Among Missoula TIF projects, the Morrison-Maierle building on Mount Avenue is an example of project where funds were used favorably.
In part three of Sterling CRE’s series on TIF funding, Matt Mellott focuses on the positives- how TIF funds can be used as part of a good partnership that benefits both the private and public sectors.
It’s important to note that here at Sterling CRE, we work on commercial sales and developments involving TIF funds. From that experience, we know TIF projects aren’t all good and they aren’t all bad. But, TIF is a misunderstood tool. This series is meant to help clear up some of the confusion looking at some local case studies and exploring TIF mechanisms.
In this case, this stretch of Mount Avenue got a modern update when the Morrison – Maierle building was completed in 2019. But beyond being a much more aesthetically pleasing façade, the tax revenue the City derives from this area increased substantially.
Ideally, TIF funds are leveraged to allow projects to move ahead that would otherwise be undoable without municipal co-investment on infrastructure deficiencies. When those projects are complete, taxes increase because of these improvements and the city benefits from increased tax revenues.
But let’s check out the numbers to see why this project was viewed favorably.
The MRA, who manages TIF funds, gave $221,000 to support this project. That money was largely spent on infrastructure deconstruction of existing facilities, demolition, asbestos removal and site clearing. Here’s why the city’s contribution to the project made sense:
The taxes on this property before the improvements made by the new build were about $8000. After the improvements, the taxes went up to about $43,500. That means that the TIF district will be “paid back” in about 5 – 6 years.
Morrison-Maierle was growing quickly. An expanded facility would allow for a growing staff- and that means more jobs in Missoula. In the TIF application, it was estimated that 10 – 15 engineers were to be hired, along with support staff. That seems to have born out, as over 19 people have been hired since the opening of the new facility on Mount Avenue.
When the project was proposed to the MRA, the developer was in a very strong financial position, with secure financing and collateral already in place. That means it was a reasonably low risk for the city to partner with the developer.
And who was the developer? A local family who had previously developed projects within TIF areas.
The project allowed high-speed communication fiber to be extended to the site. By extending the fiber to the site on Mount Avenue, over 20 nearby businesses were also able to tap into this new resource.
Finally, the city had identified that this area needed more professional office. The building fulfilled this purpose.
All in, this project was a great example of public/private partnership. More jobs, more high speed fiber access for neighbors, more tax revenue, and more accessible walkways made this an attractive package deal.
While there is a lot of mudslinging about TIF funding, it’s important to remember that there are some very positive TIF projects that bring a great deal of value to the community. We’ll link to a helpful resource below if you’re interested in digging into all the TIF funded projects in Missoula.
In the next part of our series, we’ll cover a TIF project that caught a lot more heat and the reasons why.