City considering proposal to expand downtown TIF program
City Commissioners indicated their support during their Feb. 2 meeting for expanding the use of tax increment financing funds in the downtown district for certain projects by private developers.
The proposed expansion for the use of downtown TIF funds, which are specifically regulated by state law, was drafted and presented by Kellie Pierce of the Downtown Great Falls Association and Joan Redeen of the Business Improvement District.
[READ: Proposed drafts for an expanded downtown TIF program]
Pierce and Redeen are proposing to allow the use of downtown TIF funds for private commercial development for code compliance, facade improvements and crime prevention through environmental design projects.
Their proposal would set aside up to $500,000 of TIF funds annually that the Downtown Development Partnership would be responsible for reviewing, approving and administering funding for eligible projects.
TIF districts create specific areas of targeted development or urban renewal where a base tax level is set and the tax increment on improvements within the district go into a special fund to be used for public improvements within that district. Great Falls currently has five TIF districts.
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Several commissioners expressed concern with having the DDP administer the program and removing the commission from the approval process as the current proposal would do. In the current process, all downtown TIF applications are reviewed by the DDP, but come to the commissioners for approval.
Since the DDP is a group of stakeholders, Mayor Bob Kelly said, “I just think we need to have some more transparency and accountability and procedure in place.”
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Commissioner Rick Tryon said he didn’t realize the proposal would take the funding approvals out of the commission’s control and said, “I have some real concerns on that.”
He likened the scenario to the city’s former advisory council that reviewed, scored and made recommendations for funding entities with federal Community Development Block Grants. The council was appointed by the commission, but largely made up of people representing the agencies requesting the funds.
Conflict of interest issues in the 2017 CDBG funding cycle led the U.S. Department of Housing and Urban Development to decline funding for Paris Gibson Square after the museum’s director, Tracy Houck, who was also a sitting City Commissioner at the time, penned a letter to the city expressing frustration that her agency didn’t get funding and alleging that a member of the deciding committee had a conflict of interest.
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Further resident complaints about Houck and another commissioner lead to additional HUD investigation and more CDBG funding being pulled from local organizations.
In response, the city dissolved the council, created an ethics committee, ethics policies and overhauled the CDBG funding process.
The DDP differs from the former CDBG council in that it includes representatives from multiple city advisory boards and city staff.
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The membership includes NeighborWorks Great Falls, the Great Falls Development Authority, the Great Falls Business Improvement District, the Downtown Great Falls Association, the City of Great Falls, Great Falls Public Schools, the Great Falls Area Chamber of Commerce, Neighborhood Council 7, the City of Great Falls Parking Advisory Commission and Historic Preservation Advisory Commission, Cascade County, and other downtown advocates.
“I think we need to look more closely at that,” Tryon said of having the DDP make the funding decisions.
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Currently, the proposal does not address whether a project that was approved for tax abatement could be eligible for TIF funding.
Examples of eligible projects in the code compliance category include new elevator installation, ADA compliance and fire suppression. Under the proposal from downtown groups would allow the TIF to provide up to 50 percent matching funds for eligible projects not to exceed $25,000.
Pierce said the Rocky Mountain Building, which was purchased by Alluvion Health with plans to renovate, could benefit from using TIF funds.
“Putting this money into play downtown to help future projects move forward we feel is a really vital use of TIF dollars,” Pierce said.
Pierce and Redeen are proposing a façade program, similar to what BID had in place until Feb. 2020, with the objective of encouraging voluntary repair of existing commercial properties in the downtown core.
That program would also allow matching funds of up to 50 percent, not to exceed $25,000.
It would include window upgrades and installation, masonry and more but all improvements must be permanent in nature to be eligible.
“This would really help and has helped spur development,” Pierce said.
Pierce cited the Mighty Mo Brew Pub, Central Avenue Meats and the upcoming Newberry event center as examples of projects that have improved the look of downtown and spurred other improvements.
The crime prevention through environmental design program would allow matching funds up to $5,000 for items like exterior lighting and security cameras, which must be added to the Great Falls Police Department’s registry if they get the TIF funding.
Pierce said they’re hoping to implement the new TIF programs by July 1, which is the start of the city’s fiscal year, but commissioners had questions and concerns about some aspects of the funding process and staff and outside bond counsel still want to make some edits.
As proposed, the program would have funding limits of $500,000 annually and each parcel would be limited to a total of $80,000 over 15 years of any combination of the categories of TIF funding.
Under the current proposal, the Downtown Development Partnership would administer the program and have autonomy over the $500,000 to review and award funds.
Currently, the DDP reviews and makes recommendations to the City Commission for TIF requests in the downtown, but all projects require commission approval. Staff would provide assistance under the current proposal.
“We recognize it’s going to take a tremendous amount of work to administer these grants,” said Craig Raymond, city planning director. His department currently administers the downtown TIF program.
There was discussion, Raymond told commissioners, that for his office to administer the new TIF programs, they’d likely need to expand their responsibilities and add staff.
“This is a great opportunity to get DDP more intimately involved in some of these activities,” Raymond said.
He said that staff would continue to have safeguards in place and monitor the program to ensure the projects are vetted properly and meet the requirements of using prevailing wages and competitive bidding, among other requirements for projects that use public funds.
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Raymond said that based on the recent financial reports, the downtown TIF will have a minimum of $800,00 annually after the city makes it’s debt service payments on the Civic Center repair project, leaving “a substantial amount of money available.”
City and other publicly owned buildings would not be eligible for TIF funding in these new programs, but would continue to be eligible to request funding through the normal TIF process currently in place.
Raymond said that the city’s outside bond counsel endorses the proposed programs, with some edits.
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Redeen said their proposed programs were largely modeled after programs in other Montana cities, including Billings and Missoula.
Tryon asked how the DDP would decide who gets approval if there are more requests than available funding.
Redeen said it’s an application process and for now it would be a first come first served basis for eligible projects that go through the required steps.
Tryon said some of the downtown businesses might have competitors in other areas of town that won’t be eligible for TIF funding and might ask why their competitors should get taxpayer money to improve and give them an unfair advantage. He said he hopes staff is thinking of that as he anticipates it will come up.
Raymond said that the TIF districts are all created with specific goals in mind and the downtown TIF is an urban renewal district designed to promote revitalization of the downtown core. He said that if businesses take risk in that area, it’s reasonable to support them through available public programs.
Commissioner Mary Moe said that the TIF programs are needed, but is concerned about the administration of the funds since they don’t want to endanger that source of funding and that the further it gets from city staff, the less accountability there could be for those funds.
Raymond said that some communities, specifically Missoula, created redevelopment agencies, which would be another layer of city employees.
It’s something Great Falls could do, but Raymond said staff doesn’t believe that’s necessary yet.
The city planning department administers about $1 million annually in federal CDBG and HOME grant funds and that requires 2.5 employees, Raymond said.
So for city staff to administer the expanded TIF programs would require additional staff positions, and they looked at other options and came up with having the DDP administer the program.
Raymond told commissioners they’d look for options for more staff oversight within the current proposal, “but we’re pretty stretched thin.”
Kelly said that staff should move forward with developing the new TIF programs but there’s a concern to ensure adequate public input and the proposal needs some fine tuning.
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