Butte’s business park flying high as tax sunset nears | Local

A lot of Butte residents can tell you it’s that industrial park out by the drive-in theater, and some can name two or three companies operating out there — maybe FedEx, REC Silicon, SeaCast or Montana Precision Products.

But how many know the park is Butte’s hottest economic driver of late? That its tax-increment tool has worked precisely as it was intended from the get-go years ago? That the tool comes to an end in less than four months at a time the park is really flying high?

“I think it’s probably one of the best-kept secrets in Butte and it shouldn’t be because there are a lot of positive things happening out there,” said Mick Ringsak, a longtime member of the board that oversees the Tax Increment Finance Industrial District, or TIFID.

Todd Tregidga, associate professor and head of the Department of Business  at Montana Technological University who has chaired the TIFID board for 15 years, said the park pays big dividends to all of Butte-Silver Bow County.

“Not only are there close to 1,000 jobs in Montana Connections Park, the funding for those payrolls come from products being sold mostly out of state,” he said. “So this is essentially new money being imported into our community, which will circulate in our economy multiple times and create even more jobs.”

Those businesses source some of their products and services locally, too. And when the district sunsets on June 30, the millions of dollars in new property tax revenue it has generated and previously captured will start flowing to local government and schools.

That will benefit taxpayers “in the form of lower taxes or increased and improved services,” Tregidga said.

Under Montana law, the district cannot be extended past June 30. But the county can establish a new Targeted Economic Development District, or TEDD, with the same taxing tool that grew the business park.

Kristen Rosa, who oversees the TIFID for Butte-Silver Bow, said officials have “passed around the idea” of creating a new TEDD in the area and will likely discuss the possibility more in the coming weeks.

It’s a very public process, she said, and worth pursuing if it could help keep a good thing going.

“We have momentum, we see interest and we would like to make sure we don’t turn anybody away that would be a good fit for the park,” Rosa said.

The TFID in Butte really goes back to 1989, when Butte’s Evan Barrett and Janet Cornish and Butte native Dennis Winters drafted a bill the Montana Legislature passed putting the concept of tax-increment financing (TIF) for industrial areas into state law.

Like other TIFs, TIFIDs capture property taxes from new developments in designated areas so they can be spent on new infrastructure or improvements in those same areas. Only revenue from the increased tax values, called “increments,” is captured for reinvestment.

The improvements — in many cases new roads, sewer and water lines, broadband, rail expansions, steel warehouses with space to lease — can in turn lure new industries and businesses and help existing ones expand.

Like other TIFs, only taxes from new property developments or improvements is captured, so it can take years for the “increment” to build up. Some TIFs in Montana struggle to gain momentum.

County officials say there was very little, including roads or water or sewer services, in a large area west of town before the TIFID was established in the early 1990s. It was an ideal place for an industrial park since it boasts two major railroads and is at the crossroads of two major interstates.

It helped land REC and is now home to several manufacturers and businesses, including Montana Precision Products, SeaCast, FedEx, Scouler Grain and Old Dominion Freight Line Inc.

The area’s base value has stayed the same at $1.7 million. Property taxes from it go to local government and schools, like they do from most areas in Butte.

But in just the past 12 years, it has generated $57 million in property tax revenue from its increment taxable value and will bring in another $3.7 million this fiscal year, according to Butte-Silver Bow Budget Director Danette Gleason.

The TIFID has reinvested $27 million over the past five years alone. The money has hooked the park to drinking water and paid for a bridge realignment and upgrades to gas service. New buildings have been constructed, including a large warehouse built last year.

An $8 million rail expansion at the adjacent Port of Montana and the business park was completed late last year and now more businesses can load products and materials. It brought direct rail service to Montana Craft Malt and Ergon Asphalt.

The project was financed with TIFID dollars, Port of Montana reserves, a Montana Rail Freight loan and a $2.9 million grant from the U.S. Economic Development Administration.

The park has a new “Sugar Loaf Loop” that includes more development sites with a new a road and lines to bring in gas, electricity, potable water, industrial water and fiber optic systems. They will serve a Murdoch’s Warehouse and a planned National Guard Readiness Center.

Foothold, a Bozeman-based modular home manufacturer, has new operations at the park and recent land-purchase agreements could result in more businesses locating there. Among them are a proposed refrigerated warehouse and distribution center and a large modular housing manufacturing facility.

Tregidga says there are several reasons the park is getting so much attention “late in its life.”

“All infrastructure is now complete and we are told by site selectors across the country that we have one of the most mature and shovel-ready industrial parks in the country,” he said.

