BILL AS PASSED BY HOUSE

H.208

AN ACT RELATING TO THE VERMONT DOWNTOWN DEVELOPMENT BOARD

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1. 24 V.S.A. § 2791(5) and (10) are amended and (11) is added to read:

(5) “Downtown development nonprofit corporation” means a nonprofit corporation that is designated to implement the community reinvestment agreement under subdivision 2793(b)(2) of this title. A nonprofit corporation established by the Vermont economic development authority shall be considered qualified for purposes of this chapter. “Local downtown organization” means either a nonprofit corporation, including a nonprofit corporation established by the Vermont Economic Development Authority, or a board, council, or commission created by the legislative body of the municipality, whose primary purpose is to administer and implement the community reinvestment agreement and other matters regarding the revitalization of the downtown district under subdivision 2793(b)(2) of this title.

(10) “Local board” means a board, council, commission or organization selected or appointed by the legislative body of a municipality which is empowered by law with the primary administration, oversight, regulation or adjudication of matters of a district listed in subdivision 2793(b)(1) of Title 32. “Village center” means a traditional center of the community, typically comprised of a cohesive core of residential, civic, religious, and commercial buildings, arranged along a main street and intersecting streets. Industrial uses may be found within or immediately adjacent to these centers.

(11) “New town center” means the area planned for or developing as a community’s central business district, composed of compact, pedestrian‑friendly, multistory, and mixed use development that is characteristic of a traditional downtown, supported by planned or existing urban infrastructure, including curbed streets with sidewalks and on-street parking, stormwater treatment, sanitary sewers and public water supply.

Sec. 2. 24 V.S.A. § 2793(b)(2)(D) is amended to read:

(D) an organizational structure necessary to sustain a comprehensive long-term downtown revitalization effort, including a local ~~board or designation of the entity that will qualify as the downtown development nonprofit corporation~~ downtown organization as defined under subdivision 2791(5) of this title;

Sec. 3. 24 V.S.A. § 2793(b)(2)(E) is amended to read:

(E) evidence that any private or municipal sewage system and private or public water supply serving the proposed downtown district is in compliance with the requirements of chapters 47 and 56 of Title 10, and that the municipality has dedicated a portion of any unallocated reserve capacity of the sewage and public water supply for growth within the proposed downtown district. Any municipality proposing a municipal sewage system and public water supply to serve the proposed downtown district shall provide evidence to the state board of a commitment to construct or maintain such a system and supply in compliance with requirements of chapters 47 and 56 of Title 10, or a commitment to construct, as applicable, a permittable potable water supply, wastewater system, indirect discharge or public water supply within no more than ten years. A commitment to construct does not relieve the property owners in the district from meeting the applicable regulations of the agency of natural resources regarding wastewater systems, potable water supplies, public water supplies, indirect discharges, and the subdivision of land. In the event that a municipality fails in its commitment to construct a municipal sewage system and public water supply, the state board shall revoke designation ~~and the incentives that accrue pursuant to 24 V.S.A. § 2794 from that date forward~~, unless the municipality demonstrates to the state board that all good faith efforts were made and continue to be made to obtain the required approvals and permits from the agency of natural resources, and failure to construct was due to unavailability of state or federal matching loan funds.

* * * Designation Process and Benefits * * *

Sec. 4. 24 V.S.A. § 2793a is added to read:

§ 2793a. DESIGNATION OF VILLAGE CENTERS BY STATE BOARD

(a) A town that has a duly adopted and approved town plan and a planning process that is confirmed in accordance with section 4350 of this title, and that has given notice to the regional planning commission and the regional development corporation of its intent to apply for this designation, may apply to the state board for designation of its village center. An application for designation must include a map that delineates the boundaries of the village center consistent with the definition of “village center” provided in subdivision 2791(10) of this title.

(b) Within 45 days of receipt of a completed application, the state board shall designate a village center if the state board finds the applicant has met the requirements of subsection (a) of this section.

(c) A town with a village center designated by the state board pursuant to subsection (a) of this section is eligible for the following development incentives and benefits:

(1) provided the proposal is eligible, priority consideration for municipal planning funds under section 4306 of this title for projects that are related to the designated village center;

(2) inclusion of a village center, as defined in this chapter, as a priority growth center in the state’s consolidated plan for housing and community development programs;

(3) the authority to create a special taxing district pursuant to chapter 87 of this title for the purpose of financing both capital and operating costs of a project within the boundaries established through village center designation;

(4) a state tax credit of five percent under section 5930n of Title 32 to owners or lessees of certified historic structures located in village centers for qualified expenditures;

(5) a state tax credit of 50 percent under section 5930r of Title 32 to owners or lessees of buildings in village centers that serve as general stores or house post offices;

(6) whenever the commissioner of the department of buildings and general services or other state officials in charge of selecting a site are planning to lease or construct buildings suitable to being located in a village center after determining that the option of utilizing existing space in a downtown development district pursuant to subdivision 2794(a)(14) of this title is not feasible, the option of utilizing existing space in a designated village center shall be given thorough investigation and priority, in consultation with the community.

(d) The state board shall review a village center designation every three years. If, at the time of the review, the state board determines that the village center no longer meets the standards for designation established in subsection (a) of this section, it may take any of the following actions:

(1) require corrective action;

(2) provide technical assistance through the Vermont downtown program; or

(3) remove the village center’s designation, with such removal not affecting any of the village center’s previously awarded benefits.

