Patrick/TIF DiscussionCity of Kalispell
Post Office Box 1997 - Kalispell, Montana 59903-1997 - Telephone (406) 758-7000 Fax - (406) 758-7758
REPORT TO: Honorable Mayor and City Council
FROM: James H. Patrick, City Manager
SUBJECT: TIF Discussion
DATE: October 27, 2005
There has been a lot of discussion concerning Tax Incremental Financing Areas and Tuesday
night's discussion is intended to revisit the two types of TIF districts that a City may create, the
costs that may be paid by the TIF, TIF reimbursement, and potential projects. Tax Increment
Financing is an economic development tool used in most states and is one of the top five
questions developers ask about when looking at relocation or expansion. Property owners in and
outside the district do not pay any more or less taxes with or without TIF. Industrial and
businesses do not consume many city services nor do they send students to school and use those
resources.
Montana Code allows for Industrial, and aerospace and technology Districts. Kalispell has only
used the Urban Renewal TIF in the past. Urban Renewal Districts specifically address blighted
and/or underutilized areas of the City in an attempt to correct the blighted area. Industrial TIFs
may be used for projects undertaken within or for an industrial district if the proposed industrial
district consists of a continuous area with an accurately described boundary, is zoned for
industrial use, does not include any property included within an existing urban renewal area
district, is deficient in infrastructure improvement for industrial development, and has as its
purpose the development of infrastructure to encourage the growth and retention of secondary,
value added industries. The aerospace transportation and technology TIF is undertaken within or
for an aerospace transportation and technology district if the proposed district consists of a
continuous area with an accurately described boundary, properly zoned, does not include any
property currently included within an existing urban renewal area district or industrial
infrastructure development district, is found to be deficient in infrastructure improvements for
industrial development, and has as its purpose the development of infrastructure improvements
for industrial development, and aerospace transportation and technology infrastructure
development project in the state.
Tax increments may be used by the municipality to pay the following costs of or incurred in
connection with an urban renewal project, industrial infrastructure development project, or
aerospace transportation and technology infrastructure development project: land acquisition;
demolition and removal of structures, relocation of occupants, the acquisition, construction, and
improvement of infrastructure; or aerospace transportation and technology infrastructure that
includes streets, roads, curbs, gutters, sidewalks, pedestrian malls, alleys, parking lots and off
street parking facilities, sewers, sewer lines, sewage facilities, publicly owned buildings and any
public improvements; costs incurred in connection with the allowable redevelopment activities;
acquisition of infrastructure deficient areas or portions of areas; administrative costs associated
with the management of the industrial district or the aerospace transportation and technology
districts; assemblage of land for development or redevelopment by private enterprise or public
agencies, including sale, initial leasing or retention by the City at its fair value; the compilation
and analysis of pertinent information required to adequately determine the infrastructure needs of
secondary, value -adding industries in the industrial district or the needs of an aerospace
transportation and technology infrastructure development project in the aerospace transportation
and technology district; the connection or the industrial district or the aerospace transportation
and technology district; the provision of direct assistance, through industrial infrastructure
development projects or aerospace transportation and technology infrastructure development
projects, to secondary, value -adding industries to assist in meeting their infrastructure and land
needs within the industrial district or the aerospace technology; and the acquisition, construction,
or improvement of facilities or equipment for reducing, preventing, abating or eliminating
pollution. Business, companies that do not qualify for a TIF would pay the taxes in the normal
fashion.
As you are aware, when a TIF District is established, the current tax base is frozen for continued
distribution to the taxing agencies. The new tax base created then goes to fund the necessary
improvements for a period of 15 years or for the length of the bonds. All taxing agencies
ultimately derive benefit from the increased tax base as well as the wealth created in the
community from increased wages, services, and jobs that are made.
Respectfully submitted,
James H. Patric
City manager