Site control and due diligence — Vermont

Two different site-control bars: what gets you to pre-application, and what actually satisfies VHFA

The QAP's Section 2.1 ("Pre-Application Meeting") lists what a Sponsor should bring to that first meeting, and site control is framed loosely: "An option agreement or other evidence of site control or identified site." Read literally, VHFA doesn't require site control to even be secured before the pre-application conversation -- an "identified site" without a signed option can apparently be enough to start that dialogue. That is not the standard that governs financing, though. VHFA's Underwriting Standards state it plainly: "To apply for construction or permanent financing programs, applicants must demonstrate site control. Site control should be evidenced by: Option Agreement, Purchase and Sales Agreement. Agreements should be legally binding, recorded in the relevant land records, and include a financial deposit. The term of the option or agreement must, at minimum, extend to or provide clear provisions for the extension to the project's proposed acquisition date." Three real requirements sit inside that one paragraph that an unrecorded handshake option won't satisfy: the agreement must be legally binding, it must be recorded, and it must carry an actual financial deposit.

Site control isn't just a one-time gate, either. The QAP's Section 2.4 ("Letter of Intent") lists "Loss of site control" as one of the named "significant changes" that can jeopardize a Housing Credit award after VHFA Board approval, alongside things like a change in unit count or a reduction in bedroom count -- staff, in consultation with the Board, may require awarded credits to be returned. Site control in Vermont is therefore something a Sponsor has to maintain, and be able to document on demand, all the way through the award and reservation process, not just something to clear once at application.

Title and survey work: required for closing, folded into the Underwriting Standards rather than a standalone due-diligence checklist

VHFA's Underwriting Standards address title work under "Attorney and Title Work": "All financing transactions must be closed under the supervision of a title attorney or agent. Title insurance is required for all loans. Title insurance must include an ALTA Survey for all acquisition or new construction loans, or an updated survey if the project is being refinanced. Surveys must be performed by a licensed 3rd party." This content could not find a separate, earlier-stage title-review requirement (for example, a preliminary title report due at application) specified anywhere in the QAP or the Underwriting Standards -- the documented requirement is tied to closing, under attorney/title-agent supervision, not to a specific due-diligence-phase deadline. A Sponsor relying only on the documents reviewed here should confirm directly with VHFA staff whether an earlier title deliverable is expected in practice, since it is not written down in either source document.

Environmental due diligence: a Phase I ESA trigger tied to construction type, with the state's own escalation path

The Underwriting Standards' "Environmental Review" section sets the trigger: "All projects that will be new to VHFA's portfolio and include new construction or substantial rehabilitation work (substantial as defined by the IRS, currently $7,500 per unit) must complete a Phase I Environmental Site Assessment (ESA). The Phase 1 ESA must identify existing or potential contamination and Recognized Environmental Conditions (RECs), and the sponsor must address all RECs through a Corrective Action Plan (CAP) prior to commencing construction." That $7,500-per-unit rehabilitation threshold is VHFA's own characterization of an IRS standard, not a citation to a specific Internal Revenue Code section in the document itself -- worth independently confirming against current IRS guidance for a specific deal rather than treating VHFA's document as the definitive source on the federal number.

If a Phase I ESA turns up a REC, VHFA's own document describes an escalation path rather than a fixed follow-up requirement: "Findings or the presence of RECs during a Phase I ESA may result in a Phase 2 or 3 ESA, as determined by the State of Vermont Environmental Review process as determined by the Vermont Agency of Commerce and Community Development." Separately, any project using a HUD-related credit enhancement (Risk Share or similar) is also subject to a full National Environmental Policy Act (NEPA) review -- a federal process layered on top of, not a substitute for, VHFA's own Phase I/II/III ESA sequence.

Market study: a due-diligence deliverable with its own aging clock, not just a scoring input

The QAP's Section 3.11 ("Meeting Proven Market Need") requires an independent, project-specific market study from a disinterested, VHFA-approved third party, submitted at the time of application, meeting VHFA's separate Market Study Standards (Revised October 2024, Effective January 2025). New-construction projects must additionally be sited in a primary market with a vacancy rate of 5.0% or less, as the market study itself must demonstrate. VHFA's Underwriting Standards add the timing rule that actually matters for due-diligence sequencing: the study "must be current and should be less than a year old at the time of application and no older than 18 months at the time of construction closing. The market study provider should update aged reports." On a deal with a long entitlement or financing timeline, a study ordered early enough to support the application can still go stale before closing -- the 18-month construction-closing ceiling is the real long-pole deadline to track, not just the application-stage "under a year" rule.

Act 250 review runs alongside VHFA's own due diligence, on its own statutory track

Act 250 (10 V.S.A. Chapter 151) review is a separate state permitting process from anything VHFA itself requires, built around ten statutory criteria under 10 V.S.A. Section 6086(a): undue water or air pollution; sufficient water availability; no unreasonable burden on an existing water supply; no unreasonable soil erosion; no unreasonable highway congestion or unsafe traffic conditions; no unreasonable burden on a municipality's ability to provide educational services; no unreasonable burden on municipal or governmental services generally; no undue adverse effect on scenic beauty, historic sites, or necessary wildlife habitat; conformance with the capacity of the community and government services to accommodate growth; and conformance with any duly adopted local or regional plan or capital program. Several of these criteria (water, wetlands, floodways, wildlife habitat, forest and agricultural soils) can require their own technical studies well beyond the scope of a standard Phase I ESA -- a project's environmental due diligence budget and schedule should treat Act 250 as a second, independent environmental review track, not an item a Phase I ESA already covers.

The QAP itself acknowledges Act 250 as a distinct, later-stage gate: Section 2.5, listing the benchmarks VHFA requires before issuing a Reservation Certificate, Binding Rate Agreement, or Advanced Binding Commitment, includes "Obtaining all required local approvals and initiating the Act 250 approval process, if required." Read carefully, that only requires the Act 250 process to be initiated by that point, not completed -- but it means a Sponsor who hasn't even confirmed whether Act 250 jurisdiction applies to their site (see Phase 1's discussion of the 1-acre/10-acre municipality distinction, and Phase 3's full treatment of Act 250 pathways) risks stalling at this specific, named gate. Requesting a Jurisdictional Opinion (JO) from the relevant Act 250 district coordinator early -- to confirm whether Act 250 jurisdiction attaches at all, and whether one of Act 181's temporary housing exemptions applies -- is itself a due-diligence deliverable worth treating as such, not an afterthought left until after VHFA Board approval.

Capital Needs Assessment: a rehab-specific due-diligence item with its own bifurcated timing

For acquisition/rehabilitation deals, the QAP's Section 3.12 requires a Capital Needs Assessment (CNA) addressing all long-term capital needs, per VHFA's Capital Needs Assessment Guidance Policy, with timing that depends on construction type: for new construction or projects creating new units through adaptive reuse, or "gut" rehabilitation where major systems are being replaced or are already in good condition, the CNA is due within six months of substantial completion; for all other developments, it's required before issuance of the Reservation Certificate/Binding Rate Agreement or, if no such agreement applies, before the Carryover Allocation. Neither track requires a CNA at initial application -- a due-diligence schedule that assumes one is due up front would be adding an unnecessary early deliverable.