LISBON — The Town Council will hold a public hearing tonight on a proposal to create a municipal tax increment financing district for a new business park under construction off Route 196.

TIFs allow a municipality to return a percentage or all additional real and personal tax revenue derived from a new development, or expansion of an existing development, to the benefit of the development.

“It allows the municipality to underwrite a portion of the cost of a project through anticipated future year additional tax revenues generated by the project,” Scott Benson, the town’s economic and community development director, wrote to councilors.

The Kelly Park site, under construction on 49 acres at the former Dragon pit, 175 Lisbon St. would be entirely in the proposed TIF district, due to its “great potential for much-needed significant private sector investment and job creation/retention,” Benson wrote.

The TIF would last 30 years starting in 2013-14, if approved by the state Department of Economic and Community Development.

Premier Development Inc., based in Lisbon Falls, purchased the abandoned gravel pit site along Route 196 to construct a “high-end business park” that could yield as many as eight lots at full buildout.

The meeting starts at 7 p.m. at the town office.