State tax-credit program for downtown building rehabs draws strong demand; funding cap eyed for increase

Caitlin Corgan, program administrator with the Vermont Department of Housing and Community Development, told the Senate committee that the Downtown and Village Center Tax Credit Program offers state income tax credits to offset investments in building improvements within designated downtowns and village centers.

The program, Corgan said, “offers state income tax credits to offset the investments made in certain types of building improvements, within these designated areas.” She told members the program was created in 1998, is currently funded at about $3,000,000 annually and that the governor has proposed increasing funding to $5,000,000 a year.

Why it matters: committee members said the credits are a key lever for downtown economic development and housing. Corgan said the program helps convert vacant or underused historic and commercial buildings into housing, retail and community space and often works as a financing tool for projects that otherwise could not start.

Program basics and eligibility

Corgan outlined the program’s eligibility and four credit categories. To qualify under the current rules, a building generally must be at least 30 years old and located within a designated downtown or village center. She said Vermont is in a transition tied to Act 181, which will change mapping and designation processes, but staff are applying the current designations until new maps are finalized.

The program’s four credit categories are: - Historic…