  Make grants and loans or advances secured by a mortgage to housing sponsors for predevelopment activities related to the development of residential housing;

(19)  Make loans or advances secured by a mortgage to housing sponsors for the acquisition, construction, rehabilitation, operation, or maintenance of residential housing;

(19)(20)  Make loans to members of a housing cooperative corporation to finance their cooperative interests in such housing cooperative corporation and make mortgage loans and loans to persons or families to finance mobile homes;

(20)(21)  Use funds received from real estate trust and escrow accounts established under 26 V.S.A. § 2214(c), IORTA funds, for down payment and closing cost assistance with priority given to persons and families at or below 90% 90 percent of median income and to persons and families purchasing perpetually affordable housing.

Sec. 4.  10 V.S.A. § 622(3) and (7) are amended to read:

(3)  To make commitments to purchase, and to purchase, service, and sell federally insured mortgage loans or mortgages guaranteed by the Vermont home mortgage credit agency or its successors and to make loans directly upon the security of any such mortgage, provided the underlying mortgage loans shall have been made and shall be continued to be used solely to finance or refinance the construction, rehabilitation, purchase, or leasing of residential housing in this state;

(7)  To purchase, make, or otherwise participate in the making, to enter into commitments, for the purchase, making, or participation in the making, of eligible loans for rehabilitation to persons and families of low and moderate income, and to owners of existing residential housing for occupancy by those persons and families, for the rehabilitation of existing residential housing owned by them.  The loans may be insured or uninsured and shall be made with such security as the agency considers advisable.  They may be made in amounts sufficient to refinance existing indebtedness secured by the property, if the refinancing is determined by the agency to be necessary to permit the owner to meet his housing costs without expending an unreasonable portion of his income on it.  A loan for rehabilitation shall not be made unless the agency determines that the loan is to be used primarily to make the housing more desirable to live in, to increase the market value of the housing, to comply with building, housing maintenance, fire, health, or similar codes and standards applicable to housing, to accomplish energy conservation related improvements or to insure independent living for persons who are handicapped or elderly.  Rehabilitation loans shall be made only when the agency determines that financing is not otherwise available, in whole or in part, from private lenders upon equivalent terms and conditions.

Sec. 5.  10 V.S.A. § 623(h) is amended to read:

(h)  The agency may require that the loans to mortgage lenders shall be additionally secured as to payment of both principal and interest by a pledge of and lien upon collateral security in such amounts as the agency shall by resolution determine to be necessary to assure the payment of the loans and the interest thereon as they become due.  The collateral security shall consist of:

* * *

(2)  obligations, satisfactory to the agency, issued by any of the following federal agencies:  Bank for Cooperatives, Federal Intermediate Credit Bank, Federal Home Loan Bank System, Federal Land Banks, the Government National Mortgage Association; or issued by Federal National Mortgage Association;

* * *

Sec. 6.  10 V.S.A. § 624(a)(1) is amended to read:

(1)  Make, undertake commitments to make, purchase, undertake commitments to purchase, and participate with mortgage lenders in the making of mortgage loans, including federally insured mortgage loans and loans guaranteed by the Vermont home mortgage guarantee board and to make temporary grants, loans, and advances in anticipation of mortgage loans to housing sponsors to finance the acquisition, construction or rehabilitation of residential housing; provided, that this subdivision shall not be construed to include equity loans;

Sec. 7.  10 V.S.A. § 624(b)(2) and (5) are amended to read:

(2)  The mortgage loan may be in an amount not to exceed the value of the residential housing as determined by the agency.  The value determined may include the value of additional collateral as deemed appropriate by the agency;

(5)  Each mortgage loan to a housing sponsor for residential housing shall be subject to an agreement between the agency and the housing sponsor which will subject the housing sponsor and its principals or stockholders, if any, to limitations established by the agency as to sale prices, rental, and other charges, builder’s and developer’s profits and fees, and the disposition of its property and franchise to the extent more restrictive limitations are not provided by the law under which the housing sponsor is incorporated or organized or by this chapter; and

Sec. 8.  10 V.S.A. § 625(3) is amended to read:

(3)  The agency determines that there exists, or without the proposed residential housing there will exist, a shortage of decent, safe, and sanitary housing at rentals or prices which persons and families of low or moderate income are able to afford within the general housing market area or there is a shortage of temporary transitional or emergency housing to be served by the proposed residential housing and that private enterprise and investment are unable, without assistance, to provide an adequate supply of the residential housing and sufficient mortgage financing for residential housing for occupancy by the persons or families; and 

Sec. 9.  10 V.S.A. § 631(a) and (b) are amended to read:

(a)(1)  The agency may issue its negotiable notes and bonds in such principal amount as the agency determines to be necessary to provide sufficient funds for achieving any of its corporate purposes, including the payment of interest on notes and bonds of the agency, establishment of reserves to secure the notes and bonds including the reserve funds created under section 632 of this title, and all other expenditures of the agency incident to and necessary or convenient to carry out its corporate purposes and powers.  However, the bonds or notes of the agency outstanding at any one time shall not exceed $900,000,000.00.

