When Montana Senator Greg Hertz introduced Senate Bill 523 into the legislature earlier this year, he never imagined it would catalyze the gathering of more people than any other piece of legislation introduced during the entire 2023 session. His bill sought to rein in the addictive potential of the municipal tool known as Tax Increment Financing and allow TIF to finally receive some much needed public scrutiny. It also brought its primary beneficiaries into the light, many of whom revealed exactly how low they’re willing to sink in defense of their “free money” fountain.
After passing through the Senate Committee, SB 523 entered into the House Taxation Committee for review, where it was met by an army of lobbyists. Former City Councilman and longtime TIF critic Jesse Ramos commented on the irony of voters facing off against opponents whose salaries they’re helping to pay for:
“Unfortunately, constituents have to work,” he said. “When you’re taking on these big giants, the League of Montana Cities and Towns, a lot of these folks are paid with taxpayer dollars to fight against the interest of the taxpayers. It’s frustrating.”
Montana taxpayers were up against a crowd of suit-and-tie representatives from the Big Sky Resort, the Montana Building Industry Association, the Montana Economic Developers Association, the American Council of Engineering Companies of Montana, the Montana Contractors Association, the Great Falls Development Alliance, the Montana Banking Association, Montana Architects, the Montana Travel Association, the Hospitality and Development Association of Montana, Montana Chamber of Commerce, Montana Infrastructure Coalition, Kalispell Chamber of Commerce, Montana Association of Realtors and the Missoula Economic Partnership. Every one of these lobbyists arrived in the state Capitol to help protect their favorite public investment subsidy from succumbing to additional regulation.
Without unregulated TIF dollars, developers would be on the hook to pay for the demolition costs associated with redeveloping existing property, which is the normal course of events and always has been. It’s always nice to receive a subsidy but the screaming high demand for real estate in Montana guarantees that said developments would have happened anyway and therefore did not require an extra incentive from the taxpayers. Nevertheless, one of the classic arguments made by TIF addicts is that these developments would not have happened “but for the TIF”, hence all the corporate hysteria hurled in Helena.
Charles Robison of the Montana Chamber of Commerce alleged that, “TIF builds infrastructure that won’t get built otherwise.” WGM engineer Brent Campbell echoed with, “My developer clients will not invest in that kind of risk, where some neighborhood folks dislike a project. Frankly TIF is the great equalizer.” Brent Campbell also earned the award for Most Distracting Facial Expressions Made During a Legislative Hearing.
There were many runners up for Most Offensive Show of Entitlement for Taxpayer Money, including the unelected Mayor of Missoula Jordan Hess’ breathless claims about so-called “affordable housing” or WGM’s executive officer Jeff Smith’s contention that “TIF is too important to the health of Montana’s economy and in solving our affordable housing crisis.” The public are meant to believe that our communities would fall apart without public subsidies for developers, which is exactly what Julie Foster of Ravalli County claimed when she said, “If this bill goes forward it is the knock-out blow for our community.”
But the award for Most Emphatic Distortions may go to May Nan Ellingson from Missoula, who alleged:
“Every tax increment district, every tax increment project, every tax increment bond that has ever been issued in this state has been approved by a duly elected City Council or a board of county commissioners. … Tax increment bonds are truly revenue bonds. If the tax increment revenue is not adequate, the tax payers are not on the hook. It’s a risk that the purchasers of tax increment bonds make. Tax increment bond proceeds cannot be used to fund private buildings.”
According to constitutional attorney J. Kevin Hunt, these revenue bonds are really “junk bonds” secured only by unrealistic predictions of guaranteed prosperity. General Obligation Bonds are more secure, but must be approved by a vote of the people. Many cities issue “junk” revenue bonds explicitly to eschew that responsibility, especially when it comes to projects they know the public won’t support.
Dan Brooks of the Billings Chamber of Commerce seemed to corroborate this fact when he mentioned that, “While some cities may not require council approval, ours does, and those elected officials get to answer to their constituents.”
As for whether TIF bonds can be used to fund private buildings, that seems to be exactly what MRA proposed in 2019 when they pushed forward a $16.5 million TIF bond aimed at helping entertainment magnate Nick Checota build a community center that only he could enjoy exclusive access to, and for a lease duration of 75 years to be paid for by his property taxes. Stockman Bank likewise spent millions of dollars of public money to build private bank towers throughout the Missoula valley.
Next, the award for Most Obvious Contradiction goes to Craig Rickert and his misguided declaration that,
“People outside my TIF district are not paying taxes into the TIF district. There seems to be a lot of miscommunication about that. People outside my TED district are not paying taxes into the TED district.”
Actually, people outside your TIF district are, in fact, paying taxes into the TIF district. And that isn’t a typo – Craig conflated TIF and TED so many times the chair had to ask him which one he meant. If you own property in an Urban Renewal District (URD), part of your property taxes go into a special fund used for other projects in that area. And this a isn’t “miscommunication”. It’s the reason why neighboring taxpayers grow increasingly irate about the things that their dollars are funding in districts that redirect captured tax revenue. In 2021 Craig Rickert’s developments became the target of lawsuits from citizens who called his deal with the Department of Transportation “unconstitutional”:
The lawsuit, filed in district court in Broadwater County, takes aim at MDT’s decision to work with Montana Rest Area JV Partners to build a rest area in Three Forks near U.S. Highway 287 and Wheatland Road. In exchange for the new rest area building, MDT would hand over the 19th Avenue rest area in Bozeman to developer Craig Rickert.