Sec. 4a. 24 V.S.A. § 2793b is added to read:

§ 2793b. DESIGNATION OF NEW TOWN CENTER DEVELOPMENT

DISTRICTS

(a) A municipality, by its legislative body, may apply to the state board for designation of an area within that municipality as a new town center development district, provided no traditional downtown or new town center already exists in that municipality. An application by a municipality shall contain a map delineating the district, evidence that the regional planning commission and the regional development corporation have been notified of the municipality’s intent to apply, and information showing the district meets the standards for designation established in subsection (b) of this section.

(b) Within 45 days of receipt of a completed application, the state board shall designate a new town center development district if the state board finds, with respect to that district, the municipality has:

(1) a confirmed planning process under section 4350 of this title, and developed a municipal center plan and regulations to implement the plan, including an official map, and a design control district created under this title; and

(2) provided a community investment agreement that has been executed by authorized representatives of the municipal government, businesses, and property owners within the district, and community groups with an articulated purpose of supporting downtown interests, and contains the following:

(A) A map of the designated new town center designed to accommodate a majority of the community’s growth needs for the next 20 years.

(B) Regulations enabling high densities that are greater than those allowed in any other part of the municipality.

(C) Regulations enabling multistory and mixed use buildings and mixed uses which enable the development of buildings in a compact manner.

(D) A capital improvement program, or a capital budget and program under this title, showing a clear plan for providing public infrastructure within the center, including facilities for drinking water, wastewater, stormwater, public space, lighting, and transportation, including public transit, parking, and pedestrian amenities.

(E) A clear plan for mixed income housing in the new town center.

(F) Evidence that civic and public buildings do exist, or will exist in the center, as shown by the capital improvement plan or the capital budget and program, and the official map.

(G) An organizational structure necessary to sustain a comprehensive long-term development effort, including a local board or designation of the entity that will qualify as the downtown development nonprofit corporation under subdivision 2791(5) of this title, with funding provided as necessary to support the organizational effort.

(H) Evidence that any private or municipal sewage system and private or public water supply serving the proposed new town center are in compliance with the requirements of chapters 47 and 56 of Title 10, and that the municipality has dedicated a portion of any unallocated reserve capacity of the sewage and public water supply necessary to support growth within the proposed new town center. Any municipality proposing a municipal sewage system and public water supply to serve the proposed new town center shall provide evidence to the state board of a commitment to construct or maintain such a system and supply in compliance with requirements of chapters 47 and 56 of Title 10, or a commitment to construct, as applicable, a permittable potable water supply, wastewater system, indirect discharge or public water supply within no more than ten years. A commitment to construct does not relieve the property owners in the new town center from meeting the applicable regulations of the agency of natural resources regarding wastewater systems, potable water supplies, public water supplies, indirect discharges, and the subdivision of land. In the event a municipality fails in its commitment to construct a municipal sewage system or public water supply, or both, the state board shall revoke designation, unless the municipality demonstrates to the state board that all good faith efforts were made and continue to be made to obtain the required approvals and permits from the agency of natural resources, and failure to construct was due to unavailability of sufficient state or federal funding.

(c)(1) Upon designation by the state board under this section as a new town center, a new town center and projects in a new town center shall be eligible for the authority to create a special taxing district, pursuant to chapter 87 of this title, for the purpose of financing both capital and operating costs of a project within the boundaries established through new town center designation.

(2) Whenever the commissioner of the department of buildings and general services or other state officials in charge of selecting a site are planning to lease or construct buildings suitable to being located in a new town center after determining that the option of utilizing existing space in a downtown development district, pursuant to subdivision 2794(a)(14) of this title, is not feasible, the option of utilizing existing space in a designated new town center shall be given thorough investigation and priority, in consultation with the community.

(d) The state board shall review a new town center designation every three years. If the state board determines the new town center no longer meets the standards for designation established in subsection (b) of this section, it may take any of the following actions:

(1) require corrective action;

(2) provide technical assistance through the Vermont downtown program; or

(3) remove the new town center’s designation, with such removal not affecting any of the town center’s previously awarded benefits.

* * * Downtown Designation; Additional Benefits * * *

Sec. 5. 24 V.S.A. § 2794(a) is amended to read:

(a) Upon designation by the Vermont downtown development board under section 2793 of this title, a downtown development district and projects in a downtown development district shall be eligible for the following:

(1) priority consideration by any agency of the state administering any state or federal assistance program providing funding or other aid to a municipal downtown area with consideration given to such factors as the costs and benefits provided and the immediacy of those benefits, provided the project is eligible for the assistance program;

(2) a state tax credit of ~~five~~ ten percent under ~~subchapter 11F of chapter 151~~ section 5930n of Title 32 to owners or long-term lessees of certified historic structures located in downtown development districts that meet the requirements for the federal rehabilitation tax credit;

(3) a state tax credit of 25 percent under ~~subchapter 11G of chapter 151~~ section 5930p of Title 32 to owners or lessees of older and historic buildings located in downtown development districts for qualified expenditures;

* * *

(5) ~~eligibility for~~ financing of transportation projects under the state infrastructure bank, created under chapter 12 of Title 10;

(6) ~~eligibility~~ assistance from the secretary of the agency of natural resources for current owners and prospective purchasers who otherwise qualify under the redevelopment of contaminated sites program under subsection 6615a(f) of Title 10, or in the case of current owners, who are innocent owners. For the purposes of this subsection, an “innocent owner” is an owner who did not:

(A) hold an ownership interest in the property or in any related fixtures or appurtenances, excluding a secured lender’s holding indicia of ownership in the property primarily to assure the repayment of a financial obligation at the time of any disposal of hazardous materials on the property;

