[B]ENNINGTON — Supporters of the $53 million Putnam Block project are nervously eyeing the massive Republican tax code overhaul as it takes shape in Congress — concerned about the effects on tax credits that are vital to the redevelopment effort.
According to U.S. Rep. Peter Welch, D-Vt., the situation is similar in other Vermont communities as well, wherever developers are planning the rehabilitation of aging downtown structures.
The historic rehabilitation and new market tax credits are “extremely helpful tools for development in towns like Bennington,” he said in a telephone interview.
The credits were considered to be in hand for the potentially transformative Putnam project, but they quickly became less certain as the federal tax legislation has edged toward passage, said Bill Colvin, assistant director of the Bennington County Regional Commission and local contact person for the Putnam Block developers. As long as the $1.4 trillion tax plan continues to be revised, he said, the development group will likely be unable to plan a project groundbreaking, which was expected to take place this fall.
Expected credits from the two programs total about 46 percent of the financing plan for Phase 1 of the project, which includes redevelopment of the former Hotel Putnam and two other historic structures at the Four Corners intersection.
The total amount involved from both credits is more than $11.7 million.
“This really is a big deal” for the project, Colvin said, adding that, for the moment at least, the credits appear safe as far as the Putnam Block is concerned, barring further bill revisions.
But if the tax credit provisions are eliminated it would prove a significant loss across Vermont and elsewhere, Welch said. The programs have been “essential to success of any downtown group,” he said.
Colvin said the “immediate impact has been a kind of freezing of all tax credits because of the uncertainty of what is going to happen.”
The situation has pushed back the planned start of construction for Phase 1 from late fall to next spring, Colvin said.
While “all elements of the [Putnam] financing package have come together,” he said, “the timeline has slid four to five months” because of the ongoing tax debate.
Welch said the House-passed version of the Republican bill would eliminate historic rehab credits yet allow a window of time for projects ready to begin. “But the time frame,” he added, “I don’t think is a done deal.”
As of this week, Colvin said, it appears the tax credits that have been approved for the Putnam project would survive under either the House-passed version of the bill or the one being debated in the Senate. However, he and Welch cautioned that the details and impacts of any bill won’t be fully known until legislation passes Congress and is signed by President Trump.
The new market credits are designed to spur job creation and economic development in Census tracts meeting low-income resident requirements. Those are eliminated in the House version after one year.
Colvin said the project would require new market credits but not historic preservation credits in Phase 2 of the project, which is planned with new construction, parking and open space in the section of the four-acre Putnam Block behind the former hotel and bordered by West Main Street, Washington Avenue and Franklin Lane.
The three historic structures to be redeveloped during Phase 1 are the hotel, the Old Courthouse or Pennysaver building and the Winslow Block. Phase 2 proposes a new medical building, a grocery building and townhouse-style housing.
The project is being developed as a community-oriented effort by a consortium of local institutions and businesses, including Southwestern Vermont Health Care, Bennington College and Southern Vermont College, the Bank of Bennington, and business leaders and private investors.
“The uncertainty is concerning,” Colvin said, but at the moment those involved remain optimistic.
“The best thing is that nothing happens [in Congress],” he said.
He added that the financing package remains in place and 70 percent of the space to be renovated has been leased in advance.
“The development group remains as committed today as ever to see the project through,” he said.
Welch said the GOP bills, which were condemned by Democrats as geared toward tax breaks for the wealthy and large corporations while providing little or no benefit for middle class Americans, also contain numerous other provisions that will harm many Vermonters.
Those include the loss of tax deduction provisions for state and local taxes, property taxes and medical expenses; interest on student loans and deductions for teachers for purchasing school supplies for classrooms.
The bills essentially involve “tax cuts paid for by borrowing money from future generations,” Welch said, and would add $2.3 trillion to the national debt.
While the Senate Budget Committee on Tuesday approved and sent a tax bill to the floor of the Senate, Republican leaders were still trying to ensure they have at least 51 votes needed for passage.
A number of Republican senators have expressed opposition to one or more aspects of the tax plans and further revisions are being considered to address those concerns.
U.S. Sen. Bernie Sanders, I-Vt., issued a statement Wednesday ripping the current Senate bill: “I am disappointed but not surprised that the Republicans voted unanimously to proceed with a disastrous tax bill,” he said. “This bill will provide 62 percent of the benefits to the top 1 percent and at the end of 10 years increase taxes on 87 million middle class households — half of the families making $200,000 a year or less.”
And U.S. Sen.Patrick Leahy, D-Vt., has said of the House bill: “The House has passed a hodge-podge collection of broken promises to middle class Americans. Republican leaders and President Trump promised to close loopholes for large corporations and the wealthiest Americans to pay for lowering their tax rates. Instead, their tax rates would be cut, and the loopholes remain, meaning even lower effective tax rates for the wealthy, while exploding the federal debt.”
