Gardner mayor defends 15-year TIE exemption for 94 Pleasant Street; council presses for details

The Gardner mayor told the finance committee that the city is proposing a 15-year tax-increment exemption (TIE) for 94 Pleasant Street to enable a private developer to renovate a long-troubled downtown building into six residential units. The building, the mayor said, had been tied up in land-court proceedings since 1996, owed more than $400,000 in back taxes and was taken by the city through eminent domain in 2022 before being sold to Matias Development in 2025.

The mayor explained that a TIE differs from a tax-increment financing (TIFF) agreement: a TIFF, typically used for commercial projects, is tied to job creation and requires commonwealth approval, while a TIE is an exemption of a portion of property value for a period of time that does not require commonwealth sign-off. Under the proposal before the committee, the value of the building would be exempted for the first 10 years and then phased in over a 15-year schedule; the landvalue would continue to be taxed. The developerproject budget and financing options were included in the packet, the mayor said, but the city has no available CDBG funds to subsidize the project.

"This is how we were able to make the line work and get the financing needed to make the project happen at 100 percent market rate," the mayor said. He added that if the numbers change, the project could proceed as a mixed-income development rather than fully market rate. He also described recapture provisions that can be written into agreements: if the developer does not meet development obligations or sells within a set window for profit, the city can require repayment.

Committee members pressed for more detail. The city assessor, called forward at the mayor's request, said the current assessment is a little over $300,000 but noted the building has been reduced in condition and that a renovated, rentable building could be valued in the $700,000to$800,000 range. A committee member raised equity and precedent concerns, asking how a near-zero building assessment for a 10-year period would affect other investors and whether it would set a citywide standard for future applicants.

Committee members also asked how often ties are used elsewhere; the mayor said ties are increasingly common in non-gateway communities as a means to produce more market-rate housing where gateway-city tax credits are unavailable. Members requested examples from other municipalities and asked the mayor to provide a full draft agreement, including timing, recapture language and development milestones.

The committee did not vote to recommend the TIE; members agreed to keep the item on the calendar and asked the mayor and assessor to return with the full agreement and comparative examples for review at a subsequent meeting.