There’s a growing disconnect between Missoula’s leadership and certain critics of an economic development tool known as tax increment financing.
Some residents feel strongly that local government should be doing more to reduce their property tax burden. While there is a lot of support for tapping into other sources of revenue — such as through a gas tax or a sales tax — others would prefer that the city start by cutting its spending. In general, this view is represented on the City Council by a minority coalition of councilors: Jesse Ramos, Sandra Vasecka and John Contos.
For their part, the majority of city councilors find themselves defending their budget decisions, and TIF in particular as a valuable economic tool that pays big public dividends, while also trying to dispel persistent misunderstandings about how it works.
The same arguments seem to flare up every time City Council votes to approve TIF funding for a major development. TIF opponents don’t feel heard. TIF supporters don’t feel understood. And around and around it goes.
TIF is a complicated public finance method used by thousands of communities large and small throughout the United States. It has undeniable benefits, but also some real flaws. There’s a lot of room for misunderstanding and disagreement, and other cities besides Missoula have long grappled with how to address TIF’s various defects, both real and perceived.
But in Missoula, a long-simmering conflict went completely off the rails recently after one vocal city critic was jailed for making death threats in a video posted on YouTube this past December. The man, Brandon Bryant, is a U.S. Air Force veteran with a cadre of supporters working to free him — and worried that his arrest has a chilling effect on other critics of city leadership. Yet some members of City Council have themselves advocated on Bryant’s behalf, even as they acknowledge that threats of violence are inexcusable.
City Council’s next steps should be to form a united front and reassure the public, especially those with bones to pick, that councilors welcome civil criticism about TIF or any other municipal business. Then, they must join with the city’s administrative and economic leaders to get this discussion back on track. Public support for TIF will be key to making improvements that promise to mitigate concerns on both sides.
A 2018 report titled “Improving Tax Increment Financing (TIF) for Economic Development” provides an instructive overview of TIF programs from Chicago to California, and even includes a case study in Montana’s Jefferson County. The report, by David Merriman for the Lincoln Institute of Land Policy in Cambridge, Massachusetts, examines the potential benefits and pitfalls of TIF, and concludes with a short list of recommendations.
Not all of these recommendations are applicable or desirable for Missoula. Our TIF policy is crafted to address the unique needs of our community, but is also limited by a framework outlined in state law.
One of the recommendations is to increase state oversight of local TIF programs. We don’t agree. Montana’s legislators, especially those in more rural communities that have no experience with TIF, have proven reluctant to allow for more flexibility — one of the recommendations in the report. Flexibility is key to freeing some of the money created by TIF district for public projects of arguably higher priority. In Missoula, housing affordability and energy sustainability are two areas where TIF has enormous potential to provide enormous public benefit.
That’s not to downplay the advancements in affordable housing that have already been made thanks to TIF. More than half a dozen local affordable housing projects have received TIF reimbursements, from the Palace Apartments downtown to the environmentally sustainable Equinox and Solstice buildings. But the ability to use TIF funds more broadly to support community priorities is extremely limited.
Awaiting action in the Legislature, the city continues to seek creative ways around these limitations. It has twice pulled money from TIF districts to bolster the general fund, and in doing so avoided raising property taxes. Indeed, TIF reduces the overall tax burden of property owners, because it creates money that otherwise wouldn’t exist.
For example, the Mercantile property was vacant for several years while various plans were proposed and found to be poor fits. Now it is home to a private development that includes a Marriott hotel, as well as several shops and restaurants. And it is surrounded by upgraded public infrastructure — $1.9 million in TIF reimbursements for new sidewalks, lights, trees and utility lines. That money comes from the increase in taxable value caused by an increase in property value.
Similarly, the proposed $16.5 million in TIF for an event center at the Riverfront Triangle, which has been vacant for decades, would leverage the private investment in that property in order to provide for public facilities. Sure, the development could conceivably go forward without it — but these five riverfront acres are critical to connectivity in one of the busiest parts of Missoula, and it would be a shame to turn down an opportunity to dramatically increase public enjoyment of this key asset.
Another of the recommendations of the TIF report involves providing “extensive, easily accessible information about TIF use, revenues, and expenditures,” and Missoulians can take pride in the fact that the Missoula Redevelopment Agency is as transparent with this information as it’s possible to be. Its revenues and expenditures — and whole lot more documentation — are readily available online, and regularly updated.
The challenge is in distilling all this data and better communicating the process, goals and outcomes for the general public. It wouldn’t put an end to the arguments, but it would go a long way toward clearing up the misunderstandings.
This editorial represents the views of the Missoulian Editorial Board: Publisher Jim Strauss, Editor Gwen Florio and Opinion Editor Tyler Christensen.
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