Big Spenders

Vermont’s Progressives, as broke as they are, have eyes bigger than their bank accounts. Nothing new here, move along. You’ve seen wrecks like this before., move along.

Editor’s note: This is Part 2 of the Vermont Affordable Housing Series.

 

 

 

 

Former state auditor questions $35 million housing program

Former State Auditor Randy Brock may have distanced himself from Vermont’s political scene since his unsuccessful 2016 run for lieutenant governor, but that doesn’t mean he’s not following what’s going on financially under Montpelier’s Golden Dome.

Brock has been studying fellow Republican Gov. Phil Scott’s proposed $35 million bond for affordable housing, and he has concerns about how state officials will be able to sustain the funding.

Earlier this year, the governor, along with officials at the Agency of Commerce and Community Development, began trumpeting S.100 as a neat way to employ 1,000 workers, build 500 additional housing units, house 1,000 residents and create $100 million in new construction and renovation projects statewide. Scott champions the plan since it helps meet his first-term agenda goals: create jobs, grow the economy and protect the state’s vulnerable citizens.

In addition, many Vermont mayors, town managers and community leaders are on board with the plan. In a letter sent to Scott and House and Senate leaders last month, a coalition of seven mayors gave their full-throated endorsement. [snip]

All well and good so far. But Brock cautions that there’s a red flag that few Vermont legislators and those in the affordable housing sector care to mention. This red flag is hidden within the state’s financial statements, according to the former state auditor.

“These housing loans can be made at low or no interest,” he said. “Often they are set up to have a balloon payment at the end of the period, say 10 years, 20 years, whatever.

“So, just to use a simple example to illustrate, you have payments being made of $100,000 in 2017, $150,000 in 2018, $100,000 in 2019, $200,000 in 2020 and then $200 million in the years following! So, next to nothing is being paid on an ongoing basis, and then repayments are being pushed out into the future.”

Brock said that when a loan maturity occurs, the conservation board extends it for another 10 or 20 years.

“The money is never going to be paid back — that’s the red flag,” Brock said. [snip]

“The 2011 report concluded an ‘extraordinary record of achievement’ and we should leave well enough alone,” Brock said. “The housing agencies even defended this practice that repayment wasn’t required, and that you make it more affordable when people don’t have to repay their mortgages.”

Scott’s $35 million approach this year has a fundamental difference from the past, however: it includes a funding source. The money lent by the state will be repaid through tax revenues.

“That’s an important difference, but a concern remains: what about the underlying mortgages? Will the bond get paid?” Brock asks with more than a hint of doubt. [snip]

“If you want a truly sustainable program, you have to put out mortgages that actually get repaid, and then you use the repayments to fund more affordable housing. But when it isn’t being repaid you have to go out and do (another) $35 million housing bond to build more stuff.”

In a Progressive milieu such as Vermont, no thought to paying back such programs is ever considered. If one thinks this statement is in error, please explain the debacle of Vermont’s heath care program, the State’s under and unfunded programs and the various pensions.
All of which are FEEL GOOD, are we not so sensitive to the proles needs and so caring.

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