The South Billings Urban Renewal Association (SBURA) Board has reviewed this application for tax increment assistance and recommends to the City Council, upon project completion, a maximum of $500,000 of Tax Increment Finance funds from the South Billings Boulevard Urban Renewal District (SBBURD) to Montana Trailhead Inn (Tropicana Inn-Vestments 2.0, LLC) for partial demolition of the existing hotel for redevelopment. Actual reimbursement will be based upon 100% of the actual costs incurred for qualified expenses for the improvements made, 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 amount that can be received pending satisfactory submission of all paid invoices showing the completion of expenditures related to this project.
3.) The project reimbursement will occur after construction is completed.
4.) If funds are not available, reimbursement will be carried over to the next fiscal year.

The SBURA Board considered the Montana Trailhead Inn (Tropicana Inn-Vestments 2.0, LLC) application at its September 4, 2024 board meeting and voted unanimously to recommend $500,000 of tax increment assistance. Tropicana Inn-Vestments 2.0, LLC owns and operates the Montana Trailhead Inn on a 13 acre property at 5500 Midland Road.

The proposed project will demolish a portion of the hotel buildings that include 221 hotel rooms, make some parking lot improvements, add new laundry facilities to the remaining hotel tower, remodel the exterior of the tower, install new landscaping and reroute utilities as needed. The demolition will open up area for construction of new leasable retail or restaurant space and allow for plans to re-purpose the old convention building at the east side of the property for a large retail business. The future plans are focused on revising the parking and excess parking areas to take advantage of retail development and pad sites to better take advantage of the 13 acre property for buildings and businesses. The demolition is expected to be conducted in November 2024 with the other project improvements to follow.

Total project costs are estimated to be $3,347,000. The total requested amount of $500,000 is for demolition specifically and is approximately a 1:7 ratio of investment of public vs private funds. This is a greater investment of private funds than the City TIF policy suggests, which is a minimum of 1:5. The majority of the project cost is the demolition work estimated at about $1.4 million.

Table 1 below details the proposed expenses that qualify for tax increment assistance to Tropicana Inn-Vestments 2.0, LLC. The funds being requested will go specifically toward the demolition portion of the project. There is also detailed information relating to the project costs included in the Tropicana Inn-Vestments 2.0, LLC TIF Application, attached to this memo.

TABLE 1. 

Qualified Improvements	Estimated Costs	City TIF Policy	Urban Renewal Plan	MT Code Annotated
Site Demo and Asbestos Abatement	$1,697,000	Section 1(a)	Section 13	7-15-4233(i)
Utilities	$150,000	Section 1(b)	Section 13	7-15-4288(4)
Parking Lot Improvements	$400,000	Section 1(b)	Section 13	7-15-4233(i)
Landscaping	$100,000	Section 1(c)	Section 13	7-15-4233(i)

TABLE 2.


The taxable value increase calculation and payback period were not calculated for this application since the property is first going through demolition (See Table 2). The property tax value, while expected to increase significantly with the improvements and redevelopment, is difficult to calculate now since the extent of the redevelopment is not known at this time until the demolition has occurred and other improvements are made.

The 13 acre Trailhead Inn property sits at one of the most high-profile intersections in the SBBURD. There has been community interest for many years to have this property become a more viable contributor to the District. This property meets the definition of blight as it stands now and demolition of some of the structures, improvements to the property, and future redevelopment to take advantage of such a large commercial property are all goals of the District and meet the intent of the Urban Renewal laws (See Table 1). The long term redevelopment of this property will increase the tax base for the SBBURD and make this area a significant contributor to commercial redevelopment in the area.


 

Stakeholders for this application include the property owners in the SBBURD, the applicant and the general public in Billings. The SBURA Board meeting is a public meeting and the City Council meeting is a public meeting as well, so the public has multiple opportunities to comment on this application as it is reviewed and acted upon. The Planning and Community Services Department did not receive any public comments on this application before this memo was completed. The SBURA Board minutes when this application was reviewed and recommended for approval to the City Council are attached to this memo.

City Council may:

• Approve the recommendation from the SBURA board for the expenditure of these tax increment finance (TIF) funds; or,
• Modify the recommendation from the SBURA board for the expenditure of these TIF funds; or,
• Disapprove the recommendations from the SBURA board for the expenditure of these TIF funds. If the City Council chooses not to approve the TIF application, specific reasoning for the denial will be important for City staff and the SBURA Board as consideration for future applications occurs.

The recommendation is for a maximum of $500,000 to be reimbursed to Tropicana Inn-Vestments 2.0, LLC, Inc for the identified work of demolition. There were sufficient funds budgeted in FY25 as "unspecified development assistance" to cover this reimbursement.