Program election (9% vs. 4% vs. hybrid) — Vermont

Ceiling Credits, Bond Credits, and Hybrid deals — Vermont's own vocabulary

The QAP defines the federal credit itself in two tracks: "1. Federal Low Income Housing Tax Credit (LIHTC), including: a. 9% 'Ceiling Credits' or 'Allocated' or '70% Present Value' b. 4% 'Bond Credits' or 'automatic credits' or '30% Present Value'" (§1.1). Every other section of the QAP refers to the two tracks as Ceiling Credits and Bond Credits, not as "9%" and "4%" — a developer cross-referencing this QAP against national LIHTC materials needs to translate the vocabulary, not just the mechanics. A third structure, Hybrid Development, is separately defined: "A single development constructed simultaneously by two partnerships using both Ceiling Credit and Bond Credit as either a single or separate building(s)."

The state Affordable Housing Tax Credit: real dollars, but Bond Credit deals only

Vermont's own state tax credit is created by 32 V.S.A. § 5930u and has three eligible uses — Rental Housing, Homeownership, and Down Payment Assistance — all administered by VHFA. For the rental track that matters to this phase, the QAP is explicit and narrow about who can apply: "An eligible applicant is any Sponsor who has applied for and received an award of federal Bond Credits" (§5.1). A Ceiling Credit (9%) award, by itself, is not a qualifying event — electing the competitive 9% program forecloses the state rental credit entirely unless the deal is structured as a Hybrid Development that also carries a Bond Credit component.

One thing this research could not confirm from the statute or the QAP: the actual cash-per-credit-dollar exchange ratio a donor/taxpayer receives when making an "eligible cash contribution" to a project. The statute leaves the contribution-to-credit determination to VHFA ("an amount of cash ... contributed to the owner, developer, or sponsor of an affordable housing project and determined by the allocating agency as eligible for affordable housing tax credits" — §5930u(a)(7)), and this research did not locate a current, VHFA-published ratio. Do not assume a specific exchange rate without confirming directly with VHFA's Community Development staff. Separately, the Down Payment Assistance authorization at §5930u(h)(2) is only authorized "[i]n fiscal year 2020 through fiscal year 2026" — VHFA testified to the legislature in early 2026 in support of extending and raising that cap for FY2027–2031, but this research did not confirm whether that extension was enacted before this authorization's stated sunset.

Who actually issues the bonds: VHFA itself, on a bond-cap process with no fixed housing share

Unlike states that route 4% deals through a separate bond bank or industrial development authority, Vermont's QAP and enabling statute point to a single issuer: VHFA. Under 10 V.S.A. § 621, VHFA's general powers include the authority to "borrow money and issue bonds and notes or other evidences of indebtedness thereof" (§621(13)), and 10 V.S.A. § 631 ("Bonds and notes") separately provides that "[t]he Agency may issue its negotiable notes and bonds in such principal amount as the [Agency] shall determine." This research found no evidence of a separate conduit issuer (a municipal bond bank, industrial development authority, or similar) handling Vermont's multifamily housing private activity bonds — VHFA is both the QAP administrator and the bond issuer of record.

Vermont's private activity bond volume cap itself is not ring-fenced for housing by statute the way some states set a fixed percentage aside. Under 32 V.S.A. § 994, the State Treasurer — in coordination with the Secretary of Administration, the Secretary of Commerce and Community Development, and eligible bond-issuing authorities — must "annually survey the expected need for private activity bond allocations," "maintain guidelines for allocation of private activity bonding capacity designed to maximize the availability of tax-exempt financing among various sectors of the Vermont economy with a focus on economic development, housing, education, redevelopment, public works, energy, waste management ... and other activities," and, "on or before December 1 of each year, ... make recommendations to the Emergency Board on the allocation ... of the State's private activity bond ceiling for the following calendar year." The actual allocation decision is made annually by the Emergency Board, not fixed in statute as a percentage — housing competes for volume cap against economic development, education, and other sectors every year rather than drawing from a guaranteed statutory share.

The federal bond test: OBBBA's 25%, and VHFA's own 30% floor — for the opposite reason of most rationing states

The QAP's own printed definition of Bond Credits still states the pre-OBBBA rule: "Bond Credits: ('Automatic Housing Credits', 'out-of-cap credits', or '4% credits') Federal Housing Credits that are available to an eligible project when half or more of a project's total cost is financed with tax-exempt financing" (Definitions). That 50%-of-cost language was not updated when the federal One Big Beautiful Bill Act (Pub. L. 119-21) lowered the alternative aggregate-basis test to 25% for bonds financing buildings placed in service after December 31, 2025 — an example of the exact mid-cycle-amendment risk this guide flags generally: the QAP's own text has not caught up to a policy change VHFA has already implemented administratively.

