Affordable housing project falls apart over infrastructure gaps in Highgate

Carly Berlin covers housing and infrastructure for Vermont Public, in partnership with VTDigger.

Plans to build 30 new subsidized senior apartments in the Franklin County town of Highgate have come to a halt. 

Affordable housing developer Cathedral Square and town officials called off the project after the town determined it could not provide a public water source for the apartments. The lack of basic infrastructure like water and sewer lines has impeded housing development in many rural towns across Vermont. But the cancellation of a publicly-funded affordable housing project is highly unusual.

Sharon Bousquet, a former town administrator for Highgate who helped shepherd along plans for the development three years ago, said the housing could have provided a way for older residents to remain in Highgate as they age – and brought in tens of thousands of dollars in new tax revenue.

“It was an opportunity of a lifetime for the town of Highgate,” Bousquet said. “It’s so sad.”

The Highgate Village Housing project was intended to be a cornerstone of a larger, years-long effort to revitalize the Canadian border town’s village core. Town officials hoped to build out a new municipal sewer system and a library. When a property at the center of town came up for sale, the town purchased it, and later brought in Cathedral Square as a nonprofit developer to construct apartments for adults aged 55 and over.

The wastewater plan has since hit a snag. It is still moving forward, but town officials are now considering pursuing a line of credit to make up a gap in funding, according to the Saint Albans Messenger. Back when plans for the housing development got underway in late 2023, town officials believed the wastewater system was on track to be completed in time to support the apartments, Bousquet said.

The town also thought a well serving the nearby Highgate Sports Arena could provide water for the apartments. 

But a feasibility study concluded in late 2025 that connecting to the sports arena well wasn’t viable, in part because of state rules regulating land use near public water systems. Other options – including extending water access from the Franklin County State Airport or the local elementary school, or drilling a new well – faced similar permitting hurdles or proved prohibitively expensive. 

Town officials and Cathedral Square looked to a new state financing tool, the Community and Housing Infrastructure Program, to help fund the water supply for the apartments, but determined it wouldn’t provide enough money. State officials have yet to approve their first CHIP loan.

The town ultimately decided that it couldn’t provide public water within the strict timeframe that Cathedral Square required, said current Town Administrator A.J. Johnson.

“We were all running on good assumptions, good expectations,” said Cindy Reid, director of real estate development at Cathedral Square. “If I knew then what I knew now, we would do more due diligence straight off on the water supply.”

Cathedral Square had already lined up $17 million to build the apartments, much of that public funding with swiftly-approaching deadlines. The nonprofit sunk $124,000 that it won’t get back on design and planning work, Reid said. She expects the bulk of the remaining funding will get redirected to other housing projects in the state.

The project’s largest single source of funding – about $9.7 million – came from highly-competitive federal tax credits awarded by the Vermont Housing Finance Agency earlier this year.

VHFA is currently figuring out how to go about re-awarding the credits so the state doesn’t lose them before they expire, said Executive Director Maura Collins. 

“It is commonplace in Vermont for there to be a lot of pressure to award projects funding when there are gaps in the development plan, whether that be not fully-approved permits or zoning needing to be changed, or, infrastructure being missing,” Collins said. 

In the future, the agency plans to grant funding awards later in the development process – once more uncertainties in the building plan have been ironed out, she said.

Reid and Bousquet, the former town administrator, both pointed to frequent turnover in town leadership as another factor in the housing project’s demise.

If the town is able to create a public water source in the future, Cathedral Square would consider reviving the project, Reid said.

“We’d be interested in coming back and looking at it, because it is an underserved area, it’s a growing elderly population, and we would love to support seniors aging in place in Highgate,” Reid said.

Read the story on VTDigger here: Affordable housing project falls apart over infrastructure gaps in Highgate.