The City of Billings operates tax incentive programs under state law authority found in MCA 15-24-1401, 1501, 1502 and 1601.  Roscoe Steel, Inc., dba True North Steel, located at 1501 S. 30th Street West, applied for tax exemption under MCA 15-24-1501 and City Resolution No. 05-18377.  This program encourages existing building remodeling, reconstruction or expansion by exempting 100% of the new improvements' value from city and local school property tax for five (5) years. In the fifth and subsequent years, the improvements are fully taxable.  Minimum requirements are that the construction cost at least $500,000, it adds at least 2.5% to the property's taxable value, property tax payments are current and that the applicant identify the number and type of jobs that the investment will create. 

True North Steel submitted an application to abate taxes on a 2012, $1,000,000 building expansion to increase its capacity to build steel storage tanks for the petroleum industry.  After making this investment, the company added 12 full time employees.  Zoning is appropriate and taxes are current.  The City Council must conduct a public hearing before considering adopting the attached resolution that grants the tax exemption.

The City Council may approve or disapprove the tax exemption application. 

The company presently pays about $55,000/year in city, county, state and school property taxes, plus $21,000 of City assessments.  The estimated $1,000,000 investment will have a taxable value of approximately $20,000, so the company's estimated City tax savings on this investment may be $3,600 per year.  Local school taxes will also be abated for the five year period but staff did not attempt to calculate the dollar amount.  Most assessments are not affected by this tax exemption.     

Staff recommends that the City Council conduct the public hearing and approve the resolution granting a tax exemption to True North Steel.