(B) directly or indirectly cause or contribute to any releases or threatened releases of hazardous materials at the property;

(C) operate, or control the operation, at the property of a facility for the storage, treatment, or disposal of hazardous materials at the time of the disposal of hazardous materials at the property;

(D) dispose of, or arrange for the disposal of hazardous materials at the property; or

(E) generate the hazardous materials that were disposed of at the property.;

(7) technical assistance by the department of housing and community affairs with regard to planning and coordination issues, including but not limited to, adaptive reuse of buildings within the district, development of a marketing plan for the downtown district that includes a heritage tourism component, development of a program to encourage merchants and building owners to rehabilitate, restore and improve building facades, and, in coordination with the agency of transportation, planning for multi-modal transportation needs of the community.;

* * *

(11) ~~enabling building owners within the district to be eligible for~~ a rebate of the cost of a qualified sprinkler system in an amount not to exceed $2,000.00 for building owners or lessees. Rebates shall be paid by the department of labor and industry. To be qualified, a sprinkler system must be a complete automatic fire sprinkler system installed in accord with department of labor and industry rules in an older or historic building that is certified for a state tax credit under either ~~subchapter 11F~~ section 5930n or ~~subchapter 11G of chapter 151~~ section 5930p of Title 32 and is located in a downtown development district. A total of no more than $40,000.00 of rebates shall be granted in any calendar year by the department. If in any year applications for rebates exceed this amount, the department shall grant rebates for qualified systems according to the date the building was certified for a state tax credit under ~~subchapter 11F~~ section 5930n or ~~subchapter 11G of chapter 151~~ section 5930p of Title 32 with the earlier date receiving priority.;

(12) ~~eligibility to participate~~ participation in the downtown transportation and related capital improvement fund program established by section 2796 of this title;

(13) the option of utilizing existing space in a downtown development district shall be given thorough investigation and priority whenever the commissioner of the department of buildings and general services or other state officials in charge of selecting a site are planning to lease or construct buildings suitable to being located in a downtown, in consultation with the community;

(14) a reallocation of receipts related to the tax imposed on sales of construction materials as provided in 32 V.S.A. § 9819;

(15) a state tax credit under section 5930q of Title 32 for the installation or improvement of lifts, elevators or sprinkler systems;

(16) the authority to create a special taxing district pursuant to chapter 87 of this title for the purpose of financing both capital and operating costs of a project within the boundaries of a downtown development district.

* * * Act 250 Definitions * * *

Sec. 6. 10 V.S.A. § 6001(3) is amended to read:

(3)(A) “Development” means ~~the~~:

(i) The construction of improvements on a tract or tracts of land, owned or controlled by a person, involving more than 10 acres of land within a radius of five miles of any point on any involved land, for commercial or industrial purposes. ~~“Development” shall also mean the~~

(ii) The construction of improvements for commercial or industrial purposes on more than one acre of land within a municipality which has not adopted permanent zoning and subdivision bylaws. ~~“Development” shall also mean the~~

(iii) The construction of improvements for commercial or industrial purposes on a tract or tracts of land, owned or controlled by a person, involving more than one acre of land within a municipality that has adopted permanent zoning and subdivision bylaws, if the municipality in which the proposed project is located has elected by ordinance, adopted under chapter 59 of Title 24, to have this jurisdiction apply. ~~The word “development” shall mean the~~

(iv) The construction of housing projects such as cooperatives, condominiums, or dwellings, or construction or maintenance of mobile homes or trailer parks, with 10 or more units, constructed or maintained on a tract or tracts of land, owned or controlled by a person, within a radius of five miles of any point on any involved land, and within any continuous period of five years; except as modified in section 6001d of this title in the case of housing projects in downtown development districts designated pursuant to 24 V.S.A. § 2793. ~~The word “development” shall not include construction for farming, logging or forestry purposes below the elevation of 2500 feet. The word “development” also means the~~

(v) The construction of improvements on a tract of land involving more than 10 acres which is to be used for municipal, county or state purposes. In computing the amount of land involved, land shall be included which is incident to the use such as lawns, parking areas, roadways, leaching fields and accessory buildings. In the case of a project undertaken by a railroad, no portion of a railroad line or railroad right-of-way that will not be physically altered as part of the project shall be included in computing the amount of land involved. In the case of a project undertaken by a person to construct a rail line or rail siding to connect to a railroad’s line or right-of-way, only the land used for the rail line or rail siding that will be physically altered as part of the project shall be included in computing the amount of land involved. The word “development” shall not include an electric generation or transmission facility which requires a certificate of public good under section 248 of Title 30 or a natural gas facility as defined by subdivision 248(a)(3) of that title. The word “development” shall also mean the

(vi) The construction of improvements for commercial, industrial or residential use above the elevation of ~~2500~~ 2,500 feet. ~~The word “development” shall also mean exploration~~

(vii) Exploration for fissionable source materials beyond the reconnaissance phase or the extraction or processing of fissionable source material. ~~The word “development” shall also mean the~~

(viii) The drilling of an oil and gas well.

(B) In the case of a project undertaken by a railroad, no portion of a railroad line or railroad right-of-way that will not be physically altered as part of the project shall be included in computing the amount of land involved. In the case of a project undertaken by a person to construct a rail line or rail siding to connect to a railroad’s line or right-of-way, only the land used for the rail line or rail siding that will be physically altered as part of the project shall be included in computing the amount of land involved.

