The South Billings Urban Renewal Association (SBURA) Board has reviewed this application for tax increment assistance and recommends the City Council approve up to a maximum reimbursement of $346,201 of funds from the South Billings Boulevard Tax Increment Finance District (TIFD) to Rimrock Hospitality Billings, LLC for improvements associated with construction of a new hotel in Miller Crossing off King Avenue East. Actual reimbursement will be based upon 100% of the actual costs incurred for qualified expenses for the Improvements made to the property at 4720 King Ave East subject to the following conditions:

1. The Applicant shall sign a development agreement with the City of Billings and SBURA within 180 days of City Council’s approval.
2. This TIFD reimbursement is the maximum that can be received pending satisfactory submission of all paid invoices showing the completion of expenditures related to this project.
3. If funds are not available, reimbursement can be carried over to the next fiscal year

The SBURA board considered Rimrock Hospitality Billings, LLC application for tax increment assistance at its October meeting and then brought it back for action at its November 7 meeting. The SBURA Board recommended approval to City Council of this TIF request on a 5-1 vote. Rimrock Hospitality Billings, LLC had initially requested up to $502,370 in reimbursement for its project, but the SBURA Board reduced the request in its recommendation to be consistent with similar past requests and focus on more specific private improvements with public benefit. The $346,201 is 2.9% of the total estimated cost of the project. One concern with the timing of this request is that while the application came to the SBURA Board and staff for review prior to breaking ground, Rimrock Hospitality Billings, LLC did begin excavation for the project before the SBURA Board voted on the application in November. The CIty's TIF Policy in Section 2 Financial Assistance Through TIF states that "Financial assistance should be requested prior to beginning construction." This was pointed out by City staff during the SBURA Board discussion and the Board decided that since the application had come to them prior to ground breaking that it would move forward with the application and recommendation for funding. It is ultimately the Council's perogative per its TIF Policy as to how it wishes to apply the Policy.

The hotel project involves a 122 room hotel on the property at 4750 Kings Ave East. The hotel will provide 10-16 permanent FTE jobs and approximately 75 FTE construction jobs during completion of the hotel. This request is similar to one by Ole Rentals LLC for a new Taco John's Restaurant at 4720 King Avenue East in November 2021 that was ultimately approved by City Council for $123,898.00 in TIF funds. This hotel project is recommended for TIF reimbursement for construction of sidewalks ($110,503), curb and gutter ($61,300), and landscaping ($129,398) and irrigation ($45,000) associated with its development. The SBURA Board supports the project and found it was a match for accessing urban renewal funds because:

• The private improvements with public benefit proposed for reimbursement for the overall project exceeds the 5:1 private to public matching fund recommendation of the City's TIF Policy. The project total is estimated at $11.9 million (including land purchase) so the ratio for the project is about 34:1 private to public funding. Without the land purchase included, the project totals $10.7 million and the ratio is 32:1.
• The payback for this investment of TIF funds to be recouped in taxes is estimated at about 2.7 years.
• The application aligns with City TIF Policy, MCA, and the SBBURD Urban Renewal Plan (See Table 1 below).

Table 1. Alignment of Proposed Improvements with City TIF Policy, SBBURD Urban Renewal Plan, and MT Code.

Qualified Improvements	City TIF Policy	Urban Renewal Plan	MT Code Annotated
Sidewalks Curbs Landscaping/Irrigation	Section 1(b) Section 1(b) Section 1(b)	Section 13 Section 13 Section 4	7-15-4288(4) 7-15-4288(4) 7-15-4288(4)

This process and action of the SBURA is under its authority per the Memorandum of Understanding between the City of Billings and the SBURA approved by the City Council on May 13, 2019.


 

City Council may:

• Approve the recommendation from the SBURA board or the expenditure of these tax increment finance (TIF) funds that are consistent with elements of the South Billings Boulevard Urban Renewal Plan, or;
• Modify the recommendation from the SBURA board for the expenditure of these TIF before taking action, or;
• Disapprove the recommendations from the SBURA board for these expenditures of these TIF funds.  If the Council chooses not to approve the TIF application, specific reasoning for the denial is helpful to provide further direction to the SBURA board and City Staff for future applications.

The recommendation is for a maximum of $346,201 to be reimbursed to Rimrock Hospitality Billings, LLC for the identified work. The estimated total project cost is approximately $11,909,278, making the private to public investment ratio for this project about 34:1. The funds are payable per the conditions of approval outlined in the SBURA recommendation and pending satisfactory submission of all paid invoices showing actual cost incurred for the project. Currently, the project is estimated for completion in late fall 2024 (FY25) so this expense would need to be reflected in the FY25 SBBURD budget as payments would be made during FY25. SBBURD's annual revenue position can accommodate this expenditure while supporting other projects and obligations.