Tax increment financing is one of the few tools available to County government to support and encourage economic development in the county. The present funding mechanism allows counties to develop districts that build infrastructure in areas that are infrastructure deficient. District improvements support growth in the district, which then benefits all taxing jurisdictions. Any limitations placed on this financing mechanism will reduce the ability to build public infrastructure, create good paying jobs, and increase the tax base. By eliminating all school mills from the tax increment HB 359 will in effect eliminate the ability of local governments to use tax increment financing as it would make it almost impossible to fund infrastructure development and administrative costs for a new district. It would also limit any new investment in existing tax increment districts. Tax increment districts would be more likely to fail if future funding is not available.
The bill provides a mechanism for loans from the Department of Commerce when an existing district does not have sufficient increment income to pay bond principal and interest. This would add harm to the district as it would be required to pay both the interest on the bond and interest to the Department of Commerce. In addition, there is no mention of administrative costs and how they are paid with such a reduced increment.
The bill seems to assume that all expenses in a tax increment district are paid with bond proceeds. However, while much of the infrastructure costs are often financed with the issuance of bonds administrative costs and some infrastructure costs are paid directly with increment. Issuing bonds is only one funding mechanism.
As an example, the Missoula County Technology Tax Increment District tax increment revenue would be reduced by 46% if the school mills were not included. The County would have just enough to pay the bond payments but no funds to pay administrative costs. In addition, there would be no ability to fund future projects.
In the Missoula County Airport Industrial District, a conservative estimate of investment in infrastructure is over $5 million dollars. Just this past year, two new developments have been built in the District. The businesses wanted to locate in an area with good street, sidewalks, sewer, and water. If the District was formed under the proposed law, it is difficult to see how the development would have occurred. Missoula County would not have been able to make those changes without the increment that it accrued through development.
Sent Feb. 7:
ReplyDeleteRepresentative Hertz:
Tax increment financing is one of the few tools available to County government to support and encourage economic development in the county. The present funding mechanism allows counties to develop districts that build infrastructure in areas that are infrastructure deficient. District improvements support growth in the district, which then benefits all taxing jurisdictions. Any limitations placed on this financing mechanism will reduce the ability to build public infrastructure, create good paying jobs, and increase the tax base. By eliminating all school mills from the tax increment HB 359 will in effect eliminate the ability of local governments to use tax increment financing as it would make it almost impossible to fund infrastructure development and administrative costs for a new district. It would also limit any new investment in existing tax increment districts. Tax increment districts would be more likely to fail if future funding is not available.
The bill provides a mechanism for loans from the Department of Commerce when an existing district does not have sufficient increment income to pay bond principal and interest. This would add harm to the district as it would be required to pay both the interest on the bond and interest to the Department of Commerce. In addition, there is no mention of administrative costs and how they are paid with such a reduced increment.
The bill seems to assume that all expenses in a tax increment district are paid with bond proceeds. However, while much of the infrastructure costs are often financed with the issuance of bonds administrative costs and some infrastructure costs are paid directly with increment. Issuing bonds is only one funding mechanism.
As an example, the Missoula County Technology Tax Increment District tax increment revenue would be reduced by 46% if the school mills were not included. The County would have just enough to pay the bond payments but no funds to pay administrative costs. In addition, there would be no ability to fund future projects.
In the Missoula County Airport Industrial District, a conservative estimate of investment in infrastructure is over $5 million dollars. Just this past year, two new developments have been built in the District. The businesses wanted to locate in an area with good street, sidewalks, sewer, and water. If the District was formed under the proposed law, it is difficult to see how the development would have occurred. Missoula County would not have been able to make those changes without the increment that it accrued through development.
Please oppose HB 359.