The Billings Industrial Revitalization District (BIRD) Board of Directors recommends the City Council approve up to a maximum reimbursement of $622,195 from the EBURD tax increment finance district funds to J&S Properties to assist in the redevelopment of property for a new Yellowstone Ice and Water plant at 1523 Montana Avenue. Actual reimbursement will be based upon 100% of the actual costs incurred for qualified expenses for the improvements made to property subject to the following conditions:

1. The Applicant shall sign a development agreement with the City of Billings and BIRD within 180 days of City Council’s approval.
2. The funds would be distributed in three equal amounts of $207,389 over the three fiscal years following the approved project's completion.
3. This TIFD reimbursement is the maximum that can be received pending satisfactory submission of all paid invoices showing the completion of expenditures related to this project.
4. If funds are not available, reimbursement can be carried over to the next fiscal year.
 

The Billings Industrial Revitalization District (BIRD) Board of Directors is presenting this recommendation to the City Council for allocating $622,195 in tax increment finance funds (TIF) from the East Billings Urban Renewal District (EBURD) to provide financial assistance to J&S Properties for redevelopment of property to house a new Yellowstone Ice and Water plant at 1523 Montana Avenue.

This is the second phase, and second TIF funding request, for relocation and expansion for Yellowstone Ice and Water. The Council approved $63,085 in EBURD TIF funds in April 2021 for the first phase of this business relocating and building new facilities on this block between Montana Avenue and 1st Avenue North. The first TIF grant assisted in demolition, removal and replacement of asphalt, sidewalk construction, and engineering and architectural design work to support relocation of the offices. The overall plan was for Yellowstone Ice and Water to relocate its retail operations and then relocate its manufacturing facilities to the southern half of the property off of Montana Avenue. This second TIF request is to support completion of the plant relocation. The applicant for this phase is requesting TIF funding to assist in demolition, street improvements, sidewalk construction, utility work, landscaping and fencing, reclaimed ice water irrigation system, and architectural design and permitting work for the project. The total project development costs for this phase of the project for the facilities and site is estimated at $4,656,090. The total project is estimated at $8,037,714 as noted in the TIF application. The estimated difference in cost between the facility and site portion of the project and the total project cost is in the new and expanded equipment the new ice plant would utilize for ice production. For the purposed of this TIF application, the equipment is not part of the project total or under consideration.

The BIRD Board's recommendation of $622,195 toward the improvements results in about a 7.5 to 1 ration of private investment to public investment. The BIRD Board noted several reasons for its support of the project:

• This work is part of the larger project that will redevelop more than half of a city block with both offices and the manufacturing facility
• The Montana Avenue frontage of the property is lacking in infrastructure and landscape improvements, including pedestrian walkways and streetscape in this area that need to be brought up to City standard.
• The new ice and water plant will add capacity and efficiency to the production process and make Yellowstone Ice and Water the largest regional producer and distributor of ice and water in a 500-mile radius. Having this scale and caliber of manufacturing in the EBURD aligns closely with the goals of the EBURD Urban Renewal Plan and efforts to redevelop vacant and underutilized property in the District.
• With the redevelopment of this area, there will be a significant return on the taxable value of these properties The expenses for the demolition work, removal and replacement of asphalt, sidewalk construction, and engineering and design work recommended by the BIRD Board are eligible as per Section 7-15-4288 (See BIRD Board Recommendation attached) and Section 7-15-4233. The project also is in alignment with the EBURD Urban Renewal Plan under its Business Programs and Projects goal (See page 3, item I of the Urban Renewal Plan Attached), and the EBURD Master Plan's principles of fostering economic growth, and ensuring industrial operations continue. Reuse and improvement of this property in the EBURD to facilitate Yellowstone Ice and Water's continued expansion in the community aligns well with the urban renewal efforts of the City and the EBURD.

The BIRD Application Review Committee reviewed the application on May 18 and made a recommendation of approval to the BIRD Board. The BIRD Board of Directors voted at its meeting on June 6 to recommend funding of this application to the City Council. This process and action of the BIRD is under its authority per the Memorandum of Understanding between the City of Billings, Big Sky Economic Development, and the BIRD, Inc. approved by the City Council on May 13, 2019.

 

The City Council is the final authority in disbursing TIF funding. This proposed use of TIF funds conforms to the City's TIF Policy and aligns with the EBURD Urban Renewal Plan and Montana Code for urban renewal projects and programs. The City Council may:

• Approve the recommendation from the BIRD Board for the expenditure of these TIF funds, or;
• Modify and approve the recommendation from the BIRD Board for the expenditure of these TIF funds
• Disapprove of the recommendation from the BIRD Board for the expenditure of these TIF funds.

The request is for a total of up to a maximum of $622,195 to be reimbursed to J&S Properties only upon completion of the work and submittal of the invoices for the cost incurred. The reimbursement is being recommended to be distributed in three equal installments over the three fiscal years following the completion of the project. This payment over three years is important as the EBURD's annual available increment is currently about $280,000 to $300,000. So, while an annual payment of about $207,000 for this project would take a significant amount of the available increment, it falls within the budget. As provided in the attached BIRD Board Recommendation, the annual taxable value for the property will significantly increase with development of this project and increase the annual tax increment to the District over time. It is expected that this expenditure would not begin to impact the EBURD budget until FY24.