Next up, the award for Biggest Facepalm goes to Sara Hudson of Snowy Mountain Development, who claimed that anyone who criticizes the use of TIF must have a “fundamentally flawed” understanding of it, which in this case included Fortune 500 CFO Bob Moore and other veteran finance professionals. Officials reliant on TIF dollars predictably employ this old-hat response whenever the voters begin to get wise about where their taxes are going. Regardless of how many facts and figures are presented, critics are unanimously and contemptuously told that they “just don’t understand” how TIF works.
Finally, the award for Most Offensive Show of Entitlement for Taxpayer Money goes to developer Matt Sullivan who foolishly alleged that his ideological opponents were wasting everyone’s time and merely for the purposes of personal grandstanding:
“Programs like TIF should always be improved but please be careful, objective and data-driven to make this decision. Do not be swayed by exaggeration and misinformation! Today no proponent has presented actual studies proving this bill will lower taxes! They’ve just presented their opportunities for themselves to speak!”
First of all, neither Mr. Sullivan nor any of his peers ever satisfactorily rebutted any of the specific criticisms or concerns presented. They can’t debate the merits of a bank buying it’s own TIF bonds because they don’t seem to understand what that sentence even means. And they certainly can’t tell us it’s ethical for local businesses to be forced to subsidize outside competition.
Secondly, it’s technically true that tax burdens wouldn’t necessarily drop immediately, but they could stop skyrocketing as steeply for those affected by the so-called “special assessment” taxes of URDs.
Does anyone really think Missoula’s constant tax levy proposals are a normal consequence of fiscally responsible policy decisions? Every approved levy constitutes a tax increase. Missoula County Public Schools have repeatedly asked the voters for special general fund levies because their budgets got hollowed out by TIF. The same thing happened in California where it was discovered that TIF districts had stripped over $40 billion from public education, contributing to then Governor Brown’s decision to shutter over 400 URDs.
In 2017 only 4% of Missoula’s tax base was captured by TIF increment.
And when the City of Missoula took in $36 million in property taxes during fiscal 2020, the MRA acquired $35 million of that.
Other cities are following suit and the percentages tend to grow larger. It’s a common pattern that seems to repeat ad infinitum. When municipal officials become addicted to this one-size-fits-all approach to development there is nothing but the state legislature to stop them from stretching the limits ever further.
But while Sullivan got downright irate about the very notion that his precious subsidy might need to be regulated, he also explicitly admitted that TIF does, in fact, represent a form of corporate welfare:
“We’ve never received TIF funding or any other form of corporate welfare for our past projects, but due to high construction costs currently, we are asking for TIF funding for the project in front of you today. TIF provides developers with an incentive to improve our communities and increases the housing supply.”
I thought the love of the community was the incentive to improve it, but apparently some people need TIF money to feel that way about where they live. And increased construction costs duly noted, putting the burden on your neighbors isn’t the answer. We don’t need to build so-called “affordable housing”. Our priority should be to make existing housing affordable for people who already live here.
The main problem with funding so-called “affordable housing” developments with TIF dollars is simply that nothing in state code allows for TIF dollars to be spent that way. Tax Increment dollars were only intended to fund the elimination of physical blight, not to subsidize housing projects.
Yes, there’s high demand for housing out here but locals are well aware that the problem isn’t a shortage of places to live. The problem is that locals can no longer afford to live in the communities they grew up in. Building more buildings isn’t going to help because that doesn’t address the core problem that these policies are displacing the locals.
Matt Sullivan alleged that the loss of TIF subsidies would ultimately result in fewer apartments for Missoula, but existing Missoulians need breaks, not additional buildings funded with public money. The Missoulians who already live in Missoula but haven’t been displaced yet grow daily annoyed by the attempts all around to take their housing away, and that includes every mechanism that negatively impacts their property tax bills.
Developers are receiving TIF subsidies to build stack-and-pack apartments under the banner of so-called “affordable housing” and in doing so exacerbate the very reason housing has become so unaffordable for locals: the burgeoning effect that TIF overuse has on property taxes.
Harping on the “affordable housing” buzzword with extra gusto was former City Councilwoman and executive director for Habitat For Humanity of Missoula, Heather Harp:
“And while on council I heard from constituents about the lack of affordable housing every week, and I have to say that remains very true today in my current job. This bill unravels the work of last session to include workforce housing – which was genius by the way – which is exactly what we build at habitat. … This bill affects every developer’s lending costs. To make home ownership affordable we rely on a variety of funding sources and grants from local and federal governments are an essential part of our lending strategy. … And for 30 years our affiliate financed 2 homes a year with bake sales and raffles. But with skyrocketing home sales and a statewide housing shortage of 30,000 homes, we opted to innovate to find financing alternatives to supply the demand. That solution requires large scale investment. The problem needs cash flow now. Government grants that can direct tax increment dollars to workforce housing are a much needed tool. This bill and others focused on reducing TIF’s strengths or leverage capabilities will effectively water down those local government funding sources to be meaningless. And without those local government dollars then we will not have the necessary local match to be awarded federal grants.”
Heather Harp fails to mention the voluminous TIF opposition she witnessed during her time on council including several of the longest council meetings in Missoula’s entire history. Nor does she seem to remember the woman who lost her Habitat home to rising property taxes in Missoula. On 27 August 2018 Councilwoman Harp was present at the Missoula City Council’s marathon budget meeting where one woman provided testimony that she could no longer afford the property taxes on her Habitat home. TIFs had significantly affected her property tax assessments.
