Nicosia: Now is perfect time for TIF district

A planning consultant who has helped communities across Montana establish tax-increment finance districts says it’s been her experience that the communities grew and were successful as benefits financed with TIF money attracted outside investors.

Janet Cornish, of Community Development Services of Montana, hosted the first of many meetings in the public process to establish a TIF district in Columbia Falls at City Hall on Oct. 29.

Once a TIF district is established in a city, increases in property tax revenue in the district over the base year are diverted to a special fund devoted to redevelopment and civic improvement projects, instead of going to the city’s general fund or other taxing jurisdictions.

Property values in a TIF district will increase over time as empty lots are filled, large lots are subdivided, buildings are remodeled, expanded or replaced, and city infrastructure improvements are made.

“There is no direct financial effect on individual property owners,” Cornish said. “All that changes is how new tax revenue is distributed.”

About $18 million in taxable value has been created by the 50-some active TIF districts in Montana and the dozen or so that have expired, Cornish said. Based on current state tax codes, a $2 million project in Columbia Falls could create $34,926 a year for a TIF fund, she said.

That money could be used for streetscaping, facade restoration, building stabilization, wayfinding signs, parks or trails, and other improvements. Or it could be leveraged by selling bonds that are paid back through the life of the TIF district, or by establishing a revolving loan program for small businesses.

State law limits a TIF district to 15 years, but it can be extended another 20 years if the TIF money is used to back bonds in the first 15 years of the district’s life. TIF money can also be leveraged through grants, private-public partnerships, and special improvement districts.

City manager Susan Nicosia said the city’s goal is to establish a TIF district by Feb. 1 so 2014 becomes the base year. She said the Department of Revenue already has finished its six-year reappraisal work for the city.

Freedom Bank president Don Bennett expressed concern that properties came in with unrealistically high assessments in the last reappraisal cycle and what could happen if property values declined after a TIF district was created.

“Everything is more stable now,” Nicosia said. “Now is a good time to start a TIF district. The town is primed for development.”

Among the other taxing jurisdictions affected by a TIF district are public schools, but a mill in School District 6 is valued at about $30,000 while a city mill is valued at about $6,700, Nicosia said.

“A city TIF district would have very little impact on the school district, and it’s not concerned,” she said. “They don’t want their buildings included in the district, but they see the benefits TIF-backed projects, like a new hotel, could have on the overall tax value of the school district.”

When asked how much money a Columbia Falls TIF district could expect to earn, Cornish said she didn’t have a crystal ball.

“But a $6 million hotel could mean about $100,000 a year,” she said.

Supporting construction of a new hotel topped the wish list generated by people who attended the meeting. Other suggestions included beautifying Nucleus Avenue and U.S. 2, attracting more retail business, slowing down the 2.3 million visitors who pass through Columbia Falls on their way to Glacier National Park with an arch or entrance park at Nucleus and U.S. 2, improving infrastructure to attract high-tech business, and doing a better job of marketing the town.