EASTHAMPTON — The century-old former mill building at 1 Ferry St. has caught the eye of many developers over the years, but necessary improvements to the surrounding infrastructure have discouraged them from pulling the trigger.
Which is why the City Council approved the creation of the Ferry Street Development District in a 9-0 vote at its July 11 meeting. Known as District Improvement Financing (DIF), it provides municipalities the ability to use tax revenues generated as the property gains value to pay off construction debts.
In other words, it sends a signal to businesses that the city is willing to improve sidewalks, roads and water systems around the property to spur economic development, as City Planner Jeff Bagg put it at the meeting.
“This is a tool that we want to have in place for this area,” Bagg said. “What we are trying to do with creating a district first is to create a signal for a developer to understand that this is available to work as a partnership with the city.”
The DIF cannot exceed 30 years under state law and is useful for municipalities that cannot afford large public infrastructure improvements on their own.
The city would use bonds to pay for infrastructure upgrades and future tax revenues would be funneled back to pay them off, Bagg said.
Once there is a developer and a plan, there would need to be a financial plan created and it would require approval from the finance subcommittee and the council, according to Bagg.
“We are hoping at some point in the future that the financial plan with all the specifics would come separately,” Bagg said.
He noted that since 2008 there has been a longstanding vision to create the Mill District as part of the city’s master plan, and Ferry Street would be the “last piece of the puzzle” in fulfilling that long-term goal.
In 2006, the Planning Board approved over 100 dwelling units and potential commercial-mixed use in the property with the expectation of significantly increased property tax revenue, according to a memorandum by Bagg.
Councilor James Kwiecinski said the former mill building has been an “eyesore” for quite some time and there is no immediate cost to the city for simply designating the area as a DIF.
“It would cost future dollars to improve traffic signals, roadways, sidewalks and maybe a place along the pond that the public could share,” he said, adding that the DIF also makes the city eligible for state grants for infrastructure improvements. “I don’t see a downside.”
A distinction councilor Dan Carey wanted to make at the meeting is the difference between a DIF and Tax Increment Financing, or TIF.
The TIF is a property tax exemption for landowners given by a municipality, which Carey wanted residents to know is not what they were approving. Instead, the city will be generating tax revenue as the property value increases from a developer starting a project and making improvements to the public infrastructure. “It’s not a tax break,” Carey said. “It can be helpful to (developers) and to us to bring development in an area that is focused and where we’ve had trouble in the past, and it helps get state grants when they see we are committed to economic development in a certain area.”
Luis Fieldman can be reached at lfieldman@gazettenet.com.