When the national branch of Habitat For Humanity found out there were lobbying efforts in Montana this year to finance their housing program with public subsidies, they hit the ceiling. Habitat For Humanity homes are explicitly not supposed to be built with funding models that involve taxpayer dollars, and Heather knows it. It’s likely she knew it during her time on City Council too.
Heather’s development director, Nevin Graves, took the microphone next on behalf of Habitat to say:
“Every part of our state is facing a housing affordability crisis. And just as my previous opponent said, we build workforce housing. We have an incredible tool in Tax Increment Financing to build workforce housing. And usually when people steal tools from my tool chest I call the cops. In this case I have to come to you. … But if anyone feels like they’ve got an adequate understanding of how this works in every community in Montana, then by all means, take your action tomorrow.”
After speaking, Nevin Graves publicly accosted Jesse Ramos in a heated outburst that had to be broken up by Capitol security, earning himself the prize for Most Unprofessional Behavior At A Legislative Event.
Jesse Ramos was standing in the committee room when Nevin marched up to him and shouted, “What the fuck do you think you’re doing? This is irresponsible!”
Jesse replied, “Don’t you think it’s irresponsible that we’re subsidizing this level of corporate welfare?”
Nevin again shouted over Jesse, “You just don’t understand the time value of money. You’re supposed to be a financial advisor.”
Nevin continued cursing his adversary out until he was told to leave by capitol security.
“Sure enough!” Nevin declared as he turned and walked out the door.
As we’ve repeatedly observed for years, there just doesn’t seem to be any limit to the behavior of people desperate to defend their parasitic choke hold on public money. Not all municipalities are corrupt but someone has to clean up the ones that are. SB 523 was a gallant effort to that end.
Jesse Ramos and Greg Hertz really hit a nerve in Helena this spring. So much so that big business had to flood the legislature with a toxic cloud of “smugnorance” emitted by a shrieking chorus of angry lobbyists. It doesn’t seem particularly surprising that organizations that have grown accustomed to TIF subsidies would rather not restructure their revenue model. Big business tends to be against major changes, unless those changes make them money. Developers will happily destroy historic housing that locals can afford with patronizing insults to injury like, “Change is hard.” But look how offended they become when the shoe is on the other foot. Hence the corrupt seldom see themselves as liable for the problems their corruption creates, as though no drop of water could ever be responsible for the flood.
An addict is a person with an uncontrolled compulsion to continue engaging in an activity despite the negative personal or professional consequences that result. Addiction can also be defined by the overreaction that occurs when the object of addiction is taken away from the user.
Tax Increment Financing began as a complex and convoluted financial scheme of using public money to repair blighted areas that has gradually morphed into a silver bullet solution for every municipal problem and often gives rise to rampant cronyism at the expense of the taxpayers.
Bureaucrats who become predictably overdependent on Tax Increment Financing constitute TIF addicts and their overuse of this legal financial tool signifies an obvious perversion of the original intentions set down by the state legislature that enacted it in 1974.
This spring Senator Greg Hertz championed a bill meant to reign in some of the abuse during Montana’s 2023 legislative session, prompting an army of lobbyists and business people to come out of the woodwork and assemble in defense of the status quo.
Anyone who earnestly studies TIF will eventually recognize that the law is loose, open to interpretation and riddled with loopholes. There are plenty of instances of Cities using this tool responsibly, but nobody can deny the fact that TIF has also consistently birthed a scourge of runaway redevelopment agencies staffed by unelected bureaucrats who enjoy uninterrupted control over municipal budget spending decisions.
Don’t take it from me. Take it from former MRA director Geoff Badenoch, who ran the agency for 18 years:
“The history of Tax Increment around the country has been that it is a temptation that many cities have not been able to resist. And tax increment gets used in ways that go way out on the fringe of what I think legislatures intended. And as a result, in Minnesota, California, Illinois, other states, legislatures have felt the need to come in and restrict the use of tax increment or eliminate it altogether. And, yes. But that’s a political response to abuse. The danger with TIF is that there is a temptation to use it every which way, if you can square it in the law any way, to use it.”
Ellen Buchanan has run the MRA ever since Mr. Badenoch left over two decades ago, and today she makes $180,000 a year to dictate how our tax money is spent. Last month Ellen was quoted in the Missoulian piece titled, Missoula Officials Lash Out At Proposed Bill That Would Revise TIF Laws:
“The one that absolutely just destroys Tax Increment Financing in the state of Montana is a Senate bill sponsored by Sen. Hertz and it just puts us out of business,” Buchanan said. “There’s no way to amend it that makes it functional or even just less efficient. It just destroys Tax Increment Financing.”
When SB 523 came before the Senate Committee in March, Ellen Buchanan showed up to defend her access to the municipal purse strings. After the Montana Senate passed it Buchanan went into overdrive, sending out a mass Email that included the business community, fellow MRA board members, former mayors, TIF dealers like Stockman Bank and major TIF recipients like Peter Lambros. The Email expressed grave concern about the bill and provided an eight-bullet list of talking points with which to appeal to the members of the Tax Committee that would be deciding the bill’s fate.
Many of Ellen’s bullet points are factually problematic, like the claims made in Bullet #7:
“Elimination of TIF may result in higher property taxes, not lower property taxes. Without TIF investment in public facilities, roads, bridges, parks, other infrastructure, this puts more pressure on local governments to find ways to pay for these services.”
