City officials finish discussion of new TIF district, take no action

City Commissioners continued their discussion of a potential tax increment financing district around the former Dick’s RV Park area during their March 7 work session.

Craig Development had proposed a 513-unit apartment complex on the RV park site, but pulled their request for a rezone in February.

The developer had also submitted a $24 million reimbursement request from a TIF district that didn’t exist, prompting the commission discussion about creating a TIF district in that area.

City continuing discussion of new TIF district

In late February, the commission started the discussion with staff, but didn’t have enough time during that meeting to finish the presentation.

The proposed district would be an urban renewal district, which is specific to blight, “as opposed to merely capitalizing on opportunity,” Craig Raymond, the former planning director, whose last day was March 7.

Raymond told commissioners in February that blight has specific definitions in the law and that there’s a difference between eliminating blight and redeveloping a property to a higher and better use.

Raymond mentioned a newspaper article that raised issues of blight in the area due to homelessness and a trailer with an eclectic mix of stuff outside, both of which would be resolved by the property owner and “doesn’t require a $24 million expenditure of taxpayer funds to remedy those issues.”

TIF districts and eligible expenses are set by state law and the city has developed specific programs for each of its TIF districts based on their focus.

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Raymond said that this request is different from the other areas of urban renewal district, which are downtown and West Bank, and that other projects have been successful without a TIF district.

In a TIF district, the city sets a base level when it’s created and the taxes on the improvements above that level go back into the district for public improvements. Those funds do not go into the general fund, which supports public safety and other city operations.

Tom Micuda, now the interim planning director, told commissioners in February that it was important to understand what revenue TIF districts have been generating and their impact to the general fund budgets.

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In fiscal year 2022, which ended June 30, 2022, there was about $4.6 million generated in TIF districts that was not available to the general fund.

For comparison, the police request in the proposed public safety levy is about $4.5 million.

Micuda said the city would have to follow a specific process under state law to create the district and it would have to determine that the area is blighted.

Staff has said that they don’t believe the area meets the definition of blight and that part of the area is within the county jurisdiction.

The proposed area is about 69 acres and smaller than the downtown and West Bank TIF districts.

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The RV park is about 23 percent of the proposed area and is a “single-user request versus an area with true blight that needs to be addressed,” according to staff.

Micuda said in March that there are four parcels within the proposed district that make up 54 percent of the district, most of which increased in value over the last five years.

He said that normally, they’d look for decline or at least a flattening, to determine blight.

Micuda said that much of the area is in the city limits and has utilities, but some of the streets are more on the rural side. He said there was newer construction in the area with the Terracon office, which demonstrates investment in the area.

The area also includes the River’s Edge Mobile Home Park, which Micuda said is on the better end of what he’s see in town during his years working in Great Falls.

Because the area is split between city and county jurisdiction, which affects the way the area looks, Micuda said, since the regulations are different.

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The area is also isolated with hard edges at the interstate and the river, he said.

The city planning department supports redevelopment of the area, but Micuda told commissioners that a consideration in creating a TIF district is whether it only benefits the developer and not the larger area.

Micuda said that for context, the downtown and West Bank TIFs have generated about $11 million over their lifetimes.

The West Bank TIF was created in 2007 and the downtown TIF in 2012.

“This is a really large request,” Micuda said of the reimbursement request from Craig Development, from a district not yet created.

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Micuda said there had been a slight change in state law to use workforce housing as a consideration in TIF districts, but those definitions are vague and that the developer has indicated it’s a higher end apartment project.

If the commission wanted to pursue an urban renewal TIF district, the city would have to conduct a study and determine blight and follow a public process outlined in state law.

Micuda said the commission has to make the determination of blight, whether staff or a consultant conducts the blight study.

Micuda said that city staff does not recommend the TIF district in that area for several reasons, including that it’s driven by a single project.

Commissioner Rick Tryon asked if the developer was saying they wouldn’t do the project unless the city gave them $24 million.

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Micuda said that the developer had indicated the project wouldn’t work without TIF funding. He said they didn’t specific the amounts, just that TIF funding was needed to make the project viable.

Micuda said the developer had mentioned getting TIF funding in other places, such as North Dakota, but Micuda said staff had explained the rules under state law are different in Montana. He said that staff has indicated to the developer that most of the items they indicated in their application weren’t eligible for TIF reimbursement.

Micuda said that developer and property owner pulled the zoning request from commission consideration. He said that they indicated wanting to see the commission reaction to TIF discussion before determining next steps.

Micuda said the developer hasn’t indicated any alternatives for the project but another developer has inquired about the property for a different project.

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Raymond, the former planning director, said that the Craig Development proposal represented 23 percent of the proposed district and had requested $24 million in reimbursement from a non-existent district.

Raymond said staff didn’t think the district would generate $24 million over its lifetime and the city can’t bond against the district until they can prove it will generate increment.

“They’re asking for over 100 percent of the money,” Raymond said.

He said single family projects in the area wouldn’t benefit from the district. He said staff can see the need for roadway and pedestrian improvements, but there wouldn’t be any funds to make those public improvements if they gave the developer $24 million.

“In essence, it’s a single user TIF district”  and the city doesn’t do that, Raymond said, and they aren’t seeing other beneficial uses, “because they’re wanting a promise of $24 million that will probably never be generated.”

City Commissioner Eric Hinebauch said that he thinks the area would be great for TIF and redevelopment.

Mayor Bob Kelly said that it’s a complicated process and they don’t want to scare away development.

He said he’s spoken with other developers who told him that they always tell a community they need assistance to make a project work as a tactic.

The “nuances of TIF in different states is really lost on the laymen,” Kelly said.

He said he was concerned with setting a precedent in this case and that commissioners just approved a zoning change on the east side for an apartment complex with no public financial support.

Kelly said another developer told him that if the TIF district was approved for the former Dick’s RV Park area, they’d also come request a TIF district for their projects.

He said the “pie in the sky” request for $24 million “doesn’t work for me. I don’t want a blight study, I don’t think it’s worth the cost at this point.”

Kelly said that the developer’s request for TIF reimbursement was “inappropriate.”

Kelly said that it would be great to see development in that areas, but “I think market forces can take care of that and I don’t think they need a $24 million handout.”

Commissioners didn’t take action on the proposal and the general consensus was not to pursue a TIF district in that area at this time.