City approves TIF funds for downtown apartment rehabilitation
City Commissioners approved a tax increment financing request during their May 21 meeting for a downtown apartment rehabilitation project.
The funds will go toward the renovation of the 60-unit Elmore Roberts Apartments at the corner of Central Avenue and 6th Street.
The developers, Elmore Roberts Community Partners, has purchased the building and requested $430,000 in downtown TIF funds.
They’d presented the request during the April 24 Downtown Development Partnership, during which that group voted to recommend approval.
Developer requesting TIF funds for downtown apartment rehabilitation
Tax increment financing districts are established by the City 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.
The city currently has five TIF districts, including the Downtown Urban Renewal District.
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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 façades.
The total project cost is an estimated $5,681,620, according to the developer’s application.
The firm is partnering with NeighborWorks Great Falls on the project.
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The firm is planning an extensive rehabilitation of the building, which has 60 units, with energy efficiency and safety upgrades. The building has commercial units on the ground floor.
Ryan Kucich, of the development firm, said during the April 24 DDP meeting that current residents will be moved into hotel rooms for about three days for crews to do the bulk of the work to units, including new appliances and finishes.
He said the developer would cover the hotel and moving costs for residents, as well as a stipend for the days they are displaced.
Once residents move back into their units, they’ll continue paying 30 percent of their income in rent, as they do currently.
The developers are planning to also use federal low income housing tax credits, federal historic tax credits, Montana Healthcare Foundation loan and Coal Trust Funds to finance the project.
The developers requested the TIF funds for eligible portions of the project to cover a gap in their financing, Deputy City Planning Director Lonnie Hill told commissioners during the May 21 meeting.
In October, the Montana Board of Housing of the Montana Department of Commerce, awarded federal housing tax credits to the Elmore Roberts project.
Federal housing tax credits flow through the state agency and fund the construction or rehabilitation of nearly 160 homes, on average, annually.
Low-income housing tax credits are federal tax credits that service as a primary financing source for rent and income restricted housing. The Montana Board of Housing administers the tax credit program in the state.
Commissioner Rick Tryon asked if the owners were a nonprofit and whether they’d pay property taxes.
Kucich said during the April 24 DDP meeting that since they’re requesting TIF funds, they won’t be asking for a tax abatement and will pay full property taxes for the building.
Commissioner Joe McKenney asked about the timeline for how long the units would remain affordable versus going to market rate.
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Kucich said during a July 2023 commission meeting that the project would keep the current income levels for the apartments in place for another 50 years. That same information is included in their application for TIF funds.
Two full-time jobs exist with the current apartment building and the developer said in their TIF application that the project will add another permanent full-time job and an estimated 66 construction jobs.
The developer is planning to begin construction this summer to be completed by December.
The Elmore Roberts is an affordable housing community serving 60 households at an area median income of 50 percent or less.
Of the existing units, three are currently ADA and another three units will be turned into ADA during the rehabilitation, according to the developer’s TIF application.
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The property also has seven ground level commercial spaces.
The property currently uses two mod-rehab contracts that are set to expire this year and the the developer plans to acquire and renovate the building to preserve that affordability, by converting those contracts to a new 20-year housing assistance contract through the U.S. Department of Housing and Urban Development.
The combination of financing and subsidy will provide affordability for the next 50 years, according to the developer.
The current federal subsidy programs that keep the building as affordable housing are set to expire and the apartments are at risk of becoming market rate, which would force relocation for many current residents, Kucich told commissioners last summer.
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The proposed renovation includes Energy Star rated refrigerators, stoves and ceiling fans.
New low-VOC vinyl plank flooring will be installed, with LED lighting fixtures, formaldehyde-free cabinets and counters, low-VOC paint and low flow plumbing fixtures, according to the developer.
The exterior will be updated with new energy rated windows, paint, roof replacement and siding repair, and the parking lot will be resurfaced.
Additional work will focus on preserving the façade, original elevator and other historical features of the building.
The downtown TIF has a current cash balance of $4,476,320 and outstanding obligations of $3,817,846, of which about $2,558,443 is expected to be paid out within one year, according to staff.
The TIF receives about $2,000,000 annually of tax increment revenue.
City staff is recommending funding the first $130,000 of the request from the $500,000 earmarked annually for the
downtown TIF building programs, with the remaining $300,000 coming from the full TIF balance.
Jeni Dodd, a regular public meeting goer, said that he was concerned about using TIF funds for a private property owner.
Tryon said he would support it but was also concerned about approved TIF funds for a private developer.
At their May 7 meeting, commissioners approved the use of up to $110,750 in downtown TIF dollars for operating costs for fiscal year 2024, the current fiscal year, and up to $117,450 for fiscal year 2025, which begins July 1 for the Downtown Development Partnership.
Completed downtown projects that were awarded TIF funds include:
- The Wild Hare, 518 Central Ave., $38,157 of TIF funds
- Sip ‘n Dip, 17 7th St. S., $50,000
- Roe River Realty, 618 Central Ave., $19,370
- City Bar, 705 Central Ave., $50,924
- Columbia Grain, 120 1st Ave. N., $49,999
- Civic Center repairs, $5.9 million
- $9,100 The Newberry, 420 Central Ave.
Projects in progress that have been awarded downtown TIF funds include:
- Arvon Block, alley storm drain, $90,000
- 7th Street streetscape, between Central Avenue and 1st Avenue South, $243,000
- ADA ramps on Central, $31,052
- BID alley mural lighting, $150,000
- downtown storm drains, $2.5 million over five years
- KellerGeist, 111 Central Ave., $263,500
- Mountain Wave Distillery, 313-315 Central Ave., $68,650
- 400 block storm drain alley, $18,000
- economic vitality transformation strategy, $10,000
- Business Improvement District boulevard trees, $125,000 over five years
- Baatz Building, 400 2nd Ave. S., $130,000
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