HAMPDEN — Construction currently underway near Route 202 will expand the town’s commercial tax base — and demonstrate that municipal officials “are business friendly,” said Hampden Economic Development Director Dean Bennett.

At 29 Carey Circle in the Hampden Business Park, J.M. Brown General Contractor Inc. is building a 75-by-110-foot steel building, described by Code Enforcement Officer Benjamin Johnson as a “packaged, pre-engineered steel building.”

Central Maine Diesel will base inside the building an “assembly operation for generators with fuel-source conversion kits,” Johnson said. “It’s a wholesale operation. It’s not a retail facility.”

About a half mile to the east, town officials recently helped another Hampden-based business expand. The effort marked “a first” for Hampden, according to Bennett.

“Historically Hampden has focused on business attraction,” he said. Citing Dunkin Donuts and Katahdin Trust as examples, he pointed out that “we’ve had quite a success over the last three or four years in having new businesses come in.”

In a recent survey, responding Hampden business owners “expressed their desire [that] we focus [also] on business retention, Bennett said.

The opportunity soon arose.

Representing Dennis Paper & Food Service, Ron Dennis met with Bennett “a year ago” and discussed “his business plan for the next 10-20 years,” Bennett said. Dennis envisioned “a considerable expansion” at his company’s current site or elsewhere.

Dennis Paper & Food Services had relocated to a 55,000-square-foot facility at 101 Mecaw Road in December 2005. Ron Dennis inquired “if there was something the town could do to encourage him to stay and invest in Hampden,” Bennett said.

“I viewed this as a great opportunity,” he said. “This was the first example of a local business [owner] coming to us and sharing his needs. The town could demonstrate that we are responsive to our existing businesses.”

Dennis met with other local officials, including Town Manager Susan Lessard. Appearing before the Hampden Town Council’s Planning and Development Committee, he asked if committee members would consider “a proposal containing some economic incentives,” Bennett recalled.

The proposal involved creating a tax-increment financing district, called a TIF and described by Bennett as “a tool by which the community can shelter taxes and dedicate them to economic-development initiatives.”

The proposal also featured a credit-enhancement agreement that would refund to Dennis Paper & Food Services “for a limited period of time … a portion of the property taxes [paid] on the new addition,” Bennett said.

Earlier this year, Massachusetts-based Food Tech LLC started building an approximately 16,400-square-foot addition at Dennis Paper & Food Services. The estimated cost of the addition, which will include freezer storage space, “is approximately $3.5 million,” Bennett said.

Hampden town councilors approved creating a TIF district at the Dennis Paper site and approved the credit-enhancement agreement. Under the terms, 77 percent of the taxes generated by the new addition will be refunded to Dennis Paper & Food Services “for five consecutive years and 50 percent for the following five years, then the TIF and the credit-enhancement agreement would end,” Bennett said.

State officials must review and approve both agreements; Bennett will soon submit the requisite paperwork, and state officials will schedule a public hearing in Hampden.

“Here is a perfect example of the council’s willingness to support our existing businesses and enhance their prosperity,” Bennett said.