LACONIA — The city, which has already promised $5.1 million in support for revitalizing the Colonial Theatre, will likely have to commit more money to the project if it is to go forward now that anticipated federal tax credits have fallen through.
Mayor Ed Engler told city councilors on Monday night to be ready for a financial request at their June 24 meeting.
“By the 24th Councilor Hamel and I, as your representatives on the Colonial Theatre steering committee, will be coming forward with a report on the status of that project and very possibly we’ll be coming forward with a request for more city money,” he said. “That number hasn’t been set yet, but there is definitely a possibility, if not a probability, that Councilor Hamel and I will be coming forward asking for the city to put more money into the Colonial project.”
The long-delayed revitalization of the 105-year-old theater is intended to jump-start downtown revitalization.
Backers of the $15 million project learned on May 23 it would not be receiving $4.8 million in federal New Market Tax Credits needed to complete the complicated financing package. There are significant fees associated with the tax credits, so funding required to make up the shortfall would be substantially less than $4.8 million.
Mayor Ed Engler said the exact size of the shortfall is still being estimated and that the city is likely the last resort to fill the gap.
"Realistically, there really isn't an alternative if we are to go forward," he said. "It will be a tough decision for the City Council."
Justin Slattery, a spokesman for the Belknap County Economic Development Council, which has been organizing the project, did not have specifics when asked about the shortfall Tuesday.
"I can confirm there is a funding gap for the Colonial project and we are working hard to identify funding sources to fill that gap with our funding partners and the City," he said in an email.
The U.S. Treasury Department awarded $3.5 billion of the tax credits to 73 community development entities to spur investment and economic growth in low-income communities nationwide. Mascoma Bank, the community development agency involved with the Colonial project, was not on the list.
Revitalizing the Colonial was proposed four years ago, but construction has been delayed amid increasing cost estimates for restoring the ornate theater and problems assembling money to pay for the work.
The city loaned the Belknap County Economic Development Council $1.4 million to buy the theater, which once hosted Vaudeville acts and was a multi-screen cinema before being shuttered.
The city has been receiving interest payments on its loan to the development council. City leaders have pledged significant additional support contingent on the rest of the financing coming together.
They promised to ultimately loan $4.2 million for the project and provide an additional $900,000 to buy theater equipment.
In 2017, the project missed a deadline for New Market Tax Credits, so Mascoma Bank awarded the credits elsewhere. Mascoma was not included in the 2018 round of allocations.
The New Markets program attracts private capital into low-income areas. Investors receive a credit against their federal income tax in exchange for making investments through community development entities.