HAVERHILL — The developers of Harbor Place will get almost $1.5 million in tax breaks and 198 parking permits for the Merrimack Street garage in a deal approved by City Council to support the sweeping downtown project.
The tax package will save the Merrimack Street Ventures development group an average of $120,000 per year for 12 years, Mayor James Fiorentini said.
Fiorentini said the developers will continue to pay current taxes on six Merrimack Street properties involved in the project, but will get discounts on new taxes that result from improvements to the properties.
The proposed tax break, known as an Urban Center Housing TIF (Tax Increment Financing), was created by the state to encourage developers to build market-rate housing in urban areas where the cost of construction is high.
The centerpiece of the development is the Harbor Place project — a five-story building that is to replace the long-vacant Woolworth Building at the eastern entrance to downtown. A UMass Lowell satellite campus, Pentucket Bank, Haverhill Community Television, a restaurant and offices are among the tenants expected to occupy the new, glass-enclosed building on the banks of the Merrimack River.
A garage with 150 spaces is also planned under the Harbor Place building.
The Woolworth building is to be demolished in September. Other buildings involved in the project will be razed later, officials said.
Another new building in the second phase of the project is to include 80 apartments.
The development team is a partnership between the Greater Haverhill Foundation and the Planning Office for Urban Affairs, an affiliate of the Catholic Archdiocese of Boston that develops housing.
Fiorentini said the tax deal will end after 12 years when the property owners will begin paying full taxes on all property involved in the project.
The mayor said the city will get $500,000 in up-front permitting fees from the developers and $450,000 for the 198 parking garage permits that are also part of the package aimed at smoothing the way for the project.