Missoula County lays out budgets, projects for two Bonner tax-increment districts

Missoula County officials told the Bonner Milltown Community Council that proposed budgets for two tax increment finance districts (called TEDs, or targeted economic development districts) within the council’s boundaries will fund infrastructure projects and program costs while preserving general-county dollars.

The presentation, led by Andrew Hagemeyer, the county’s community and economic development director, and finance staffer Flana McLarty, explained how tax increment financing channels new tax revenue inside a TED to pay for roads, water, sewer and other infrastructure and then, when a TED expires, returns a larger tax base to other taxing jurisdictions.

Hagemeyer said the tool “allows us to really make infrastructure improvements, and allows us to attract investment in an area without the use of the general tax dollar,” and warned it also “freeze[s] that existing tax base” for other taxing jurisdictions for the life of the district.

Officials presented line-item estimates for the Bonner Mill TED and the West Bonner Logyard TED. For the Bonner Mill district they estimated roughly $418,000 in annual tax-increment revenues and about $500 in interest; planned district expenses included $64,000 in administrative costs, a roughly $282,000 reimbursement for an ambulance-bay project, about $50,000 for landscape design along Highway 200 and the park, an estimated $5,000 to reimburse fire-district inspections, and about $310,000 in annual debt service tied to cleanup bonds. McLarty said those projections leave a one-year shortfall of approximately $292,000, but the district’s available cash balance of about $1.3 million would cover that deficit and leave around $1 million on hand.

For the West Bonner Logyard district staff estimated about $110,000 in tax-increment revenue and $1,000 in interest; administrative costs projected at about $65,000 and $5,000 for fire inspections would yield an estimated net increase of roughly $40,000 to that district’s cash balance, which McLarty said is now about $817,000.

Hagemeyer described projects either underway, in scoping or anticipated for the coming fiscal year. In-progress work includes the ambulance bay reimbursement, which county staff said is in the administration phase and is expected to show visible construction activity in summer and to be completed in October or November. The county is also administering the construction of a public water system for a separate project described as a public water-supply well with a pump and storage tank; that project used about $5.3 million of tax-increment financing and roughly $800,000 of private funds, Hagemeyer said, with a late-comers agreement drafted to reimburse the private portion as properties hook up later.

Potential future requests include an application anticipated from a private outreach effort dubbed Blackfoot Crossing, landscaping design work across from the school, and contracts to reimburse the Missoula Rural Fire District for inspection work that otherwise is uncompensated because the TEDs freeze taxing jurisdictions’ bases. Hagemeyer and McLarty also described program-level work: an industrial land study tied to the county comprehensive plan update, internal policy development for how the county administers TEDs, and quarterly financial reporting to the Missoula Development Authority board.

Council members pressed staff on the distributional effects on other taxing jurisdictions. Hagemeyer outlined mitigation options the county can use, including limited reimbursements for inspection time, annual remittances of excess increment back to taxing jurisdictions, and levy adjustments to change how much increment is captured. He cited a past district where annexation left a fire district without expected long-term benefits and said the council’s Bonner-area TEDs are not likely to be annexed, increasing the chance that taxing jurisdictions will realize long-term revenue when the districts expire.

Hagemeyer summarized the public-review process: projects seeking use of tax-increment financing require a formal application, a recommendation from the Missoula Development Authority and final approval by Missoula County Commissioners, with public hearings occurring during that review. McLarty said the county will present the proposed TED budgets to the county commissioners during the upcoming budget cycle; staff noted a public presentation schedule across June into July and a preliminary county budget hearing set for July 24, with a final budget hearing on Sept. 4. Hagemeyer said he and McLarty will present to the commissioners the following Thursday as part of that process.

Why this matters: TEDs devote new property-tax revenue inside targeted boundaries to pay for infrastructure that can unlock private investment without using general tax dollars, but they also delay additional tax revenue for schools, fire districts and other taxing jurisdictions until the district expires. The council asked for clearer policies, more public reporting and earlier community engagement when projects move from scoping to application.

What’s next: county staff said they will present the proposed budgets to the Missoula County Commissioners and invited community input at upcoming public budget presentations and the TED-specific public hearings.