LACONIA — After a year of delays, city leaders hoped refurbishment work on the 103-year-old Colonial Theatre could finally begin this spring, but financing issues have kept the start of construction on hold.
A total of $5.4 million, or 39 percent of the cost of the project, has yet to be finalized.
That money is supposed to come from federal New Market tax credits, which community development entities sell to investors to raise capital for projects in low-income rural communities.
There appears to be less investor appetite for these financial instruments than anticipated.
Justin Slattery, executive director of the Belknap Economic Development Council, which is organizing the project, said Tuesday the federal tax cut approved late last year created uncertainty.
“The tax bill shook up the federal tax code and it’s been slow for some investors to figure out their new tax liabilities, how much credits they want to buy and the pricing of the credits,” he said.
Corporations saw their top tax rate fall from 35 percent to 21 percent under the bill. This reduction in tax liability could translate into less need or demand for tax credits such as those offered under the New Market program.
Slattery said there is no alternative plan to make up the funding that is to be provided through the tax credit program.
In February, the U.S. Treasury Department awarded $3.5 billion in New Market tax credits nationwide.
In March, Slattery expressed optimism that the project could soon get underway.
“Belknap EDC is currently finalizing financing for the project including New Market tax credits with our funding partners and is looking forward to moving to the project’s construction phase,” he said at the time.
City Manager Scott Myers on Tuesday referred all questions about the project to Slattery.
Once work begins, it will take another year before the aging theater can be turned into a modern entertainment venue that will retain the ornate touches that give it character. The hope is that the project will attract more people, business and investment in a downtown area that needs help.
The economic development council is using a mix of state, federal, city and donor funds to bring the theater back to life.
The Colonial Theatre project, part of an effort to revitalize the downtown core, is also to include 14 market-rate apartments and four retail spaces. Earlier delays occurred after design projections undershot the total cost of the intricate refurbishment.