Residents in Randolph will be asked at a special town meeting Tuesday night if they want to approve the creation of tax increment financing districts for a hardware store and for natural gas pipelines.

The meeting is scheduled for 6 p.m. at the town office.

Tax increment financing districts, or TIF districts, allow municipalities to freeze the value of properties in designated areas and use the tax revenues that would have been earned from future development for set uses, including giving it back to the developer in the form of credit enhancements or economic development activities. Taxes from the prior valuation on the property would still be paid to the town’s general fund.

The proposed tax district for the hardware store — a project from two owners of Damariscotta Hardware — would return up to $300,000 to the store to help cover the cost of constructing the new building.

All of the new revenue from natural gas pipelines that have been built and will be built by Summit Natural Gas of Maine will fund various infrastructure improvements, public safety equipment and other economic development costs.

The hardware store tax district is needed because of the costs associated with constructing a new building in the flood zone, said Rob Gardiner, president of Damariscotta Hardware and one of the store owners opening the Randolph store.

The property, which is on Water Street between Windsor and Elm streets, is in the floodplain. Since new buildings can’t be constructed there, the owners of the store will have to raise the land up 11 to 12 feet with compacted fill. The cost of that alone will be roughly $300,000, according to the proposal.

“Without the TIF, we would not be able to afford to go in there and do anything,” said Gardiner, who will own the new store with his sister, Susan Geyer.

Starting next year, the proposed tax district would return 100 percent of the new tax revenue at the property back to the store for the first two years. The percent of credit enhancement returned to the store would decline by five percent every two years until it reaches zero after 20 years. The entire tax district value would go to the town for the remaining ten years.

The tax increment financing proposal is projecting that $248,000 of new tax revenue will be returned to the store and $232,000 will go to the town’s new development fund.

A major reason for providing such a high tax rebate for the store is because of the jobs that will be created there, said Selectman Mark Roberts, who is leading the effort for the town. He said hopefully the new store will spur more interest in the town and encourage other businesses to locate there.

Gardiner expects the 11,900-square-foot store to be built by November and to hold a soft opening in February or March. It will employ eight to nine people, all but two of which will be new hires, he said.

Gardiner’s father, Robert Gardiner, opened Damariscotta Hardware in 1955. The Randolph store — part of the Do it Best Corp. hardware store cooperative — will be the second location for the owners.

The tax district for the natural gas pipeline would follow the entire length of Randolph’s Water Street and extend along part of School Street. It would also include the natural gas company’s valve station.

The tax district is expected to add nearly $1 million to the town’s development fund over its 30-year lifespan.

Besides allowing municipalities to use new tax revenue for specific development uses, tax districts shelter the new development from being used to calculate its state valuation for the duration of the agreement. This decreases the percent the city has to pay for its share of county and school district costs and increases the amount of municipal revenue sharing and education aid from the state.

Both proposed districts will need to be given final approval by the state if residents approve them Tuesday.

Paul Koenig — 621-5663

[email protected]

Twitter: @paul_koenig

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