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Big Sky committee explores new TEDD option to finance infrastructure
Published
10 years agoon
By Joseph T. O’Connor Explore Big Sky Managing Editor
BIG SKY – A group of community leaders is considering ways for this unincorporated town to make major strides in local, public infrastructure development.
While new buildings are being constructed in Big Sky – in the form of a medical center and grocery store, as well as in the private home sector – the Big Sky TEDD Committee, formed in early July, believes infrastructure improvement is imperative to support economic development, and feels a Targeted Economic Development District could service the area to that end.
The near-25 member committee – a commission of the Big Sky Chamber of Commerce – has been meeting for six weeks to dissect TEDDs, and to see if this form of infrastructure development support could work in the Big Sky area. Last year, a change in Montana law made this option viable.
In April 2013, Gov. Steve Bullock signed into law Senate Bill 239, in part allowing certain areas in the state to form TEDDs and harness property tax for local investment. SB 239 amended the Montana Urban Renewal Law to spur community growth and encourage private investment in infrastructure-deficient areas. Before the statute changed, incorporated cities were the only areas that could use this type of development support. The amended law caught Bill Simkins’ attention.
“When I read it I thought, ‘Gee, this could be a great tool for Big Sky,’” said Simkins, a local developer and manager of Simkins Holdings LLC, who sits on the Big Sky TEDD Committee. “It’s a common tool to fund public infrastructure and encourage economic development.”
SB 239 allows counties to form TEDDs and keep development-generated property tax dollars in the district, as opposed to sending the taxes to the county and state. These districts can be funded through Tax Increment Financing, or TIF, which allows the TEDD to effectively keep incremental property tax increases and reinvest them in infrastructure improvements.
Those projects can include improvements to roads, sidewalks, parking facilities, sewer lines, bridges, publically owned buildings, or any number of public improvements the law authorizes.
According to a document acquired by EBS and prepared by the Big Sky TEDD Committee, a local TIF could potentially support “school, fire department, police and transportation system upgrades; year-round tourism opportunities; and extend public infrastructure to support attainable workforce housing,” among others.
The community stakeholders have been working on the possibility of creating two TEDDs – one in the Gallatin County portion of Big Sky; one in the Madison County portion.
The idea, said Big Sky School District Supt. Jerry House, is to find the best way to move development forward and to benefit from growth in both areas in Big Sky. The county line runs north and south between the meadow and Lone Mountain. Big Sky Resort, including the Moonlight area, as well as the Yellowstone Club are in Madison County, while Spanish Peaks Mountain Club has land within both counties. Town Center, the Meadow Village and the Canyon are all in Gallatin County.
“TEDD is a very positive forum,” said House, who has 11 years of experience with TIF funds as superintendent of the Whitefish School District, and also sits on the Big Sky TEDD Committee. “The beautiful thing is that as we grow as a community, the school will grow and businesses will grow, and I really think that if Madison and Gallatin [counties] work together as one, we can arrive at solid decisions.”
A diverse advisory board would manage both districts, according to committee meeting documents, and would be comprised of a cross section of the area, including community members, resort industry stakeholders, and public service representatives in both counties.
But first, both county commissions must deem that the proposed TEDDs include infrastructure-deficient areas, and then approve the development plan. The committee is currently working on a public engagement process to gather community feedback before submitting the plan to county commissioners.
“TIF can be a hard thing to sell, but part of that is a misunderstanding of TIF and TEDD,” said Pierre Martineau, chairman of the Gallatin County Commission. “But we have to explore it because it’s a possible solution to a lot of problems.”
Along with a shortage of workforce housing in the Big Sky area, Martineau pointed to sewer and water infrastructure deficiencies that could pose problems down the road as area population increases.
Madison County also recognizes potential infrastructure issues, said Madison County Commissioner David Schultz, and hasn’t ruled out a TEDD as an answer. “I’m still trying to get my arms wrapped around the TEDD/TIF concept,” Shultz said. “Big Sky is truly becoming a community, and to make it opportunistic for people to live there and stay, it’s going to be interesting. TEDD is one of the opportunities that we’re looking into as we learn more about it.”
One advantage to TIF, the committee says, is that this financing tool is self-sufficient, relying on local development to fund further infrastructure projects.
“TIFs do this without adding any new or additional taxes and without relying on federal funds,” said Brian Caldwell, an architect with Bozeman-based planning and architecture firm Thinktank, which has served as a consultancy for the Big Sky committee since May. Caldwell says he and business partner Erik Nelson have significant experience working with TIF districts in Bozeman.
“It’s all about recommitting taxes generated in the area toward future success in that area,” Caldwell said.
How it works
The Montana Legislature created Urban Renewal Districts in 1974 as catalysts for infrastructure growth in cities. Using Tax Increment Financing as a funding mechanism, a number of cities took advantage of the development opportunity, including Whitefish, Helena, Missoula and Bozeman, which currently has four TIF districts, including one that covers its downtown area.
There are now roughly 50 districts in the state, three of which are TEDDs. Since the passing of SB 239, TEDDs have sprung up in Montana in Bonner, Shelby and Stevensville.
If Gallatin and Madison counties approve a TEDD, a baseline amount of property tax in the district is determined. This baseline amount will continue to go to the counties but over time, as infrastructure improvements are made, the property taxes generated above the baseline tax stay in the district to be used for further public infrastructure projects.
“Our main goal with this [TEDD] is to help underwrite needed workforce housing and water and sewer improvements,” said Ryan Hamilton, also a member of the TEDD committee.
Workforce housing has been a focus of community attention for years, given a lack of affordable options for locals employed in the area. At a housing meeting hosted by the Big Sky Chamber of Commerce in January, Janet Cornish, principal at Community Development Services of Montana, presented the idea of a TEDD. Commissioner Martineau was present at the meeting.
“I’m all in favor of it,” Martineau said. “I think Big Sky has a serious housing issue and TEDD might be able to address that.”
During the meeting, Cornish explained that TEDDs have a 15-year shelf life, but that it “can be extended for up to a total of 40 years if the local government issues a TIF bond any time during the first 15 years.”
Bonding authority could allow the area to tackle larger projects, such as purchasing land for attainable housing projects or expanding the Big Sky Water and Sewer District to include parts of the Gallatin Canyon, according to committee documents.
While it’s still early in these processes, Cornish, with more than 35 years under her belt as a consultant for community development, says a TEDD could be a valuable asset to the Big Sky area.
“If they go through all the steps, there’s no reason why they couldn’t do it and it’s a great tool,” Cornish said. “Businesses benefit, the local community benefits and the county benefits in the long run.”
The Big Sky TEDD Committee is in the process of establishing an informational webpage for the potential TEDDs in the area. EBS will continue to follow this story as it develops.
Megan Paulson is the Co-Founder and Chief Operating Officer of Outlaw Partners.
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