With little room to say otherwise, the Missoula Redevelopment Agency’s commissioners on Monday consented to the city’s plans to remit $2.3 million in tax increment financing to bolster the municipal budget for a number of deferred needs.
Missoula Mayor John Engen met with the board just hours before the City Council was set to adopt its Fiscal Year 2020 budget to discuss the impact the remittance will have on city operations.
Calling the city’s urban renewal district a success story, he said the one-time remittance would have little impact on MRA’s ability to continue investing in public infrastructure or meeting other community goals that lie beyond the reach of the city’s general fund.
“My guiding notion is that URDs are created to improve public infrastructure outside the general fund and generate new taxable value for the good of the community,” Engen said. “When that taxable value becomes available for the community to use, we ought to use it.”
Of the $2.3 million remittance, the city will collect $725,000. That funding will bring the city closer to its stated goal of keeping 7 percent of its general fund budget in reserve as a rainy day fund, a move unanimously hailed last week by members of the City Council.
The city saw a boost in taxable values this year after the state completed its appraisal process, one that saw property values rise. That includes existing properties and newly taxable properties, or projects that have recently come onto the tax rolls.
“Fiscal Year ‘20 represents the best set of taxable values in my career as mayor. They’re good all over,” Engen said. “What we’ve been able to do with that expanding tax base reflects those good numbers. Our budget allows us to take care of a lot of work we’ve been deferring over the years.”
Riding on this year’s valuations, the city plans to hire six new police officers, upgrade the police radio system, invest in roads and maintenance, and create a program to fight Internet crimes against children, among others.
“We’re doing all of that, and we’re still able to lower mills,” Engen said. “The success of those districts presents us with an opportunity to further tamper the tax burden, not only for municipal taxpayers, but also the other taxing jurisdictions.”
This year marks the second consecutive year the city has remitted revenue from MRA and its urban renewal districts. Last year’s remittance was needed to cover a shortfall in the city’s budget, and this year it will help the city build its reserve balance.
While Engen suggested this year’s remittance won’t prevent MRA from making future investments, board members sought a broader conversation on the role MRA will play moving forward.
“I think we need a broader discussion about what’s the long-term plan here,” said MRA board member Karl Englund. “What do we want these (urban renewal) districts to do? We’re going to need to understand that both in terms of how we operate day in and day out, and how the city considers things like this.”
Engen said MRA will continue to perform “all that work,” despite the remittance. He said he met recently with MRA staff to identify its needs based on known and projected projects planned for each district.
Such projects haven’t been publicly identified, nor have they been viewed by MRA’s board. Once it views those projects, it will determine which districts to draw the remittance from.
“We don’t have the current figures on what the increment is yet. We also haven’t seen an analysis that looks to each district and their anticipated projects,” said board member Nancy Moe. “I feel that’s the board’s responsibility so we agree where the money is coming from to fund what the City Council wants to do.”
Engen also suggested a shifting philosophy in the role MRA will play moving forward. In the past, he said, the agency often reacted to projects that came to the city.
In the future, he said, MRA’s investments would become more strategic.
“The work of the agency over the past 15 years is much different than it was before. The projects are different, the need is different and the resources are different,” Engen said. “We have traditionally tended to react to proposals rather than make those proposals. We’re doing more of that, and I suspect there will be even more of that in the future as we move forward, based on community needs.”
Engen said MRA could play an expanded role in helping the city meet the goals identified in its new housing policy. City Council president Bryan von Lossberg agreed.
“It’s not to say MRA hasn’t been a great tool relative to housing to date. It has been,” von Lossberg said. “We passed a comprehensive housing policy umbrella, and it would be remiss to not have a conversation with (MRA) staff, the board, the administration and (city) council around what parts of that should change, if anything, and what we’re affirming.”
Engen said his administration would also work to better inform the public on the importance of the city’s urban renewal districts.
“There’s a fundamental misunderstanding that we’re giving money to the private sector,” he said. “But we’re actually creating public infrastructure that supports private investment, that creates taxable value, that expands our base and allows us to levy fewer mills, tax individuals less, and get more done. This is a success story at the end of the day.”