Missoula Redevelopment Agency sends $5.3M in TIF to city, county, schools, bus system
The Missoula Redevelopment Agency is sending more than $5.3 million in Tax Increment Financing as a remittance to local taxing jurisdictions. The money will be split up between the city, the county, the state, the Missoula Urban Transportation District (which runs the fare-free Mountain Line bus system) and local school districts.
The funding comes from a few of the city's Urban Renewal Districts, where the property tax revenue from new development (since the time each district was formed) is controlled by the MRA rather than going through the city's general fund.
The mayor and the Missoula City Council, when they approved a budget for fiscal year 2025, requested a one-time transfer from the MRA to the city general fund of $877,702 for public safety, including helping the police and fire departments. Then, the city also requested a remittance from the MRA of $1,363,500 to cover a revenue shortfall.
And so, under state law, if the MRA sends a remittance to the city, it also has to send remittances to all other taxing jurisdictions in the city. That's why the total remittance is in excess of $5.3 million.
"The city gets about 26 cents on the dollar because it has to go proportionally to all the taxing jurisdictions," said MRA director Ellen Buchanan.
The Missoula Urban Transportation District will get $368,000, while Missoula County will get $1,164,194. High schools in Missoula County will get over $442,000, and other schools in the county will split over $630,000. Missoula Elementary School District No. 1 will get just over $1 million, while Hellgate School District will get a little over $15,000. The state will get about $272,000.
The money held in each of the Urban Renewal Districts is usually used to finance the public portion of projects that benefit the public. Often, it is used to help public infrastructure costs around private development projects, which in turn spur more property tax revenue and perhaps incentivize other nearby investment and redevelopment. The MRA has also used TIF to help with affordable housing projects.
Buchanan said that the MRA decided to take quite a bit of money from URD III (which covers a huge swath of town around Southgate Mall) but leave all the money intact inside the Riverfront Triangle Urban Renewal District. That property, next to the river in downtown Missoula just northwest of the Orange Street Bridge, has sat vacant for years but is a prime piece of property available for redevelopment. The city owns a portion of the land, and hopes to use TIF to build infrastructure in order to encourage a developer or multiple developers to build a big project there that benefits the community.
"Riverfront Triangle, we are working actively with a developer to try to arrive at terms around a development agreement," Buchanan explained. "And we know that we need everything that's in that district to build the infrastructure that is necessary, that meets the city's goals in terms of how we want to see that property utilized. So we've left that (district) alone."
She said the North Reserve/Scott Street URD was also left alone because there is "active interest" from developers interested in projects there.
She said the MRA is leaving over $2 million in districts where there's "development potential."
At an Oct. 31 meeting, the MRA's board unanimously approved the remittance.
Buchanan and members of the board expressed frustration that the money can't be used as its intended, to incentivize development or build workforce housing. But, they noted, they're glad that Tax Increment Financing exists in Missoula as a tool to help cover city budget shortfalls and help other jurisdictions.
Buchanan said all the districts are healthy because there's been significant growth in taxable values.
"Staff recognizes that the budget issues facing the taxing jurisdictions in Missoula are not unique and are a product of a property tax system that simply cannot meet the needs of Montana communities," Buchanan told the board. "This is a statewide issue that cannot be fixed at the local level and TIF remittances are a band aid at best and one that is not sustainable. A major concern that is and will continue to be a problem is our housing shortage, both locally and across the state. We expressed this concern when we were addressing the TIF remittance last year and our concerns have been proven to be accurate."
She said that remittances impede the ability of the MRA to help finance affordable housing projects.
Board chair Karl Englund noted that the MRA has remitted a total of about $20.5 million since fiscal year 2019, of which the city got about $6.7 million.
"I get it," he said. "We're a part of the city and the city needs the money and that's the way it works. It's quite a contribution we've been able to make."
Buchanan said that "running government on the backs of Urban Renewal Districts" is not sustainable.
Missoula mayor Andrea Davis and Missoula city council member Mike Nugent both expressed gratitude that there is sufficient funds in the Urban Renewal Districts to cover the shortfall.
David Erickson is the business reporter for the Missoulian.
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