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Proposal for reining in Vermont’s motel housing costs creates uncertainty, anxiety

A sign with a sun and the words "Days Inn by Wyndham" next to a building
Carly Berlin
Vermont Public and VTDigger
The Days Inn in Colchester, a hotel that participates in Vermont’s emergency housing program, pictured on Feb. 13, 2024.

This story, by Report for America corps member Carly Berlin, was produced through a partnership between VTDigger and Vermont Public.

Some unhoused Vermonters sheltered in hotels and motels on the state’s dime are worried they might lose their rooms earlier than anticipated if lawmakers begin limiting the amount of taxpayer money that the lodging establishments can be paid.

Lawmakers have proposed capping the nightly rate the state pays hotels and motels participating in the state’s emergency housing program at either $75 or $80, a stark departure from the average of $143 a night the state paid the establishments in fiscal year 2023. Legislators say implementing a cap — which would go into effect March 1 — could generate savings, and members of Gov. Phil Scott’s administration argue that a cap could provide leverage for the state to eventually lease or purchase the buildings and convert them into longer-term shelter or housing.

But in the short term, some program participants fear a rate cap could compel the motel owners they rely on for shelter to stop reserving their rooms.

One tenant at the Days Inn in Colchester, who spoke on condition of anonymity for fear of retaliation from the hotel owner, said she and her family have been struggling to find an apartment they can afford before April 1, when they were set to lose their state voucher. Now, she said, staff at the hotel have indicated to her that the Days Inn might pull out of the state program if the cap takes effect. (Staff at the Days Inn declined to comment for this story.)

“Where does that leave everybody?” the tenant posed. “We don’t have any other options.”

Historically, the state has allowed motels participating in the program to name their price — sometimes getting subpar living conditions in return, including severe plumbing problems, mold, chronic bed bug infestations and doors that won’t lock, as VTDigger revealed in an investigation last year.

Members of the Scott administration have made clear that the program bears “high costs for low returns,” as Department for Children and Families Commissioner Chris Winters put it to lawmakers at a Statehouse hearing last week.

Before the pandemic, the state compensated motels participating in the program at around $75 a night per room, Winters said. That rate has nearly doubled.

Lawmakers sitting at a table in a committee room in the Statehouse.
Peter Hirschfeld
Vermont Public
House Human Services Committee Chair Theresa Wood, second from left.

Rep. Theresa Wood, D-Waterbury, chair of the House Human Services Committee, said in an interview last month that capping the nightly rate could help rein in costs.

“At this point in time, what we’re trying to balance is the ability of the state to pay, being fair to hotel owners, and sheltering people who need shelter,” Wood said.

‘Not acceptable’

Some hotel and motel owners have signaled that they may drop out of the state shelter program under the proposed rates, arguing the amounts are too low to adequately cover operating costs.

Anil Sachdev, who holds an ownership stake in several hotels across the state that participate in the emergency housing program, said the proposed rates “are not acceptable” and too low to sustain “the cost of operation and the cost of infrastructure,” along with insurance costs. (Last month, the Vermont Attorney General’s office required Sachdev to pay back improperly held security deposits to people he sheltered through a version of the emergency housing program.)

In a phone call on Tuesday, Sachdev said if the proposed rate caps get set in stone, he intends to stop participating in the emergency housing program. He estimated he owns around 400 rooms that participate in the program. According to DCF, the state currently has space for around 1,600 households in the program at a time, and is consistently turning people away because rooms are full.

Key deadlines approach as lawmakers debate changes

The rate caps under consideration would go into effect on March 1. That could impact hotel and motel stays for Vermonters who had expected to remain in their rooms for at least another few weeks.

People currently sheltered through the pandemic-era version of the state’s emergency housing program are set to lose their rooms on April 1. Others sheltered through the state’s winter weather policy will see their months-long vouchers time out after March 15.

As part of a mid-year budget adjustment bill, lawmakers could extend some of those Vermonters’ stays — and establish the rate cap.

Both the House and the Senate have passed versions of the bill, and leaders of the two chambers are expected to hash out their differences in a joint committee in the coming days. There, they will need to decide which motel program participants might be eligible for a possible extension through June. They will also need to agree on the nightly rate cap for the motel program going forward.

On Jan. 26, after the House advanced its version of the mid-year budget adjustment bill, the Department for Children and Families sent a letter to motels and hotels participating in the state’s emergency housing program, notifying them that the legislature was proposing a rate cap that would go into effect March 1.

The letter asked motels and hotels that are “unwilling to accept a rate of $75” beginning on March 1 to notify the department “so that we can start moving households to other lodging establishments.” It did not set a deadline for those conversations.

The department did not answer a question from VTDigger/Vermont Public asking how many hotels and motels have expressed they are unwilling to accept the rate cap. But Commissioner Winters said in an emailed response to questions that “hotels are coming to the table to negotiate, and we are excited to work with them to come to a better arrangement for clients and financial sustainability for taxpayers.”

The Scott administration has consistently called for an end to the state's costly reliance on motels and hotels for shelter — and has expressed its interest to convert these buildings into more permanent shelter or housing options.

More from Brave Little State: ‘Can’t we just buy them?’ The future of Vermont’s motel housing program

A woman in a dark blazer and white shirt stands in front of a brick background.
Matthew Smith
Vermont Public
Brenda Siegel, an advocate for unhoused Vermonters, pictured in 2022.

Last month, a DCF spokesperson told VTDigger/Vermont Public that a rate cap could provide the state leverage to buy or lease motels and hotels, allowing them “to be turned into more traditional shelters, with access to all of the services available within shelters that the hotel program currently lacks.”

Brenda Siegel, an advocate for unhoused Vermonters, acknowledged the state’s need to lower rates. But she’s concerned that the proposed figures are too low to be realistic for motel and hotel owners. As the state and the owners work out an agreement, she worries about the thousands of unhoused people caught in the middle.

“I just don’t think we should be using people as the pawns for this negotiation,” she said.

A three-story motel with balconies
Carly Berlin
Vermont Public and VTDigger
The Days Inn in Colchester, a hotel that participates in Vermont’s emergency housing program, pictured on Feb. 13, 2024.

The tenant at the Days Inn in Colchester said she understands the financial imperative for motel and hotel owners facing the potential cap.

“Obviously business is business, they want to make money,” she said.

But the stress of not knowing when her family’s stay will end is eating at her.

“When you don’t have an answer for your kid, it’s like the worst feeling in the world,” she said.

Have questions, comments or tips? Send us a message.

Carly covers housing and infrastructure for Vermont Public and VTDigger and is a corps member with the national journalism nonprofit Report for America.
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