Overview of Funding
Montage Liberty is a 1,100-acre master planned community mixed-use development project that will bring employers, businesses, public infrastructure, and new residents to an undeveloped area on the west side of Liberty.
For nearly a decade, this project has been in the works with a collaborative effort between the city staff, the school district, public services, economic development, MODOT, land owners, and the developer.
The developer, GaleHart Communities, maintains a deep and proven commitment to sustainable development practices with great care to work with the surrounding landscape and communities. The principals have fallen in love with Liberty and are thrilled to be able to bring dynamic growth to the area in a sustainable way that will improve the surrounding area. Experienced in creating nationally-recognized communities across the Midwest and Rocky Mountain regions, they apply their expertise and sustainable core values to the vision, planning, and development of great communities.
In order to make a project of this magnitude come to life, the project must first be funded. The Montage development will require the use of a Special Reimbursement District.
What is a Special Reimbursement District?
Partial Funding through a Special Reimbursement District
Special Reimbursement Districts (SRD) are a financing method that utilizes a unique private financing mechanism to enable a developer to install the city-required public infrastructure and improvements necessary to generate future greater taxable income through real estate development. Eligible public infrastructure expenditures are later reimbursed to the developer from those generated tax dollars. In this way, the developer takes on the risk of the up-front expenses, while awaiting the reimbursement of the eligible infrastructure on a year-by-year basis.
Tax Increment Financing (TIF) from a created TIF district is a public financing method that allows a local government to subsidize upfront funding for redevelopment, infrastructure, and other community-improvement projects without dipping into the current tax base. TIFs are typically created without raising taxes, and also without dipping into the base tax revenues present at the time of adoption.
Although similar to a TIF, a Special Reimbursement District (SRD) works well because it has a few key things to differentiate it:
- An SRD is initially privately, instead of publicly, financed and funded.
- An SRD requires no municipal underwriting or risk and yet provides public infrastructure that doesn't exist but is required for the development to occur.
- The SRD captures the increase in property taxes (and sometimes other taxes), resulting from the new development, and
- An SRD diverts that revenue to subsidize the construction of the public infrastructure without the risk to the municipality.
Without the financing mechanism of a Special Reimbursement District, the Montage project cannot be constructed and the land will remain stagnant, thereby unable to generate new tax proceeds for public utilization and future growth.