“Additionally, a lot of focus lately has been on improving the efficiency of the supply chain,” he said. “Being at the intersection of two transcontinental interstates and railways helps developers achieve that objective.”

Ringsak said the adjacent Port of Montana has played a big role in the park’s success. The Port is a transloading facility for Burlington Northern Santa Fe and Union Pacific railroads that allows direct transfer of goods from rail to truck.

It also provides storage and inventory control and is a Foreign Trade Zone, meaning a company doesn’t have import duties assessed until after the products leave the zone. That allows them to be held until the best price can be obtained in the U.S. market.

“We’ve had a really good relationship with the Port of Montana and it’s been a major driver of what’s happened out there,” Ringsak said. “So the two together have a lot of synergy.”

Like Tregidga, Ringsak noted that Interstates 15 and 90 intersect just outside the park.

“There’s a lot of Canadian traffic coming from Calgary that goes through, which is why there are three trucking firms out there,” Ringsak said. “The last several (TIFID) actions that have been done have to do with warehouses and regional distribution and Butte is a really good location for distribution throughout the Northwest.”

There’s been another big selling point: Silver Lake.

Butte-Silver Bow owns rights to some water in the lake northwest of Anaconda and pumps millions of gallons of it into town each day for industrial uses, a lot of it going to the business park.

It was a big, big reason why late Butte businessman Ron Ueland and other investors chose the park as home to Montana Craft Malt, a $15 million facility that produces malt for craft brewers in and outside of Montana.

“There is a story that needs to be told beyond just our project,” Ueland said in April 2017 when announcing plans for the malt plant. “The Connections Park has a hidden-value secret that doesn’t need to be a secret — shouldn’t be a secret 
— and that is the water supply out there.

“When you are processing — in our case malt — water is such an important factor, and the water coming off of the Pintlers in Silver Lake and the water line that goes to the business park is very valuable,” he said. “We couldn’t find that any place else in Montana. There is pristine mountain water here, and plenty of it.”

Ueland died in May 2018 but his daughter, Jennifer O’Brien, saw the project through and a ribbon-cutting ceremony was held to mark the facility’s opening in January 2020.

Although the current tax-increment tool expires soon, the TIFID still had $5.7 million in cash as of mid-February. The plan is to spend or commit all of that money on remaining projects prior to June 30. If contracts are in place by then, the work can go past that date.

The projects include infrastructure for a Murdoch’s expansion, additional road and sewer work, improvements to the Silver Lake system and more rail projects in partnership with the Port of Montana.

There are 180 acres still available for sale as well as four parcels under contract that haven’t been closed as developers work on remaining details, Rosa said.  

There’s an effort in motion now by the state to get 350 acres of non-zoned land it owns just south of the business park zoned as “rural industrial,” meaning it can be used for heavy industry and transportation-oriented purposes. The TIFID is zoned that way.

The state would continue to own the land regardless of zoning changes and any future leases for development would go through the state. But certain permits would go through Butte-Silver Bow and the county could advocate on behalf of developers.

Several residents who live in largely rural areas near the 350 acres spoke against the zoning change at a recent meeting of the Butte-Silver Bow Planning Board. They said there was already too much truck traffic and light pollution from the business park.

Planning Board members sympathized, to a point, but still recommended the Council of Commissioners OK the zone change. As it stands, they said, the state could allow anyone to locate in the area because it isn’t zoned at all.

The request is now before commissioners and people should have weeks more to weigh in. Rosa said she respects the concerns of opponents and the TIFID has worked to restrict lighting, but hopes the park keeps growing.

“We have less land available than we did 10 years ago (but) I think seeing additional development in this area is a good thing for the economy,” she said.

There is no mechanism in state law left to simply extend the life of the TIFID, she said, but the county can create a TEDD with a tax-increment tool. It could include the 350 acres owned by the state.

“We would look at modified boundaries for the (new) district and look where we haven’t seen development and where we could put additional infrastructure to assist with industrial development,” Rosa said.

Ringsak and Tregidga like the idea.

“No new taxes will be available for further infrastructure development until new development is sited in the new district, but it will be a lot less costly to extend existing infrastructure than it was to bring them to the park initially,” Tregidga said.

Ringsak said the TIFID has been great for Butte and he would like to see that continue.

“It really raises the recognition that this city is an ideal place for distribution and it has a good workforce and a good atmosphere,” he said.

Rosa summed it up this way:

“We talk a lot about job creation and economic diversification,” she said. “If you look at the way we have guided all of this development at Montana Connections, the two underlying themes are growing our economy and diversifying our economy.”