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Alvarez Block Denied Federal Tax Credit

This circa 1890 photo shows Montpelier Argus and Patriot offices, now known as the Alvarez Block. Photo courtesy of the Vermont Historical Society.

By Tom Brown

The storefronts of the Alvarez Block on Main Street have served Montpelier residents continuously since  the 1870s. Like most of the buildings in the city’s historic downtown district, it has survived flood, fire, and recessions, and it has twice been approved for inclusion on the National Register of Historic Places.

The building’s new owners, Drs. Sam and Karena Shippee, are renovating the space for their new eye care center and applied for a 20 percent federal tax credit offered by the National Park Service (NPS) and the IRS to encourage rehabilitation of “historic, income-producing buildings.” They were surprised to learn that their application had been denied because federal officials ruled that the building did not qualify as a “certified historic structure.”

The reason, according to the letter of denial from NPS, is structural changes made to the building in the 1950s and more dramatically in 1971, following a fire that gutted the third floor and mansard roof, which was removed. These structural changes caused the building to be unrecognizable to a “historical contemporary,” in other words the reviewer said if a person from pre-1950 saw the building today she would not recognize it.

Alvarez Block
The Alvarez Block on Main Street as it looks today, minus its original third floor and roof. Photo by Tom Brown/The Bridge

Jay Ancel of Black River Design Architects is working on the project for the Shippees and says the denial of the tax credit is unprecedented in Vermont.

“This has never happened in Vermont in our 35 years,” Ancel said. “We recently completed the French Block (using the tax credit), and we’ve been through a number of these. Never did we question whether it would be eligible.”

The 20 percent federal tax credit combined with a separate 10 percent state credit can make a huge difference on rehabilitation projects that cost hundreds of thousands of dollars. “It’s a huge element to the viability of the project,” he said.

Ancel and the owners have appealed the NPS decision and that appeal has the support of the state Division for Historic Preservation, the City Manager’s Office, the Montpelier Development Corp., Rep. Mary Hooper (D-Montpelier), the Montpelier Historic Preservation Commission, and U.S. Sen. Patrick Leahy.

State Historic Preservation Officer Laura Trieschmann said her office filed an “integrity statement” with the NPS that found the building a “contributing resource” to Montpelier’s downtown historic district and determined that despite the alterations the block retains its historical integrity in six of seven NPS criteria. 

“The integrity statement that we submitted supports that it’s a contributing resource to the Montpelier Historic District because sufficient material remains from when the building was altered in the 1950s and its original 1870s storefront,” she said.

One of the intents of the tax credit is to encourage owners to rehabilitate and preserve historic buildings and avoid the generally cheaper option of tearing them down. Ancel said the Shippees and contractor Connor Construction have restored many elements of the structure, including stabilizating an original exterior brick wall on the Hazen Place side.

The new space will house the offices of Shippee Family Eye Care and also include three market-rate rental units, Ancel said. ”

The Alvarez family acquired the block  in 1947, and it has housed the Capital Market, the Montpelier Evening Argus (and later the Times Argus after its merger with the Barre Times in 1959). It withstood the flood of 1927 and suffered extensive damage in 1971 in a fire allegedly started by a careless cigarette in the apartment of Bennington lawmaker Robert Kearns.

The appeal of the tax credit denial was filed May 1, and officials hope for a timely decision. The Shippees application for a state tax credit will be reviewed likely next month, Trieschmann said.

“The federal tax credits are always under scrutiny by Congress and the U.S. Treasury,” Trieschmann said. “So I think the pressure has come down on the NPS to make sure that projects that do get funding are worthy, but I think that in the case of this building it is very worthy of the tax credit and would help maintain a sense of place and pride of place in Montpelier.”