(i) The construction of improvements for farming, logging or forestry purposes below the elevation of 2,500 feet.

(ii) The construction of improvements for an electric generation or transmission facility which requires a certificate of public good under section 248 of Title 30 or a natural gas facility as defined by subdivision 248(a)(3).

Sec. 6a. 10 V.S.A. § 6001d is added to read:

§ 6001d. HOUSING PROJECTS IN DOWNTOWN DEVELOPMENT

DISTRICTS

(a) With regard to the construction of certain housing projects located entirely within a downtown development district designated pursuant to 24 V.S.A. § 2793, “development” shall mean:

(1) the construction of mixed income housing with 100 or more housing units or mixed use projects with 100 or more housing units, either of which is constructed on more than 10 acres of land, in a municipality with a population of 20,000 or more;

(2) the construction of mixed income housing with 50 or more housing units or mixed use projects with 50 or more housing units, either of which is constructed on more than 10 acres of land, in a municipality with a population between 10,000 and 20,000;

(3) the construction of mixed income housing with 30 or more housing units or mixed use projects with 30 or more housing units, either of which is constructed on more than 10 acres of land, in a municipality with a population between 5,000 and 10,000;

(4) the construction of mixed income housing with 20 or more housing units or mixed use projects with 20 or more housing units, either of which is constructed on more than 10 acres of land, in a municipality with a population fewer than 5,000; or

(5) the construction of 10 or more units of mixed income housing where the project involves the demolition of one or more buildings that are listed on or eligible to be listed on the state or national registers of historic places.

(b) With regard to the construction, by a person, of housing units located entirely within a downtown development district designated pursuant to 24 V.S.A. § 2793, those units shall not be counted together with units located partially or entirely outside the district, regardless of whether or not they are within a radius of five miles. However, all housing units constructed by a person within the designated downtown development district within a continuous period of five years shall be counted for the purposes of determining jurisdiction under this section. Regarding mixed use projects located entirely within a designated downtown development district, portions of those projects that are not comprised of housing units shall not constitute “development,” unless the number of housing units constructed is as specified in subsection (a) of this section.

Sec. 7. 10 V.S.A. § 6001(27), (28), and (29) are added to read:

(27) “Mixed income housing” shall mean that at least 15 percent of the total units of housing proposed in a project to be constructed in designated downtowns shall be affordable housing.

(28) “Mixed use” shall mean construction, including both mixed income housing and commercial construction, provided that at least 40 percent of the gross floor area of the buildings involved is mixed income housing.

(29) “Affordable housing” shall mean either of the following:

(A) Housing that is owned by its inhabitants, whose household gross annual income does not exceed 80 percent of the median family income in Vermont, as estimated by the United States Department of Housing and Urban Development in Notice PDR-2001-02, as superseded from time to time, and has a total annual cost of principal, interest, taxes, and insurance for the housing that is not more than 30 percent of the household’s gross annual income.

(B) Housing that is rented by its inhabitants, whose household gross annual income does not exceed 80 percent of the median family income in Vermont, as estimated by the United States Department of Housing and Urban Development in Notice PDR-2001-02, as superseded from time to time, and has a total annual cost of rent and utilities for the housing that is not more than 30 percent of the household’s gross annual income.

Sec. 7a. 32 V.S.A. § 3101(b) is amended to read:

(b) The commissioner shall:

* * *

(10) administer and enforce all taxes within his or her jurisdiction; ~~and~~

(11) from time to time prepare and publish statistics reasonably available with respect to the operation of this title including amounts collected, classification of taxpayers, tax liabilities and such other facts as the commissioner or the general assembly considers pertinent;

(12) Report on tax credits. The commissioner shall submit annually on June 1 to the joint fiscal office a report on the tax credits authorized by sections 5930n, 5930p, 5930q, or 5930r of this title. The report must include the number of taxpayers applying for the credits, the number of taxpayers granted the credits, and the amount of the credits granted.

Sec. 7b. 32 V.S.A. § 3102(e)(12) is added to read:

(12) to the joint fiscal office or its agent, provided the disclosure relates to a taxpayer claiming a tax credit pursuant to sections 5930n, 5930p, 5930q, or 5930r of this title or the credits claimed thereunder, and the disclosure is reasonably necessary for the joint fiscal office or its agent to perform its duties.

Sec. 7c. 10 V.S.A. § 6081(o) is added to read:

(o) This subsection applies to situations in which a housing project of greater than ten units is not subject to this chapter because it is located entirely within a downtown development district designated pursuant to 24 V.S.A. § 2793, and the number of units falls below the jurisdictional threshold established in section 6001d of this title. With regard to projects to which this subsection applies, if the downtown development district’s designation is removed, subsection (a) of this section shall apply to any substantial change in the project.

* * * Tax Credits for Restoration of Historic Buildings * * *

Sec. 8. 32 V.S.A. § 5930n is amended to read:

§ 5930n. TAX CREDIT FOR SUBSTANTIAL REHABILITATION OF

HISTORIC BUILDINGS ALSO CLAIMING FEDERAL

REHABILITATION TAX CREDIT

* * *

(6) “Qualified rehabilitation expenditure” means a qualified rehabilitation expenditure as defined in the Internal Revenue Code, 26 U.S.C. § 47(c) properly chargeable to the certified rehabilitation after July 1, 1998. This definition does not apply to ~~subchapter 11G of chapter 151~~ section 5930p of this title.

