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HomeMy WebLinkAbout07-07-26 Public Comment - R. Muldowney - TIF ResearchFrom:City of Bozeman, MT To:Bozeman Public Comment Subject:[EXTERNAL]*NEW SUBMISSION* Public Comment Form - City Clerk Date:Tuesday, July 7, 2026 12:20:08 PM CAUTION: This email originated from outside of the organization. Do not click links or open attachments unless you recognize the sender and know the content is safe. Public Comment Form - City Clerk Submission #:4932629 IP Address:37.19.210.16 Submission Date:07/07/2026 12:20 Survey Time:3 minutes, 14 seconds You have a new online form submission. Note: all answers displaying "*****" are marked as sensitive and must be viewed after your login. Read-Only Content Full Name Robert Muldowney Email bobmuldowney@gmail.com Phone (406) 595-4865 Comments Mike / Alex - as promised, partner document to presentation sent through previously. similarly this too should be distributed to the mayor, deputy mayor, commissioners, city manager, and attorney. thx again bob m If you would like to submit additional documents (.pdf, .doc, .docx, .xls, .xlsx, .gif, .jpg, .png, .rtf, .txt) along with your comment, you may alternately address comments@bozemanmt.gov directly to ensure receipt of all information. TIF_Research_Summary_FINAL.pdf Thank you, City Of Bozeman This is an automated message generated by Granicus. Please do not reply directly to this email. Public Comment — Commission Submission — July 2026 Page 1 To: Mayor Morrison, Deputy Mayor Fischer, Commissioners Madgic, Bode, Sweeney, City Manager Winn, City Attorney Sullivan Date: July 7, 2026 Re: Planned Podium Presentation Below please find my planned remarks from the podium tonight, but as there will not be a meeting, I thought to share these remarks directly. Please note, these remarks were / are directed towards the URDs apart from the DURD, which I still believe has run its course and could potentially lead to adverse financial impacts to the overall and longer-term health of our city. Additionally, realizing that I am only a citizen living in Baxter Meadows, I wondered whether there were any economic studies on the impact of TIFs on a community and to my surprise, the study of TIFs appears to be a target rich environment for economists looking for cause and effect scenarios “in the wild”. I am sending a separate document citing that research. As always thank you for your commitment and continuing service to our community. Kind regards Robert Muldowney Baxter Meadows, Bozeman A Tale of Two Bozemans Public Comment — City Commission Meeting, July 7, 2026 Good evening, Mayor Morrison, Deputy Mayor Fischer, Commissioners Madgic, Bode, and Sweeney, and City Manager Winn. Today Bozeman has six active TIF districts. Each one diverts its share of new property tax growth away from the General Fund and into the TIF, even as that same General Fund carries the full cost of police and fire for the entire city — TIF district and non-TIF district alike. The Bozeman Police Department operates well below guideline averages set by DOJ and FBI and average fire response time exceeds ten minutes compared to a six-minute national standard. In November 2024, this community was asked for a public safety levy. It failed. The Legislature itself recognized an inherent problem. Effective April 6, 2017, it amended MCA §7-15-4286(2)(c) to exclude new voter-approved mill levies from a district's tax increment calculation — but only for districts created on or after that date. The four Bozeman districts created earlier, remain under the old rule, whereas any new mill levy approved by voters residing in those URDs, is fed entirely back into the TIF. Were voters ever told this in 2024. Public Comment — Commission Submission — July 2026 Page 2 Here in Downtown, that structural gap is compounded. This district's TIF has already been extended once. And the 2011 interlocal agreement pledges the City's own share of increment back into the district — past the inflation-adjusted cap that Ordinances 1409 and 1628 established. Funds that were planned to be returned to the General Fund by ordinance, instead keep flowing back into TIF. An arrangement of; • a 30+ year DURD TIF • an interlocal agreement passed as a consent item in 2011 pledging City funds back into the TIF above the proposed cap in Ordinance 1409 • starving the General Fund of the resources to pay for police and fire while having been told that the BID floated the idea of paying the cost of 2 Bozeman Police officers for the DURD All this perpetuates the perception of two Bozemans. Downtown, and the rest of us. When will we as a community, recognize that Bozeman is one unified city, not a series of fiefdoms walled off by TIF boundaries? That is not the place I chose to call home twelve years ago. I have brought several challenging situations regarding TIFs to this Commission but at the very least, I ask this Commission, to make the needed adjustment understood by the 1995 Commission and the April 2017 State Legislature: that TIFs should no longer capture new levy dollars. Otherwise, it must be disclosed to voters exactly what any new mill levy request is paying for. Thank you. TIF Research Summary — Fiscal Diversion, Overlapping Jurisdictions, and Housing Displacement TIF Research Summary — Commission Submission — July 2026 Page 1 Summary of Research: TIF Fiscal Diversion, Overlapping-Jurisdiction Effects, and Housing Displacement I. Fiscal Diversion and Overlapping-Jurisdiction Effects — Foundational Studies Chapman & Gorina (2012), "Municipal Fiscal Stress and the Use of Tax Increment Financing (TIF)," Town Planning Review 83(2), pp. 195–212 This lead article (published