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Missoula County to correct $2M state error, pass taxes on to proper jurisdictions

What’s being billed as a bookkeeping error at the Montana Department of Revenue will prompt Missoula County to withdraw up to $2 million in tax increment and pass it on to the area’s taxing jurisdictions, including an elementary school.

Dori Brownlow, director of the county’s development district, said the error was discovered recently as the county prepared to sunset its tax increment financing district at the Missoula Development Park.

Brownlow said the county filed an amended map for the district in 2006 to remove several non-industrial properties from the TIF portion of the district, though DOR inadvertently put them back in the next year, diverting tax revenues back into the TIF and away from the taxing jurisdictions.

“We can only guess it was a bookkeeping entry by DOR in 2007 when they put them back in,” Brownlow said. “It means some of the taxes paid were in the increment when they should have gone out to the taxing jurisdictions.”

Brownlow said the county removed the Wingate Hotel, the Harley Davidson retail and repair shop and Lithia Motors, along with other properties, from the TIF district in 2006, though the properties were added back in through the state’s bookkeeping error.

She placed the cost of the error at roughly $2 million, though the county is working to calculate the exact amount. The funds are available within the TIF district, which sunsets on July 1. The money goes to DeSmet Public School and Missoula Rural Fire, among other taxing jurisdictions, Brownlow said.

“We’re thankful we have the money in the district,” Brownlow said. “It’s money that would be paid out to the taxing jurisdictions, regardless, after the district sunsets.”

Despite the error, the TIF district has been hailed as a success. It was formed in the 1990s and is 80 percent occupied with light industrial development, along with a collection of commercial properties. The technology portion of the district remains empty.

Brownlow said other TIF requests are pending, though the county will need to recalculate how much money the district has remaining after it withdraws what’s owed to the taxing jurisdictions.

“The airport has put in a funding request, but we’re delaying taking that to the commissioners until we know how much money we have,” she said. “We have a number of projects in that district we’re working on right now.”

The city of Missoula is preparing plans to annex the district, possibly later this year.

Given the growing need for industrial properties, both Missoula International Airport and county officials are looking at other  development opportunities.

The county is chasing a federal grant that could help fund a multi-million dollar infrastructure project to improve access to land owned by the airport and eyed for light-industrial development.

The Wye is also being looked at as a possibility.

“There’s a very general discussion about the Wye area,” Brownlow said. “There’s an area out there that’s really looked at a lot for industrial development. But without infrastructure in place, you’re going to get haphazard development.”