Opinion: How TIF Funding Works | Chroniclers
Even in Missoula, a community that typically has a well-educated and reasonably informed constituency group, I am amazed at the misinformation surrounding the debate over TIF funding. Especially as we go through another local electoral cycle, disinformation seems to be the order of the day.
As the owner of two buildings in Missoula, both supported by TIF funding, I thought I would take a moment and try to explain how it works from an owner’s perspective.
In 2002, I purchased the old Missoula Children’s Theater and the Missoula Mercantile Warehouse in the 200 block of Front Street. It had been empty for seven years and needed massive fire safety upgrades and general code compliance issues. We moved into the building in August 2004 and were the only business east of Higgins and Front. We asked for and received aid to finance the TIF, the building was saved and we were able to afford to build it thanks to the support of the TIF. Since 2004, development around us has accelerated and we now have a robust neighborhood.
In 2019, I completed a project to rehabilitate the old Sears warehouse on Garfield in Midtown Missoula, securing support from TIF to remove four large concrete walls and replace them with floor-to-ceiling windows, completely changing the character of a dark warehouse into a cool and funky boat. store. Neither building would have been renovated like I did without the help of TIF funding.
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So how does it work? A TIF constituency (Financing by tax increase) is constituted by a vote of elected officials. When a project is presented and approved, after the project is completed, the money is paid to the owner for only the work that has been pre-approved and which is generally used to pay off the debt. The building is now worth more than it was before the project and, as a result, the property tax assessment increases.
This increase (the added tax collected due to the increase in value) is the only money that goes into TIF funding to support the next project. When the neighborhood ends, by status, all tax money goes to the general fund for the rest of the building’s life. In my case, the value of the building increased dramatically and within two years the neighborhood I was a part of came to an end. Another district was formed, but the added value of my building was included in the tax roll of the general fund for 15 years, a figure much higher than the money I received to carry out the project.
The program is working and the vast majority of approved projects, like mine, are small but important to the owner. In many cases, the financing of the TIF was the key element in the realization of the project.
The program has rules – if you follow the rules and the project respects them, you get funding. The rules are no different if you’re Starbucks, a hotel developer, or a local business like mine.
Everyone follows the same rules and it doesn’t matter that they (the big nationals) would have built the project anyway. TIF funding is a tool to stimulate development in an area of ââthe community that has needs and opportunities. Reserve Street is the alternative development you get without TIF funding.
It is one of the most powerful tools a community can use to create a community worth living in.
Todd Frank owns The Trail Head and Trail Head River Sports.