TIF stands for tax increment financing. This is a method of public financing that is used as a subsidy for redevelopment, infrastructure, and other community-improvement projects throughout the world and in the United States.
A year ago, town meeting overwhelmingly approved a TIF plan for the revitalization project. The mall, which opened in 1971, has been losing both stores and customers in recent years and sought to reinvent itself as an open-air lifestyle retail center with restaurants and amenities. Under the tax agreement, PREP will get a steadily decreasing property tax exemption for 16 years, starting with 100 percent for 2022 to 2026 and dropping to 50 percent for 2031 to 2034. The exemption only applies to the increase in the property’s value beyond the purchase price.
The TIF ensures PREP will continue to pay taxes based on the purchase price of $39.5 million, even as the actual value continues to decline. Once the redevelopment begins and the value increases over the $39.5 million, then the TIF tax savings begin. PREP has also committed to spending a minimum of $40 million in redeveloping the mall.
The proposed residential component is not part of the TIF, making it fully taxable. That alone represents an estimated $800,000 to $900,000 in additional tax revenue for the Town of Hanover.