A local developer is asking city officials to support a new special tax district in downtown Billings.
Russ Fagg, whose family business has developed several downtown properties and recently purchased the old St. Francis Catholic School building, is advocating for a new TIF district that would encompass much of the western downtown district.
TIF, or tax increment financing, districts are areas where tax values are frozen for a set period of time for the purposes of general tax revenue. Tax revenue from increases in values are instead spent inside of the tax district.
Advocates for the districts argue that they're a valuable economic development tool to encourage businesses to invest in struggling areas. Opponents argue that the districts siphon funding from public entities and that spending in the districts disproportionately benefits businesses.
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Billings currently has three TIF districts, including one that encompasses much of the downtown area. The new district would stretch from North 31st to Division streets, and from Montana Avenue to Sixth Avenue North. Fagg said that while supporters prefer a new district, they're OK with being absorbed into the existing downtown TIF.
Jeff Kanning, an architect with Collaborative Design Architects, said that he first started talking with downtown clients about development plans and the possibility of a TIF in 2016. Those talks were overshadowed by One Big Sky, a since-discarded proposal for a major downtown development, but they reemerged.
The Billings city council narrowly approved $4,000 Monday to help pay for a blight study required for such a district. A petition for the district was submitted in late January, Fagg said, and he expected it to take about 4-6 months before a decision would be made, and he acknowledged that there could be pandemic-related delays. The petition will eventually have a public hearing in front of the city planning commission in the first of several public-meeting steps.
“We haven’t made a lot of progress yet, but bottom line is we’re moving forward,” he said.
Fagg, formerly a district court judge and Republican U.S. Senate primary candidate, had already asked school trustees at a digital meeting to either support a new district or stay neutral.
“Long term, we believe this is the perfect place for housing,” he told trustees.
Fagg Family Properties' purchase of the old Catholic school, now dubbed the Kate Fratt Memorial Parochial School, didn't come up at the meeting. The group bought the building for $750,000 in November. In December, the company put in a failed bid for a new city hall that could have included a 10-20 story building, according to the proposal.
Now, the company plans to develop housing, Fagg said, and preserve the historic character of the building.
“We’re going to probably develop that into condominiums. Whether or not the TIF district goes through isn’t going to make a difference,” he said. “We are literally, as we speak, laying out floor plans for condominiums.”
However, Fagg did say that secondary projects on land currently occupied by parking and playground space could be affected by public money available through a TIF.
“What we would love to do is put in a one-two story parking garage with 3-5 stories of apartments or condos above,” he said. “If the TIF doesn’t go through, that project doesn’t pencil out,” he said, citing public support for a parking structure.
When a school trustee asked about "blight" — a legal definition of economic decline required for TIF districts — Fagg said that he believes there are some residential and commercial properties that would qualify.
He said that a firm from Butte has been contracted to conduct the required blight study, which would be paid partially by Fagg Family Properties, partially by the Downtown Business Alliance, and partially by the city council, as voted on Monday. That study will also examine tax revenue in the district.
Fagg said that he wasn't sure what sort of public projects the money from a TIF would end up supporting, but said that there may be infrastructure needs for basics like water and sewer systems.
“My guess is there’s going to be some infrastructure needs just because this area of the city has been here for over 100 years.”