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City Council’s proposed shakeup of MRA enters reality check, risks stalling larger goals

MSO MRA
Posted at 9:46 AM, Sep 17, 2021
and last updated 2021-09-17 11:46:15-04

MISSOULA — The impacts surrounding proposed changes to the Missoula Redevelopment Agency began to set in this week as both sides discussed the potential setbacks of placing a cap on revenues held within the city’s urban renewal districts, and what would happen if those revenues were removed.

At the same time, the need for additional revenue for the city and other taxing jurisdictions also became clear, with city officials saying the status quo won’t work much longer, especially as the state and federal government place the cost of addressing many of today’s social issues squarely on local governments.

“We do have to find a balance between our operating goals at the city, and maintaining our level of service there, versus the goals we’re accomplishing out of MRA,” said city CAO Dale Bickell. “They’re both super important. MRA has been our number one tool and partner in getting our key infrastructure projects done. It’s a balancing act, and these are important choices council is making here.”

Several members of the City Council last week introduced a resolution that, among other things, would direct MRA to invest more heavily in housing and projects with a component of daycare. It would also limit the amount of tax increment available within the city’s urban renewal districts. The City Council created each district with expressed goals, from sparking economic investment to eliminating blight.

But over time, and as a result of other economic influences, several urban renewal districts have seen their level of tax increment grow. As other large projects come online, including a proposed hotel and conference center in downtown Missoula, and the Scott Street housing project, revenue held within the city’s urban renewal districts will grow beyond the proposed 9% cap when compared to the total taxable value of the city as a whole.

Advocates of the changes want any revenue above and beyond that cap remitted back to the taxing jurisdictions, which include the city and county, and Missoula County Public Schools – the latter being the largest taxing jurisdiction of them all.

“We’re trying to retain our ability to keep the lights on and maintain a level of service we’ve been accustomed to,” said Bickell. “The natural growth in the tax base has been enough to pay for our current level of service and maintain our inflationary pressures. But we don’t get that now. We’re seeing drops in level of service from the federal and state government, and so we’re starting to get involved in housing issues, which hasn’t necessarily been a local responsibility in the past. All these things add up to these pressures and we need to refine the process. Everything is related to that balance.”

While the city and county eye more revenue, others suggest the City Council’s proposed resolution is ripe with pitfalls and challenges. The city maintains six urban renewal districts, and the proposal would draw the remittance from just one, that being Urban Renewal District III in the Midtown area.

That could rob residents and business owners in that part of the city an equal opportunity to make improvements to the neighborhood, placing them at an economic disadvantage when compared to businesses in other districts.

The sacrifices could also include long-sought improvements to the Brooks Street corridor – a plan years in the making and sought after by everyone from Mountain Line to local residents and the city itself. The project has been eyed for both safety reasons and as a tool to boost further economic investment.

“The place from which we make remittances are the places that have cash, and that’s URD III and the Brooks Street corridor,” said MRA board chair Carl Englund. “The plan approved from the very beginning recognizes that Brooks Street itself needed a significant amount of work to make it the street it has become as opposed the street for which it was built, and that takes a significant amount of investment. We have an opportunity now, with talk of infrastructure, to get some of that work done. But if we don’t have those funds, we can’t get that done.”

From its inception, tax increment in the city’s urban renewal districts has resulted in a long list of public improvements that otherwise would have fallen to the city’s general fund, its nonprofit partners and local businesses. In many cases, much of the work would never have taken place without the support of tax increment.

The tool has helped preserve public buildings, improve fire stations, police stations and bus stations. It has aided high school construction projects, improved the art museum, funded the construction of parks, and supported nonprofits for the public good.

It also has built at least three parking structures, four footbridges, water mains and helped consolidate utilities. Tax increment has made road improvements and, over the last decade, has built 15 miles of sidewalks.

“MRA has given resources to many small businesses doing redevelopment projects, and small business that got big and kept jobs in Missoula,” Englund said. “Housing is of course a big issue now, the dominant issue, but it’s always been the focus of the work MRA has done.”

Englund said more than $200 million has been spent on housing in the city’s urban renewal districts, and MRA has contributed $14 million to make public improvements related to those projects. It also has aided the city’s housing agencies, including Homeward, the North Missoula Community Development Council, the Missoula Housing Authority and others.

“The success is proven by the numbers. The growth in the districts are exactly what’s supposed to happen,” Englund said. “But now, because of noise, which is largely based in political disputes about the proper role of the city – and a significant amount of misinformation about TIF – (the City Council) has perceived there’s a signal of public concern within the context of the entirety of city government as to the proper role or future role of what has been and will continue to be a very effective agency.”

While the ordinance would direct MRA to focus on housing, daycare and infrastructure, advocates of the program suggest that’s been the mission of MRA all along. Outside a few controversial investments, the agency – acting in accordance with state law – has invested in housing and infrastructure, often in partnership with private development.

As a result, some are urging the City Council to slow the process down until the full picture becomes clear, including members of the City Council itself.

“I want to make sure we’re being smart when talking about the future,” said council member Amber Sherrill.

Englund offered a similar request, particularly around the proposed 9% cap and taking a sizeable remittance from one part of the city, that being Midtown.

“It’s a novel idea, and we’re heading into uncharted waters,” he said. “Before the cap is enacted, I’d urge us to work together to measure what it will mean and what effect it will have on the projects and goals you (the City Council) have put before us.