“Nobody should have to lose a home that they already own,” Svein Newman said last year after he started a Go Fund Me Campaign to help 200 Missoula homeowners that were about to lose their homes due to unpaid taxes. “A lot of these homes were being lost for very low debts – under $200. That was shocking to me.”
Six years earlier it was the same story - high taxes forcing long-time Missoula residents from their homes:
“Betty Museus had lived alone for many years in her home in Missoula, Montana. With no close family to assist her, she fell behind on her property taxes. Her home was purchased at tax sale by Virginia-based Mooring Tax Asset Group for the $5,822.09 tax debt. Ms. Museus did not respond to letters sent to her by Mooring and she failed to redeem the property. Mooring evicted her, eliminating the remaining equity in Ms. Museus’ house, valued at $150,000.
Missoula’s City Attorney responded to Ms. Museus’ loss by requesting that the state legislature revise the tax sale procedures to include an in-home visit to provide property owners with an explanation of their financial options. He believed that a reverse mortgage was one such option that could have saved Ms. Museus’ home.”
I wasn’t able to find any information on a state-run program to provide in-home visits for elderly property owners like Betty Museus.
We know that women like Betty run into problems because they have fixed income and can't keep up with a city that has raised taxes by 100% over the past decade.
A big reason taxes have gone up so much is that the city doesn't allocate enough to its general fund, and instead diverts tax money to things called Urban Renewal Districts, which then use that tax money for their own ends.
This in no way benefits Missoula homeowners like Betty Museus.
The Montana Legislature first approved the use of Tax Increment Finance Districts way back in 1974. Missoula jumped on the bandwagon in 1978, creating the first urban renewal district (URD) to take advantage of these news laws.
The Montana Department of Transportation tells us that TIF money can be used like so:
“Expenditures of TIF-generated revenues are subject to certain restrictions and must be spent within the district. The funds generated from a new TIF district could be used to finance projects such as street and parking improvements, tree planting, installation of new bike racks, trash containers and benches, and other streetscape beautification projects within the designated area.”
Sometimes, however, using this money actually hurts people.
The DOT even admits that using TIF money can lead to the gentrification of neighborhoods.
A big problem is that the TIF model relies upon increasing property values, something that will in turn cause property taxes to go up for those now-more-valuable properties. Unless you have more and more income each year, this is not good for you.
“Stakeholders such as small business owners, renters, and elderly or low-income homeowners may feel threatened by proposals for large scale TIF-funded development,” DOT goes on to say, “as they may not be prepared for the higher tax burden generated by the intended higher property values.”
DOT suggests that local governments institute property tax deferral programs to offset this problem.
The state offers such programs under their Property Tax Assistance Program, or PTAP. One problem for Missoulians - where the average home value is now well-above $300,000 - is that the PTAP only covers the first $200,000 of a home’s market value.
Also, PTAP will only help you if your federally adjusted gross income is less than $22,700 for a single person, or $30,300 if you’re married.
Missoula offers a similar program, called Betty’s Fund. The program only helps you if you’ve already applied for the PTAP funds. If you succeeded there, you can get an additional 25% “credit off of the city of Missoula general fund portion” of your tax bill.
You have to be elderly or disabled to qualify for Missoula’s program, and sadly, the program is a joke.
The city did not allocate one penny to Betty’s Fund in their most recent budget, and when you search through the nearly 400 pages of that budget, you don’t find anything about property tax deferral programs.
Missoula only pretends to care about those hurt by their TIF policies, and they don’t even do a good job at that.
The whole idea behind TIF money in Missoula is that it benefits the community. Most of the time it’s only businesses that receive this money, and sometimes it doesn’t even need to be paid back.
Here’s how the Missoulian put it recently:
“If the developers can convince the MRA board of the value of the project, they can get TIF funding that doesn't have to be paid back. Usually, the board wants developers to commit at least 10 times the amount in private capital as they get in TIF funding. The debt the MRA incurs by giving developers the TIF money is paid back by the increase in property taxes that projects in the URD generate.”
When Missoula first put TIF finance to work in the 1970s, it was clear that the city’s general fund would suffer.
“With the creation of the URD, the MRA was able to leverage $20 million in Tax Increment Financing, which was diverted away from the city’s general fund, and leverage that into $200 million worth of private, state and federal investment.”
The good news is that the city can get some of this TIF money back for the general fund, like they did last year with $2.7 million they needed to shore-up the budget.
Sadly, the Missoula Redevelopment Agency can either say yes or no to the city’s requests for this money. There is no City Council oversight of the MRA, and all of the MRA board members are appointed by the mayor.
Each member of the MRA board donated to the mayor’s most recent election campaign.
While the city often can’t get any TIF money back, the good news is that the City Council often has the chance to approve or disapprove of the use of TIF funds before they’re awarded to a project.
Recently the Council voted to give Stockman Bank $1.5 million in TIF money, despite the fact that the company has billions of dollars in assets.
We have two big problems: Missoula taxes are too high, forcing many out of their homes. Secondly, the city doesn’t think it has enough money (it made $165 million last year) and therefore has to keep raising your taxes for want-list items.
Many times the city will try to rename certain areas of town as blighted so that it can slap an urban renewal district on the area, which allows them to divert tax money away from the general fund - where it’s used on essential services - and into TIF funds that only seem to benefit private developers.
So what’s the answer?
In my opinion, it’s having a much wider area of use for TIF money.
So what can we use TIF money for?
As you might know, I’ve been a big proponent of using TIF money to plow our streets, fix our potholes, pick up our leaves, and other things that the city won’t do with the money it has in the general fund.
For instance, even though the city has a policy of plowing residential streets within four days of a snowfall, we know this does not happen.
Maybe if the Streets Division had more money, they could do this. If the city can’t or won’t allocate more money to their budget, then perhaps we need to allocate TIF money for that.
These are essential services that aren’t being done because the city doesn’t have the money because they’ve created too many urban renewal districts to take advantage of TIF money...money which is then given to private developers, and not used to fund essential services.
The good news is that the MRA and our TIF-governing laws all say TIF money can be used to improve streets and parking and street beatification.
We just don’t have the political will on the City Council to use this money for the common good as opposed to lining the developers’ pockets.
So go out and vote and tell others to vote.
That’s the only way the city can get people on the Council that will work to help taxpayers, not hurt them.