The State Legislature authorizes cities and counties to offer tax abatements for certain types of property improvements.  In 2005, the City Council adopted programs for commercial and industrial property improvements.  State law (15-24-1601 MCA) authorizes a similar tax abatement program for historic properties.  If the Council is willing to establish the program, it must adopt a resolution that outlines the abatement conditions and process.  The attached resolution will accomplish that requirement.  The Yellowstone Historic Preservation Board has agreed to review plans for rehabilitation/restoration and the Big Sky Economic Development Authority will provide most of the assistance to applicants and will manage the approval and filing processes.  Yellowstone County has indicated that it may adopt a similar abatement program.  The City Council should conduct a public hearing and consider adopting the attached resolution that will establish the historic property tax abatement program. 

The City Council may approve or disapprove the Resolution.  Approving the resolution will allow owners of contributing properties in historic districts and properties on the National Register to obtain partial tax abatement on improvements to those properties.  The eligible improvement types include rehabilitation, restoration and expansion of historic properties and some new construction.  All construction must meet US and State historic preservation requirements. 

There is a small negative financial impact on the City of Billings.  First, there are relatively few buildings within the two historic districts and others that are outside the districts but on the National Register.  Second, the abatement program applies only to the property value increase attributed to the rehabilitation/restoration work.  Third, the City may approve abatement of the City's and the local school districts' levies.  If the County adopts a similar program, it can abate only the County tax levy.  Statewide levies are never abated under this program.  Finally, the abatement period is limited to no more than 12 months of construction plus the subsequent five (5) years.  When the abatement period ends, the full property value becomes subject to all levies.   

Staff recommends that the City Council conduct a public hearing and approve the Resolution Establishing a Historic Property Rehabilitation and Restoration Tax Abatement Program.