YOUR
VILLAGE
VILLAGE CENTER DESIGNATION!
What
is a
Village center designation, as provided for
in 24 V.S.A. chapter 76A was created by the legislature in 2002 to recognize
and encourage local efforts to revitalize
The Village Center Designation boundary in your town is
depicted on the enclosed map. As you
know, this area is identified as a cohesive core of residential, civic,
religious, and commercial buildings.
These qualities represent the unique character of your village that has
evolved over time, reflecting the community’s economic, social and cultural
changes.
How Does This Affect My Business?
What Else Can Be Done To Revitalize Our
Village center
revitalization is an ongoing process to improve a community’s vitality
and livability, and Village Designation is only one of many tools available to
communities interested in maintaining economically and socially viable
traditional centers. Other
revitalization activities could include projects like community centers,
recreational spaces, sidewalks and other landscaping improvements and the
retention of historic post office and educational facilities. Planning public
celebrations or programs to support local businesses also play an important
role in overall revitalization efforts.
TABLE OF CONTENTS
o
Benefits Available For Designated Village Centers
o
The 50% Vermont Income Tax
Credit for Code Improvements
o
The 20% Federal
Rehabilitation Investment Tax Credit (RITC)
o
5% Vermont Income Tax Credit
For Substantial Rehabilitation Of Certified Historic Buildings
o
Federal Tax Benefits For
Making Buildings Accessible
o
The Secretary of the
Interior’s Standards for Rehabilitation
o
Revitalizing Village Centers
Benefits Available For Designated Village Centers
50% state income tax credit
-
Available to:
property owners and lessees of commercial buildings located within the boundary
of a designated village center.
-
Available for:
code improvement activities, capital improvements or fixtures in order to
comply with state requirements for fire prevention, life safety and
accessibility, food establishments, sale of dairy and meat products, and/or
weights and measures.
-
Only one award may be made to any one
building from this program, up to a maximum tax credit of $5,000.
-
Detailed information on page 9 of this
packet and at www.historicvermont.org
20% Federal Rehabilitation Investment Tax
Credit
-
Available to:
owners of income producing properties listed on the National Register of
Historic Places.
-
Available for:
costs of renovations including labor, materials and architects or other
consultant fees.
-
Owners of historic
buildings that are not currently in the Register may apply for listing through
the Division for Historic Preservation.
-
Detailed
information on Page 17
5% state tax credit for Substantial
Rehabilitation of Certified Historic Buildings
-
Available to:
owners of income producing properties listed on the National Register of
Historic Places and located within the boundary of a designated village center.
-
Available for:
all qualified rehabilitation expenses available under the 20% Federal
Rehabilitation Investment Tax Credit.
-
Project expenditures must exceed $5,000 and
the building’s adjusted basis. There is no cap on the amount of credit per
building.
-
Detailed information on Page 21 of this
packet and at www.historicvermont.org.
The State’s Municipal
Planning Grant Program, and the Consolidated Plan for HUD funding including the
Community Development Block Grant Program (CDBG) will give designated village
centers a priority consideration for all grants.
The State Buildings
Department will give consideration and priority to designated village center
locations when leasing or constructing buildings, in consultation with the
community.
A Special Assessment
District in a designated village center may use funds for operating costs in
addition to capital expenses.
Chris
Cochran, with the Department of Historic Preservation, is available for
information and guidance on using all three tax credits. He can be reached at chris.cochran@state.vt.us or by
calling
The 50% Tax Credit for Code Improvements
to Commercial Buildings
Application Guidelines
Overview
A
50% state income tax credit is available to property owners and lessees for
capital improvements or fixtures in commercial buildings located within the
boundary of a designated village center in order to comply with state
requirements and related rules for fire prevention, life safety and accessibility,
food establishments, sale of dairy and meat products, and/or weights and
measures. The applicant must apply to the Downtown Board prior to starting
work on the project, and must submit documentation from the appropriate
state agency, depending upon the project – Department of Labor and Industry,
Department of Health, and/or the Agency of Agriculture, Food and Markets – that
the proposed project is necessary in order to comply with state requirements
and rules.
Award
of credits: The Downtown Board is authorized to award a
total of $1,000,000 to projects in six programs: the three tax credits for
designated downtowns; the sales tax reallocation for designated downtowns; and
the two tax credits for designated villages. No single community may be awarded
more than 40% of the total annual awards. The Board awards tax credits on a
first-come, first-served basis. On the occasion where there is competition
among applicants, the Board will give priority to applications from designated
downtowns.
