Members of the Missoula City Council on Wednesday tightened their grip around the Missoula Redevelopment Agency, introducing a resolution that would limit the amount of tax increment available within the city’s urban renewal districts.
The resolution would also appoint new ex-officio members from three large taxing jurisdictions and ensure all MRA projects are “consistent” with the goals of the city around infrastructure and housing. Supporters also added daycare as a new priority worthy of MRA funding.
The resolution doesn’t mention job creation or economic development, and it marks a dramatic shift in the program’s original approach to boosting the local economy.
“This really gets to how we’re going to benefit the community,” said resolution co-sponsor Gwen Jones. “Our MRA has been investing in affordable housing for decades. This isn’t new.”
Advocates suggest the changes will strengthen the way the city allocates TIF funding and resources, though skeptics remain critical, seeing it as a sudden shift away from projects that create jobs and provide a return on the city’s taxable value.
The resolution covers three policy areas, including a limitation on the amount of TIF available within the city’s six urban renewal districts. It would also ensure comments from all taxing jurisdictions are “considered” as part of MRA decisions.
The resolution would appoint the chair of the City Council’s own Administration and Finance Committee to the MRA board, along with a representative from Missoula County and Missoula County Public Schools, the latter representing the single largest portion of a property owner’s tax bill.
“This is an area where we’ve done a lot of work, and there’s a good opportunity to formalize those relationships,” said city CAO Dale Bickell. “It would ensure comments from local taxing jurisdictions are part of comments around MRA deliberations.”
Throughout its history, tax increment has in principle recognized areas of the city in need of redevelopment, including those with a stagnant or declining tax base. The incentives offered by TIF were intended to fuel private investment, which in effect lifts taxable values and grows the city’s general fund once a TIF district expires.
City Council members once described it as one of the most powerful economic development tools available to municipalities in Montana. But the changes appear to take a different tact, inspired by what some on City Council described as targeted opposition to the program in general.
Under the proposed resolution, the recommended investments from MRA mention infrastructure, which has always been a source of MRA investment, as has affordable housing. The daycare element is new, prompting one council member to say “We’re elevating that as a priority.”
It wasn’t clear Wednesday how daycare elevates the local tax base.
Bickell said the resolution recognizes the city’s strategic plan, though as noted by one council member, the plan doesn’t mention daycare. Still, supporters said the changes would help clarify the benefits of MRA in supporting community values.
“It also helps the development community,” Bickell said. “MRA really helps drive private investment in our community. With our goals clearly articulated, it’s easier for the private sector to create projects that help support our goals.”
The resolution would also cap at 9% the revenue available in any urban renewal district within the city when compared to the total taxable value of Missoula as a whole. Currently, the city’s TIF districts combined represent around 7.8% of the city’s total taxable value, according to city officials.
“If there is incremental taxable value over the proposed cap, that amount has to be remitted back to the taxing jurisdictions,” Bickell said. That includes both MCPS and the county, which would both become board members under the proposal.
The state’s two-year appraisal cycle began pushing up property values in 2018, when the percent of tax increment tucked into Missoula’s urban renewable districts hovered at around 3.8%. Ever since the state shifted its reappraisal cycle, the city’s percent of tax increment has been 5.9% or higher on average.
Still, supporters believe the 9% cap is a solid mark.
“The limitation in this will help balance that out,” Bickell said. “It will keep it at a level of adequate operational revenues, not just in the city, but other taxing jurisdictions.”