Bennington to gain 11 new apartments by next year
BENNINGTON — Eleven new apartment units are coming to downtown Bennington, with a boost by a tax credit program from the state.
State tax credits of $112,500 will support the sensitive rehabilitation of the historic, 19th-century building at 219 Pleasant St., offsetting the costs of code improvements and the installation of a sprinkler system in the building, which has been minimally maintained over the past 40 years, according to information from the Agency of Commerce & Community Development.
It is the only awarded project in Bennington County in this round.
Once complete, the building will house 11 apartments, five market rate and six of which — at least for a decade, under the terms of Community Development Block Grant funds — will be reserved for people whose incomes do not exceed certain thresholds.
The total project cost is estimated at $880,000.
Jon Hale, president of Hale Resources, a real estate development and property management firm, said he hopes to start work in December on the planned $1.2 million project at the site, which has also won $650,000 in Community Development Block Grant funds.
Hale and his son, Zak Hale, purchased the property through a partnership for $285,000 last year, he said.
Anticipated work involves gutting "at least 50 percent" of the building and installing new plumbing and heating, along with new kitchens and bathrooms, doing work on the floors, adding insulation and parking, making structural changes, upgrading energy efficiency, stripping siding and performing asbestos abatement, Hale said. Goldstone Architecture of Bennington is the contractor.
Hale said he anticipates the units will be "ready to go" for renting by next summer.
There will be 10 one-bedroom units and one two-bedroom unit, and the units will be about 400-800 square feet. One unit will be handicapped-accessible.
The tax credit award is part of a $2.8 million state tax credit program for 24 projects statewide, supporting over $40 million in downtown and village center and rehabilitation projects, according to a Wednesday media release from Gov. Phil Scott's office.
"The goal is to provide an incentive for property owners in our designated downtowns and village centers to invest in the existing buildings," Caitlin Corkins, tax credits and grants coordinator for the state Department of Housing and Community Development, said of the credits.
"We hope that that will allow the buildings to be brought up to code so property owners can create housing, attract businesses, create jobs [and] generally just revitalize these commercial centers."
State tax credits offer a "flexible tool" that can be used by business owners, property owners and even nonprofit organizations, she said.
While not cash or a grant, tax credits essentially redirect income taxes owed to help pay construction bills on such projects, according to the Agency of Commerce and Community Development's website.
For example, if a tax bill is $10,000, a $4,000 credit will reduce that bill to $6,000.
From the state's perspective, tax credits offer an advantage in that they are not part of the capital budget, Corkins said.
"It's basically income taxes that are not coming into the state," she said.
But because of investments that are made in these projects, tax income comes to the state in other ways, such as the sales taxes paid on materials used for these projects.
"At the end of the day, when these improvements are made, the value of the building will increase," Corkins said. This yields increased property tax revenue in the long run.
The downtown and village center tax credit program began in 1998, and has since increased its funding and become quite competitive, she said.
Since the program began, over 370 projects have received over $30 million in tax credits to help bring existing buildings up to code and put underused or vacant buildings back into productive use, according to the release.
Applications for the tax credits are reviewed by the state's Downtown Development Board annually. To qualify, a building must be in one of the state-designated downtowns and village centers.
"We look at the project scope and timeline, we look at the budget, and most importantly, we're looking for projects that meet a need in their community and have a long-term positive impact on their community," Corkins said.
Applicants are asked to describe how their particular project is going to do something for their community, she said.
"Not all of the communities in Vermont have the same needs," she said.
Zak Hale described the public benefit of the 219 Pleasant St. rehabilitation effort. "Providing quality, accessible housing," he said. "There's housing crisis in Southern Vermont, and we're trying to combat that."
Pleasant Street is a very neglected street, Jon Hale said.
"We're trying to do our part to improve that neighborhood," he said. "This is something that needs to be done in Bennington."
Hale Resources has done similar projects in the past — rehabbing run-down buildings — but not to this scale, Jon Hale said.
A number of the projects receiving tax credits get funding from various sources, including block grants and low-income tax credits for housing projects.
"[Other funding] is definitely a factor in how the downtown board looks at the application," Corkins said. That's because funding, and access to funding, speak to project readiness, she said.
Jon Hale said a project like the 219 Pleasant St. rehabilitation needs outside funding. "You can't do this type of project with your own money," he said.
He is also seeking federal tax credits for the project, which would be 25 percent of the estimated total project cost of $880,000.
Even after all the anticipated renovation work, 219 Pleasant St. will only be worth about $350,000 when complete, he said.
Besides Bennington, projects awarded state tax credits are in Barre, Brattleboro, Bristol, Castleton, Enosburg Falls, Fairfield, Granville, Jericho, Lyndonville, Middlebury, Montpelier, Northfield Falls, Springfield, St. Johnsbury, Swanton, Vergennes and Waterbury.
Patricia LeBoeuf can be reached at email@example.com, at @BAN_pleboeuf on Twitter and 802-447-7567, ext. 118.
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