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Jim Howard, the superintendent of Bonner School District, points to Spokane LLC's bitcoin data center at the Bonner Mill in 2017. The plant emanates a loud humming from fans to cool the servers for the large network of computer servers in the building.

At a sometimes explosive meeting Wednesday, the Missoula Development Authority Board turned down a request from a crypto-currency mining operation in Bonner for over $135,000 in Tax Increment Financing to reduce what neighbors say is irritating and unhealthy noise from hundreds of fan blades that cool the huge computer server banks.

The motion failed on a 4-4 vote with one abstention because a majority is needed to pass.

Steve Nelson and Mike Boehm of Bonner Property Development own the former millsite in Bonner that now houses a variety of industrial businesses, including Project Spokane, LLC, a bitcoin mining company.

Nelson came to the MDA Board on Wednesday with Dan Stivers of Project Spokane to ask for $135,880 in Tax Increment Financing to pay for the purchase and installation of several hundred new fan blades, as well as sound engineering work. The goal is to mitigate the loud humming noise that emanates from the fan blades as they cool off the computer servers that run 24 hours a day, 7 days a week.

Neighbors have complained about the incessant and loud hum for many months, saying they can’t open their windows and sleep at night. They also worry about long-term health effects, such as hearing loss.

Project Spokane applied for and was granted all required permits by Missoula County for its business. Because there are no county noise regulations for industrial sites, they say they are in full compliance with the law. 

But County Commissioner Dave Strohmaier suggested that may change. He said the Board of County Commissioners will meet on June 14 to “contemplate emergency zoning relative to crypto-currency mining in Missoula County.”

Joanne Weimer, a resident of the area near the mill site, wrote a letter to the development board calling the sound “aggravating, intense and to some, totally intolerable.” She said she feels betrayed by the county commissioners for allowing the “terrible business” into the lives of the residents, claiming they should have been aware of the risks of a bitcoin operation because surveys conducted by other communities found “offensive noise” was the most oft-cited complaint.

Other residents of Bonner said that the noise from the bitcoin facility is even worse than when the now-defunct Stimson lumber mill was in full operation.

Nelson defended his decision to request TIF funds, which come from the increment of additional property tax revenue generated by businesses that were created after the formation of the Bonner Mill Tax Increment Financing Industrial District in 2012. Property tax revenue that is generated above and beyond what was being generated in 2012 is diverted away from the county’s general fund and is supposed to be reinvested back for projects that benefit the public.

Nelson argued that his request is exactly what the TIF funds are supposed to go toward.

He and Stivers noted that the Montana Department of Revenue has told them the company will be paying over $300,000 in property and business equipment taxes this year.

“Our community has been extremely patient in this process, and now we think it’s time to act,” Nelson said. “In your TIF documents, based on critical considerations, the goals are to foster and revitalize the millsite to adjacent homes and the surrounding community.”

One board member, Ben Fitch-Fleischmann, wanted to know why taxpayers should foot the bill rather than the business. He said he thought that bitcoin operators generate lots of profit.

“A good neighbor takes care of their own problems instead of asking the taxpayers to do it,” he said. “They don’t do just what’s (legally required).”

Nelson said that TIF funds are also supposed to go toward “reducing or preventing or abating pollution” and although he clarified that this project generates noise pollution, he felt it qualified.

Nelson and Project Spokane hired a sound engineer who they say found decibel levels of about 95 near the fan blades, with spikes at certain frequencies. The engineer told them that different fan blades will reduce the amount of sound by half, which equals about 10 decibels, and the new blades will also reduce the spikes at the two frequencies. They’ve already installed test fans to confirm the hypothesis.

“When Project Spokane came to Bonner, they sent in a zoning compliance permit request that went to the county,” Nelson said. “The county looked at it. I have emails. They are in perfect compliance.

"There is no zoning regulation regarding noise in heavy industrial. They’re not in violation, so why would they want to pay even if they could? We’re the developer. I don’t have a spare $135,000 lying around. They haven’t done anything wrong, that would be my first comment.”

Nelson also said he believed blockchain technology might be the wave of the future, just like credit cards were when they were first introduced or like the Internet was in the 1990s.

Jim Valeo, a member of the MDA board, was adamantly opposed to the request.

“You guys brought this business here and no products are produced and huge amounts of power are consumed,” he said. “This is not a taxpayers’ responsibility. Those (TIF provisions) are with regard to starting (a business) and helping with sidewalks, not about solving a problem that you created, which is what you guys did when you put that thing there.”

Valeo also told Nelson and Stivers that they shouldn’t “sit on” the fact that they’re in compliance with the county’s laws. Valeo suggested that there could be a class-action lawsuit in the future.

“You’re not good citizens,” Valeo continued. “You’re offensive citizens. It’s an unfortunate development. You didn’t do your homework to see what could happen there. As far as I’m concerned, this is not a taxpayer response. I hope for the sake of the company you will be man enough to take care of it. I hope for both the owners of the property and the operating company you can solve this problem. Saying ‘we comply with all regulations’…sorry guys, that doesn’t cut it.”

At one point, Stivers, of Project Spokane, became upset at the line of questioning.

“Is a $300,000 check real to either of you?” Stivers asked, referring to the property tax he says the state told him he will pay. “Is that not real money? We’ll be committing four times that ongoing. We did everything regulatory correct coming into this community and have invested millions of dollars.”

Stivers then showed Fitch-Fleischmann an email from a Montana Department of Revenue worker to confirm that the company’s property tax bill will be over $300,000.

“I just did the math, and $135,000, that’s 18 bitcoin,” Fitch-Fleischmann responded. “It feels like small money to you guys. It feels like small money, and it’s difficult to see why you don’t just step up and do it. It’s clearly a complex community issue that needs to be talked about.''

Stivers responded by saying that the company “competes on a global scale” for what they provide and at one point suggested that the only way to resolve the issue was to relocate the company.

The board took a vote on the motion and, because it was a 4-4 tie, the motion will not go to the Board of County Commissioners for approval.

Project Spokane has applied for Big Sky Economic Development Trust Fund job creation grants from the state in the past, but withdrew their application. The company has so far not received any taxpayer dollars.

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