As a public and private development, most of the project will be paid for by the developer (approximately $80 million). The City's costs (approximately $15 million) would be recouped through Tax Increment Financing (TIF), which means that the costs will be covered through income tax revenues generated by the new jobs that the project will create, as well as land sale proceeds and tax revenues from the new jobs. The project also will generate new property tax revenues from the new homes to be built in the project that will benefit the Hudson Schools.
This same TIF method was used to build First and Main. With First and Main, the developer paid for the majority of the project costs and owns most of the land. The City's portion was paid for through a TIF. Built in 2004, First and Main CIty costs have already been recouped and paid for through the TIF.
Downtown Phase II is projected to generate:
$1,800,000 annually in property tax revenues from the project.
$700,000 to $1,000,000 annually in income tax from the new jobs created.
Will My Taxes Go Up Because of Downtown Phase II?
No, there will be no income or property tax increases as a result of Downtown Phase II.
There will be no income tax or property tax rate increases as a result of Downtown Phase II.
New Money for the Schools
Downtown Phase II will benefit more than its residents – it will benefit our schools. As was done for First and Main, the City is using a TIF (tax increment financing) for the residential portion of Phase II, which means approximately 77% of the new property taxes generated by the new residential units in the project will be used to help pay for community improvements, including roads, traffic calming, infrastructure and parking structures, for a period of 20 years. Approximately 23% of that money will go to our schools. Those taxes, added to the additional real property tax generated from the commercial portion of the redevelopment, is more money for the Hudson Schools.
What is Tax Increment Financing (TIF)?
Tax Increment FInancing (TIF) allows the City to borrow the money to pay for the City's portion of the project and pay it back over the course of 20 years using the new income and/or property taxes generated by the new offices and homes in the project. That way, the City does not have to use current general fund money to pay off the note.
A TIF was used for Phase I - First and Main, and the borrowed amount has already been paid back through the increased income property tax revenues generated by the stores and homes in the project.