Missoula County opposes SB 523, Generally revise tax increment financing laws, up on the Senate floor this morning. Counties use Targeted Economic Development Districts (TEDDs) to build infrastructure that promotes the creation of industrial jobs. TEDDs will become unworkable if this bill passes.
The 5% cap on administrative costs punishes smaller targeted districts, like the ones counties use, and inadvertently encourages larger regional districts. It would be impossible to administer a program in the early years when so much planning is required on a small amount, such as $30,000. This low administrative cost also would create challenges with the provision that elections be held prior to bond issuance, as election costs might be higher than what the 5% retainer will cover.
This bill would also shorten the length of time that a district could be in effect to the extent that the limited bonding capacity would make them almost impossible to use. Sunsetting districts before they reach maturity defeats their purpose. TIF districts don’t generate any increment in the first decade or more - they neither become useful nor pull increment from outside taxing jurisdictions during that period. For example, the Bonner West Log Yard is a TEDD in Missoula County created in 2014 that is only just now receiving enough TIF funding to see results. The tax increment collected within the last nine years has only just reached $700,000 – enough to start a small project such as a road, but not enough for necessary improvements, such as addressing water and wastewater, to bring in high value-adding businesses. If this TEDD were to sunset after 10 years, no jobs would be created in the area.
Senators,
ReplyDeleteMissoula County opposes SB 523, Generally revise tax increment financing laws, up on the Senate floor this morning. Counties use Targeted Economic Development Districts (TEDDs) to build infrastructure that promotes the creation of industrial jobs. TEDDs will become unworkable if this bill passes.
The 5% cap on administrative costs punishes smaller targeted districts, like the ones counties use, and inadvertently encourages larger regional districts. It would be impossible to administer a program in the early years when so much planning is required on a small amount, such as $30,000. This low administrative cost also would create challenges with the provision that elections be held prior to bond issuance, as election costs might be higher than what the 5% retainer will cover.
This bill would also shorten the length of time that a district could be in effect to the extent that the limited bonding capacity would make them almost impossible to use. Sunsetting districts before they reach maturity defeats their purpose. TIF districts don’t generate any increment in the first decade or more - they neither become useful nor pull increment from outside taxing jurisdictions during that period. For example, the Bonner West Log Yard is a TEDD in Missoula County created in 2014 that is only just now receiving enough TIF funding to see results. The tax increment collected within the last nine years has only just reached $700,000 – enough to start a small project such as a road, but not enough for necessary improvements, such as addressing water and wastewater, to bring in high value-adding businesses. If this TEDD were to sunset after 10 years, no jobs would be created in the area.
Please oppose SB 523.