ST. ALBANS — St. Albans City will receive $2.5 million for the Brickyard Tavern property on Federal Street and 170 spaces within the planned city parking garage.

The sale price is part of a development agreement approved unanimously by the St. Albans City Council Monday night. The agreement between the city, the State of Vermont, and ReArch Company, the developer of the new state office building, lays out a timeline for the remaining elements of the project and the obligations of each party.

The overall plan is for the state to sell its existing office building on Houghton Street to Mylan Technologies, Inc. According to David White of White + Burke Real Estate, who is assisting the city with the project, the sale will give Mylan room for additional expansion.

The state will relocate its operations in St. Albans to a new building on Federal Street. Parking for the building will be in a new garage located on the core parking lot directly behind the state office building.

The city is scheduled to complete its purchase of the Rail City Salon building on Lake Street for $286,000 on Sept. 17. The Design Advisory Board approved demolition of the building to make way for the new garage on Monday night. The Development Review Board must still give final site approval to the project. It meets on Aug. 12.

Some of the deadlines listed in the agreement are fast approaching.

The city and ReArch must reach an agreement for the sale of the former Brickyard Tavern site to ReArch by July 1. That sale will include the purchase of 170 spots in the parking garage. Once the garage is complete ReArch will pay a monthly fee to the city for its share of the garage maintenance.

The state must have a purchase and sale agreement with Mylan for the sale of the Houghton Street building by Aug. 15.

Also by the same date, the state must sign a lease agreement with ReArch and the city must have a contract with its construction manager for the parking garage.

The city must also hold a tax increment financing (TIF) vote by Sept. 10 to fund the construction of the new garage.

Total cost for the garage, site work, demolition, and environmental cleanup is estimated at $10 million, according to city manager Dominic Cloud.

“Engineers, architects, and estimators are hard at work finalizing the number in the coming weeks,” said Cloud in an e-mail response to Messenger questions.

The garage is one of the projects the city intends to construct with TIF funds. With TIF funding the bond payments on public infrastructure projects intended to support new economic development may be paid with a share of the increased property tax revenue from the new development, including a portion of the revenues that would have gone to the state education fund.

This project will return the state office building on Houghton Street to the city’s tax rolls. For the next 20 years, 75 percent of the property tax revenue from that building, which is valued at $5.4 million, can be used to pay for public infrastructure. The same is true of the new state office building, which will be privately owned. White has estimated the tax revenues just from the new building at $150,000 annually.

The lease between the state and ReArch will allow the state to purchase the new Federal Street building after 10 years. However, under the agreement signed Monday, the state must first negotiate with the city to insure that the city will not suffer from lost TIF income.

The sale of the state office building to Mylan will involve changes to Houghton Street. “The portion of Houghton Street immediately in front of the State Office building will be reconfigured in order to allow Mylan to connect their two properties,” said Cloud. “The city has commenced conversations with adjacent properties and is working with all the property owners to finalize the plans. All of the plans under consideration call for construction of a pedestrian walkway between Immigration and Lake Street using the West side of the parcels.”

Mylan manufactures transdermal generic drug patches.