With funding short, MRA considers prioritizing tax-generating projects over tax exempt

The Missoula Redevelopment Agency and its board of directors on Thursday waded into a philosophical discussion prompted by a funding shortfall – itself the result of a $2.7 million remittance it made to various taxing jurisdictions, including the city of Missoula and Missoula County Public Schools.

In the end, the agency settled on maintaining the status quo, by and large, even if that means pausing public investment in projects that are tax exempt, such as affordable housing and work related to public infrastructure.

“We’ve got a proposed 200-unit affordable housing project proposal for the North Reserve/Scott Street district that is probably going to need some infrastructure work, but it won’t be on the tax rolls,” MRA Director Ellen Buchanan said, citing one example. “We desperately need the low-income housing, but that’s not going to create any increment, so that sort of thing would be a dilemma.”

In the past, MRA has invested in both tax-generating and non-tax-generating projects. Those that generate taxes, such as the Residence Inn by Marriott and Stockman Bank, have received some public investment to aid with coinciding public improvements.

But other projects, like MRL Park, public housing and trail work, don’t generate new taxes. Still, they too have received public investment under the belief that such projects have a ripple effect and serve the greater good.

Given the options, the board of directors declined to change the agency’s mission over what’s expected to be a temporary shortage of funding in its urban renewal districts.

“This is an interesting fiscal situation that we’re figuring out,” said board member Melanie Brock. “But I don’t want to shift from an organization that helps with public projects. We have value in what we can do, helping with infrastructure and housing. While this may be a period of different budget numbers, I don’t even want to open the door a crack and divert from the kinds of projects we do.”

For the next year, at least, that could mean prioritizing funding requests and turning down many projects that are worthwhile. How those priorities are made could depend on where a project is located and what sort of activity is taking place nearby.

As one staff member said, the board will have to get comfortable with saying no to projects it would approve under normal circumstances. The amount of contingency funds in each of the districts, including those with the most redevelopment activity, are low.

“If I had any inkling that was going to happen in the Front Street District in terms of growth of taxable value this year, we would not have done the $200,000 additional payment to the library,” Buchanan said. “You’ve seen the numbers. It’s pretty grim.”

If MRA struggles to prioritize projects based on its limited funding, members of the City Council said, they’d be happy to offer policy direction. The board didn’t take the council members up on the offer, though the proposal may be considered if necessary.

“I appreciate the impact of the remittance to MRA’s budget,” said council member John DiBari. “But you also have the resource of the City Council to help you with these policymaking decisions. I will offer City Council time to think about these sorts of issues and help set a policy for the community in terms of helping MRA make a decision on how to prioritize.”

In the near term, Buchanan proposed moving funds from other programs, such as facade improvement, into their matching  urban renewal districts.

That would leave key districts with more revenue, though how much hasn’t yet been finalized.

“One of the messages I’m trying to send – because there’s been a lot of concern after the remittance became very public – we don’t want to send the message to developers that MRA is out of business,” Buchanan said. “I’d like to have healthy contingencies in the districts where that’s possible, and where we are seeing redevelopment.”