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The City of Burlington now has a newly expanded
Designated Downtown District! As a property owner or business person within the
district, you are now eligible for a number of benefits. The entire downtown
area also may benefit from a number of opportunities created for designated
downtowns. The designation is a result of the 1998 Downtown Development Act.
Recognizing that vital downtowns are critical to the well-being of Vermont’s
communities, the legislation strengthens downtowns by providing incentives to
community-led revitalization efforts. Burlington’s district was designated
because a partnership of town officials, organizations, business and property
owners, and volunteers has developed a comprehensive revitalization strategy.
The strategy involves a long-term commitment to enriching economic
opportunities, preserving historic buildings and using them to their fullest
potential, improving infrastructure, and providing comfortable public spaces in
the commercial district.
The Vermont Division for Historic Preservation
administers federal and state tax credits designed to encourage the
restoration/rehabilitation of historic buildings. The goal of the tax
credit programs is not to preserve a building as a museum, but to give old and
historic buildings a place in the contemporary real-estate market.
What is a Tax Credit? Briefly, a tax credit is
better than a deduction. A deduction merely lowers a taxpayer’s
taxable income, but a credit lowers a taxpayer’s actual tax bill. For
example, if your tax bill is $10,000, a $4,000 credit will reduce your tax
bill to $6,000.
Rehabilitation Tax Credit (RITC) is the most widely
available tax credit. This federal tax credit is for 20% of the costs of
renovations to an income producing building (including labor, materials and
architects or other consultant fees). For instance, if an
owner/developer spent $100,000 restoring a historic building, they would get
20%, or $20,000, worth of tax credits. In other words, for every four
dollars the developer puts into the project, the IRS puts in one dollar.
What properties qualify? To qualify for the
federal credit, a building must be certified as an historic building in a
National Register Historic District or must be individually listed in the
National Register of Historic Places. Owners of historic buildings that
are not currently in the Register may apply for listing through the Division
for Historic Preservation by contacting Sue Jamele at (802) 828-3046.
Other requirements? All work must meet the
Secretary of the Interior’s Standards and be approved by the National Park
Service (NPS). The project cost must exceed the adjusted basis of the
building: (Adjusted basis = purchase price - appraised value of the land –
depreciation + capital improvements). The tax credit is limited to income
producing properties such as a retail store, office building, apartment
building, or a vacation rental. Private homes, which do not generate income,
are not eligible for the credit.
To assure receipt of the tax credit, owners are urged to
obtain approval of Steps 1 and 2 before starting work.
Step 1. Evaluation of Significance - If the building
is individually listed in the National Register of Historic Places, it is
already a certified historic structure. If the building is not listed in
the National Register, call the Division for Historic Preservation to make a
preliminary determination of significance.
Step 2. Description of Rehabilitation - Before the
project begins, photos documenting existing conditions inside and out, the
work program, and project plans and drawings—including related demolition
and new construction—are reviewed by the Division. The Division
forwards this application to the NPS with a recommendation. NPS
certifies, or approves, the plans only if the overall rehabilitation project
meets the Secretary of the Interior’s Standards for Rehabilitation.
Step 3. Request for Certification of Completed Work -
Photo documentation after the rehabilitation is complete to determine if work
meets the Secretary of the Interior’s Standards for Rehabilitation and is
likewise designated a "certified rehabilitation."
10% Federal Rehabilitation Investment Credit (RITC)
10% of qualified rehab costs on non-Historic Buildings built before 1936 is
allowed as credit on investors fed tax return.
What properties qualify? This
credit cannot be used on projects where Downtown Reinvestment funds are
awarded. Buildings listed in the National Register of Historic Places are not
eligible for the 10% credit. Buildings located in National Register listed
historic districts or certified State or local historic districts are presumed
to be historic and are therefore not eligible for the 10% credit. There is no
formal review process for rehabilitation of non-historic buildings.
The State gives an additional 10% income tax credit to
approved projects receiving the 20% federal tax credit. In
effect, the combined federal-state credits can reduce the cost of the
rehabilitation project by 30%.
To qualify for any of these tax credits, the qualified project must
exceed $5,000.
25% Facade Improvement Tax Credit. A building must be located
within a Designated Downtown and have been
built prior to 1983. This credit is capped at $25,000 for qualified
projects and can be combined with the 50% code credit, but the applicant may
not "double dip." Tax credits can now be requested in the form of a
bank credit certificate, they can be accepted in return for cash, or to
lower the interest rate on the loan that relates to the improvements of the
qualified building. Smaller property owners can benefit from this for
their qualified project. Private homes, which do not generate income,
are not eligible for the credit.
10% Historic Rehabilitation Tax Credit. A qualified historic
rehabilitation project is entitled to this 10% add-on to the 20% federal tax
RITC credit and can, in effect, receive a net 30% reduction on the costs of
rehabilitation.
50% Tax Credit for Code Improvement. Up to $50,000 ($12K for
a platform lift) available for property owners and lessees for installing or
improving an elevator, lift, or sprinkler system, may be combined with the
Federal 20% and the State 10%, or the 25% Facade
Credit, but not both. Applicants who are eligible for the 50% federal
Disabled Access Tax Credit (see below) must subtract the first $10,000 in
expenditures when applying for an elevator or lift.
From time to time, the State may have grant funds available
for your downtown project. Contact Bruce Seifer at CEDO for more
information at 802·865·7179.
Federal Disabled Access Credit
(Section 44) A credit up to 50% of
eligible access expenditures to a maximum of $5,000 per year. For
removal of barriers, improving accessibility, and installation of adaptive
equipment (i.e., fire alarms, strobes).
Federal Architectural and Transportation Barrier Removal Deduction
(Section 190) A credit up to $15,000 for making a facility owned or leased for
business more accessible. Accessibility standards must be met. New
construction or complete renovation of a facility do not apply.
A 50% tax credit (up to a maximum of $50,000) is available for construction
of elevators, lifts and sprinkler systems.
Is your building located in a designated downtown? For more
information, call:
Community & Economic
Development Office
Tel: (802) 865-7144 TTY: (802) 865-7142
E-Mail: cedofd@ci.burlington.vt.us
The Vermont Downtown Program provides technical assistance and
training to communities, helping them develop skills and strategies for their
downtown revitalization efforts.
Tel: (802) 828-3211
Downtown Transportation and Related Capital Improvement Fund:
Burlington’s downtown is eligible to receive loans, loan guarantees, or
grants for capital transportation and related capital improvement projects.
Grants may not exceed 25% of a project’s cost.
State Infrastructure Bank:
Burlington’s downtown has priority access to loans or loan guarantees for
transportation projects under the State Infrastructure Bank.
Priority Consideration by State Agencies:
Burlington’s downtown district will receive priority consideration by any
State agency administering any State or federal assistance program providing
funding or other aid to the municipal downtown area, with consideration given to
such factors as the costs and benefits provided and the immediacy of those
benefits.
Traffic Calming Options: Burlington
has the authority to post speed limits of less than 25 mph to help calm traffic
and make the downtown a more pedestrian-friendly environment.
New Signage Options: Within
Burlington’s designated downtown district, alternative signs may now be posted
by a municipality to help guide visitors to transportation centers, and unique
educational, recreational, historic or cultural landmarks.
Promotion Assistance and Hospitality Training: The
Department of Tourism and Marketing will include the promotion of Burlington’s
downtown district as part of their integrated marketing and promotion program.
Bruce Seifer, Assistant Director for Economic Development
802·865·7179
Ed Antczak, Economic Development Specialist
802·865·7587
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