Several City Council members strongly defended the use of Tax Increment Financing in Missoula as the council's lone Republican, Jesse Ramos, said Wednesday he felt the program had been misused in the past for projects that don’t benefit the majority of the community.
“I’m a Republican and I’m the only one on the council that’s opposed to giving $1.5 million to Stockman Bank, which is owned by one of the richest guys in Montana,” Ramos said, speaking by phone to the Missoulian after he said he didn’t get enough time to ask questions during a council committee meeting Wednesday.
Ramos also said he felt the Missoula Redevelopment Agency's funding of $5 million for a pedestrian/bike bridge over Reserve Street, and $6.9 million for a new road, sidewalks, street trees and other infrastructure near Southgate Mall weren’t appropriate.
He said that money would have been better spent going to city police, schools, firefighters and road maintenance. Ramos also indicated he believes that the MRA purposefully extended the life of at least one Urban Renewal District from 15 years to 40 years so that they have control over tax revenue for a longer period of time.
Ellen Buchanan, the director of the MRA, was giving her annual presentation to the City Council's Administration and Finance Committee on Wednesday to describe the agency’s role in overseeing how TIF funds are used.
In March, the Missoulian reported on Buchanan’s many arguments for why she believes Tax Increment Financing benefits the city. She and MRA board member Ruth Reineking told a Citizen’s Academy class that the downtown Urban Renewal District I, for example, turned a deteriorating, crime-ridden area into a thriving neighborhood that generates much more tax income now that it has sunsetted.
In a handful of Urban Renewal Districts around town, property taxes generated by new development are diverted from the city’s general fund and are overseen by the MRA, which is tasked with funding projects that benefit the public inside those districts, and to eliminate blight and spur new investment.
The ultimate goal is to have more private development inside those districts than would otherwise occur without developers getting TIF funding. When a district sunsets, there should be more money going into the general fund coffers than there otherwise would be. Buchanan and most of the Missoula City Council say Missoula’s Urban Renewal Districts spur development and increase the overall tax base over time.
But Ramos said later he is trying to set up a meeting so he can ask Mayor John Engen and Buchanan all the questions he has for them about Tax Increment Financing, because he felt he didn't have enough time on Wednesday.
"I'm frustrated," he said. "The government shouldn't be giving money to rich people when people can't afford to live there. That's kind of my view. URD III is huge, there's tens of thousands of people that live there. All those people need more services, but that money isn't going to provide those services. It's going to a large corporation like the mall."
Urban Renewal District III encompasses a large portion of the Brooks Street corridor to Reserve Street.
In 2015, the Missoula Redevelopment Agency approved a request to apply $6.9 million in tax increment financing to help build a new road, an extension of Mary Avenue between Brooks and Reserve, which directed much more traffic through the mall property. The money will be paid back by what city officials estimate will be more than $320,000 a year in new property taxes, which are diverted from the city's general fund and put back toward the property.
Ramos said people who have built a home in URD III since 2000 don't realize their property taxes are being diverted from schools and police until 2040.
"It's all going to pay for a road requested by the Lambros family, one of the wealthiest families in Missoula, to get improvements in their mall, only for them to sell it later for $58 million," he said. "And somebody else's taxes have to go up to pay for this increased demand."
He also criticized the MRA for spending $25,000 on a dog statue, which was a public art project in a park.
Council member Gwen Jones defended TIF on Wednesday.
“There’s all sorts of discussion that this is freezing this money from the community,” she said. “But this money goes to leverage private investment that creates more income. Second, it goes to create quality-of-life improvements that people want. And third, it goes to creating what I would classify as survival issues like affordable housing."
She noted that the MRA contributed funding to the new YWCA crisis shelter to support homeless families and victims of abuse.
"We do not have any other tool in this community to do that, and I think there is strong community support for creating these districts," she said.
But Ramos asked Buchanan if the reason the South Reserve Pedestrian/Bike Bridge in URD III was built because it allowed the MRA to extend the amount of time it controlled money in the district. State law allows the MRA to extend the life of districts if certain qualifications are met.
"Was that your intention, to extend the district for as long as possible, to have control over that money?" he asked.
"The goal of the bridge was to provide a trail connection from Missoula to the Bitterroot," Buchanan responded.
