City staff reviewed the options for using tax increment financing funds toward workforce housing and determined it doesn’t really meet the identified need of filling upper downtown floors, but commissioners instructed staff to continue working on making it an available tool for property owners and developers.
In March, representatives from Great Falls Development Alliance, NeighborWorks Great Falls, Home Builders Association of Great Falls and the Great Falls Association of Realtors presented four suggestions to commissioners.
They wrote that the city can make housing development more appealing to developers by:
- aligning existing urban renewal tax increment financing districts with the state law provision allowing workforce housing as a reimbursable expense
- leveraging special improvement districts to address infrastructure cost and barrier to new development
- considering the highest and best use of city-owned properties that might be appropriate to develop into housing through a request for qualifications/proposals process
- pre-approve plan sets for accessory dwelling units
The four local groups wrote that local housing costs are up 61 percent since 2020 and “without a new and consistent supply of housing units in Great Falls housing costs will continue to rise, putting extreme pressure on our most vulnerable residents and major employers alike.”
City considering code, policy changes for workforce housing development
They wrote that there’s been some recent successes to increase housing stock, but the city is still “severely behind production numbers highlighted in the 2024 housing market demand assessment required to curb the rise in housing costs.”
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That assessment found a need for more than 650 new units per year.
The four agencies asked the city to include their feedback in the growth policy process and encouraged commissioners to also consider the changes.
In May, commissioners discussed those recommendations and Commissioner Joe McKenney said the city could update its existing TIF program for residential units on currently vacant upper floors of many downtown buildings.
City planning staff held two discussion sessions in May about the use of TIF funds for workforce housing, which is defined under the code as housing that is affordable to families earning 60 percent to 140 percent of area median income, as defined by the U.S. Department of Housing and Urban Development.
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During their Aug. 19 work session, Brock Cherry, city planning director, said that those figures equate to:
- one person: 60 percent is $36,120 and 140 percent is $84,280
- two people: 60 percent is $41,280 and 140 percent is $96,640
- three people: 60 percent is $46,440 and 140 percent is $108,360
For comparison, NeighborWorks is proposing a self-help build on the northwest side that is considered “low income” but under those program guidelines, HUD defines low income as 80 percent of median income.
For 2025, median income in Cascade County, according to data from HUD, is $90,800.
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The 80 percent mark of that is $50,900 for one person. For a two-person household, it’s $58,150; for three people, it’s $65,400 and for a four-person household, it’s $72,650, according to the HUD data.
In a TIF district, the taxes paid on improvements within a district stay within that district for use toward additional eligible improvements under state law.
The city has five TIF districts, one of which is the downtown district. Two are industrial, one is the airport and the other is the West Bank Urban Renewal District.
TIF could also potentially be used toward workforce housing in the West Bank district, Cherry said during the Aug. 19 work session.
The urban renewal plans for both the downtown and West Bank districts would have to be amended to make workforce housing an eligible expense for TIF.
Cherry told commissioners during the August meeting that they were initially looking at it through what they’d heard during the growth policy survey and informational sessions, which was to fill up empty spaces, particularly vacant upper floors downtown.
“That’s the mandate that we have for downtown,” he said.
City staff talked to planning staff in Missoula, which is the only city in the state with active TIF projects for workforce housing, that includes the city, nonprofit partners and a private development agency.
That project is 314 units with some income qualified and some market rate, Cherry said.
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The takeaways from that conversation is that the Missoula project is “very different than what we were trying to achieve,” Cherry said, and that TIF money lends itself to large projects, not smaller ones such as a downtown property owner trying to turn some upper floors into housing.
It’s “insanely complicated,” Cherry said, primarily due to the income compliance regulations under the law that city staff doesn’t currently have the capacity to handle.
Cherry said during the commission meeting that if the city gave one cent of TIF funds for workforce housing, the city would have to monitor that one cent in perpetuity to insure the project continued to meet the income requirements.
In actuality, the law requires income compliance for 30 years on a TIF workforce housing rental and 75 years for units that were for sale.
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“When it comes to meeting the initial goals that we had of trying to find moderate income housing products, getting thes upper floors redeveloped, that this is more likely to benefit new construction than existing and it doesn’t address the biggest weakness that we have in just revitalizing what we have,” Cherry told commissioners in August.
TIF is not the tool they were hoping it would be to meet that need, he said.
The city could look at infill development downtown by issuing a request for proposals for new construction on city owned property in which it could set specific parameters, or explore tax abatements or exemptions for rehabilitation projects, but that also doesn’t address the large inventory of vacant downtown upper floors, he said.
The city could also consider building permit fee reductions for such projects, he said.
Federal HOME funding could be used in conjunction with TIF for housing, but those dollars also come with rules under HUD, and an individual property owner downtown is unlikely to have the capacity to navigate those complexities, but a nonprofit partner is used to operating in that space, Cherry said.
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Commissioner Susan Wolff said she sees vacant upper floors downtown, or entire buildings, such as the former Asurion building on the corner of Central and 4th Street.
“It’s just sitting there empty, I think gosh that would make a great place for housing of some kind,” Wolff said, but the owner might not be interested.
The Asurion building was purchased by Justin Madill, a practicing emergency medicine physician, through an auction in November 2018. He listed the building for lease, but as of yet, nothing has moved into the building, which has been vacant since Asurion announced it was closing in 2015.
Lonnie Hill, deputy city planning director, said that during the information sessions with downtown property owners in May, they had a lot of questions and concerns about the stringent requirements that go with TIF funding.
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He said in those meetings, it was said the estimated cost to remodel upper floors is more than $200,000 per unit, so it gets hard to pencil for individual property owners.
Commissioner Joe McKenney said during the August work session that despite the income complexity of TIF funding for workforce housing, there are some creative thinkers out there and it could be a tool.
“We’re not developers,” he said. “I would expect something to happen, I don’t know how, I don’t know when, but this is out there.”
Mayor Cory Reeves said they should move forward with using TIF for workforce housing and “I think it’s a great plan for the community.”
In a March 19 memo to commissioners, Cherry, city planning director, assessed each of the recommendations and offered potential next steps.
“These recommendations could be pursued immediately or incorporated into the upcoming growth policy update as goals and objectives to guide long-term housing strategies,” Cherry wrote.
TIF funds are currently primarily used for infrastructure and redevelopment improvements.
Several years ago, the city expanded its downtown TIF program to allow more private developers to apply for funds for specific eligible property improvements such as life safety code compliance, façades and environmental safety.
City approves expanded TIF programs for downtown projects [2021]
State law allows workforce housing as an eligible TIF expense, but the city’s TIF policies would need to be adjusted, Cherry wrote, which requires amending the city’s urban renewal plans and defining what qualifies as workforce housing within the city.
The city would also need to further discuss that change with the Downtown Development Partnership and others to ensure the change “aligns with existing redevelopment goals,” he wrote in March.
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Commissioners could direct staff in the near term to draft amendments and policies that include workforce housing as an eligible TIF reimbursable expense and provide clarification if they want those requests determined solely by commissioners or would allow some staff discretion to administratively approve some of those funds like other downtown TIF programs.
Those details were not discussed during the August work session.
In the longer term, such as the growth policy process, commissioners could evaluate the role of TIF in supporting workforce housing as part of broader housing and redevelopment policies, Cherry wrote.
