Cape Elizabeth has won state approval to establish its first tax increment financing district to help further a long-standing plan to develop a more village-like, pedestrian-friendly town center.

The Maine Department of Economic and Community Development approved the so-called Town Center TIF to start on March 31, according to a news release Monday from Town Planner Maureen O’Meara. The 20-year TIF will capture a portion of property taxes collected in the district to help build sidewalks and improve stormwater management.

“Sidewalks in the town center have been on the town’s to-do list since the first Town Center Plan was adopted in 1993,” said Town Council Chairwoman Katharine Ray.

Updated in 2014, the plan’s goal is “to create an identifiable, vibrant town center that includes mixed retail uses for residents and visitors, a safe and inviting pedestrian and bicycle environment, a common meeting place, visual vitality, and linkages to the town’s open space and nearby residential neighborhoods.”

The town center district consists of 144 acres, or about 1 percent of the town’s total area, where Route 77 passes Town Hall, Cape Elizabeth High School and the Pond Cove Shopping Center.

Property in the town center is currently valued at $11.7 million, O’Meara said. Over the next 20 years, tax revenue collected on increased property value within the district will be diverted to a fund that the town can use for sidewalk and stormwater improvements.

The TIF is expected to generate a projected $758,000 to help fund $2.6 million in projects, according to the TIF application.

Town officials decided to establish the TIF at a time when several town center properties are in transition and likely to increase in value, O’Meara said. While the funds are expected to fall short of projected costs, the TIF funds can be used to seek matching grants or combined with other funding sources, she said.

“Sidewalks are often requested by town residents and the Town Council has to balance needs with minimal increases in taxes,” Ray said. “The TIF creates a way forward to meet resident needs without putting more pressure on property taxes.”

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