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Missoula County extends AT&T lease agreement, caps excess tax increment

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Posted at 3:03 PM, Dec 24, 2021

MISSOULA — A lease agreement signed during a different economic era in Missoula underwent some modifications this week after AT&T/Direct TV extended their lease in the county’s tech district for another five years.

The lease extension includes a base monthly rent of roughly $66,000. The county passes much of that on to the state to buy down the principal on an infrastructure loan it used to attract Direct TV to Missoula and the jobs it provides.

“We didn’t borrow it – it was a conduit borrowed through us with the Montana Board of Investments with Direct TV. They borrowed the money to build that call center. We own the land and lease the land to them,” said county CAO Andrew Czorny.

Of that funding, the county retains around $7,000 a month in lease payments, Czorny said.

The payments stem from excess tax increment financing within the tech district. AT&T/Direct TV has been the only tenant within the district for much of that time, and its payments are slowly paying off the debt.

“The way the original agreement is set up, at the end of every lease period, we take all excess tax increment in the district and we give that money, after our expenses, to the state to pay down the principal,” said Emily Brock, director of economic and land development for the county. “That’s the way it was set up.”

But this month, the county sold a parcel within the district for $1.5 million to Shadowcast Partners. That company plans to construct a distribution center for electric freight trucks.

With new tenants expected to move in, the county placed a $500,000 cap this week on excess tax increment. Anything up to that amount will be used to pay off the infrastructure loan. Anything above it will stay with the county, Brock said.

“We’re going to cap all excess tax increment that’s eligible to pay back the infrastructure loan to $500,000,” Brock said. “That’s in case there’s a windfall in the district due to the sale of lots we had recently to Shadowcast.”

The tech district includes a number of vacant lots, though the addition of Shadowcast Partners could spark additional interest. It’s unlikely the county will again use tax increment in a development district to pay off a loan used to attract a business and the jobs it provides – an arrangement commissioners described this week as antiquated.

By placing a cap on excess tax increment, anything over $500,000 can now be applied toward local needs, the county said.

“There was a time when you didn’t see a now-hiring sign everywhere and we needed good-paying jobs in Missoula,” Commissioner Josh Slotnick said of the original agreement. “With the cap, we can now use that money to do some really great projects around housing.”