(2)  The agency shall have the power, from time to time, to issue notes to renew notes and bonds to pay notes, including the interest thereon and, whenever it deems refunding expedient, to refund any bonds by the issuance of new bonds, whether the bonds to be refunded have or have not matured, and to issue bonds partly to refund bonds then outstanding and partly for any of its corporate purposes.

(3)  Except as may otherwise be expressly provided by resolution of the agency, every issue of its notes and bonds shall be general obligations of the agency payable out of any revenues or moneys of the agency, subject only to any agreements with the holders of particular notes or bonds pledging any particular revenues.

(4)  Federal aggregate limits. Pursuant to section 103A(g)(6) of the federal Internal Revenue Code, the authority to issue qualified mortgage bonds within the limits of the state ceiling for any calendar year is hereby allocated seventy-five percent to the Vermont housing finance agency.

(b)  The notes and bonds shall be authorized by resolution or resolutions of the agency, shall bear such date or dates and shall mature at such time or times as the resolution or resolutions may provide, except that no bond shall mature more than 42 years from the date of its issue.  The bonds may be issued as serial bonds payable in annual installments or as term bonds or as a combination thereof.  The notes and bonds shall bear interest at such rate or rates, be in such denominations, be in such form, either coupon or registered, carry such registration privileges, be executed in such manner, be payable in such medium of payment, at such place or places within or without the state, and be subject to such terms of redemption as the resolution or resolutions may provide, provided, however, that at the time of the authorization of the issuance of such bonds or notes the agency determines in such resolution:

(1)  that mortgage loans made by or on behalf of the agency, directly or indirectly, with the proceeds of such bonds or notes in accordance with section 621 or 622 of this title can be issued bearing a rate or rates of interest which will be less than the prevailing rate of interest on comparable mortgage loans available in the state without the assistance of the agency at the time the bonds or notes are sold; and

(2)  that the agency will derive receipts, revenues or other income from mortgages purchased or loans made through mortgage lenders with the proceeds of such bonds or notes sufficient to provide, together with all other available receipts, revenues, and income of the agency, for the payment of such bonds or notes and the payment of all costs and expenses incurred by the agency with respect to the program or purpose for which such bonds or notes are issued.  The notes and bonds of the agency may be sold by the agency, at public or private sale, at such price or prices as the agency shall determine.

Sec. 10.  10 V.S.A. § 631(k) is added to read:

(k)  Interest rate exchange agreements.  The agency may enter into one or more agreements for the exchange of interest rates, cash flows, or payments to reduce net borrowing costs, achieve desirable net effective interest rates in connection with its issuance and sale of debt obligations and to provide for an efficient means of debt management.

Sec. 11.  10 V.S.A. § 632(d) is amended to read:

(d)  In order to assure the maintenance of the debt service reserve requirement in each debt service reserve fund established by the agency, there may be appropriated annually and paid to the agency for deposit in each such fund, such sum as shall be certified by the chairman chair of the agency, to the governor or the governor-elect, the president of the senate, and the speaker of the house, as is necessary to restore each such debt service reserve fund to an amount equal to the debt service reserve requirement for such fund.  The chairman chair shall annually, on or about February 1, make and deliver to the governor or the governor-elect, the president of the senate, and the speaker of the house, his or her certificate stating the sum required to restore each such debt service reserve fund to the amount aforesaid, and the sum so certified may be appropriated, and if appropriated, shall be paid to the agency during the then current state fiscal year.  The principal amount of bonds or notes outstanding at any one time and secured in whole or in part by a debt service reserve fund to which state funds may be appropriated pursuant to this subsection shall not exceed $125,000,000.00, provided that the foregoing shall not impair the obligation of any contract or contracts entered into by the agency in contravention of the Constitution of the United States of America.

Sec. 12.  10 V.S.A. § 637 is amended to read:


The agency shall have the benefit of sovereign immunity to the same extent as the state of Vermont.  Commissioners, officers, employers, and the executive director of the agency shall be deemed employees of the state for purposes of 12 V.S.A. chapter 189 (tort claims against state) and 3 V.S.A. chapter 29 (claims against state employees).  Notwithstanding the foregoing, obligations issued under the provisions of this chapter shall not be deemed to constitute a debt or liability or obligation of the state or of any political subdivision thereof or a pledge of the faith and credit of the state or of any political subdivision but shall be payable solely from the revenues or assets of the agency.  Each obligation issued under this chapter shall contain on the face thereof a statement to the effect that the agency shall not be obligated to pay the same nor the interest thereon except from the revenues or assets pledged therefor and that neither the faith and credit nor the taxing power of the state or of any political subdivision thereof is pledged to the payment of the principal of or the interest on such obligations.

* * * VHFA Property Transfer Tax Exemption * * *

Sec. 13.  Sec. 277(c) of No. 62 of the Acts of 1999 is amended to read:

(c)  Sec. 272 shall be effective from passage, and the provisions in Sec. 272 providing for a property transfer tax exemption shall be repealed July 1, 2006.

Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont