The Value of TIFs

By Kellyn Brown

It took until the 11th hour for the Kalispell City Council to extend the life of the West Side Tax Increment Finance District. As someone who now lives in the district, I have to wonder why it took so long. The area is in dire need of a facelift and the redevelopment tool has the potential to spur improvements. Without an agreement, the TIF was scheduled to sunset in March.

The West Side TIF, created in 1997, has already been used for various upgrades in the area – from acquiring land and building a parking lot next to the Gateway West Mall to redesigning the intersection of Three Mile and Meridian roads – and it has accrued about $2 million.

When the district was created, it capped property values in the area and, for nearly the last 15 years, tax revenues generated above that cap have been placed in the TIF fund. Its creation allowed the city to focus on an area that needed attention and still does. Of course, not everyone agrees that TIFs are useful and some city councilors argued for allowing this one to sunset and sending the remaining money to the school district and city and county coffers.

While all three are worthy causes, so is the section of the city that is obviously blighted. There are a number of redevelopment opportunities that exist in plain sight in the area. So the compromise reached to extend the TIF is a good one.

Earlier this month the Kalispell City Council voted to include two projects into the West Side Urban Renewal District, one that could improve the intersection of Meridian Road and Appleway Drive and another that creates a $750,000 revolving loan fund that will help property owners in the area raze abandoned and decaying buildings.

“This would allow us to incent owners to scrape property and remediate blight,” former City Manger Jane Howington said. “And it would give them a period of time to market their property before they had to repay loans.”

If an investor chooses to buy the buildings and repair them, all the better, but in the meantime many of the structures in the district are falling into disrepair. For those who doubt a TIF district’s ability to revitalize a neighborhood, examples of its effectiveness are most apparent in downtown Whitefish.

With the help of this development tool, Whitefish’s core is thriving and, despite an economic downturn still lingering in the valley, the streetscape there is completed and new buildings are under construction. True, Whitefish city councilors have agreed to divert some of its TIF money to the local high school, which has not received substantial renovation in about 50 years.

Of course, not all TIFs are created equal. Compared to Whitefish, a TIF used to improve downtown Kalispell offered more modest returns. Nonetheless, it provided money to improve the roads and sidewalks and to purchase and rehabilitate the Museum at Central School.

The Kalispell Chamber of Commerce, Montana West Economic Development and Flathead County Economic Development Authority supported extending the Westside TIF district. There have also been discussions about expanding the district to include possible improvements at the Flathead County Fairgrounds and the removal of railroad tracks that run through town. They are good ideas.

I agree the city needs to remain frugal and is in no position to overextend itself. It wasn’t long ago that Kalispell was facing a budget shortfall and there is no sense spending money for the sake of spending it. But to stop looking for ways to improve parts of the city that so obviously need attention is no way to promote economic development, something all our elected officials say they support. Especially when the money is already there, waiting to be used.