Published for the 11/2/18 print edition of Yellowstone County News.
LOCKWOOD — A proposal to expand the TEDD (Targeted Economic Development District) in Lockwood passed first reading at a public hearing on Tuesday, with an amendment that would direct 25 percent of its future revenue back to other taxing jurisdictions.
All three Yellowstone County Commissioners supported the proposal that will more than double the size of the TEDD, after Commissioner Denis Pitman moved to add the amendment. A second public hearing, where the commissioners will make a final decision, will be held at 9:30 a.m. Nov. 13 in the County Commissioners’ conference room in the Stillwater Building.
Pitman’s amendment was offered to mitigate the impact of the TEDD on the Lockwood School District, whose board of trustees stand opposed to the expansion.
Pitman said that he “struggled” with the issue because he understands the value of TEDDs, but also understands the dilemma faced by the School District.
“I think there has to be some discretion in the distribution of revenues,” he said.
Lockwood School Superintendent Tobin Novasio spoke on behalf of the school board, saying that at the formation for the TEDD the board decided to remain neutral, so long as the TEDD was not expanded beyond the boundaries, which were finally settled upon at its creation two years ago. The TEDD, which is essentially a tax increment finance district, was created under the auspices of Big Sky Economic Development as a means of funding a “ready-to-go industrial space,” to attract “value adding economic development” – i.e. manufacturing businesses. The proposed expansion, now being considered, brings the TEDD back to near the size that was originally proposed at the very beginning of discussions about creating a TEDD.
At that time school board members objected to its size, even while split about the benefits of the concept. Novasio reminded that the School Board sent a letter to the County Commissioners, on Nov. 14, 2016, stating their position of remaining neutral on its creation as long as the size remained as was finally settled upon.
Novasio said that was a mistake.
“We should have opposed it from the get-go,” he said. “We feel like we were sold a different bill of goods.”
Novasio said that he served on an advisory board at the formation of the TEDD and sensed then that “the plan was to expand it from the get go.” He pointed out the size of the expansion is such that “it is almost like creating a second TEDD.”
The existing TEDD is 570 acres. The expansion request which comes from a number of different property owners, would add 625 acres, nearly a square mile, bringing its total size to 1,194 acres.
Novasio said that he felt like he was speaking on behalf of all the Lockwood property taxpayers who are not in the TEDD because a tax increment district shifts to other taxpayers the burden of compensating for the tax revenue that is directed to the TEDD. While other taxing jurisdictions can increase their mill levies to compensate for revenues lost to the TEDD, the school district is restricted by state law regarding levy increases, and must function within a narrow margin.
Opponents and proponents testifying during the hearing were about evenly split on the issue.
Most of the proponents were associated with TEDD properties or property owners seeking to be part of the TEDD.
In a formal presentation by Laura Waterton with Sanderson Stewart, the engineering firm that developed the TEDD master plan, it was explained that the request to expand the TEDD comes directly from the property owners, not from EDA. They are property owners who did not know about the formation of the TEDD when it was being formed, couldn’t participate at the time for some reason, or are new property owners. All recently changed the zoning of their property as required to be part of the TEDD.
As a tax increment district designed specifically for rural areas, a TEDD, at its inception, establishes a base or cap of property tax revenues under which revenues continue to go to their designated jurisdictions, but any new future tax revenues generated by development in the district is directed back to the district to be used to build infrastructure, such as water and sewer lines, roads, lighting and power.
Pitman’s amendment would require that 25 percent of the new tax revenues would be directed back to the other taxing jurisdictions, such as the school district.
“It’s like creating three-fourths of a TEDD,” was one comment.
Jim Weaver, who owns the Trailhead Industrial Park in the TEDD, said the TEDD is “vital for the growth of Yellowstone County… it would be a shame if doesn’t go through.” His daughter, Jennifer, also spoke to say that the TEDD “will attract new businesses, new jobs, and new families and students for the school.”
Vu Pham pointed out that Weave Management, owned by Jim Weaver, and for whom Pham has worked, did an economic analysis about the prospects of the Trailhead Industrial Park that showed it would generate $200 million through 2040.
“That reflects on what the TEDD can do for the community,” he said.
Carl Peters, chairman of the Lockwood Water and Sewer Board, said, “It will strengthen the community as a whole. They will fund infrastructure that is needed.”
A local Realtor, Tom Llewellyn, spoke on behalf of one of the property owners, Jack Ramirez, a former state legislator and 1980 gubernatorial candidate, to say that the location of the TEDD is in “a tough area for normal commercial development but fits the TIF very well.”
The TEDD is located on the northwest corner of the intersection of Johnson Lane and Interstate 90, where the proposed Billings Bypass will enter the Lockwood area from the Heights.
Other opponents suggested that an expansion of the TEDD be postponed until it can be seen whether the TEDD at its current size is working.
Kevin Nelson, a Billings resident, claimed that most of the other TIFs formed by EDA are not doing very well. The only one that has increased its increment, he said, has done so primarily because of a reassessment of property values that increased them. Others have suffered decreases in property values that have left them unable to meet obligations. He said that in the TEDD “You can’t afford water and sewer… because the properties are too sparse, and the value of the property is too little, and the costs are too great.”
Larry Reiman also objected to the expansion, just as he opposed the creation of the TEDD. He said, “They already can’t pay their bills as planned,” referring to a request by EDA to adjust the repayment plan for the TEDD for money borrowed from the county to pay for the master plan development. The original agreement was to pay off the loan from the first year’s increment, which would consume almost all of the first year’s revenue. They requested a change in the agreement so that the TEDD would have money to spend sooner.
Reiman said that he represented other county taxpayers in objecting to taking away revenue from other county funds, such as the road department, weed department and schools.
“If you can’t do it with 500 acres, you aren’t going to do it with 1,200 acres,” he said. “Amend the whole thing and throw it out.”
