County officials are pushing forward with a proposed tax-increment district along much of Harrison Avenue on the Flat in hopes of spurring more development there, but its size has been cut in half.
The revised plan goes before commissioners Wednesday night and over the next several weeks, they will consider adopting an ordinance to establish the district. The Montana Department of Revenue must also OK the plan.
The proposal was reduced from about 1,500 acres to 750 acres and no longer includes Stodden Park and areas west, any portion of Dewey Boulevard, Bert Mooney Airport or the Copper King Hotel and areas around it.
County Assessor Dan Fisher pushed for the shrinkage, saying the much-larger area would keep too much future property tax revenue from flowing into the county’s general fund, where it can be spent on police, fire and other services that benefit all taxpayers.
He also said some swaths that were cut out, including Dewey Boulevard and areas around the Copper King, have already been developed or have planned subdivisions going in.
And because of the changes, new tax dollars generated by the district would be re-invested in a smaller area so the people and businesses paying into it are more likely to benefit from new developments.
On the latter point, Community Development Director Karen Byrnes agreed that the size of the initially proposed district was too unwieldy.
“If the district is too large and you cover too many areas, it spreads out those (reinvested) dollars too thinly,” she said.
The county already has four tax-increment finance districts, or TIFs, including one covering the business industrial park west of town, one Uptown, one for northeast Butte that includes East Park Street, and a new one just south of urban Butte that includes the old MSE complex.
Like the others, taxes generated by increased values on existing properties and new developments in the proposed area of the Flat would be captured and re-invested in economic development in the same area.
The money can be spent on such things as new or upgraded water and sewer lines, street improvements and sidewalks. It can be used to provide loans or subsidies to private investors for projects that create jobs and the paychecks and tax revenue they come with.
The districts do not by themselves increase property taxes. A base tax value continues to generate dollars that flow to all taxing units, including local government and schools. Only revenue from increased values, called “increments,” is captured solely for re-investment.
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Byrnes has said that some major developers have looked at the retail corridor on the Flat in recent years but shied away because of poor street designs, inadequate water and stormwater capacity and other issues. Streets in some nearby neighborhoods are in poor shape, some don’t have sidewalks or curbs and some aren’t safe for pedestrians.
Byrnes, county Chief Executive Dave Palmer and others on an “economic team” believe a tax-increment district could help turn that all around.
A memo recommending the plan to commissioners says its “general scope” is to “invest in public infrastructure, foster economic growth and leverage resources to achieve neighborhood revitalization and rehabilitation.”
There are some perceived downsides to tax increment districts.
Some tax values in an area might go up through appreciation and other natural factors, but if there’s a TIF, the extra revenue isn’t available for general purposes like schools, police, fire and services that benefit everyone. And without that extra money, the county or schools might have to raise property tax rates for such things or cut services.
Fisher was concerned that creating a new, sprawling district on top of four already would put too much of Butte under tax-increment financing, so he pressed for more discussions.
He said Monday that the TIF for the industrial park is set to expire in 2022, and even if it is renewed, the additional tax values over the years would become part of the base again. That means those tax dollars would flow to the county’s general fund and the increment would start at zero again, something Fisher wanted.
He also said if the TIF for northeastern Butte is extended through bonding for new infrastructure, it likely would be for five years or less, not the 15 allowed.
If the size of the proposed new district itself had stayed at 1,500 acres, he said, there would be areas paying into the TIF that would probably never benefit directly from new developments it funds on the other side of town.
“It was way too big for reinvestment,” he said.
Byrnes said the council can make changes in the coming weeks as the proposal moves through a typically lengthy procedural process. A public hearing is set for Nov. 6 at 7:30 p.m. before commissioners at the courthouse and people can submit written comments then or prior to the hearing.
They can be sent to Karen Byrnes, Director of Community Development, Butte-Silver Bow Government, 155 W. Granite St., Butte, MT 59701. Contact Byrnes for more information on the plan at 406-497-6467.