VHFA issued a dedicated policy memo, "VHFA defines policy for implementation of new federal 25% test," dated February 18, 2026, from Deb Flannery, Managing Director of Community Development. It states plainly: "In 2025, the federal One Big Beautiful Bill Act (P.L. 119-21) reduced the private activity bond financing threshold from 50% to 25% for buildings placed in service after 12/31/2025. Since each state receives a limited amount of private activity bonding authority (volume cap) from the U.S. Treasury Department annually, this lower threshold increases production potential for states where the demand for private activity bond financing exceeds their bond volume cap. Vermont does not currently use all its bond volume cap so this change does not have the same effect in Vermont as in 'cap constrained' states."

VHFA nonetheless imposes its own floor above the new federal minimum: "Projects must demonstrate that at least 25% of the aggregate basis is financed by tax-exempt bonds. The private activity bond volume cap allocation by VHFA to the project must be the greater of 30% of the project's aggregate basis used to calculate the 25% Test, or the amount required for maximum permanent supportable debt on the project, subject to underwriting." The memo gives the rationale directly — and it is the mirror image of why cap-constrained states (Georgia, Colorado, and others) impose a similar-looking floor: "VHFA has established a minimum standard of 30% of aggregate basis to strike a balance between increased flexibility for projects and providing a compliance buffer to reduce risks for investors and lenders ... VHFA is allowing the maximum request to exceed 30% because Vermont is not currently bond volume constrained with regard to 4% PABs. However, if PABs become constrained in Vermont in the future, VHFA may adjust this requirement." In other words, Vermont's 30% floor exists to protect deal quality for investors, not to ration a scarce resource — the opposite motivation from states that impose a similar-sized cap because they are bond-cap-constrained.

Set-asides, waivers, and the Basis Boost on the Ceiling Credit side

Vermont receives the federal small-state minimum rather than a large per-capita allocation: "Federal legislation passed at the end of 2000 granted the State of Vermont a 'small state set-aside' of $2,000,000, which is adjusted annually by an inflation index" (Ceiling Credits definition). Within that pool, the QAP layers two set-asides: the federally required 10% for qualified nonprofits (§1.4), and a Vermont-specific carve-out of "[u]p to 30% of the available ceiling ... for projects meeting the definition of Delayed Project Set-Aside" — a re-application pathway for projects that previously received and had to return Ceiling Credits "due to factors beyond the control of development team" (§1.4, Definitions).

No single Ceiling Credit application may exceed 30% of the total available pool, waivable by the VHFA Board only where the limit "would result in (i) the loss of considerable federal funding; (ii) the displacement of a large number of low income households; or (iii) the continued presence of significant health hazards" (§1.3). Separately from the federal QCT/DDA boost (automatic for Bond Credits), Vermont's own state-designated Basis Boost — "an increase of up to 30% in eligible basis" — is available to Ceiling Credit projects at VHFA's discretion for three categories: a single annual historic-tax-credit project in a Designated Downtown or Village Center; buildings of 49 units or fewer dedicating at least 15% of units to Housing with Services for the Homeless; or other high-priority projects VHFA designates as needing the increase for feasibility (§1.3).

A QAP overdue for renewal — confirm the current status before citing a section number

VHFA states it "updates the QAP every two years," and the document actually governing today is the one covering 2024-2025: its own cover page reads "Revised 2/6/2023" and "Effective 10/1/2023." As of this research (September 2026), VHFA's own QAP webpage still labels that document "Current QAP" rather than a newer plan. A substantially restructured draft QAP was reviewed by the VHFA Board on June 23, 2026, following a Joint Committee on Tax Credits review on May 18, 2026 and a public comment period that ran from March 24 to April 24, 2026 — but the draft's own cover page reads "Effective XXXX," with no adoption date filled in, and VHFA's website gives no indication that the Governor has signed it. Every section number cited in this phase is to the currently governing 2024-25 QAP; before relying on any of it, confirm directly with VHFA whether a newer plan has since been adopted.

The June 2026 draft is a genuine restructuring, not a light edit — it replaces the 16-item checkmark scoring system with a point-based scoring table, and (based on this research's OCR reading of the draft PDF) appears to raise the per-project Ceiling Credit cap from 30% to 50% and would replace the current percentage-of-TDC developer fee schedule with a flat per-unit cap. None of that is in force today, and specific numbers from the draft should not be treated as adopted policy until confirmed against a Governor-signed version.