City commissioners will consider approving about $500,000 worth of incentives to spur a project that is being touted as a boon to both the arts scene and East Lawrence.

Commissioners at their weekly meeting will be asked to approve a special type of property tax rebate to facilitate the renovation of the late-1800s-era Ciderworks Building, 812 Pa., that is envisioned as a centerpiece for a new arts district.

“I think we have a chance to create a zone near downtown to help grow the arts movement, provide artists another place to exhibit their works and really provide another reason for people to come visit Lawrence,” City Commissioner Mike Dever said.

But first it will require some financial incentives. Area developer Tony Krsnich is seeking to use the Neighborhood Revitalization Act, which will allow the project to receive a 10-year rebate on 95 percent of the new property taxes generated from the renovated building. In total, the city is estimating the value of the incentive to be about $500,000 over a 10-year period.

In return, city leaders are hoping to get a building that will provide a boost to efforts to promote arts-based tourism in the community. Plans call for the ground floor of the building to be converted into a 7,000-square-foot arts gallery that could also function as event space. The project also would include a 7,000-square-foot outdoor plaza area that would be designed for art events.

“We’re consulting with artists and architects about how to make this a first-class gallery,” said Krsnich, who also is completing a renovation of the nearby Poehler Grocery Warehouse Building into affordable apartments. “We think it will be the type of arts space that you don’t see often in the Midwest.”

The second floor would be converted into small-scale offices.

But Krsnich said the project isn’t feasible without the property tax rebates. He said the old building, which originally was an apple cider factory, had become badly deteriorated. The $1.6 million project will involve replacing the roof, windows and many of the structural support beams.

Krsnich thinks the project will help maintain momentum for an East Lawrence revival that started with the Poehler renovation, which has converted a once-vacant four-story warehouse into about 50 rent-controlled apartment units. Krsnich said the Poehler project, which will be completed by July 1, has been so successful it now has a waiting list for its apartments. Krsnich said he now is studying plans to build a new affordable apartment building very near the Poehler site. His investment group recently has bought just under one acre of ground west of Pennsylvania Street and just south of Eighth Street — in other words, right across the street from the Ciderworks Building. He said he also is evaluating other sites in the area.

“I think the Cider building will have the same catalytic effect on the area that the Poehler building did,”Krsnich said.

City commissioners, though, will have to figure out at what cost. An analysis completed by the city’s economic development planner found the 10-year property tax rebate met the city’s cost/benefit standards, but the report noted the numbers were tight. The report found the 10-year property tax rebate would create $1.29 in benefits for every $1 worth of taxes rebated. The city sets the minimum payback required to consider a project at $1.25 per $1.

The report also found the project likely would not be feasible without the incentive. The report estimated the project would produce only an average rate of return of 1.15 percent over a 10-year period, if it didn’t receive the requested incentives. With the incentives, the report estimates the project would experience an average rate of return of about 21 percent over a 10-year period.

Krsnich also has asked the city to consider improving Pennsylvania Street. Costs estimates for that project haven’t been developed, and Dever said he thought such improvements likely would need to be a longer range project. But he said he expects the city will be open to future investments in the area.

“I think a lot of people see this area as a way we can set ourself apart from other communities,” Dever said.