City approves TIF funds for KellerGeist remodel

City Commissioners voted 4-1 during their Aug. 1 meeting to approve a request for up to $263,500 in downtown tax increment financing funds for the KellerGeist Pub Theater project.

The KellerGeist owners are planning to remodel the building at 111 Central Ave., originally know as Albercht Furniture and dates to 1887.

The remodel includes extensive façade work including window replacement, wall repair, front awning repair and concrete repair. The project also includes adding a fire suppression system, ADA compliant bathrooms, installation of security cameras, outdoor lighting and replacement of the rear security door.

City to consider TIF request for KellerGeist project

The owners, Matthias and Jolene Schalper are planning about $1.4 million of total improvements to the property to create a music and theater venue, in addition to the existing bar space. They estimate that once completed the project will bring about 20,000 people to downtown annually.

The Schalpers applied for TIF funding through the commission since the total amount requested exceeds the $130,000 cap through the downtown TIF programs that are reviewed and approved by staff. The rear door replacement and concrete repair aren’t currently eligible through the existing environmental safety program, but staff views the improvements as appropriate for TIF funding, and are eligible under the broader TIF program.

The project is expected to begin this fall and completed by Christmas.

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Staff recommended approval of the request.

Commissioner Rick Tryon voted against the request.

He asked staff what’s the public benefit of the project.

Lonnie Hill, a city planner, said that the intent of the downtown TIF programs are to leverage those TIF dollars for private development in the downtown district to benefit the district as a whole.

He said that the city’s growth policy and downtown plans specifically call out theater and event venues as destination spaces that “create a catalyst effect for the district as a whole.”

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“We really want to see public dollars going into historic buildings to benefit the district,” Hill told commissioners.

Tax increment financing districts are established by the commission, under state law, with specific purpose and boundaries. They set a base tax level and increased property tax revenue on increases above the base go into the district’s fund to be used for public improvements within the district.

In 2021, the Business Improvement District and Great Falls Development Authority worked with city staff and the city’s outside legal counsel to develop three distinct improvement programs within the downtown TIF district that private developers could apply for. Those programs include life safety/code compliance, environmental safety and facades.

When commissioners adopted those programs, they set funding caps within the programs and an overall $500,000 cap for all three programs annually. Anything above the program limits could come before the commission for consideration at their discretion.

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When a project is approved for TIF funding, the work must first be completed and a property owner then submits the invoices or receipts to the city for review for reimbursement.

Commissioners discussed why the KellerGeist project was recommended for approval when staff recommended denial of a similar request in January.

Commissioner Eric Hinebauch asked when the funding limit was set and if there had been discussion of reevaluating the limits.

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At the time of the January request for $68,650 toward fire suppression for the Metropolitan building at 313-315 Central Ave., city staff were operating under specific program rules that had been set by the commission.

At that time, staff determined that the Metropolitan request wasn’t eligible under those commission set rules and recommended denial as a result.

In January, commissioners voted to approve the request and asked staff to review the rules.

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In April, commissioners approved a change to the program related to fire suppression and increased the limit under the life safety/code compliance program.

Mayor Bob Kelly said that staff was operating in January under the commission’s program rules that had since been adjusted so that’s why staff was making a different recommendation for the KellerGeist project.

Brett Doney of the Great Falls Development Alliance said that staff does a good job of determining what projects are eligible for TIF funding and that the city was commended during the last legislative session for how well staff determines eligibility.

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He said that how much of TIF dollars allocated to the downtown programs and available to support private development is up to commissioners, but that the programs are about leveraging private development.

Doney said costs are higher in Great Falls as “we are still an emerging market” and that construction costs outpace the revenue property owners can generate from a property, meaning tools like TIF help developers make projects work.

“Renovating these old buildings is a real challenge,” he said. “This is an exciting project, I think it will spur that block.”

Doney said that the KellerGeist owners were asking for $263,000 and investing more than $1 million themselves.

Commissioner Joe McKenney said that tools like TIF were helping downtown development and that multiple downtown business owners used some TIF funds to get started or make improvements.

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Buildings that have already been improved under the downtown TIF programs include the Sip ‘N Dip/O’Haire Inn; Columbia Grain building at 120 1st Ave. N; Honey Hippo at 325 1st Ave. N.; The Newberry and The Wild Hare, Metropolitan building and now KellerGeist.

Commissioner Rick Tryon said, “the TIF fund is not a slush fund or private developers.”

He said he supported the funds for the fire suppression system but didn’t want to approve funds over the existing program cap.

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Tryon said since the staff recommendation was different for the Metropolitan building in January than for KellerGeist in August sent a message of favoritism.

Commissioners directed staff to make changes to the program after approving the Metropolitan project and in April, commissioners changed the rules.

Tryon said that TIF isn’t “to increase value of private property” but improve public infrastructure.

The TIF funds are the tax revenue generated by improvements and increased property values of properties within the downtown district.

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The city has used millions of those funds for stormwater improvements downtown and the Civic Center façade project.

“I just don’t see a sufficient objective, a public benefit, associated with this project,” Tryon said. “I cannot support this.”

Fire suppression is listed as costing $150,000 in the KellerGeist TIF application, which is $20,000 above the current program limit that was increased in April.

No commissioners suggested adjusting the amount of TIF funds being approved for the KellerGeist project.

In January, while approving the Metropolitan building request that was outside the program parameters at the time, Tryon said if others were worried about getting higher requests for fire suppression, “I hope we get lots of other requests for renovating downtown. It’s not something I would be afraid of.”

He said that if a developer were to come to commissioners with a higher request for fire suppression, “I say bring it on,” and they’d consider each request on its merits.

Mayor Bob Kelly said consistency is an issue they deal with but that with the adopted TIF programs, commissioners gave themselves some flexibility.

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He said the programs aren’t being tapped as they expected and hopes more applications are submitted.

Kelly said he was convinced the KellerGeist project was within the parameters they’d set for the downtown TIF funds.