So without TIF there aren’t any resources for government to fix the roads? What about the taxes that were collected to begin with? Do we really need a bank loan to fix our roads?
But it doesn’t matter that many of the bullets are factually and demonstrably false because if you get enough people to repeat the lie everyone starts to believe that it’s true. And she definitely harnessed enough people to repeat her points.
In fact, Buchanan’s recruitment efforts were so successful that she didn’t even have to herself testify before the committee. Her newly unelected mayor, Jordan Hess (alongside his handler Council President Gwen Jones), also came to her bidding and helped hypnotically repeat the phrases “affordable housing” and “workforce housing” while she lingered in the background on her phone building the next wave of testimony. The real power remains behind the throne.
A cacophony of lobbyists and business owners stepped up to the microphone to read versions of Buchanan’s talking points at the tax committee. Among the hyperbolic allegations was the predictable claim that “TIF critics are just ignorant,” which seemed particularly offensive given the explosive history of TIF criticism in Missoula.
Speaking of offensive, Missoula City Council President Gwen Jones publicly projected the word “criminal” onto Adam Hertz and Jesse Ramos – two former Missoula City Councilmen – for compiling a list of TIF abuses in their City. By The Missoulian’s account, Jones is “an experienced attorney in town” (ostensibly meaning her enunciation of the word “criminal” has extra authority). The article went on to illustrate how the MRA unanimously characterized professional criticism to their spending habits as a“lot of misinformation” being presented deliberately by elected officials:
Everyone in the room murmured in agreement. “By elected officials who know precisely what they’re doing,” Jones said.
One wonders if Ms. Jones has access to a mirror, as she too is an elected official who knows exactly what she’s doing. She is also well versed in the practice of abusing her power. As a board member of Missoula Aging Services, Gwen Jones threatened the job of another MAS employee who had written a poem critical of her policy as a City Councilwoman of placing crippling debts on local homeowners for unnecessary and unsolicited sidewalk updates. She also made a habit throughout 2019 and 2020 of performing background checks on all constituents who presented TIF information to the City Council that she personally disagreed with.
“You watch what’s going on in Helena and it’s just terrifying,” Buchanan said. “It’s just a microcosm for what went on in D.C. … It’s pretty scary,” Buchanan said. “It’s frightening for staff. It’s frightening for me and it’s frightening to city administration. So not to be a Debbie Downer, but it’s been a tough couple weeks around here.”
She also alleged that there’s been a “criminal” amount of disinformation spread about TIF. Former City Councilman Jesse Ramos responded, saying, “And citizens going to Helena to fight for what they think is right is ‘criminal’? That’s fantastic.”
Big Business opposed the bill with extreme prejudice, and many of the lobbyists who rose in opposition are paid by Montana tax dollars. Most of them parroted Chicken Little’s claim that “the sky is falling” and other apocalyptic predictions foreshadowing the end of the world as we know it should this bill ever become law.
They couldn’t debate obvious instances of TIF abuse so they instead try to divert attention elsewhere. And their buzzwords this session were “affordable housing” and “workforce housing.” But we don’t need to build affordable housing. We need to make existing housing affordable. Native Montanans are supposed to be represented by their legislature and their existing housing is under threat from the commonly occurring phenomenon of sudden property tax inflation. TIF districts disproportionately affect the working classes who pay for them because their property taxes balloon when the “taxable value” of their homes increases.
A stated purpose of TIF is the increase of taxable value, which thereby theoretically grows the tax base.
Theoretical benefits of TIF aside, the demonstrable abuses are as numerous as they are egregious but are all still technically “legal” since the legislature hasn’t really begun to regulate TIF in Montana yet. They include banks loaning their own TIF handouts to municipal governments at interest, unlawful claims of eliminating “future blight” and “blight down the trail,” designating newly constructed buildings as “blighted” to justify additional spending, weaponizing tax monies against local businesses who pay for their corporate competitors to out-compete them, and the cronyism inherent to a runaway board of unelected bureaucrats who have seized control of the City budget and decide economic winners and losers without regard to public will.
While snakes in suits kicked the legislative can down the road in the halls of Montana’s Capitol, many hardworking Montanans continue to be taxed out of their homes and businesses to make room for tourists with townhouses and second-home snowbirds. For the development regime who opposed Hertz’s bill last month that’s not a bug but a feature.
The problem in Missoula is not a lack of housing, it’s that people can’t afford it. One Army veteran we interviewed returning home to Montana in April of this year couldn’t find a one-bedroom studio apartment for less than $2,200 in his hometown of Missoula. But TIF addicts love to twist the reasons for our affordability problem around, which is why they talk a lot about their false solution to the problem: so-called “affordable housing.” TIF addicts like this subject because it technically allows them to administer many additional hits of industrial-grade TIF, even though the TIF statute says nothing whatsoever about building housing.
But Ellen Buchanan won’t let a petty thing like facts get in the way of her propaganda. And beyond quoting her inane blathering, the stenographers at the corporate-owned Missoulian won’t ask her any follow-up questions to statements she utters that make absolutely no sense:
“One of the arguments that is being made by some of the folks testifying for this bill is that we’ve got no business doing housing,” Buchanan said. “All we’re supposed to do is remove blight and housing is not something that’s permitted under TIF statutes, which is ridiculous. That’s been said over and over again, by one of our former city council members that’s really pushing this bill hard. So that’s a little bit ironic that there’s this dichotomy going on.”
