The City of Billings operates tax incentive programs under state law authority found in MCA 15-24-1401, 1501, 1502 and 1601.   Jefferson Partners, LP, dba Jefferson Lines, applied for a tax incentive under MCA 15-24-1501 and City Resolution No. 05-18377.  This program encourages existing building remodeling, reconstruction, or expansion by exempting the new improvements' value from city and local school property taxes during construction and for the following four (4) tax years. In the fifth and subsequent years, the improvements are fully taxable.  Minimum requirements are that the construction cost at least $500,000, add at least 2.5% to the property's taxable value, property tax payments are current, zoning is correct and that the applicant identify the number and type of jobs that the investment will create.  The City Council must conduct a public hearing before considering adopting the attached resolution that grants the tax exemption.

City Council may:

• Approve the application for tax abatement, or;
• Disapprove the application

Jefferson Partners, LP submitted an application to abate taxes on $750,000 - $850,000 of commercial building remodeling that was completed in July, 2015 at 1802 and 1820 4th Avenue North.  This is the former Underriner's dealership located at the intersection of 4th Avenue North and N. 18th Street.  The company provides inter-city motorcoach transportation in Montana and nearby states.  The company predicts adding eight to ten full time and 3-4 part time employees at the new facility.  Zoning is appropriate and taxes are current.  The property is valued at $889,000 prior to redevelopment, of which $639,475 is building value.  The taxable value is approximately $16,800.  The property owner paid $12,758 in taxes and fees in 2015.  If the new improvements have a market value of $750,000, the property's taxable value could increase by as much as $14,175.  If the City Council approves the abatement, the owner may save an estimated $6,380 per year in City and local school taxes until the improvements are fully taxable in the 5th and subsequent years.  Property assessments, such as Street Maintenance, Arterial Construction, and Storm Water Management are not affected by these tax abatements.

This property is located in the East Billings Urban Renewal District (EBURD).  As such, any increase in taxable value and accompanying taxes would be credited to and be spent within the EBURD for public improvements.  Exempting the new improvements' value from taxation for four years will reduce the district's potential tax increment by approximately $25,520.   
 

Staff recommends that the City Council conduct a public hearing and adopt the resolution granting a 5 year tax abatement on new investment to Jefferson Partners, LP, dba Jefferson Lines on property located at 1802 and 1820 4th Avenue North.