Montana defines TIF in the Montana Tax Increment Financing Manual (April, 2012, p.2). It states, “Proposed TIF districts are typically characterized by blight and/or infrastructure deficiencies that have limited or prohibited new investment.” State law requires the city to document this blight and/or infrastructure deficiency in order to be allowed status as a Tax Increment Financing District (TIFD). For urban renewal the finding must be in the form of a resolution of necessity. Polson’s Resolution 739 outlines their findings of blight with the intent for “rehabilitation and redevelopment.” Once established, the city is permitted to finance debt. The method for calculations used for finance is beyond the scope of this document but can be reviewed in the manual mentioned above.
Any community is taking a financial risk in undertaking a TIF district, as there is potential for subsidized projects to not increase in value, or not increase rapidly enough. The law is specific about “blight”, “infrastructure deficiencies” and “redevelopment and rehabilitation.” Understand that someone should not be able to approach the redevelopment agency with an idea because of the nice pot of money. It isn’t a pot of money. It is a risky debt fund that can only be repaid if property values increase substantially.
What is Blight?
State law is quite clear about blight. MCA 7‐15‐4206 (2). Blighted “means an area that is conducive to ill health, transmission of disease, infant mortality, juvenile delinquency, and crime, that substantially impairs or arrests the sound growth of the city or its environs, that retards the provision of housing accommodations, or that constitutes an economic or social liability or is detrimental or constitutes a menace to the public health, safety, welfare, and morals in its present condition and use.”
The Polson Redevelopment Agency (PRA)
The responsibility and obligation for oversight and prioritizing blighted projects was given to the created Polson Redevelopment Agency (PRA). There is some evidence that the PRA was initially semi-serious about using TIF financing responsibly. The Gambles Building on Main Street is perhaps a good example of blight as defined. At a City Commission meeting (10/17/11), PRA Chairman Jules Clavadetscher reported “that the Gambles building was currently the top priority.” According to City Commission meeting minutes (4/16/12), Mr. Clavadetscher reported “The PRA is in the process of obtaining a commercial appraisal of the [Gambles] building which should be available by the end of April. The PRA will then make a recommendation to the City Commission on how to proceed on the Gambles building.”
Somehow, by the following month, all that had changed. The Polson City Commission agenda (5/21/12) stated: REVIEW OF PRA RECOMMENDATION FOR GAMBLES BUILDING. As Mr. Clavadetscher spoke it appeared he wasn’t going to get around to the agenda topic so “Mayor DeVries asked if Jules Clavadetscher wanted to update the Commission on the Gambles building. Jules Clavadetscher stated that at this time the PRA is considering a TIF Bond that would be paid back with TIF district revenues…Mr. Clavadetscher stated that it is premature to discuss the Gambles building at this time.” What TIF project is he talking about? Answer: The walkway bridge under the Highway 93 bridge. This project was brought to the PRA by now departed city manager Todd Crossett on behalf of Envision Polson! and Parks Superintendent Karen Sargeant.
This concludes Part 1 which was written to provide a foundation for understanding. Specific TIF abuses will be explored in TIF Trouble in Polson–Part 2.