Missoula County approves $5.28 million TIF purchase of Wye public water system

The Missoula County Board of County Commissioners approved using $5,282,264 in tax-increment financing (TIF) to purchase a publicly owned water system for the Wye targeted economic development (TED) district and approved related agreements and steps to form a special district to operate the system.

County staff said the system is intended to provide the fire-flow and domestic water capacity that has constrained industrial development south of the Wye. "This piece of infrastructure is critically important in the Wye," Community Economic Development staff member Andrew Hagemeyer told the commission, saying the system would enable larger buildings, expanded job capacity and future extensions into adjacent areas.

The commission approved a development agreement that spells out developer obligations—competitive bidding for subcontractors, prevailing wage and insurance requirements—and conditions for transfer of ownership to the county once construction is complete. The county will acquire the well, a 550,000-gallon storage tank, booster pumps and related improvements and easements as part of the purchase.

The board also adopted a resolution of intent to form a local improvements special district to own, operate and maintain the system. County staff said the district initially would include two properties—the Grass Valley Industrial lot and Montana Knife Company—and that joining the district will be optional for property owners who later elect to connect. The county estimated first-year assessments would be no more than $1,200 per parcel but said the actual fee will be set after an operations analysis; staff gave a working range of about $60–$80 per month as a comparable county system benchmark.

Separately, the commission approved a subdivision improvements agreement and surety to secure completion of remaining infrastructure in the Grass Valley Industrial Subdivision. The outstanding improvements covered by the agreement include roads, storm drainage and lot distribution lines; the developer-provided surety letter from Philadelphia Indemnity Insurance secures approximately $2.81 million in remaining work and a one-year maintenance guarantee on roads and drainage.

Private partners and local developers told the commissioners the water system is a necessary catalyst. "The only way that we're going to be able to grow is to have a facility to grow in," Joshua Smith, CEO of Montana Knife Company, said, adding that the company has created roughly 80 jobs in the area and needs a site with adequate fire suppression and domestic water to expand. Matt Malott of Grass Valley Industrial Park LLC said the availability of adequate fire flow can increase tax value per acre several-fold by enabling larger, taller buildings.

County staff said the project is a public–private partnership: the private sector will design and build the system to municipal standards, the county will provide oversight, then issue bonds and reimburse the developer after construction is complete. Staff estimated total project cost at roughly $6 million, including about $800,000 in unreimbursed private investment; the TIF request covers approximately $5.28 million. The commission was told the Wye TED currently generates roughly $700,000 in annual TIF revenue and that the projected annual bond payment would be about $400,000.

Next steps outlined by staff include a required public hearing when the county issues the TIF bond, a 60-day protest/comment period before finalizing the special district (with a decision on April 24 listed as the next formal district decision date), completion of final design this winter, construction beginning in spring and water turned on by the following fall. County bond counsel and public works staff will return with more detailed fee and bond documents before closing.