with responding commentary from other scholars) examines TIF as both a genuine redevelopment tool and, in some municipalities, a workaround for fiscal stress and tax/expenditure limitations. The authors' central concern for overlapping jurisdictions is that TIF-area redevelopment can increase demand for services — for example, fire suppression or school enrollment — without generating any new revenue for the department or district providing that service, since the incremental tax growth is captured by the TIF fund instead. The article's core thesis: TIF's fiscal effect on the host municipality and overlapping taxing bodies depends heavily on whether the district's growth is truly incremental (a "but for" case) or would have occurred regardless, and on whether the jurisdiction is using TIF for genuine blight remediation versus general revenue management. Dye & Merriman (2000), "The Effects of Tax Increment Financing on Economic Development," Journal of Urban Economics 47(2), pp. 306–328 Using a sample of Chicago-area municipalities across pre-adoption, adoption, and post-adoption periods, this study found that municipalities using TIF exhibited slower overall property value growth than comparable non-TIF municipalities, and that TIF designation was associated with negative assessed-value growth in the non-TIF portions of the same municipality. Thesis: TIF tends to redirect growth toward the designated district rather than generate new growth, at a measurable cost to the rest of the municipality's tax base. Dye & Merriman (2003), "The Effect of Tax Increment Financing on Land Use," in Netzer, D. (Ed.), The Property Tax, Land Use, and Land Use Regulation, Edward Elgar, pp. 37–61 Extending the 2000 analysis to the level of individual districts, the authors found no net increase in property values attributable to TIF citywide — growth within a TIF district was typically offset by decline or slower growth in another part of the same jurisdiction. Thesis: at the district level, TIF appears to shift the location of investment rather than create new investment, undermining the standard justification that TIF revenue represents growth that would not otherwise have occurred. Weber (2003), "Equity and Entrepreneurialism: The Impact of Tax Increment Financing on School Finance," Urban Affairs Review 38, pp. 619–644 This study found that more intensive use of TIF — measured as the share of a jurisdiction's total property tax base placed into TIF districts — measurably reduces the property tax revenue available to school districts, since schools continue to bear service costs for TIF-area population growth without receiving incremental revenue. Thesis: the overlapping-jurisdiction revenue loss from TIF scales with how much of the tax base a city places into TIF, making the fiscal effect on schools (and by direct analogy, general funds) a function of TIF intensity, not an incidental side effect. II. Recent Research (2022–2026) He, Yektansani & Azizi (2022), "Impact of Tax Increment Financing on School District Revenues and the Spillover Effect," Journal of Economic Issues 56(3), pp. 782–804 Using empirical data from Cook County, Illinois, this study examines the fiscal impact of both active and expired TIF districts on school district revenues, incorporating spillover effects on surrounding, non-TIF areas. The authors find that school districts with more intensive TIF use received measurably less revenue, and that districts recovered a one-time revenue "windfall" only upon a TIF district's dissolution. Thesis: revenue diversion from overlapping jurisdictions is not a temporary or incidental effect — it persists for the life of the district and is only reversed at dissolution, which is directly relevant to dissolution analysis under a state's TIF-termination statute. Choi (2025), "The Effects of Tax Increment Financing on Local Income and Income Surtax Base: Evidence From Iowa School Districts," Growth and Change (Wiley) Part of a growing Iowa-based research thread (Choi and Nguyen-Hoang, 2021–2025) examining TIF's effects on school finance and local economic composition. This paper found that TIF districts may attract higher-income in-migrants, which can enhance a district's local fiscal capacity — but the authors caution that this same dynamic can also drive gentrification, rising housing costs, and displacement of lower-income residents. Thesis: TIF's fiscal and demographic effects are double-edged — revenue- positive for some overlapping jurisdictions in some cases, while simultaneously accelerating the affordability and displacement pressures described in Section III below. TIF Research Summary — Fiscal Diversion, Overlapping Jurisdictions, and Housing Displacement TIF Research Summary — Commission Submission — July 2026 Page 2 Civic Federation, "Tax Increment Financing: A Primer" (2025–2026) A current policy report (non-academic, but built on the empirical literature) assessing TIF's fiscal impacts on overlapping taxing bodies, using Illinois's approximately 1,488 active TIF districts across 511 municipalities as of 2025 as its empirical base. The report identifies three specific, unresolved concerns: (1) taxpayers can end up paying more in taxes even though TIF does not officially reduce overlapping governments' revenue, because those governments typically still levy for the revenue they need against a smaller taxable base — a risk the report notes is most severe for tax-capped governments with little room to raise rates; (2) whether TIF genuinely creates new growth or merely shifts investment within a region remains an open empirical dispute; and (3) TIF districts' long lifespans, combined with inconsistent financial