(7) “Qualified rehabilitation project” means a rehabilitation project, located within a designated downtown ~~community~~ development district or a designated village center under the provisions of chapter 76A of Title 24, that is a certified rehabilitation with respect to this ~~subchapter~~ section ~~and meets the requirements of subdivisions (b)(2) and (3) of section 5930p of this title~~.

* * *

(b) State board credit allocation.

(1) ~~Prior to the commencement of any rehabilitation work, an~~ An owner or long-term lessee of a building in a downtown development district or village center designated under the provisions of chapter 76A of Title 24 may apply to the state board for an historic building tax credit allocation under this section. The board shall grant approval for an historic building tax credit allocation, and issue a letter of approval, if it finds that the applicant meets the provisions of subdivision (2) of this subsection. The burden of proof shall be on the applicant.

* * *

(c) Amount of credit. Except as limited by subsection (f) of this section, the owner of a qualified building shall be entitled to claim against the taxpayer’s state individual income tax, state corporate income tax, bank franchise or insurance premiums tax liability a credit in an amount equal to 10 percent for those qualified rehabilitation projects located within a downtown development district, or five percent for those qualified rehabilitation projects located within a village center, of the qualified rehabilitation expenditures ~~pursuant to 26 U.S.C. § 47(c)~~.

* * *

(f) Limitations and recapture.

(1)(A) In any ~~calendar~~ fiscal year after 1998, the state board ~~shall not~~ may award ~~a total amount of~~ tax credits to all applicants under this ~~subchapter~~ section and ~~subchapter 11G~~ section 5930p of this ~~chapter that exceeds $300,000.00~~ title, so that the total shall not exceed $750,000.00, when added together with the following:

(i) total sales tax reallocated under section 9819 of this title;

(ii) credits awarded under section 5930q of this title, concerning lifts, elevators and sprinklers; and

(iii) credits awarded under section 5930r of this title, concerning village general stores and post office structures.

(B) A total annual allocation of no more than 40 percent of these tax credits in combination with sales tax reallocation may be awarded in connection with all of the projects in a single municipality.

* * *

(4) If, within five years after the building is placed in service upon completion of the certified rehabilitation project, any of the following events occur, then for such year and all succeeding years, any unused credit shall be disallowed and the taxpayer shall be liable for a recapture penalty:

(A) the owner of the building for which a tax credit has been awarded under this subchapter disposes of the building; or

(B) the division finds that the taxpayer performed any work on the building not contained in the application for certified rehabilitation as defined in subdivision (a)(3) of this section or not otherwise certified by the National Park Service, or the National Park Service has revoked certification for unapproved alterations or for work not done as described in the historic preservation certification application, or the taxpayer has knowingly failed to supply information, or knowingly failed to supply true information required by the division or the state board for certification under this section; or

(C) the taxpayer failed to satisfy any requirement of certification imposed by the state board in the tax credit allocation; or

(D) the taxpayer performed any subsequent work during the five-year period that resulted in loss of status as a certified rehabilitation.

(5) If the department of taxes is notified of any determination under subdivision (4) of this subsection, the department shall assess the amount of the recapture penalty against the taxpayer in the following amounts:

(A) in the event of a disposition under subdivision (4)(A) of this subsection, the recapture penalty shall be a percentage of the total credit used, computed in accordance with the following table:

~~(i) in the first year, 100 percent of the credit;~~

~~(ii) in the second year, 80 percent of the credit;~~

~~(iii) in the third year, 60 percent of the credit;~~

~~(iv) in the fourth year, 40 percent of the credit;~~

~~(v) in the fifth year, 20 percent of the credit;~~

Years between close of tax year when Percent of credit recaptured

credit became available and tax year

when building was disposed

Less than one year 100 percent of the credit

One year 80 percent of the credit

Two years 60 percent of the credit

Three years 40 percent of the credit

Four years 20 percent of the credit.

(B) in the event of a determination under subdivisions (4)(B), (C) or (D) of this subsection, ~~any unused credit shall be disallowed and~~ the recapture penalty shall be ~~in an amount~~ equal to the total state tax credit used.

Sec. 9. 32 V.S.A. § 5930p is amended to read:

§ 5930p. REHABILITATION TAX CREDIT FOR OLDER OR HISTORIC

BUILDINGS

(a) Definitions. In addition to the following, the definitions found in ~~subchapter 11F~~ section 5930n of this ~~chapter~~ title apply to this ~~subchapter~~ section unless otherwise indicated.

* * *

(4) “Qualified expenditures” means construction related expenses, excluding any expenses of an owner or lessee of a private residence, and excluding any expenses of an owner or lessee that is a religious entity operating with a primarily religious purpose, or a state or federal agency, political subdivision, or instrumentality of the United States, incurred to achieve one or more of the objectives of ~~subsection~~ subdivision (b)(2) of this section.

(b)(1) Prior to the commencement of any rehabilitation work, a property owner or lessee may apply to the state board for a rehabilitation tax credit allocation under this section. The state board, within 45 days of receipt of a completed application, shall decide, based on the availability of credit, whether or not to grant a rehabilitation tax credit allocation. In granting such tax credits, the board shall issue a letter of approval after receiving certification by the local board of the district in which the project is located that the project meets the requirements of subdivisions (2) and (3) of this subsection. In all instances the burden of proof shall be upon the applicant.