The applicant may
request the credit allocation in the form of a Mortgage Credit Certificate that
a bank may accept in return for adjusting the rate or term of the applicant’s
loan on the building. This credit can
be used by non-profits to negotiate financing for a project.
A bank that purchases a mortgage credit certificate
may use it to reduce its state franchise tax liability for the first tax year
in which the qualified building is placed back in service after completion of
the project, or in a subsequent year.
If at the time of application to the Downtown Board,
the applicant knows what bank will be accepting the mortgage credit
certificate, that information should be included in the application. An
applicant who has received a tax credit allocation may subsequently request it
from the Board in the form of a mortgage credit certificate, stating the portion of the credit that has
not been taken and providing copies of all tax returns documenting tax credits already
taken, if any. The Downtown Board is not involved in negotiating the mortgage
credit certificate.
Credit amount: The applicant may apply for 50% of qualified
expenditures up to a maximum tax credit of $5,000. Only one credit allocation
per building is allowed, so the applicant should apply for all eligible work
that is planned, at one time.
Qualified expenditures: costs
for capital improvements or fixtures incurred within a 24-month period in
existing commercial buildings located within the designated village center
boundary. The work must be necessary to comply with state requirements and
related rules of at least one of the following:
·
Title
21 concerning fire prevention, life safety and accessibility, and determined by
the Department of Labor and Industry to meet such requirements;
·
Title
18 concerning food establishments, and determined by the Department of Health
to meet such requirements;
·
And, as
determined by the Agency of Agriculture, Food and Markets to meet such
requirements:
o
Title 6,
chapter 151 concerning sale of dairy products;
o
Title
6, chapter 204 concerning sale of meat products;
o
Title
9, chapter 73 concerning weights and measures.
Note: Costs of any work incurred prior to the
applicant’s award of a tax credit allocation by the Downtown Board are not
eligible for this credit. An applicant may not apply for a credit for work that
is already under construction or completed.
Qualified
applicant: Property owners or lessees with the
following exceptions:
- Religious
entity operating with a primarily religious purpose;
- State or
federal government;
- Political
subdivision of the state or federal government (including municipalities);
- Where the
subject building is used solely as the residence of the property
owner or lessee.
Project
design
It is expected that projects in or near historic buildings will be designed to respect the property’s historic features and materials. Installation of entrance ramps, sprinkler systems or hardware that opens narrow doors or widens the swing of existing doors can be done without removing or damaging historically significant interior or exterior features or materials, while meeting access requirements. The Secretary of the Interior’s Standards, listed at the end of this booklet, provide excellent guidance for planning a rehabilitation project. The Department of Labor and Industry is available to assist owners in planning appropriate solutions to life safety and accessibility compliance (see below). Many architects are experienced in solving accessibility solutions while respecting the design of the building and its surroundings.
Period of eligibility
The applicant must apply to the Downtown
Board prior to starting work on any of the items for which the applicant
intends to claim a tax credit. All costs to be claimed for the credit should be
incurred within a 24-month period. The credit is available for the tax year in
which the qualified expenditures are made, and any unused credit may be carried
forward to reduce the taxpayer’s tax liability for no more than 9 succeeding
tax years following the first year the credit is claimed.
Obtaining
State Agency approvals prior to application to the Downtown Board
The applicant must obtain a letter from the applicable state
agency (Department of Labor and
Industry, Department of Health, and/or the Agency of Agriculture, Food and
Markets) demonstrating
that the proposed work is necessary in order to comply with state requirements
and rules, prior to applying to the Downtown Board. The letter, or letters - in
the case where work is required by more than one state agency - must be
attached to the tax credit application. The applicant should contact the state
agency well in advance to allow enough time for review and response, and
indicate that they are applying to the Downtown Board for a tax credit for a
project in a designated village center.
·
Department of Labor and Industry consultation and
approval of compliance
A construction permit is required for alterations of public
buildings (any structure such as stores, restaurants, businesses, and apartment
buildings that the public might have occasion to enter) to ensure that the
building meets requirements for fire prevention and safety, and that access for
persons with disabilities is provided. The applicant will need to contact the
regional Dept. of Labor and Industry office (see below) about obtaining the
necessary preliminary review letter to include with the tax credit application.
o
o For technical assistance or additional
questions, contact the
Please note that if the applicant makes changes to a planned
project after receiving a conditional approval from Labor and Industry, a
construction permit or plan review approval may not be issued. The burden
remains on the applicant to comply with all relevant fire prevention, life
safety and accessibility rules throughout the entire process.