I fail to see what Ellen Buchanan means by “ironic” since irony is an outcome opposite from and in mockery of the expected result. She doesn’t provide any evidence whatsoever that her critics are incorrect in their assertion, just that said assertions are “ridiculous”. Having said that, it does indeed seem ironic that a former elementary school principal and superintendent would oppose a bill supported by the School Administrators of Montana:
Rep. Ed Butcher, R-Winnifred, said he supported the bill because he believes “bad actors” are abusing the system. “Big corporations that don’t need these tax dollars for their construction projects. We have a person from Big Sky coming up here wanting his money, that really turned me off because those guys have more damn money than the U.S. government has.”
The bill was supported by the School Administrators of Montana, who argue that TIF diverts funds from school districts and instead into construction projects in Urban Renewal Districts.
But Rep. Mark Thane, D-Missoula, took issue with Butcher’s comments. Thane is the former superintendent of Missoula County Public Schools.
“We’ve heard essentially people say that there are abuses, that it’s corrupt, that it’s corporate welfare,” Thane said. “And I just want to go on record as saying that these funds are audited. There’s oversight by local government entities. There is no evidence that there’s been any kind of fraud or corruption or even abuse.” Thane went on to say, “I do take some offense at the allegations that it’s in some way corrupt or being abused when there’s been no evidence presented.“
But plenty of evidence of abuse was presented before Thane and his peers by Senator Greg Hertz during the hearing. Thane’s definitely come a long way from his 1995 appointment as principal of the newly constructed Chief Charlo Elementary. Isn’t it interesting that he opposed a bill supported by the School Administrators of Montana, since TIF districts adversely affect school budgets?
TIF addicts won’t bother trying to defend the $1.5 million to Stockman at 4% interest or the $1.6 million to First Interstate at 6%.
They can’t deny the fact that Andy Holloran’s Home Base received over $3.6 million in TIF and used it to add an additional floor to the Marriott.
They can’t rebut the fact that “future blight” is not covered under state code, but was employed to justify $8.6 million in TIF subsidy to Peter Lambros to build a new road toward SouthGate Mall to incentivise Lucky’s Market to move in. But Lucky’s went out of business after only two years and Lambros sold Southgate to Washington Prime Group for $58 million. According to then Mayor Engen, the reason we helped Peter make a cool fifty million dollars of profit with over eight million in public money was to prevent “future blight,” since malls were going out of business all over the country.
Nevertheless, SB 523 died in committee on its way to the House after being tabled by a vote of 13-8. Former City Councilman Jesse Ramos said of the bill’s defeat, “Most unfortunately, SB 523 died in Committee today because of the Great Falls Caucus who believe it is their job to represent their local government. Not their constituents.”
It also didn’t help that certain committee members seemed hellbent on abdicating their responsibility to even consider regulating demonstrably irresponsible behavior. Committee member Dan Fern from Whitefish pigeonholed the debate as “the Missoula show” and even tried forcing a requirement on speakers to identify what town they were from. Chair Feilder overruled Fern’s requirement, but his minimization of the issue was duly noted.
All in all, Ellen Buchanan’s success was a manifest reality. Her persuasion machine succeeded, however narrowly, in convincing the legislature to leave her magic wand collection alone. With the legislative session finally over, she can breathe a sigh of relief knowing that her access to the tax coffers – and her ability to continue profiting from them – remains unimpeded.
At least for now.
Efforts to reign in TIF in Montana multiplied following this legislative session as more citizens began to familiarize themselves with the law, learning for themselves just how deep the rabbit hole goes. SB 523 awoke the multi-tentacled TIF Leviathan. And when the next round of TIF debates fill the halls of the Helena Capitol in 2025, Montana taxpayers can expect an even larger and more menacing beast to rear its ugly head.
Every time the City Council vote “yes” on inappropriate TIF subsidies, they confirm that short-term gains are more important than long-term sustainability.
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The death of iconic local businesses like the Old Post American Legion Hall, Iza Asian Restaurant and now Pita Pit and The Green Light, all within the space of three months, confirms that the heart and soul of Missoula is disappearing before our very eyes; the latest examples of a terrifying trend. Countless other Missoula staples have been forced to close in recent years, including institutions like Uptown Diner, the Red Bird, and Stage 112, just to name a few. Many displaced shopkeepers say they were forced to close down because their new landlords increased their rents by astronomical amounts, while others were obliged to vacate after property taxes suddenly multiplied. And the very same vice squeezing locals out of their business spaces is likewise pinching residents from affordable homes.
Considering that Missoula’s income disparity is now the 33rd highest in the nation, it would seem we’re not that far from experiencing Frisco’s affordable housing woes.
Locals aren’t happy about this deadly trend, and they’re starting to become savvy to its causes. One cause increasingly stands out above the rest: the misuse and abuse of Tax Increment Financing (TIF). An elaborate taxpayer-giveaway scheme that causes property taxes to spike, in-turn causing rents to skyrocket, and in-turn displacing locals and gentrifying entire communities.
