The City of Billings operates tax incentive programs under state law authority found in MCA 15-24-1401, 1501 and 1502.  Mercedes-Benz of Billings, located at 3045 King Avenue West, applied for tax abatement under 15-24-1501 and City Resolution No. 05-18377.  This program encourages existing building remodeling, reconstruction or expansion by exempting 100% of the improvements' value from city and local school property tax during construction and for four years following the construction period. 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 taxable value, property tax payments are current and identify jobs that the investment creates.
Mercedes-Benz of Billings submitted an application to abate taxes on a building remodel and expansion.  Rimrock II LLC is the property owner.  The company states that the previous market value was $2.1 million, the new investment will be $1.5 million and it plans to add over 20 full time jobs within 2 years.  Taxes are current.
The City Council must conduct a public hearing and at its conclusion, may approve, disapprove or conditionally approve the application for tax abatement and the attached resolution.     

The City Council may approve, disapprove or conditionally approve the application and the resolution. 

The tax abatement's financial impact is difficult to accurately determine.  Assuming that the applicant's cost/value estimate of $1.5 million is correct, the annual tax abatement would be $15,509.  About 41% of the total levy is assessed by the City, so the City's uncollected tax revenue equals $6,359/year.  The Dept. of Revenue's estimate of market value, which usually has little relationship to actual market value, how the Legislature mitigates potential tax increases and predicting tax levies for the five year abatement period can make this estimate unreliable. 

Staff recommends that the City Council conduct a public hearing and adopt a Resolution granting a tax abatement per MCA 15-24-1501 and City Resolution No. 05-1837 for Rimrock II LLC, dba Mercedes-Benz of Billings.