At that point, council member Heather Harp told Ramos he needed to wait until the end to ask questions because she wanted to let Buchanan and Reineking finish their presentation.
The discussion though, soon turned into multiple City Council members defending the South Reserve Pedestrian/Bike Bridge.
"We routinely hear how nobody uses that bridge, which is blatantly factually false," said council member Bryan von Lossberg. "At some point it would be good to have an update to get that (user count) to dispel some of these ongoing myths. I have very little patience when I hear people say, 'I was waiting at the stoplight and I didn't see anybody go over the bridge, therefore nobody uses the bridge.'"
Jones acknowledged that the bridge provokes a "fair amount" of conversation in the community.
"I've heard there are 400 or so (people) per day going over the bridge," she said.
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Jones said that because cars don't have to wait as long at the nearby crosswalk for bikers and pedestrians, it cuts down on pollution emissions and saves commuting times. She also said bicyclists who go to and from the Bitterroot are more likely to spend money on local businesses.
Council member Jordan Hess, who works as the director of the Associated Students of the University of Montana's Office of Transportation, confirmed that an average of 400 people use the bridge every day, according to counting machines.
"This is a really good long-term investment," Jones said. "It may not look like it as you're sitting and looking at this bridge when you're stopped at the light, but a lot of thought and intention went into that."
Ruth Reineking, the MRA board member, said the bridge provides a safe crossing, because a street-level crosswalk at that busy intersection was more dangerous because cars travel at high speeds there.
But Ramos said it didn't matter to him how many people use the bridge.
"My qualms is, for one, it extended (URD III) out 25 years," he said.
That means, according to Ramos, that the new property taxes in that district are diverted from city funds even as more people move to Missoula, more kids enroll at schools and there are heavier strains on police and services.
"So we have to make up for that by raising taxes on everybody else," he said. "And according to Montana law, the only thing that TIF money is supposed to be used for is the elimination of blight."
"You have 30 seconds," Harp told him.
"I fail to see how the bridge is the elimination of blight," he said. "Again, it cost $5 million, and with principal and interest it is over $7 million. With the depletion of that from the city and the county and schools, I didn't think it eliminated blight."
Buchanan responded by saying Ramos' logic, if applied everywhere, would have meant fewer trails and private investment all over the city. She also believes URD III will provide more tax revenue to the city when it sunsets than it otherwise would have, in part, because of the bridge.
"If you follow that reasoning, then we wouldn't have built any trails," she said. "There's lots of evidence of what the Riverfront Trail created along Front Street. This (bridge) is a part of the trail system and people will build now that they're connected to Fort Missoula Regional Park and the green space and amenities they were absolutely separated from."
Council member Julie Merritt said the bridge improves Missoula's transportation grid.
"And thereby provides an elimination of blight," she said.
Jones concluded the meeting by saying she took issue with Ramos' statement that the MRA funded the bridge to extend the life of the district.
"It's a big mischaracterization to say (the MRA has) any intention of tying up money for any period of time," she said. "I think that's completely wrong. There's a very complex definition of blight, which is far more than what people assume."
Jones said TIF is one of the only tools the city has to eliminate blight and spur investment in certain areas.
Harp said the success of downtown Missoula is an example of how TIF works, even though it takes decades to realize the impacts.
"Successful cities are intentional, and that's what happened four decades ago," she said. "We had a super story with our first URD. Half our buildings downtown were boarded up, literally."
She noted that residential and commercial buildings everywhere were vacant and there was high crime in the area.
"It was a very different Missoula and we took a leap of faith to set Missoula on a different trajectory than a lot of the other dying communities," Harp said.
Buchanan told the board that $20 million invested in downtown leveraged $200 million in other funding sources, and she estimated there's a billion dollars worth of investment there now.
"The Merc wouldn't have been deconstructed without TIF dollars," she said, meaning the building would have been demolished and taken to the landfill if the MRA had not dictated re-use of the materials. "That's a big feather in our cap."
Buchanan said a proposed $150 million project to build a hotel and conference center at the Riverfront Triangle is still likely to happen, although she's not sure on the timeline.
"That's an exciting project, probably one of the largest projects in the state once it gets started," she said.