For those who say “correlation is not necessarily causation,” former defense attorney Kevin Hunt corroborates our worst suspicions:
“Although it was said that ‘general taxes in the community won’t be affected,’ we know that these TIF projects have, in fact, already drastically increased property taxes for some people in this city. The Missoulian has already written articles about what’s happened to people like Office Supply; people who are downtown. When we start bookending these projects around these locally owned businesses – icons – familiy businesses, who were presented with property tax bills that had suddenly tripled, and because of that, their landlords now are jacking up their rents and they don’t know if they’re going to remain in business. …
“What happens is a lot of times these people do go out of business, and then the buildings are snapped up. And they’re snapped up by people like Nick Checota. Not that he would do it. But others with the funds to do it, they snap them up at a discount. Often they then end up demolished because they’re declared “blighted” and then we use more TIF. And what do we do with the more TIF? We demolish these buildings. We maybe save a facade or two. And pretty soon Missoula doesn’t look like a western town anymore.”
Countless subversive “lost cat” posters appearing all over town seem to signal a mobilization within the community, many of whom consider the current state of Missoula nothing short of an emergency situation. An emergency that officials are now attempting to ameliorate with its very causes: inappropriate TIF subsidies that set dangerous precedents for the further abuse of the TIF law.
Councilman Jesse Ramos posted the “lost cat” on facebook, adding:
These were found all over Missoula this weekend. It is time the council has a serious discussion about TIF.
Our streets are in disrepair, our police are understaffed, our citizens are being taxed out of their homes and now the city wants a sales tax to cover these basic services. Yet oftentimes when a wealthy developer comes to the city with their hand out they walk away with millions.
Not only does TIF cause the city tax rate to go up but it also puts upward pressure on the county and school district taxes.
The latest case in point is unfortunately the Missoula Food Bank – an organization about which I have nothing but positive things to say. It’s an indispensable lifeline that’s helped me and many of the people I know navigate difficult times. I’ve even volunteered there. But this TIF is blatantly inappropriate, highlighting the creative misuse of the law.
First and foremost TIFs are only supposed to be used for the “elimination of blight,” and the Missoula Food Bank currently resides in a brand new building. Can anyone really tell us with a straight face that a brand new building can be considered blighted?
Far from it.
The present director of the Missoula Redevelopment Agency (MRA) Ellen Buchanan showed up in the flesh on Monday night not only to double down on the misuse of TIF funding, but also to tell us that she’s not required to follow the common understanding of the law, leaning instead on its many possible interpretations:
“I think one thing that comes into play here is the fact that in order to create an urban renewal district, you have to make findings of blight. And the definition of blight is laid out in State Law and it includes, you know, a dozen or better different conditions and you have to meet so many of those in order to declare an area blighted. And I think what that’s translated into for a lot of people is that Tax Increment Financing dollars can only be used to address those specific things that are laid out in that definition of blight.”
Current standards for defining “blight” in the State of Montana. As the law is written, proposed projects that hope to make use of TIF funds are required to honor this provision. Unfortunately, it’s still an extremely low standard that allows for the abuse of TIF because virtually anything can be considered “blight” under such loose conditions.
Buchanan continues:
“But if you read the statute in its entirety, there are references all through the statute to things that really speak to this type of project. In the preliminary statement of policy it says that, it’s declared that blighted areas which constitute a serious and growing menace, injurious to the public health and safety and morale, that the existence of such areas constitutes an economic and social liability. There is reference to health and safety throughout the statutes. And there also is authorization in the statute to use TIF funds for the acquisition of real property, to provide land for public facilities. I would argue this is a public facility. By virtue of the relationship with the county and the nonprofit status and the community that it serves. And I’m not going to bore you with all of the references in the statute. But I was aware of the issues that Geoff Badenoch raised back in October. He raised those. The city attorney responded in almost exactly the same way that I have addressed this tonight.
“We’re going to buy that property. We’re going to buy a portion of that building. And it will be for a public use. That’s no different than using TIF funds to buy a piece of land, and building a public park for public use. So I don’t know how you make the argument that this is an inappropriate use of TIF funding. It’s throughout the statute. I think that State Law enables us to do this. This serves a public purpose, like almost all of the dollars that we spend do. So I’m happy to try to answer questions, but I would encourage you to read through the statute and find those references that are to something besides water and sewer and streets and sidewalks.”
Bryan von Lossberg: “Thanks for clarifying. So Mr. Badenoch’s comments were back in October?”
The article’s author, Martin Kidston, gaslights his readers by dishonestly characterizing Jesse Ramos and other TIF skeptics as “conservative” in order to portray all critics of TIF as classist snobs who hate poor people. After all, why else would anyone vote against this Food Bank/Partnership Health Center deal?
Geoff Badenoch explains exactly why:
“Let me say first off, I am all for helping public health clinics and food banks with public funds. Second, on most issues, I would not agree with Jesse Ramos. [But] on this issue of TIF funds, I think there is less daylight between our views. One does not have to be “conservative” or “liberal” to examine the purposes for which the Montana State Legislature empowered local governments to use TIF as a tool for redevelopment. It is essentially a tool meant to correct physical deficiencies that create social problems. Assemble and/or Clear land. Expand or relocate utilities. Plan. Build curbs, gutters, sidewalks and streets. Build parks. Missoula has used it to build other government or public facilities.
“I am concerned about this particular use because it has been the case all over the country that municipalities cannot resist the temptation to use TIF in ever more expansive ways and state legislatures have almost always responded by removing that tool from local governments.
“Anyone can go to mt.gov and look up the urban renewal statutes in the Montana Codes Annotated. Simply look in Title 7-15, Parts 42 and 43. Read it yourself and see if this issue as not as clear cut as it appears. I think we need to be terribly circumspective about these expansive uses of TIF. This particular use might even be worth referring to the State Attorney General for an opinion as to its legality.
