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Great Falls staff: TIF can help housing but income rules limit small downtown projects
Summary
Planning staff told the City Commission that state rules let Tax Increment Finance (TIF) support workforce housing, but income-compliance requirements make TIF most useful for larger new-construction projects rather than small upper-floor infill; commissioners asked staff to explore complementary tools such as RFPs, abatements and nonprofit partnerships.
Director Brock Cherry told the Great Falls City Commission on Aug. 19 that Montana guidance treats workforce housing as households earning 60%–140% of area median income and that the mechanics of TIF make it a better fit for larger developments than for small property owners seeking to add a few units above downtown businesses.
"Income compliance is really hard," Cherry said, describing the monitoring obligations that can come with workforce-designated TIF awards and the administrative gap the city would face in enforcing those restrictions "in perpetuity." He said Missoula’s model — a development partner plus a community trust and a redevelopment office — showed how larger projects can absorb the compliance burden.
The presentation summarized outreach the planning department made during the growth-policy update and two informational May town halls with downtown property owners, designers and small-business operators. Staff reported that rehabilitation of upper floors often costs more than $200,000 per unit and that those economics, combined with complex compliance rules, mean TIF alone may not "pencil" for many small infill projects.
Commissioners pressed staff on alternatives and complements. Commissioner Brock Wolf asked whether CDBG HOME funds could be part of a capital stack; Cherry said CDBG could be layered with TIF for qualifying projects. Cherry and others recommended exploring requests for proposals (RFPs) for city-owned parcels, property-tax abatements and building-permit fee reductions to make downtown infill more attractive.
"Sometimes good things happen when you start small," Wolf said, urging staff to keep the idea before the development community and pursue multiple tools. Other commissioners emphasized partnering with nonprofit housing developers that already manage income compliance and suggested the city consider a community land trust for owner-occupied units.
Staff recommended keeping a workforce-housing TIF option available while pursuing additional incentives and targeted RFPs for city property. There was no formal vote; commissioners agreed to keep the initiative on the work plan and asked staff to return with more direction and options.