* * *

(3) The local board shall also find all of the following:

(A) the qualified expenditures for a 24-month period selected by the taxpayer and ending within the taxable year exceed $5,000.00; and

(B) the total qualified rehabilitation expenditures of the project do not exceed the adjusted basis of the structure if the structure is listed, or individually eligible for listing in the National Register of Historic Places as determined by the local board in consultation with the division for historic preservation, or the application is solely for the expenses of an exterior elevator access in addition to a structure otherwise undergoing a rehabilitation that applies for the state tax credit under ~~subchapter 11F~~ section 5930n of this ~~chapter~~ title and for which the costs of such an addition is are not a qualified rehabilitation expenditure; and

* * *

(f)(1)(A) In any ~~calendar~~ fiscal year after 1998, the state board ~~shall not~~ may award ~~a total amount of~~ tax credits to all applicants under this ~~subchapter~~ section and ~~subchapter 11F~~ section 5930n of this ~~chapter that exceeds $300,000.00~~ title, so that the total shall not exceed $750,000.00, when added together with the following:

(i) total sales tax reallocated under section 9819 of this title;

(ii) credits awarded under section 5930q of this title, concerning lifts, elevators and sprinklers; and

(iii) credits awarded under section 5930r of this title, concerning village general stores and post office structures.

(2) The owner or long-term lessee of a building that is listed in the National Register of Historic Places, or is determined to be individually eligible by the division as part of the local board’s review of the application for the tax credit allocation, whose proposed qualified rehabilitation ~~expenses~~ expenditures equal or exceed the adjusted basis of the building, shall be eligible for a tax credit under ~~subchapter 11F~~ section 5930n of this ~~chapter~~ title, but shall not be eligible for a tax credit under this subchapter.

* * *

(6) If within five years after the building is placed in service upon completion of the qualified rehabilitation project any of the following events occur, then for such tax year and all succeeding tax years, any unused credit shall be disallowed and the taxpayer shall be liable for a recapture penalty:

(A) the owner of a building for which a tax credit has been awarded under this subchapter disposes of the building; or

(B) the local board finds that the taxpayer performed any ~~remedial~~ work on the building not contained in the application, knowingly failed to supply any information or true information required by the local board for certification under this section, or failed to satisfy any requirement of certification imposed by the local board; or

* * *

(7) ~~If the department of taxes is notified of any determination under subdivision (6) of this subsection, the department shall assess the recapture penalty against the taxpayer in the following amounts:~~

(A) in the event of a disposition under subdivision (6)(A) of this subsection, the recapture penalty shall be a percentage of the total credit used, computed in accordance with the following table:

~~(i) in the first year, 100 percent of the credit;~~

~~(ii) in the second year, 80 percent of the credit;~~

~~(iii) in the third year, 60 percent of the credit;~~

~~(iv) in the fourth year, 40 percent of the credit;~~

~~(v) in the fifth year, 20 percent of the credit.~~

Years between close of tax year when Percent of credit recaptured

credit became available and tax year

when building was disposed

Less than one year 100 percent of the credit

One year 80 percent of the credit

Two years 60 percent of the credit

Three years 40 percent of the credit

Four years 20 percent of the credit.

(B) in the event of a determination under subdivisions (6)(B), or (C) ~~or (D)~~ of this subsection, ~~any unused credit shall be disallowed and~~ the recapture penalty shall be in an amount equal to the total rehabilitation tax credit used.

Sec. 10. 32 V.S.A. § 5930q is added to read:

§ 5930q. TAX CREDIT FOR LIFTS, ELEVATORS OR SPRINKLER

SYSTEMS

(a) Definitions.

(1) “Qualified project” means a project installing or improving lifts, elevators or sprinkler systems in an existing building located within a designated downtown development district under the provisions of chapter 76A of Title 24 that is undertaken:

(A) in order to comply with requirements under Title 21 and related rules concerning fire prevention, life safety and accessibility, and is determined by the department of labor and industry to meet such requirements;

(B) by an owner or lessee that is not a religious entity operating with a primarily religious purpose, a state or federal agency, a political subdivision of the state or federal government, or an instrumentality of the United States; and

(2) “State board” means the Vermont downtown development board established pursuant to chapter 76A of Title 24.

(b) A property owner or lessee may apply to the state board for a tax credit allocation under this section. No more than one award shall be granted with respect to any one building. The state board, within 45 days of receipt of a completed application, shall decide, based on the availability of credit, whether or not to grant a tax credit allocation. Upon granting such tax credits, the board shall issue a letter of approval. In all instances, the burden of proof shall be upon the applicant.

(c) Amount of credit. Except as limited by subsection (g) of this section, the owner or lessee of a qualified building shall be entitled to claim against the taxpayer’s state individual income tax, state corporate income tax, bank franchise or insurance premiums tax liability a credit of 50 percent of qualified expenditures up to $12,000.00 for installation or improvement of a lift, and up to $25,000.00 for installation or improvement of an elevator or sprinkler system.

(d) If, within five years after the building is placed in service upon completion of the qualified rehabilitation project, the owner of a building for which a tax credit has been awarded under this section disposes of the building, then for such year and all succeeding years, any unused credit shall be disallowed. Furthermore, there shall be imposed upon each such owner a recapture penalty equal to a percentage of the total credit used, computed in accordance with the following table:

Years between close of tax year when Percent of credit recaptured

credit became available and tax year

when building was disposed

Less than one year 100 percent of the credit

One year 80 percent of the credit

Two years 60 percent of the credit

Three years 40 percent of the credit

Four years 20 percent of the credit.

(e) A taxpayer claiming a credit under this section shall submit with the first tax return on which a credit is claimed a copy of the state board credit allocation.

