Lockwood Targeted Economic Development DistrictJust the FAQs

• Targeted Economic Development Districts (TEDDs) assist local communities in addressing infrastructure deficiencies in order to support the retention, expansion and location of value-adding businesses and industries.

• Tax Increment Financing or “TIF” is a funding mechanism which can be used to help fund public infrastructure and associated services in Targeted Economic Development Districts (TEDDs).

• A TEDD creates a partnership with private industry to address the needed public infrastructure that then supports private investment.

• TIF is authorized under Montana Code Annotated § 7-15-4282 and enables communities to direct property taxes from new development within a designated infrastructure-deficient geographic area to various public development activities.

• A base year is established from which incremental increases in property values are measured.

• Providing required matching funds to secure local, state and federal grants
• Expenditures based on existing cash
• Debt financing
• Leveraging funds from other sources
• Revolving loan fund
• Bridge funding

• Land and Infrastructure Development
• Roads
• Rail Services
• Sewer, Water and Stormwater Drainage
• Utilities
• Land improvements and Site Preparation
• Connecting to Services Outside the District
• Public Services
• Business and Technical Assistance Programs

• State and Federal Loans and Grants, for example:
  • US EDA Public Construction Grants,
  • MDT Transportation Alternatives Grants,
  • MT Department of Commerce Big Sky Economic Development Trust Fund Grants,
  • MT Department of Commerce Treasure State Endowment Program (TSEP) Funds,
  • MT Department of Commerce Board of Investments InterCap Loans,
  • MT Department of Natural Resources and Conservation State Revolving Loan Funds,
  • MT Department of Fish, Wildlife and Parks’ Recreational Trails Program,
  • USDA Rural Development Loans (RD) Water and Environmental Loans, and
  • Gas and Diesel Tax Distributions to Counties, among others.
• Special Improvement Districts
• Public-Private Partnerships
• Developer-Financed Infrastructure Improvements

• Each taxing jurisdiction continues to receive property taxes levied against the TEDD’s base taxable value.
• Only the incremental tax dollars received from new development are placed in a separate fund for making public improvements within the TEDD for 15 years.

 Assume:              $2,000,000 dollars of appraised NEW value (above the base taxable value)

 Assume:              Class 4 property (residential, commercial, industrial) @ 2.20% (2015)

 Calculate:            $2,000,000 x .022 = $44,000 in taxable value

 Assume:              A mill levy of 721.78 (Total mill levy for Lockwood, less the 6 mill university levy)

 Calculate:            $44,000 x 0.72178 = $37,758.32 Tax Increment

 So:  $37,758.32 is available to invest in public infrastructure every year until the TEDD expires.  This also means that the private sector had to FIRST invest $2,000,000 to generate that increment.

• The TEDD is a tool to grow the tax base. When the TEDD sunsets, for every $2,000,000 of new appraised value, Lockwood School will receive an additional $6,852.36 per year of new tax revenue.  [$37,758.32 x 0.18148 (Lockwood School District mill levy)  = $6,852.36]

• There is no financial impact on taxpayers.
• The TIF provision ONLY affects the WAY in which new property tax dollars (based on new value) are distributed.
• As always, taxes paid are based on the value of your property including new improvements.
• Property owners benefit, however, because infrastructure improvements are made in the area in which their properties are located.

• The TEDD tool can be used to plan growth. Should the Yellowstone County Commission elect to adopt the Resolution of Necessity with the Statement of Infrastructure Deficiency presented to them on March 6, then BSED, our consultants, and the Lockwood community will move forward to develop a Comprehensive Development Plan for the Lockwood TEDD.

• That Plan will address at minimum: a TIF provision; a description of the District; the TEDD’s goals; an analysis of infrastructure deficiencies and priorities; potential targeted industries; a list of activities and projects; District and program administration and management; funding strategies; TEDD Plan amendment procedures; and documentation of public comments made throughout the planning process.  This allows Lockwood to plan for growth within and, to a certain extent, around the Targeted Economic Development District.

• BSED will ask the Planning Board to review the Growth Policy to determine:
  • Whether the Comprehensive Development Plan conforms with the adopted Growth Policy, and
  • That the area of the TEDD is zoned in accordance with the adopted Growth Policy.

• The Yellowstone County Commission will then hold a public hearing on the TEDD Plan following notification by mail of all property owners in the District and through the placement of a legal advertisement.

• BSED will ask the Yellowstone County Commission to consider adopting the Ordinance that creates the TEDD, which, if adopted, will be effective 30 days after passage.

• BSED will submit materials to the Montana Department of Revenue for Certification.