City using TIF funds for Civic Center repair; downtown groups ask to use the fund for private development
The city is continuing plans to use tax increment financing funds to help pay for an estimated $5.5 million Civic Center facade repair.
During the Aug. 4 City Commission work session, city staff walked commissioners through the minor amendment that is needed in the Urban Renewal Plan for the downtown TIF district and the timeline for issuing bonds and requesting construction bids for the project.
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Next week, the city planning board will consider an amendment to the Urban Renewal Plan to include the Civic Center as a specific project. The plan has not been updated since 2012 and specifically identifies the Rocky Mountain Building as needing preservation and rehabilitation.
[READ: Montana law regarding what TIF funds can be used for]
Tax increment financing districts are designated areas of the city where the base taxes on properties go into the general fund, but the tax revenue generated by improvements to properties in the district go into a fund that is used to fund public improvements in the district with the idea of spurring development.
When a district expires, those funds go back into the general fund. If the district wasn’t in place, those funds would be in the general fund.
Using the TIF funds to finance the bond would allow the city to use existing funds versus sending the project to the ballot and asking voters to approve a bond, effectively raising taxes on themselves for 20 years.
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According to Melissa Kinzler, city finance director, the bond would be an estimated $5.5 million to $6 million for 20 years at 4 percent, which equates to annual debt service payments of $405,000 to $440,000.
The revenue collections for the fiscal year that ended June 30 was $1.2 million and the district is projected to generate $1.2 million to $1.3 million during this fiscal year, according to city officials.
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Some downtown TIF funds have already been committed to the wayfinding project, city parking system improvements and operational costs for the Downtown Development Partnership, leaving an estimated $700,000 available annually for downtown developers to request.
Some downtown property owners and agencies, including the DDP, Downtown Great Falls Association, Business Improvement District and the Great Falls Development Authority has asked the city to consider changing the downtown urban renewal plan to allow for fire suppression and ADA improvements to private properties.
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Currently, one downtown property owner has submitted a request for $84,065 in TIF funds for sidewalk improvements and fire suppression at 313 Central.
City staff has indicated that making such a change to the downtown TIF program will require an overhaul of the downtown urban renewal plan and further research to ensure the legality of using TIF funds for private development. Staff will explore the options if City Commissioners direct them to do so, but as the Aug. 4 work session, that had not happened, said Craig Raymond, city planning director.
Downtown groups have said other cities in Montana have done so, but city staff and the city’s bond counsel have said that those projects haven’t yet been challenged legally and expressed caution since the Legislature has taken aim at the TIF program in recent years. Those other communities have also established separate agencies that handle TIF applications and decision making for funding up to certain dollar amounts, according to Craig Raymond, city planning director. Anything over that dollar amount goes to their city commissions, he said.
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Raymond said the city has been very conservative in its approach to TIF and has sent representatives to Helena to testify in an attempt to preserve their ability to use TIF. The law, Raymond said, is pretty specific about using TIF funds for public infrastructure and publicly owned facilities.
“There are certain elements in the Legislature that are not happy with how some communities handle TIF,” Raymond said.
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Mayor Bob Kelly said he’s not against using TIF for the things private developers are asking, but “we really are under the microscope when it comes to TIF funds.”
He suggested asking other communities on what feedback their hearing from lawmakers and the public. Raymond said staff has already started those preliminary discussions.
Kelly said there has been “absolute animosity toward TIfs” from some key lawmakers, but “I do think we need to explore it.”
Brett Doney of GFDA said they support the renovation of the Civic Center, but asked asked the city to consider building flexibility into the plan.
Tom Jacobson, a local legislator and downtown business owner, said “Great Falls has been held out as one of the best TIF communities that has done this right.”
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He said he believes using the funds to help developers meet public safety codes would be in line with state law and help build the downtown.
If there’s concern about putting public money into private development he said the city could create provisions that require a property owner to pay the money back if they sell the building within five years, or something along those lines.