reporting, make it difficult to evaluate outcomes and hold districts accountable. Thesis: TIF's fiscal effects on overlapping jurisdictions remain a live, unresolved policy concern at significant statewide scale, not a historical artifact of the 1980s–1990s TIF boom. ICMA, "Tax Increment Financing: Navigating the Intersection of Policy, Development, and Reform" (March 2025) Published by the International City/County Management Association for a city-manager audience, using Milwaukee and Cook County as case studies. Thesis: municipalities should adopt regional task forces and revenue-sharing mechanisms specifically to coordinate with overlapping jurisdictions affected by TIF, an implicit acknowledgment by the local-government management profession itself that the coordination and revenue-diversion problem remains current and unresolved in practice. III. Housing Affordability, Gentrification, and Displacement Freeman (Columbia University), as discussed in City Observatory, "A Solution for Displacement: TIF for Affordable Housing" (Joe Cortright) Freeman, a leading scholar on gentrification, has proposed using the increment generated by gentrification-driven property value growth to fund affordable housing preservation in the same neighborhood, on the premise that TIF-eligible growth and displacement pressure are generated by the same underlying process. Thesis: the property value appreciation that funds a TIF district is frequently the same appreciation that drives displacement of lower-income residents and workers — Portland, Oregon's practice of dedicating roughly 40 percent of TIF revenue to affordable housing is cited as a partial policy response, implicitly conceding the causal link between TIF-area appreciation and displacement risk. Greenhalgh, Furness & Hall (2012), "Time for TIF? The Prospects for the Introduction of Tax Increment Financing in the UK From a Local Authority Perspective," Journal of Urban Regeneration and Renewal 5(4), pp. 367–380 A survey of 200 UK local authorities, supplemented by interviews with local authority officers in Scotland administering the UK's pilot TIF schemes. Thesis: local government officials themselves identify displacement as one of the principal risks of TIF- financed redevelopment, alongside insufficient revenue uplift, TIF failing to reach areas of greatest need, and private investment failing to materialize — displacement is treated by practitioners administering these programs, not just outside critics, as a foreseeable risk requiring active mitigation. IV. Bozeman-Specific Data (Current Reporting, Not Peer-Reviewed Research) NBC Montana, "Residents struggle with Bozeman housing affordability" (May 7, 2026) Bozeman Police Chief Jim Veltkamp is on record stating that both sworn officers and civilian staff increasingly live farther from the city and commute substantial distances, specifically because they can no longer afford to live near where they work. Mayor Joey Morrison is separately quoted acknowledging the affordability pressure statewide. This is a directly on-point, attributable, current account of employed residents being priced out of the community they serve, coming directly from the City's own police chief and mayor. Mountain States Policy Center / The Center Square, "How housing costs are reshaping who can live in Montana" (2026) Reports Bozeman's average home value at roughly $700,000–$725,000 against median household income of roughly $80,000– $88,000, a price-to-income ratio near 8 to 9 times — well above conventional affordability thresholds. The piece also notes that Montana's 2025 legislative session enacted housing reforms (parking-mandate limits, ADU protections, manufactured/workforce housing permitting changes) upheld by the Montana Supreme Court in March 2026, indicating the state itself now treats workforce housing barriers as a policy problem requiring legislative correction. What the record supports, and what it does not No study located ties Bozeman's specific TIF-driven downtown appreciation, as distinct from Bozeman's general regional growth and in-migration, to service-worker relocation outside the city. Absent that data, the defensible claim is the broader one supported above: Bozeman's price-to-income ratio and the Police Chief's own commuting-distance statement, not a more specific causal chain. TIF Research Summary — Fiscal Diversion, Overlapping Jurisdictions, and Housing Displacement TIF Research Summary — Commission Submission — July 2026 Page 3 Connecting the Threads Taken together, these three threads describe a single structural problem rather than three separate ones. The fiscal accountability gap identified by the Civic Federation — long district lifespans paired with inconsistent reporting — makes it difficult for a city to notice when a TIF district has stopped serving its original purpose. The unresolved effectiveness dispute means that even the growth a district does capture may simply be investment redirected from elsewhere in the city, not new value created. And the gentrification and displacement pressure documented by Choi (2025) and Freeman is not a side effect of that captured growth — it is generated by the very appreciation TIF is designed to capture. Bozeman's own price-to-income ratio, detailed in Section IV above, illustrates this pattern locally; anecdotally, Bozeman's workforce is having to live outside of the community that they serve. A city that allows a downtown district to keep capturing that appreciation indefinitely, while the workforce it depends on is priced out and the General Fund services that made the district attractive in the first place go underfunded, is sawing off the branch it is sitting on.