Prestige Toyota, located at 1532 Grand Avenue, has applied for a property tax abatement under City Resolution No. 05-18377 and Montana Code Annotated (MCA) Section 15-24-1501. This program abates a portion of the property tax on remodeling, expanding or reconstructing commercial buildings during the construction period and for the following four (4) tax years. The property owner demolished the former building in 2007 and built a new structure in 2008. In order for the City Council to grant the abatement, it must conduct a public hearing and adopt the attached resolution that conditionally approves the abatement. Recommended conditions of approval are that the applicant must provide all of the application information and approvals, document the building completion and value with the Big Sky Economic Development Authority (BSEDA) and apply to the Montana Dept. of Revenue for the appropriate tax abatement.

The City Council may:
• Approve the resolution and the tax abatement
• Disapprove the resolution and the tax abatement

The applicant reports that the demolished building had a value of $780,000 and the new building cost $4,212,000 to build, or a net difference of $3,432,000. If approved, this abatement applies only to the net investment. If the Montana Dept of Revenue values the property the same as the reported value, the net difference in value would have a taxable value of approximately $81,394 (tax year 2010). This abatement program exempts the added value from city and school district levies, but not the county, state or other levies. The city and school tax on the added taxable value would be approximately $29,000 in the first year (2010).  The new building's net taxable value will be exempt from the specified taxes for an additional two (2) years. The abatement would normally be for the construction period and four years following completion, but this application is being considered for approval late in tax year 2009. Therefore, the property is not eligible for the abatement during construction (tax year 2008) or for the first year following completion (tax year 2009). The improvement’s value is fully taxable after the abatement period expires.

Staff recommends that Council conduct a public hearing and conditionally approve the tax abatement for R, M & S, LLC, owner and Prestige Toyota, operator under City Resolution No. 05- and MCA 15-24-1501.