by William Skink
The Missoula Current is asking City Council candidates a series of questions as the municipal election draws near. I would like to think this blog’s critical focus on Tax Increment Financing, combined with the fiscal thorn of Jesse Ramos, has had some influence on the conversations that are happening. As evidence we are having an impact, this is the first question MC is asking candidates: Do you support the use of tax increment financing as a tool for economic development, job growth and expanding the city’s tax base?
I have detected a smidgen of defensiveness in some of the responses to this question. For example, Ward 4 candidate Amber Sherrill had this to say:
I support Tax Increment Financing as a tool because I believe it does spur economic development and expand the city’s tax base. I believe this is similar to any type of investment in future returns. It is also an effective tool in addressing urban blight. While I believe this program is commonly misunderstood and/or misrepresented it has proven to be effective in many cities across the country. That being said, I think it should be used strategically and that we should regularly reassess the effectiveness in specific areas and the needs of our community to make sure they align with how TIF funds are being allocated.
I agree that TIF is commonly misunderstood and/or misrepresented, and Sherrill’s response is actually a good example of why this is the case.
When Sherrill says “spur economic development” what this actually means is unelected board members from the Missoula Redevelopment Agency disperse our public tax money to private developers in order to incentivize development in an Urban Renewal District. When Sherrill explains this development “expands the tax base” she is misrepresenting what is actually happening by omitting the fact that this expanse occurs ONLY within the Urban Renewal District, and the subsequent increase in tax revenue goes NOT to the general fund, but back to the Missoula Redevelopment Agency. That is why critics like myself and Jesse Ramos correctly point out that this URD/TIF scheme starves the general fund, and the result has been the city’s perpetual need to increase taxes in order to keep up with providing essential services, like police and fire.
Let’s take a look at another attempt to defend TIF. Ward 3 incumbent Gwen Jones gives a vigorous defense, going all the way back to the late 70’s when Southgate mall opened and threatened to kill economic activity downtown. We are led to believe that without the miracle of Tax Increment Financing, downtown would have remained “a ghost town”. My favorite part about Jones’ defense comes near the end of her TIF cheerleading, where she acknowledges a counter-narrative exists:
There is a narrative in Missoula that TIF is a waste of taxpayer dollars, gives millions to corporations, and is driving up property taxes. While I am sensitive to such concerns, the key is to evaluate each proposed project for TIF funding to assess its ultimate value to the community as a whole. As our Missoula economy changes, we should engage in discussions as to what the priorities are for future TIF spending. If we are in an economic situation where, after numerous years of expansion, we can reprioritize how we spend TIF in Urban Renewal Districts, I look forward to those conversations. The Missoula Redevelopment Agency and TIF have proven successful and we need to recognize what a valuable tool TIF funding can be to improve our city and quality of life.
Where to start? First, speaking just for myself, I don’t think every single project TIF has helped fund has been a waste of taxpayer dollars. Jones herself helps make this point by cherry-picking projects like Silver Park and affordable housing projects that have received TIF money.
But not every project that gets TIF money is a park or affordable housing project. A little company by the name of Starbucks got TIF money in 2014, and Marriott got “reimbursed” 1.8 million for the SoBro hotel that replaced the Merc. So yes, corporations have benefited from TIF money, and property taxes do continue to go up despite all the development that’s occurred. I’ve explained repearedly how URD/TIF contributes to this. As more people begin to understand the skim & give scheme, expect council members who support the Mayor’s slush fund to get more and more defensive.
Being sensitive to this, Jones claims the “key” is to “evaluate each proposed project for TIF funding to assess its ultimate value to the community as a whole”. That sounds great and all, but there is a big piece being left out here, and that is WHO is doing the evaluating? And WHO determines the “ultimate value to the community as a whole?”
If you go to the city website you can see who is making the decisions, a board of five members appointed by the mayor and “subject to City Council confirmation”. These members serve 4 year terms and the 3 qualifications bullet-pointed are being a city resident, experience in finance, planning and legal issues and experience with property ownership affairs–so bankers, lawyers and property owners hand-picked by Mayor Engen.
Going back to the “key” of evaluating each proposed project, let’s take at Missoula’s bridge to nowhere. According to an article from the Missoulian at the end of last year, the bridge is part of a strategy to increase recreational use of the West Broadway Island in order to, so the thinking goes, run out the homeless addicts trashing up the place. From the link:
“When we talked to [police Chief Mike Brady], he said the police department is absolutely supporting this project,” Behan said. “For many years, the island has been an area where transients have camped. However, over the past three years there has been a dramatic increase of intravenous drug use and other criminal activity associated with campers on the island.”
“There’s a real fear from people that are using this area.”
Behan said Brady told him the department is spending a large chunk of its budget patrolling the area. Both the MRA staff and the police department believe that by rehabbing an existing bridge to make it ADA-accessible and building a new pedestrian bridge, the island will become more inviting to the general public.
“The more people down there, it cleans stuff up to a great extent,” Behan explained.
For a bunch of smart banker/lawyer/property owner types there seems to be some extreme wishful thinking here to rationalize a half million dollar expenditure of public money.
According to the article, the police are overwhelmed with criminal drug use and there is a “real fear” from people in the area. How exactly is a bridge going to help address this issue? Will the bridge help fix the dysfunction of our criminal justice system? Will it provide supportive services, like treatment for addictions? Will it create affordable housing? The answer to all these questions is, of course, no.
What the bridge does accomplish is the transferring of public money to the pockets of the engineers and developers tasked with building this non-solution to societal ills. And it only took 5 years to push this bridge to nowhere through the meat grinder:
The island lies within the Urban Renewal District II, and the money for the improvements comes from property tax revenue generated within the district. Behan said the MRA has been working on the project for five years, and they finally have enough funding to move forward. The island is managed by the city’s Conservation Lands department, and Morgan Valliant, the city’s conservation lands manager, has had crews out for the past few years clearing non-native species in an effort to increase visibility for island visitors.
It’s taken a lot of time and public money to get this bridge built and it’s still not open to the public yet. Why? Did someone screw something up? If someone did screw something up, how does the public hold that person and/or institution accountable?
While I’m loathe to recommend repeating anything California is doing, policy wise, I will point out that the state of California put redevelopment agencies out of business nearly a decade ago:
The California Supreme Court threw hundreds of redevelopment agencies out of business in a ruling that will benefit state budget coffers but hobble local economic development and housing programs.
The court ruled unanimously in favor of a state law passed last summer that abolished redevelopment agencies and voted 6 to 1 to strike down a companion measure that would have allowed the agencies to continue if they shared their revenues.
More than 400 redevelopment agencies will cease to exist after Feb. 1. Authorized by law since 1945, the agencies have been responsible for such success stories as Old Pasadena and San Diego’s Gaslamp Quarter but also plagued by projects that some argued had little public benefit.
If you don’t like the idea of 5 unelected individuals re-directing millions of tax dollars then pay attention to what is being done with your money. When more details on what’s going on with the bridge to nowhere emerge I hope more people in Missoula will come to the realization that something needs to change with the Missoula Redevelopment Agency.
And if nothing changes, I hope the Montana legislature considers the California option.