MISSOULA - The Missoula Redevelopment Agency (MRA) is sounding the alarm over a Senate Bill in Helena that drastically limits the use of Tax Increment Financing (TIF).
MRA director Ellen Buchanan says TIF is the only economic development tool available to local governments and if this bill passes, it will be disastrous to communities across the state.
There are a lot of moving parts here, but we wanted to concentrate on housing.
Buchanan says if the proposed bill passes, it could slow down or even stop the development of workforce housing projects, which is housing that is affordable to a middle-income worker and something Missoula desperately needs.
“So, we finally have the ability to invest in the bricks and motor -- and like I said, we’re trying to find the most effective way to that and get as many housing units as we can. One of the graphics that we put together clearly shows that if this bill goes into effect, there are almost a thousand units on the drawing board today that are going to be dependent on tax increment that will no longer be viable, “Buchanan explained. “They will likely not happen or happen at a greatly reduced rate, or they’ll be [building] an apartment building that’s not income qualified.”
Buchanan says the bill could also put an end to any development on the Riverfront Triangle along the Clark Fork River in downtown Missoula.
"Tax increment financing has been in use in Missoula since the late 70s. What you see downtown is a direct result of investment in tax increment dollars. When this agency was created, downtown was pretty much a ghost town. This was the late 70s, the mall had come into play. There were empty storefronts, the alleys were still dirt. And over the course of that...we invested more than $20 million of TIF funds into the downtown and we leveraged over $200 million in other investments in the downtown. That's how the trail system got built, that's how Caras Park got built. That's how new buildings were able to be built in the district because we were able to provide infrastructure money. We don't have any money in those private buildings. That's against the law as it stands right now. - Missoula Redevelopment Agency Director Ellen Buchanan
The bill is sponsored by Republican Senator Greg Hertz of Polson. He stated In an email to MTN News that “what appears to me and others is inappropriate spending of TIF money. It has been within the law but not always in the best interest, in my opinion, of the local taxpayers.”
Hertz believes, in part, TIF should be used to invest in workforce housing and not what he calls ‘horizontal infrastructure”-- meaning buildings.
“The changes to TIF laws I am proposing will result in possibly reducing the TIF increment up to 50% and in many cases, less. He says the remaining money should be used to benefit taxpayers in general and not select private business owners,” Hertz stated.
Read Sen. Greg Hertz’s full email to MTN News below.
"What I have learned over the years from people across the state, including members of local governments, was what appears to me and others is inappropriate spending of TIF money. It has been within the law but not always in the best interest, in my opinion, of the local taxpayers.
TIF funds should have been focused on what I would call horizontal infrastructure, such as roads, water and sewer line extensions, sidewalk improvements, etc. Things that benefit the public in general. It should not have been spent on vertical infrastructure owned by private companies such as subsidizing banks, malls, hotels, etc. In Missoula there has been investments in private buildings where the owner has then turned around and sold the property getting the benefits of receiving taxpayer monies and then putting the proceeds into their pockets on the sale.
If TIFs wanted to invest in buildings it would have been wiser to invest in workforce housing with their TIF funds, something that would indirectly benefit business owners and taxpayers. I do see some local govs changing their focus.
Under current law TIFs seem to last for well beyond their intended purpose. It is time to end them and return the additional taxes from the improved area and help reduce taxes in the local taxing jurisdiction to help reduce property taxes.
The changes to TIF laws I am proposing will result in possibly reducing the TIF increment up to 50% and in many cases less, so the changes will still leave monies in TIFs but the remaining monies need to be focused on improvements that benefits taxpayers in general and not selected private business owners."
There is a public hearing Monday before the Montana House Taxation Committee in Helena about Senate Bill 523 and people are welcome to comment on the measure.
Click here to learn more about Tax Increment Financing from the MRA. A map showing what projects the MRA has helped produce can be viewed here.