“TIF is too important a tool to be used without serious and deep consideration, regardless of the good outcome that may come for the clients of the Partnership Health Center, a brilliant institution that itself does wonderful work.”
Fun fact about Geoff Badenoch: he worked Ellen Buchanan’s job as MRA director for 18 years, from 1985 to 2003. I’m betting he probably knows what he’s talking about.
This is not to suggest that Ellen Buchanan doesn’t know what she’s talking about. The above quote is a concise illustration of how the evolution of the TIF law since the 1970’s consistently results in wider and wider interpretations of the law, lending itself to misuse and abuse over time.
When TIF addicts hit the TIF pipe too much, they force legislators at the state level to take this “imperfect tool” away from municipalities. Historically this is invariably what occurs in every state where dependent municipalities inevitably fall victim to TIF addiction. Tax Increment Financing in California has driven several cities to declare bankruptcy, compelling California legislators to take away the TIF toys forever.
Buchanan declared that blighted areas constitute a serious and growing menace. But for many Missoulians, the only serious and growing menace that directly threatens the health and safety of their families is the prospect of raised rents that price them out of Missoula. Property owners are worried about the serious and growing menaceof exploding property tax bills that force them to sell their property to speculators. And our fragile community is terrified about theserious and growing menace of gentrification.
“Housing prices continue to behave like a runaway helium balloon in the Garden City, while wages behave like a child on the ground with hands toward the sky, watching as the gap gets larger. Missoula’s median home sales price soared to a record high of $315,000 in 2019, a jump of 8.62% from the 2018 price of $290,000. … Andrea Davis, the executive director of the nonprofit Homeword in Missoula… noted that a person or a family would need an income of around $100,000 a year to afford a median-priced home in Missoula.”
The constant abuse of taxpayer money through endless TIF results in runaway housing prices that in-turn cause property taxes to explode, thereby displacing entire generations out of the neighborhoods they grew up in but can no longer afford. Then those newly abandoned areas are declared “blighted” enabling subsequent waves of gentrification to violently uproot the last vestiges of formerly-strong communities.
“Tax Increment Financing (TIF) legislation is geared not toward low-cost housing, but toward new commercial development. Often, that development is built where “unsightly” (but affordable) housing once existed. Its destruction is encouraged by government policy.”
Missoula-born local Lily Elison identifies how everybody loses when communities become gentrified:
“It is the inner-woven lives of individuals which creates a community … If we do not hold space for our local people and historic places, we will lose what makes this city worth living in. We will see a serious loss of security in our streets as life-long neighbors and childhood friends are replaced with strangers who have no community ties or responsibility to this place.
“I don’t want to see our history bulldozed. I don’t want to see skyscrapers instead of mountains. And I definitely don’t want to see my people in tent villages, because that’s what’s happening in Portland right now, because of their gentrification, because they’re pushing people out.
“And just think. What if it was your home that they were asking you to leave? What if it was your home?”
YOU JUST DON’T LIKE IT BECAUSE YOU DON’T UNDERSTAND IT
A persistent myth elected officials use to justify these taxpayer giveaway schemes is that ordinary folks are just “too dumb” to understand TIF. Indeed, any TIF addict relies on this myth as their primary rebuttal to the concerns of locals. Earlier at Monday’s meeting, Missoula local and longtime TIF critic Robert Moore — a man who spent the bulk of his career as the Chief Financial Officer for Fortune 500 Companies — approached the lectern to dispel an awful myth:
“Here’s an article where some of the members of the City Council are saying that the reason we don’t agree with TIF is that we don’t understand it. Well let me tell you – I do understand it. And I think all of you all understand it. You’ve just got a different purpose in mind. You want to give ten-million-dollars to the shopping center; four-million-dollars to Stockman Bank, that’s got a balance sheet of 2 or 3 billion dollars, and a surplus of 300-million-dollars.
“Tax Increment Financing is something we all need to learn more about, but at the same time Mrs. Harp [deflects] question[s] about it by saying, ‘You just don’t like it because you don’t understand it.’
“I understand it very well. It’s nothing but taking taxpayer money and giving it to developers and builders, and calling it ‘investment’.
“I think TIF oughta be disbanded.”
Councilwoman Heather Harp
When it was Heather Harp’s turn to speak to Mr. Moore’s comments, she reiterated the very myth he sought to dispel, suggesting once again that people just don’t understand the law:
“I think one of the things that has often eluded a lot of folks, and frankly I don’t blame you, is because you don’t necessarily have all the facts. And I think we have a long ways to go in this community in terms of being able to tell a compelling story about why TIF is good. We know it has been good for us for 40 years. But going forward how how can we reshape that, so that folks understand?
“We also face the fact that we only have one tool in our toolbox in terms of being able to actually remedy our economic decline in these certain neighborhoods.
“Jesse, from time to time we’ve gotten into conversations about the merits and the demerits of our one and only tool. And I come down to this point of view that you can’t throw the baby out with the bathwater. This is the only thing we have. And at this point in time we have 600 people that need services of all types.”
I’m sure that Mrs. Harp, like everyone supporting this project, thinks she’s doing the right thing. After all, how can you go wrong endorsing either the Food Bank or Partnership? There is no questioning the good these organizations do on a daily basis for the many people who depend on their services.
But that isn’t the issue at all.
Critics don’t dispute the merits of TIF, but the negative side effects that occur later as a direct result. Negative side effects that we can’t afford to ignore for much longer.