·
Department
of Health approval of compliance
Applicants with food-handling businesses must contact the Dept.
of Health for information on how to obtain a letter stating that the proposed
project for capital improvements or fixtures on the property will bring the
building into compliance with Dept. of Health requirements and related rules.
Contact them at:
o
Ph:
·
Agency
of Agriculture, Food and Markets approval of compliance
Applicants
who are licensed or inspected by the Agency of Agriculture, Food and Markets
for selling dairy and meat products, and using measuring devices must contact the
Department for information on obtaining a letter stating that the proposed
project for capital improvements or fixtures on the property will bring the
building into compliance with state requirements and related rules. Contact at:
o
Director of Food Safety and Consumer Assurance Div.
Ph:
Combining Credits
An owner or lessee can use this credit at the same time as the other building rehab tax credit for designated village centers as long as he or she is following all the rules of each program, and is not claiming credits more than once on any eligible expenditure. (See example on page 5). If an applicant intends to use both tax credit programs on the same project, he or she should apply to the Downtown Board for both credit allocations at the same time, following the directions for each program.
To Apply For The Credit
Please
also refer to General Information for All Tax Credit Applicants found at
the front of this booklet. There is no application form for this credit. An
owner or lessee applies by sending to the Vermont Downtown Board the following:
1. Ownership and location information:
·
Name,
address and phone number of applicant
·
Name,
address and phone number of owner if applicant is not owner
·
Building
name (if there is one) and property address
·
Building
use before and after proposed project
·
A
statement that the property is located within the boundaries of a designated
village center
·
A
statement that the applicant is an owner or lessee that is not:
a) A religious entity operating with a
primarily religious purpose; or
b) A state or federal agency; or
c) A political subdivision of municipal, state,
or federal government; or
d) An
instrumentality of the
e) That the property is not solely the
residence of the owner or lessee.
·
A
statement that this building has not previously received a 50% Tax Credit for
Commercial Buildings in Designated Village Centers.
·
A
statement of any other tax credits being requested from the Board for this
project.
2. If
requesting a credit in the form of a Mortgage Credit Certificate - name and
address of financial institution, contact name and phone number
3.
Estimated start and completion dates for this project (the time period
during which eligible costs will be incurred).
Include a statement that project construction did not begin prior to
application.
4. Project description:
a. Provide a brief description of the qualified project and the
project design. Drawings or photographs may be included as long as they are
well labeled, and the photos are printed or mounted on letter-sized paper. Be certain to describe how the proposed
project will meet the requirements or rules of the appropriate state agency –
Dept. of Labor and Industry, Dept. of Health, and/or Agency of Agriculture,
Food and Markets - that have made the project eligible for this credit.
b. Attach
the letter(s) from the appropriate state agency(ies).
c. A statement certifying that the project will
comply with the state agency requirements and rules.
5. An itemized list of the qualified
expenditures for the project.
6. A statement of the total cost of the
eligible project that the applicant commits to spend on the project, and
a dollar amount request for a tax credit (or mortgage credit certificate) of no
more than 50% of the qualified expenditures, up to a maximum of $5,000.
To Claim The Credit
In the first year
claiming a credit under this program, the taxpayer must submit a copy of the
Downtown Board’s credit allocation letter, countersigned by the taxpayer, with
the income tax return. The Vermont Department of Taxes strongly encourages
taxpayers to include a copy of the allocation letter with the tax return for
all subsequent years claiming any portion of this credit.
Recapture Penalties
If
the property is sold, then no unclaimed credit may be used in that year or
future years, and a recapture penalty will be assessed on the credit already
used according to the following table:
|
Years between close of tax year
when |
|
|
Less than
one year |
100
% |
|
One year |
80% |
|
Two years |
60% |
|
Three years |
40% |
|
Four years |
20% |
To Access
The tax credit statute is available online
at the www.leg.state.vt.us.
Select “Vermont Statutes Online” and search for Title 32, Chapter 151,
subchapter 5930r. The statutes are also
available at the Supreme Court law library, most public and college libraries
and in municipal offices.