Preservation advocates push to double Vermont downtown tax credit as demand outpaces $3 million cap

Caitlin Corkins, a program specialist at the Vermont Department of Housing and Community Development, told the Ways & Means Committee that the Downtown and Village Center Tax Credit program, created in 1998, provides a mix of state credits to support downtown and village center revitalization and currently carries a statutory annual cap of $3,000,000. To qualify for awards, a building must be at least 30 years old and located in a designated downtown or village center; awarded projects have three years to complete work and receive certificates.

The program offers several credit types. Corkins said the historic credit requires listing in the National Register and an approved federal Rehabilitation Investment Tax Credit (RITC) application; the federal credit covers 20% of qualifying rehabilitation expenses and the state adds an additional 10% on the same expenses. For projects not using the federal program, the state offers a facade (exterior) credit—25% of investment up to a $25,000 cap—and code-compliance credits to bring buildings to current safety standards. Corkins said code credits are the most-used tier: a 50% credit with a $100,000 cap, with higher subcaps for major items (elevators up to $75,000; sprinkler work up to $50,000). A flood mitigation credit, added in fiscal year 2023, supports measures such as raising utilities and improving foundations; much of the early use of that credit supported rebuilding after the 2023 and 2024 floods.

Corkins said most credits may be stacked on a single project but that the historic and facade credits cannot be combined because they cover overlapping work. She explained the program’s mechanics: credits offset state income taxes, can be carried forward up to nine years and may be sold to banks or insurers to monetize value for owners and nonprofit entities that do not have state tax liability. Corkins said market prices for sold credits typically run between $0.90 and $0.95 on the dollar, although she cited a recent nonprofit recipient who obtained full value in a particular deal.

The presentation included recent project examples: a $10.3 million warehouse conversion that produced 15 apartments and used both federal and state credits (a combined award totaling a little over $2 million), a St. Johnsbury renovation that stacked facade, sprinkler and code credits (about $120,000 in state credits), and a small East Hardwick project that used roughly $70,000 in credits to convert a former single-family home into three higher-quality rental units.

Ben, who identified himself as president of the Preservation Trust of Vermont, urged lawmakers to increase the program’s funding. He told the committee the tax credit is “an essential tool” that leverages technical assistance and other financing; he cited that, of 33 projects awarded credits for fiscal year 2026, nearly one-third had also received substantial assistance from the Preservation Trust. Ben said limited federal resources and the prospect of larger eligible areas under newly proposed land-use maps mean the state should expand its commitment, asking the committee to double the cap to $6,000,000.

Corkins and Ben framed the request as a way to enable more small-town, adaptive-reuse projects and to preserve village economic activity rather than shift development to greenfield sites. The committee did not take action at the hearing; members asked for additional data on credit monetization and on project outcomes for unfunded applicants.