2. TIF DistrictsCity of Kalispell
f Post Office Box 1997-Kalispell. Montana 59903-1997-'Felephone (406) 758-7000 Fax - (406) 758-7758
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REPORT TO: Honorable Mayor and City Council
FROM: James H. Patrick, City Manager
SUBJECT: TIF Discussion
DATE: April 21, 2005
There has been a lot of discussion concerning Tax Incremental Financing Areas and Monday
night's discussion is intended to revisit the different types of TIF districts that a City may create,
the costs that may be paid by the TIF, TIF re I rnburseinent, 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.
Montana Code allows for Urban Renewal TIF, 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 isundertaken 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.
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. I feel there may be some
ability to reevaluate and restructure the tax base during the course of the TIF especially when
new bonding is contemplated.
There are several new TIF projects that are being contemplated to include but not limited to
expanding the existing airport TIF to include several additional properties, a new TIF District
along the railroad, an industrial TIF, and a technology TIF. These items will be further discussed
Monday evening.