CPA Mutual Insurance Company of America Risk Retention Group is the first captive insurance company to take advantage of Vermont’s Affordable Housing Tax Credit programme.
The captive purchased £133,334 of credits from the Champlain Housing Trust (CHT) and will use the proceeds to create permanently affordable homes in Essex, Vermont.
Vermont’s captive legislation expansion was passed by the Legislature in July, allowing captive insurance companies to participate in the Affordable Housing Tax Credit programme.
CPA Mutual’s captive management company, Strategic Risk Solutions, worked with the Vermont Captive Insurance Association and the Vermont Department of Financial Regulation to bring the initiative to the legislature.
The purchase of the tax credits will provide a reduction in state tax liability spread out over the next five years, while providing a lump sum up front for CHT to subsidise four condominiums for sale in its signature shared equity programme.
William Thompson, president of CPA Mutual, commented: “This was an easy decision for us. To play a role in increasing the availability of affordable housing in Chittenden County is critical right now, and investing in the tax credits makes good business sense, too.”
The four condominiums at Fort Ethan Allen, Vermont, will be available for purchase by households earning less than the area median income, which for a family of four is $82,400.
The revenue from the sale of the credits will subsidise the purchase of the homes. In exchange for this down payment assistance, buyers agree to share any market appreciation if they decide to sell at a future date.