The purpose of the Fund is to provide low-cost and flexible capital for municipalities to extend and increase the capacity of water, sewer, transportation, and other public infrastructure where a lack of capacity or extension is a barrier to new housing development.
This loan program is expected to help finance projects associated with existing and pending tax increment finance (TIF) and community and housing infrastructure program (CHIP) approvals, as well as other municipally sponsored infrastructure initiatives that will further housing production in Vermont.
The Bond Bank's flexible program can be used for the following purposes, among others:
| Eligible Uses of Funds | Eligible Infrastructure Types |
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Application Requirements
In addition to financial underwriting, the applicant must:
- demonstrate how the financing will result in the creation of new housing units – both directly and indirectly;
- describe the timing of the construction and/or conveyance to the municipality; and,
- expected phasing of the related housing.
Loan Process
The Bond Bank will initially award a loan to pilot the program with closing to occur within 6 months after a March 2026 award. Open rounds will begin in the second quarter of 2026 and continue quarterly thereafter.
Contact Vermont Bond Bank loan officer, Ken Linge, to start. Potential borrowers will be invited to apply following a preliminary review of the proposed project.
Loan Specs/FAQs
- Eligible borrowers are governmental units including: cities, towns, villages, and various districts
- Legal opinion from local bond counsel
- Annual report for three years or three years of financial audits (preferred)
- Term of financing must not exceed useful life of asset financed
| Loan Amount | Up to $3.5 million (Bond Bank retains all rights to determine amounts) at below terms; may be combined with other Bond Bank programs for a larger overall loan amount |
| Term | Up to 30 years |
| Interest Rate* | 20 years = 2.75% 30 years = 3.50% |
| Closing Costs | $2,000 for funded construction accounts (vs BAN payoff) |
| Payment Dates | Semi-annual interest payments; annual principal payments |
| Drawdown Period | Fully funded at closing; funds accessed by requisition |
| Prepayment | At any time with no penalty |
| Requisition of Funds | Contractor and borrower certified requisitions |
| Security | General obligation or revenue bond |
| Legal | Local bond counsel opinion |
| Permitting / Environmental | Evidence of all local permitting and approvals for both the infrastructure project and related direct housing units |
| Covenants |
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| Credit / Underwriting | Bond Bank undertakes credit review followed by board approval prior to issuing loan |
| * Evaluated monthly based on underlying market conditions |
| Projects must receive an evaluation score of six (6) or more to be considered (subject to credit review). Applications will be accepted quarterly, with approved loan commitments expiring six (6) months from the date of approval. | ||
| Evaluation Category | Evaluation Type | Description |
| Direct connection to proposed or in-progress housing development with demonstrable progress toward regional housing targets | Binary; Tie breaker | Infrastructure cost per unit (with indirect units counted at 50%) will be used to compare competing applications with preference for lower costs per unit |
| Expansion of existing infrastructure systems | Binary | Added capacity to existing systems will be prioritized |
| Proximity to designated centers and growth areas | Scored from 1 to 3 | Tier 1 growth area = 3, Transition or Infill = 2, Other Tier II = 1 |
| Project readiness and timing of financing needs | Scored from 1 to 3 | Vertical construction < 1 year from closing = 3; 1 to 2 years = 2; other = 1 (loan must close within 6 months) |
| Availability of financing for project completion or phased components | Binary | Evidence of housing project feasibility and financing commitments |
| Relative housing need of the community based on State housing targets | Tie Breaker | Loan allocations per RPC will be monitored in aggregate; category will be used comparatively to evaluate |
| Vermont Community Index (VCI) Score | Tie Breaker | Category will be used comparatively with lower capacity applicants preferred all else equal |
The Bond Bank will initially award a loan to pilot the program with closing to occur within 6 months after a March 2026 award. Open rounds will begin in the second quarter of 2026 and continue quarterly thereafter.
Approved Loan Bond Counsels
Local bond counsel serves a critical role in confirming the legality of our borrower’s debt issuance. Early engagement of local counsel will ensure that they will be able to provide a preliminary legal opinion alongside a loan application to the Bond Bank. Legal opinions for the Bond Bank require specialized firms that must first be pre-approved.
