AGAWAM – The City Council has approved Mayor William Sapelli’s proposed District Improvement Financing (DIF) district – which is centered on the vacant parcel that formerly housed Games & Lanes.

The commercial district also includes the vacant parcels of the former Agawam Motor Lodge and Getty station, which are situated on the corner of Suffield and Main St. The new DIF district is designed to incentivize private investment in the area by authorizing the town to invest tax dollars, created by increased property assessments, back into the district for public infrastructure improvements – such as increased water and sewer capacity.

“Everyone realizes it’s an area that is depressed and needs help,” said Sapelli. “The previous administration proposed a plan using some state money, but also a lot of town monies. That got voted down because people didn’t want to spend that kind of money. Knowing that, I thought I’d get creative – I sat down with our economic development director, Marc Strange, and we were putting our heads together when he came up with the DIF idea.”

A bowling alley was originally built on the plot of land back in the 60s, and later succumbed to a cleaning company. After the cleaning company left, the soil was contaminated with chemicals. The parcel has since been cleaned and undergone extensive environmental remediation. In areas like the Walnut Street business district, property values tend to decrease while also having a ripple effect on municipal revenue. Many of these economically depressed locations pose a drain on municipal services and can make it difficult to attract private investment.

District Improvement Financing (DIF) and Tax Increment Financing (TIF) are economic tools that promote redevelopment in these types of areas by use of public or private partnerships. TIF offers tax breaks to developers, while DIF channels tax dollars into targeted redevelopment districts. Both DIF and TIF provide municipalities with innovative tools to target districts or specific projects for redevelopment. The use of tax increments is the centerpiece of both tools.

According to the Massachusetts Executive Office of Housing and Economic Development, DIFs can provide opportunities to redevelop areas in ways that can lead to increased property values, increased tax revenue, improved infrastructure, enhanced transportation services, increased housing supply, new jobs and an overall improvement in quality of life for the inhabitants of the city or town.

DIFs do not impose an additional tax on property owners. Instead, DIFs allow cities and towns to separate tax dollars from the general fund to finance public infrastructure improvements within the district.

The following is a guideline for cities or towns wishing to utilize a DIF:

• A city or town wishing to utilize DIF must first designate a development district and a corresponding development program

• The district and program must then be certified by the State Economic Assistance Coordinating Council (EACC)

• A development district may be as small as one parcel or may comprise up to 25% of a town or city’s land

• A district can be in effect for a maximum of 30 years

• Each district must have a unique development program. The development program spells out the goals of the district and the means to achieve them. It will identify: the existing uses and current zoning; proposed uses and any needed zoning changes; planned construction or renovations; current and planned infrastructure; and a financial plan

Once a district and program have been certified, the city or town has the ability to use various tools to implement the program, including acquiring land, construction or reconstructing improvements, incurring indebtedness and pledging tax increments and other project revenues for repayment of these debts.

Sapelli told Reminder Publications that he’s pleased with the council’s decision to unanimously approve the DIF district.

“I’m very happy they [the Council] voted for it. Some of them doubted it would generate enough revenue, but they were optimistic for the most part,” he added. “I was very pleased with their open-mindedness and cooperation and the fact they wanted to do what’s in the best interest of the town.”

The next steps for the Town involve identifying the properties’ set assessed values in the district, registering those taxes and then waiting for development.