Special tax dollars will cover the $18,984 tab for an acoustics study done at Bonner’s cryptocurrency mining business, but they won’t pay the $121,700 bill for the installation of 424 quieter fans at the facility.
During an at-times contentious administrative meeting, Missoula County commissioners said while the new cooling fans at HyperBlock — formerly Project Spokane — certainly made life better for Bonner residents, it wasn’t up to taxpayers to pay to fix the noise problem the company created when it opened a Bitcoin mining industry at the former mill.
However, the commissioners agreed that using Bonner Mill Tax Increment dollars is appropriate to reimburse Bonner Property Development for undertaking the study, which measured the noise emanating from the fan blades that cool the computer servers running around the clock every day. The servers solve mathematical problems to earn cryptocurrency.
Bonner Property Development bought the old Stimson Lumber Mill site in 2011 and is bringing new businesses to the area.
“I’m not particularly inclined to let HyperBlock or Project Spokane off the hook for a problem they created themselves, particularly given the volatility of the crypto mining industry,” Commissioner Dave Strohmaier said. “I have low confidence these businesses will be there in the future or that the fans will be able to be used in the future at that facility. That’s how tax increment funds are used; they’re meant to install infrastructure not just for one business but will endure over time.”
Jason Vaughan, the site manager for HyperBlock, argued that they followed all the county requirements when they started the business, and that the county didn’t have any noise regulations they needed to follow. At that time, the Bonner facility was the largest Bitcoin mining operation in the nation, and they hadn’t realized how loud 424 fans would be, he said. Once they realized the amount of noise pollution being created, then-Project Spokane tried to rectify the situation immediately.
Vaughan noted that remedies for noise pollution are one use for TIF dollars.
“We basically met the requirements to take care of the noise pollution, and we have had great feedback from the community,” Vaughan said.
Jeff Moore, a long-time supporter of the cryptocurrency operation, added that the noise suppression doesn’t benefit HyperBlock or Bonner Property Development one bit, but it does benefit the community as a whole.
“If they could choose, they [HyperBlock] wouldn’t have spent their money on the fans. It was completely a public improvement,” Moore said.
Commissioner Jean Curtiss noted that the commission didn’t approve the use, but only issued the necessary building, mechanical and electrical permits that were needed.
“You told us what you were going to do, but we didn’t approve the use,” Curtiss said.
“But Jean, you have to admit in a sense they solved a community problem,” Moore countered.
“That’s called being a good neighbor,” Curtiss responded.
Commissioner Cola Rowley replied that just because they followed the rules doesn’t make it right.
“You created a big problem for that community. Is it right for the government to step in when you created a big problem? That’s the question that’s debatable,” Rowley said. “This is a hard situation for everyone.”
Strohmaier challenged HyperBlock to cover the entire $139,691 cost of the acoustic study and new fan installation, which meant reimbursing Bonner Property Development, saying “it falls squarely in your lap.” He added that TIF dollars usually are allocated prior to a project to help it become reality if it’s at a “tipping point.”
But Curtiss said she appreciated how quickly Bonner Property Development responded to the noise concerns with the acoustic study, and that was a reasonable use for the TIF dollars. In the end, the county voted 3-0 in support of using the tax dollars to reimburse the $18,984 cost.
The commission did leave room for HyperBlock to seek reimbursement for the fans in the future. The TIF money comes from additional property tax revenue generated by businesses formed after the creation of the Bonner Mill Tax Increment Financing Industrial District in 2012. Property tax revenue that’s generated above the 2012 base level is diverted from the county’s general fund, to be reinvested back for projects that increase the property values in the district.
Commissioners noted that this is the second time HyperBlock tried to get TIF dollars to pay for the fans. In May, the Missoula Development Authority Board denied the request, with board member Jim Valeo noting that the business doesn’t produce a product and consumes large amounts of power.
“I would like to see, in several months from now, for MDA to take a closer look at it and see if anything come out of that,” Rowley said.
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