The City of Billings operates property tax incentive programs under State Law authority found in 15-24-1401,1501, 1502 and 1601, MCA.  7th Avenue Hospitality, LLC, dba Home2 Suites by Hilton, applied for a tax abatement under 15-24-1501, MCA and City Resolution No. 05-18377.  This program encourages property remodeling, reconstruction and expansion by exempting 100% of the increase in valuation from City and local School District taxes during the construction period and for the following four (4) years.  In the fifth and subsequent years, the improvements are fully taxable.  Minimum qualifications include that the investment must be at least $500,000, it adds at least 2.5% to the property's taxable value, current property taxes are paid, the zoning is correct and the applicant disclose the type and the estimated number of full time and part time jobs that the investment will create.  The private investment meets the value criteria, taxes are paid and the zoning is correct.  The applicant states that the new hotel will create 16 new full time and 10 part time jobs.  The City Council must conduct a public hearing before considering the attached resolution that grants the tax exemption.  The hearing was advertised in the Billings Times on January 26 and February 2. 

The City Council may approve or disapprove the application and resolution.  If the Council disapproves the application, it should state the incentive criteria that the applicant does not meet. 

The property formerly had several houses and small office buildings on it.  The buildings had a total assessed value of $1.3 million prior to their demolition in 2015.  The Montana Department of Revenue estimates that the assessed value of the new building will be approximately $8 million.  If the Council approves the application, the owners will not pay property tax on the net, new investment value until the incentive expires after four (4) years.  The property will still be subject to the City's other fees and assessments.

Staff recommends that the City Council conduct a public hearing and approve the application and resolution granting a tax abatement for the Home2 Suites by Hilton located at 2611 7th Avenue North.