(f) A credit under this section shall be available for the tax year in which the expenditures are made, and any unused credit may be carried forward to reduce the taxpayer’s liability for no more than 14 succeeding tax years following the first year the tax credit is claimed.

(g)(1) In any fiscal year after 1998, the state board may award tax credits to all applicants under this section and sections 5930n and 5930p of this title, so that the total shall not exceed $750,000.00, when added together with the following:

(A) total sales tax reallocated under section 9819 of this title; and

(B) credits awarded under section 5930r of this title, concerning village general stores and post office structures.

(2) A total annual allocation of no more than 40 percent of these tax credits in combination with sales tax reallocation may be awarded in connection with all of the projects in a single municipality.

(h) In lieu of using its tax credit allocation to reduce its own tax liability, an applicant may request the allocation in the form of a mortgage credit certificate which a bank may accept in return for adjusting the rate or term of the applicant’s mortgage or loan related to a leasehold interest on the qualified building. The amount of the mortgage credit certificate shall equal the unused portion of the credit awarded under this section. An applicant requesting a mortgage credit certificate subsequent to receiving a tax credit allocation shall provide to the state board a copy of all returns on which a credit under this section was taken. A bank which purchases a mortgage credit certificate may use it to reduce its franchise tax liability under section 5836 of this title for the first tax year in which the qualified building is placed back in service after completion of the qualified project, or in a subsequent year.

Sec. 11. 32 V.S.A. § 5930r is added to read:

§ 5930r. TAX CREDIT FOR CODE IMPROVEMENTS TO

PRIVATELY‑OWNED BUILDINGS THAT HOUSE GENERAL

STORES OR POST OFFICES

(a) Definitions.

(1) “Qualified project” means a project for capital improvements or fixtures in general stores or post offices located within a designated village center under the provisions of chapter 76A of Title 24 that is undertaken by an owner or lessee that is not a religious entity operating with a primarily religious purpose, or a state or federal agency, political subdivision of the state or federal government, or instrumentality of the United States, involving a building that is not solely the residence of the owner or lessee, in order to comply with:

(A) requirements under Title 21 and related rules concerning fire prevention, life safety and accessibility, and determined by the department of labor and industry to meet such requirements; or

(B) requirements under Title 18 and related rules concerning food establishments, and is determined by the department of health to meet such requirements; or

(C) requirements under Title 6, chapter 151 and related rules concerning sale of dairy products; Title 6, chapter 204 and related rules concerning sale of meat products; or Title 9, chapter 73 and related rules concerning weights and measures; and is determined by the department of agriculture, food and markets to meet such requirements.

(2) “State board” means the Vermont downtown development board established pursuant to chapter 76A of Title 24.

(b) Prior to the commencement of any eligible work, a property owner or lessee may apply to the state board for a tax credit allocation under this section. No more than one award shall be granted with respect to any one building. The state board, within 45 days of receipt of a completed application, shall decide, based on the availability of credit, whether or not to grant a tax credit allocation. Upon granting such tax credit, the board shall issue a letter of approval. In all instances, the burden of proof shall be upon the applicant.

(c) Amount of credit. The owner or lessee of a qualified building shall be entitled to claim against the taxpayer’s state individual income tax, state corporate income tax, bank franchise or insurance premiums tax liability a credit of up to 50 percent of expenditures for capital improvements or fixtures, or both, to a maximum of $5,000.00.

(d) Claim for credit. A taxpayer claiming credit under this section shall submit to the department of taxes with the first return on which a credit is claimed a copy of the state board tax credit allocation.

(e) Availability of credit. A credit under this section shall be available for the first tax year in which that part of the qualified building for which the qualified expenditures were made is placed back in service. Any unused credit may be carried forward to reduce the taxpayer’s tax liability for no more than nine succeeding tax years following the first year the tax credit is claimed.

(f) If, within five years after the building is placed in service upon completion of the qualified project, the owner of a building for which a tax credit has been awarded under this section disposes of the building, then for such year and all succeeding years, any unused credit shall be disallowed and the taxpayer shall be liable for a recapture penalty, and the recapture penalty shall be a percentage of the total credit used, computed in accordance with the following table:

Years between close of tax year when Percent of credit recaptured

credit became available and tax year

when building was disposed

Less than one year 100 percent of the credit

One year 80 percent of the credit

Two years 60 percent of the credit

Three years 40 percent of the credit

Four years 20 percent of the credit.

(A) total sales tax reallocated under section 9819 of this title; and

(B) credits awarded under section 5930q of this title, concerning the installation and improvement of lifts, elevators or sprinkler systems.

(2) A total of no more than 40 percent of these credits in combination with the sales tax reallocation may be awarded in connection with all of the projects in a single municipality.

* * * Reallocation of Sales Tax Receipts * * *

Sec. 12. 32 V.S.A. § 9819 is amended to read:

§ 9819. REALLOCATION OF RECEIPTS

(a) Receipts from the tax imposed by this chapter on sales of construction materials used in qualified projects under chapter 76A of Title 24 shall be allocated by the commissioner of taxes and paid to the municipality in which the project is located ~~in the following amounts~~ as follows:

(1) In a municipality in which the population is 7,500 residents or less, all receipts from sales in excess of $100,000.00 of construction materials used in each separate qualified project located in that municipality~~, provided that a total of no more than $600,000.00 may be allocated under this section to all municipalities of 7,500 residents or less~~.

