New London ― An incentive agreement aimed at jump-starting the transformation of a long-vacant Garfield Avenue former mill property into apartments calls for providing $2 million in tax reimbursements to the developer.

The credit enhancement agreement, approved Monday by the City Council, is also expected to eventually triple the city’s share of tax revenue generated by the property and serve as a catalyst for economic growth in the distressed neighborhood.

The tax break agreement is for the sprawling former Edward Bloom Silk Co. property at 90 Garfield Ave., a building city officials described as derelict and a nuisance.

Litchfield-based Park Lane Group, operating as Garfield Mills LLC, bought the mill building for $239,000 in 2019. Plans call for the construction of 90 market-rate and affordable apartments inside a space originally built to house rows of silk looms.

The city currently collects about $20,000 in annual taxes from the 97,000-square-foot building and 3.5-acre site but anticipates that figure will jump significantly after its redevelopment.

If the mill site remained unused, the city could expect to take in $510,893 in taxes from the property over a two-decade period. But that figure leaps to $1.3 million when the project, with its anticipated $4.8 million assessment, is completed, Finance Director David McBride said.

Over the 20 years of the agreement, the developer however will save $2.16 million on its tax bill.

The developer will pay an annual tax bill of $20,000 for the first four years of the agreement during the construction phase with those amounts increasing by 2.5% annually in most subsequent years.

The largest tax bill is pegged for year 11 when the developer would pay $174,000.

“In order to assist the developer with his financing to make this project a reality, they need some of their tax money coming back in and showing as revenue back to them,” city Law Director Jeffrey Londregan said.

Londregan said the city, in exchange for signing the agreement, will get a new housing complex expected to spur future economic improvements in the surrounding area.

Director of Economic Development and Planning Felix Reyes said Garfield Mills has already sunk millions of dollars into cleaning up the brownfield site, work that was aided by a $1 million state grant the city helped obtain.

“We’ll be getting revenue because of this development,” he said. “And, more important than revenue, we’ll be seeing an economic impact to that neighborhood.”

He said the project will begin “shortly.”

John Satti, the only councilor to vote against the agreement, lauded Reyes and Mayor Michael Passero’s work on the plan, but voiced concerns over the city giving up tax revenue.

The mill is located in the Tax Increment Financing Garfield Mills district, an incentive zone created by the council last year that allows a portion of any increase in tax revenues from rising property values to be set aside for infrastructure improvements in that area.

Under that plan, 50% of tax revenue realized by increases in assessed value will be “recycled” back into the neighborhood for various improvement projects, including new sidewalks, parks and lighting, with the remainder funneled into the city’s general fund.

Since the City Council oversees the TIF district, it may opt to use the neighborhood tax profits for projects outside the Garfield Avenue area.

“This kind of financing is a way to encourage private investment in a neighborhood, to attract other developers,” Reyes said.

j.penney@theday.com