Jefferson County officials are exploring the feasibility of adding a third tax increment financing industrial district — tentatively eyed for property north of Clancy.
“This is a concept plan with preliminary discussions in the works with the landowner to gauge interest,” said Tom Harrington, project coordinator with the Jefferson Local Development Corporation.
Harrington said the landowner can be identified once they meet with him and determine his interest.
“We are still in the very early conceptual phase of this district since it was identified as a potential project during our strategic planning session. One of our board members knows and has worked with the landowner and was aware he owned land in the north end of the county that he is interested in developing. Board asked staff to explore possibilities for a new district since the existing north district was successful,” said Harrington.
If the plan does move forward, and Harrington stresses that it is still at the concept phase, it would be similar to the county’s other districts, one located near Montana City, and the other, the Sunlight Business Park, near Whitehall.
A tax increment financing industrial district (TIFID) is a popular way for governments to finance the initial infrastructure needed to attract business — roads, water and sewer, electricity and internet. As a property value increases with the improvements, additional tax revenue is used to finance more improvements. When the district status expires, usually after 20 to 30 years, the sponsoring government enjoys increased tax revenue reflecting the property’s increased value.
“It’s a business incentive on our part,” said Harrington, adding that by covering the infrastructure, it allows the new business locating in the county to concentrate its efforts on its own bottom line.
If executed, the third TIFID would be for general business, he said.
The district would start by setting up a base value of the property reflecting its current agricultural use, said Harrington. For the duration of the TIFID designation, any additional value generated due to improvements would be used to either fund future improvements or to pay back the money spent to front the project.
The county’s two existing TIFIDs, as they are referred to, will expire in 2024, according to the statewide master TIF list.
Harrington said the county has relied on its metal mines tax revenues to provide the funding needed to build the infrastructure. The metal mines license tax, collected from mines located within a county and distributed by the Montana Department of Revenue, is allocated proportionately to those counties and its schools. Counties, in turn, can use the money to promote economic development.
The northern TIFID has about 30 commercial lots and is nearly full. It was created as a public-private partnership with Tri-County Disposal, said Harrington.
The Sunlight Business Park, while it encompasses 6,000 acres, has about 50 acres in its business park. Businesses there include a wind developer, internet company, medical services, an agricultural product distributor and a mobile mechanic, said Harrington.
The future plan is to use the additional acreage at Sunlight for a wind farm, based on designs from the wind developer in the Sunlight Business Park, said Harrington.
Jefferson County Commissioners Chairman Leonard Wortman said the wind developer is in the process of creating a prototype design of a wind turbine that is smaller — with less visual impact — than the ones currently in use.
TIFIDs are authorized through the Montana Annotated code.
Harrington said the biggest objections to setting up a TIFID generally comes from the school districts, which fear losing their tax base.
Harrington said that concern is countered with the expectation that the property value will increase and the schools will eventually benefit from the added revenue once the TIFID expires.
The landowner also benefits from having the infrastructure added to the property, said Wortman.
The Northern Jefferson County TIFID near Montana City had a base value of $18,590 in 2009. In 2018, the total taxable value was $101,359, with an incremental value — the accumulated increase over the base — that year of $82,769, according to the statewide master TIF list.
Sunlight Business Park had a base value of $737,334 in 2009, and in 2018 the total taxable value was $1.26 million, with an incremental value that year of $531,220, according to the statewide master TIF list.
Wortman said the idea behind setting up the TIFIDs in the county came from a failed attempt to get a privately run prison to locate here in the 1990s.
“We had nothing to offer them,” he said, adding that the company eventually located in Shelby.
Harrington said the county doesn’t have much in the way of incentives to offer potential businesses, so this gives it a tool to do that.
“Somebody has to take the risk on it,” he said of the county fronting the initial infrastructure costs.
Setting up a TIFID is a lengthy eight to nine month process and includes public hearings, said Harrington.