(2) In a municipality in which the population is greater than 7,500 residents but ~~less~~ fewer than 30,000 residents, all receipts from sales in excess of $200,000.00 of construction materials used in each separate qualified project located in that municipality~~, provided that a total of no more than $600,000.00 may be allocated under this section to all municipalities of more than 7,500 but less than 30,000 residents~~.

(3) In a municipality in which the population is more than 30,000 residents, all receipts from sales in excess of $1,000,000.00 of construction materials used in each separate qualified project located in that municipality, ~~provided that no more than $800,000.00 may be allocated under this section to all municipalities of more than 30,000 residents~~.

(b)(1) In any fiscal year after 1998, the Vermont downtown development board, established under 24 V.S.A. § 2792, may certify for allocation to municipalities sales tax revenues under this section, so that the total shall not exceed $750,000.00, when considered together with the following:

(A) credits awarded under sections 5930n and 5930p of this title, concerning substantial historic rehabilitation and historic and older building rehabilitation;

(B) credits awarded under section 5930q of this title, concerning lifts, elevators and sprinklers; and

(1) “Construction materials” means all materials purchased by the owner or owner’s representative, project manager, construction manager, general contractor, or subcontractor to be incorporated into a qualified project.

(2) “Qualified project” means expansion or rehabilitation of contiguous real property that is or will be used at the completion of the expansion or rehabilitation as a structure in a downtown development district designated under chapter 76A of Title 24, but only to the extent that the expansion or rehabilitation becomes an integral component of the real property and the project does not seek qualification for either tax credit authorized under ~~subchapter 11F~~ section 5930n or ~~subchapter 11G of chapter 151~~ section 5930p of ~~Title 32~~ this title. “Qualified project” also means new construction of contiguous real property that will be used at the completion of the construction as a structure in a downtown development district designated under chapter 76A of Title 24 but only to the extent that the new construction is compatible with the buildings that contribute to the integrity of the district in terms of materials, features, size, scale and proportion, and massing of buildings.

~~(c)~~(d) The owner or owner’s representative of a qualified project shall report all sales taxes paid on purchases of qualified construction materials to the treasurer of the municipality in which the project is located. The treasurer of the municipality shall submit requests for allocation of revenues under this section to the ~~Vermont~~ downtown development board ~~established under section 2792 of Title 24~~, and the board shall certify the qualified projects and sales taxes paid thereon to the commissioner of taxes, who shall allocate the appropriate amounts of sales tax revenues due under this section to the municipalities. Revenues allocated to a municipality under this section shall be used by the municipality only for expenditures related to the support of the qualified project located in that municipality which generated those revenues.

Sec. 13. 32 V.S.A. § 5930n(f)(1) is amended to read:

(f)(1) In any fiscal year after 1998, the state board may award tax credits to all applicants under this section and section 5930p of this title, so that the total shall not exceed ~~$750,000.00~~ $1,000,000.00, when considered together with the following:

* * *

Sec. 14. 32 V.S.A. § 5930p(f)(1) is amended to read:

(f)(1) In any fiscal year after 1998, the state board may award tax credits to all applicants under this section and section 5930n of this title, so that the total shall not exceed ~~$750,000.00~~ $1,000,000.00, when considered together with the following:

* * *

Sec. 15. 32 V.S.A. § 5930q(g) is amended to read:

(g)(1) In any fiscal year after 1998, the state board may award tax credits to all applicants under this section and sections 5930n and 5930p of this title, so that the total shall not exceed ~~$750,000.00~~ $1,000,000.00, when added together with the following:

* * *

Sec. 16. 32 V.S.A. § 5930r(g) is amended to read:

(g)(1) In any fiscal year after 1998, the state board may award tax credits to all applicants under this section, sections 5930n and 5930p of this title, so that the total shall not exceed ~~$750,000.00~~ $1,000,000.00, when added together with the following:

* * *

Sec. 17. 32 V.S.A. § 9819(b) is amended to read:

(b)(1) In any fiscal year after 1998, the Vermont downtown development board, established under 24 V.S.A. § 2792, may certify for allocation to municipalities sales tax revenues under this section, so that the total shall not exceed ~~$750,000.00~~ $1,000,000.00, when considered together with the following:

* * *

Sec. 18. 21 V.S.A. § 252(h) is added to read:

§ 252. RULES; INSPECTIONS; VARIANCES

* * *

(h) A building owner or contractor engaged in an older and historic renovation project may propose innovative, performance‑based alternatives in lieu of strict fire and building code compliance. The commissioner shall consider such alternatives, and shall accept those that provide equivalent protection of the public safety and health. A decision to accept or deny a proposed alternative shall be in writing and explain the reasons for accepting or denying the alternative.

Sec. 19. ADVISORY COMMITTEE; REPORT

The department of labor and industry shall review the building code‑related recommendations presented in the report to the general assembly from the task force on the redevelopment of upper stories in downtown buildings, established pursuant to No. 62 of the Acts of 2001. This review shall be conducted in consultation with a nine‑member advisory committee created by the commissioner, including at least three members of the task force. The advisory committee shall contain an owner or developer of older and historic buildings in downtowns, a representative of the historic preservation division of the agency of commerce and community development, a regional manager of the fire prevention division of the department of labor and industry, an architect, a representative of municipalities, a person with expertise in state and federal accessibility laws, and a person with knowledge and expertise in life safety codes and problems in downtown buildings. The department shall report to the general assembly by December 15, 2002, concerning the implementation of each of the report recommendations.

Sec. 20. EFFECTIVE DATES

Secs. 1-12 and 18-20 of this act shall take effect on passage. Secs. 13-17 of this act shall take effect July 1, 2003.