NORWAY — Town officials say they will not wait much longer to resolve an issue with the Federal Deposit Insurance Corp. that could cost them $200,000 in federal tax credits for the Norway Opera House renovation project.

“We can’t allow that,” Town Manager David Holt said.

Instead, the town may look for a private investor to partner with and in turn receive a tax shelter for $200,000.

In February, the Board of Selectmen voted unanimously to transfer the deed for the Main Street edifice to the Norway Opera House Corp. and proceed with a $1.1 million renovation of the six, first-floor storefronts and the back wall, which now has a temporary cover on it. The project was expected to go out to bid in May.

The work would be paid for with the approximately $200,000 in tax credits from the federal government, $200,000 in state tax credits coupled with a $400,000 Communities for Maine’s Future Grant received last fall and $180,000 in private donations the corporation is raising.

In attempting to partner with the Norway Savings Bank to get the tax credits, Holt said they discovered that the FDIC had to approve the project for the federal tax credits.

The FDIC is an independent agency created in 1933 by the U.S. Congress to maintain stability and public confidence in the banking system by insuring each depositor in an FDIC-insured bank up to $250,000. The Norway Savings Bank’s holdings are insured by the FDIC and therefore the bank must comply with its regulations.

The FDIC approval could take many months, officials said.

“We all learn as we go through this process but this is more than we anticipated,” Holt said.

Holt said he is in touch with an investment firm in Portland who can hook the town up with a private investor, if necessary. The investor would then have a tax shelter of $200,000 of his or her money that is put into the project.

If a private partner can not be found, the town will proceed with the renovation without restoring the back wall.

Dennis Gray of the Norway Opera House Corp. said there is only a small window of opportunity to get the federal tax credit so action has to be taken swiftly. The town already has been given the go-ahead for a state tax credit of just over $200,000.

Gray said the Opera House is insured under the town’s policy. Once it is deeded over to the corporation, the corporation will have its own insurance on the building.

It is expected that the Norway Opera House Corp. will eventually look for a buyer for the building.

The 1894 Opera House, once the center of town civic and cultural events, has been vacant since a section of the roof collapsed in 2007. The town took it by eminent domain in 2010, because it was deemed a public safety hazard, and reinforced the back wall. The first floor has been vacant since the roof collapse and the upper floors closed for decades.

An initial $200,000 donation from Bill and Bea Damon of Norway allowed the town to pay for taking the three-story brick structure and stabilize it.

ldixon@sunjournal.com

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