ENTER PRINZING JONES
Councilwoman Harp is not the only one gas-lighting citizens about TIF. She has a lot of help from her fellow ideologues – like Natasha Prinzing Jones.
As William Skink noted this January, “The Missoulian is launching a new quarterly publication focusing on doing PR for businesses called Missoula Business. This vapidly titled quarterly will feature a notable business person and other things … The first notable business person is a lawyer for the Missoula Redevelopment Agency and the topic will be PR spin for Tax Increment Financing.”
Natasha Prinzing Jones is an un-elected MRA board member, married to a banker who works for a bank that benefited from TIF the same way Stockman Bank did, loaning us their own corporate handout and stiffing taxpayers with the interest payments. What’s more, Prinzing Jones happens to work in an office that itself benefited from TIF subsidies.
Natasha Prinzing Jones is also the attorney who underestimated Missoula’s Mountain Water legal fees by over $12 million!
So what does this “competitive spirit” have to say about citizen criticism regarding TIF?
“My observation is that many of the individuals who voice either concerns or opposition of TIF funding misunderstand its role and application,” she said. “Many individuals who are critics, I’ve never seen at a single (MRA board) meeting. Big picture, I think folks just don’t understand what’s going on. Their objections to the agency and the concept of TIF would benefit from a deeper review of what’s actually happening at those meetings.”
There you have it folks.
Once again, with painful predictability, there are NO specific responses whatsoever to either criticisms or concerns about TIF. The Missoulian had a whole cover story to do so. An entire centerfold’s worth of material, and only a few short paragraphs dedicated to beating Missoulians
Instead of responding to specific concerns, Prinzing Jones defaults to the same politically expedient tactic as all the other TIF addicts, claiming that Missoula’s citizens are just too brainless, too ignorant, and too stupid to understand how TIF works.
The reason that TIF addicts don’t debate the specific concerns is because they know they’ll lose if they argue the points before them. Critics don’t question the merits of TIF, but focus instead on it’s many unintended consequences.
TIF addicts seem to prefer employing STRAWMAN arguments: they substitute their opponent’s actual position with a distorted version that’s easy to dismiss. The debate is NOT about what TIF can do, but what it’s effects are. It’s about multi-million dollar taxpayer giveaways to banks, shopping centers and entertainment monopolies that unnecessarily and inappropriately increase everyone else’s property taxes to the point that locals are displaced completely by wealthy out-of-staters.
The Missoulian recently featured such a Strawman, quoting Linda McCarthy, executive director of the Missoula Downtown Association. Not only does McCarthy claim that, despite all the businesses closing all around us, “Downtown Missoula is without question a thriving commercial and community hub today.” The strawman comes in the form of trying to show all the good that TIF has done for local businesses – something critics don’t usually dispute.
Linda McCarthy, executive director of the Missoula Downtown Association
What TIF addicts don’t seem to realize is that by constantly using TIF to finance everything in the city from Lord Checota’s Ego-Dome to Stockman Bank’s Crony-Tower to Peter Lambros’ Shopping Maul to Andy Holloran’s Hotel Holocaust, what they’re actually doing is dooming Missoula to a fiscal death-by-a-thousand-cuts. And just like any addiction, the more they do it, the more they must continue doing it.
It doesn’t take that much time for these policies to produce negative side effects of increasing relative tax burdens for everyone, by artificially raising property values across the board.
TIF addicts claim that they’re trying to alleviate poverty, while actually helping to worsen the very conditions that exacerbate poverty in the first place: rising housing costs!
Mrs. Harp’s comment seems especially perplexing within the context of its timing. The previous week, on the 8th of January, she was stripped of her chairmanship on the Finance Committee, apparently because of her willingness to sincerely listen to citizen anxieties about TIF, and its constant overuse.
Her replacement, Gwen Jones, consistently displays an unapologetic contempt for citizens concerned about the effects of TIF, and was therefore the logical choice to Chair Missoula’s Finance Committee, at least from the point of view of wealthy developers, their cronies, and the useful idiots who go along to get along. Gwen’s cold, calculating indifference is further revealed by her recent declaration that “battle lines have been drawn.” Because apparently our community is nothing but a battlefield.
Those on the Council who helped unseat Mrs. Harp have sent a chilling message both to the people of Missoula as well as the rest of our elected representatives: don’t ever work with the people of your community, or you’ll lose what little authority we allow you to have.
I concede that at least this Food Bank/Partnership TIF is aimed at doing some good. Unlike the proposed $16.5 million TIF for Nick Checota’s LogJam Monopoly to further dominate Missoula’s entertainment scene with a giant monstrosity that they alone will have rights to operate for the next 75 years, all on the taxpayer dime.
As Missoula’s debt engines speed toward the cliff of bankruptcy, the TIF addicts are hitting the nitrous boosters while screaming, “Can’t this thing go any faster?” And the only operator who even discussed tapping the brakes was just pulled from the driver’s seat.
Jones isn’t merely a TIF addict; she’s a TIF dealer.
Under these circumstances, what possible benefit exists in continuing to patronize taxpayers with the same condescending claim that Tax Increment Financing is just too complicated a subject for ordinary folks to wrap their heads around?
Gabrielle Lafayette is the executive producer for the Outer Limits Radio Show. This cache of thought is presented free of charge as a service and gift to you. May our eternal vigilance help liberate all beings from the smoke-and-mirrors deceptions of the Samsaric Panopticon.
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