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Item 1.
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| City Council Work Session | |
| Date: | 09/03/2024 |
| Title: | Updating Resolution Setting Tax Rebatement Policies |
| Presented by: | Chris Kukulski, City Administrator |
| Department: | City Hall Administration |
| Presentation: | Yes |
| Legal Review: | Yes |
| Project Number: | N/A |
RECOMMENDATION
Approve repealing and replacing all previous City of Billings tax abatement policy resolutions and adopting the consolidation of those resolutions into one tax abatement policy resolution, as proposed.
BACKGROUND (Consistency with Adopted Plans and Policies, if applicable)
In 1988, the State of Montana statutorily provided local government with the authority to implement tax abatement programs. Since then, Yellowstone County and the City of Billings have offered the discretionary tool as an incentive to existing business and recruit new business to our community. The abatement allows the businesses to add to their bottom line incentivizing them to grow and add to Yellowstone County’s economy by creating good paying jobs, increase services, and contribute to the economy’s overall economic health.
A reminder, tax relief received is only on the incremental increase in taxable valuation.
The City’s current tax abatement program resolutions have been in place for more than 15 years. Billings City Council, Yellowstone County Commissioners, and staff initiated a review of the tax abatement programs and resolutions. The proposed resolution is consistent with what Yellowstone County adopted earlier this year. The department of revenue strongly encourages the city and county to be consistent with one another.
A reminder, tax relief received is only on the incremental increase in taxable valuation.
The City’s current tax abatement program resolutions have been in place for more than 15 years. Billings City Council, Yellowstone County Commissioners, and staff initiated a review of the tax abatement programs and resolutions. The proposed resolution is consistent with what Yellowstone County adopted earlier this year. The department of revenue strongly encourages the city and county to be consistent with one another.
STAKEHOLDERS
City and County Administration, Finance and Legal collaborated to review and revise resolutions related to tax abatement programs within the City of Billings and Yellowstone County.
ALTERNATIVES
City Council may:
- Approve repealing and replacing the City's current tax abatement resolutions and updating and consolidating into one resolution as recommended by staff and Big Sky Economic Development (BSED); or,
- Not Approve repealing and replacing existing tax abatement resolution, in which case those will remain as the City's current policy.
FISCAL EFFECTS
There are no fiscal impacts to approving the resolution. Any future fiscal impact would be based on the approval or denial of each tax abatement request presented.
While tax abatements suspend immediate new incremental government revenue, they encourage investment through business expansion and new business development to stimulate economic growth and generate additional revenue in the long term. By providing incentives for investment in economic activities, tax abatements can attract businesses, create jobs, and spur economic development.
While tax abatements suspend immediate new incremental government revenue, they encourage investment through business expansion and new business development to stimulate economic growth and generate additional revenue in the long term. By providing incentives for investment in economic activities, tax abatements can attract businesses, create jobs, and spur economic development.
SUMMARY
Big Sky Economic Development (BSED) staff acts as the facilitator of requests for tax abatements in the City of Billings and Yellowstone County. Its staff oversees the application process to determine complete applications, needed information is supplied and property owner/ business owner signatures are on the applications. BSED provides the applicable jurisdictions (City and County, or County) Attorney and Finance offices with the applications for review and confirmation it meets the minimum requirements to move forward with a request. If so, BSED collaborates with the applicant to guide the application through the jurisdiction’s appropriate process for consideration.
BSED requests and gathers information from the applicant, County, City, and the Department of Revenue. As economic development professionals, BSED gathers and analyzes data to show the estimated value of the proposed new private investment. BSED leans on its partners' expertise within local government and the Department of Revenue as its staff are neither attorneys, accountants, nor taxation specialists and obtains information from outside experts, publicly available information and property owner provided information.
Big Sky Economic Development worked with the City and County on revising the tax abatement resolutions to better align with current Council and Commissioner directives.
The combined resolution incorporates all resolutions into one document, improves the resolution language and clarifies the requirements of the programs.
The revised resolution raises the minimum investment needed to be eligible to apply for a tax abatement to $500,000 or greater across each program.
The revised resolution adds additional requirements under job creation and payroll reporting by requiring notarized job creation and payroll reports each January on active abatements.
The proposed resolution will provide clear application and reporting requirements to applicants, Billings city staff, and BSED in navigating the tax abatement process. Additionally, the job retention, job creation, payroll reporting provides clarity to program results.
BSED requests and gathers information from the applicant, County, City, and the Department of Revenue. As economic development professionals, BSED gathers and analyzes data to show the estimated value of the proposed new private investment. BSED leans on its partners' expertise within local government and the Department of Revenue as its staff are neither attorneys, accountants, nor taxation specialists and obtains information from outside experts, publicly available information and property owner provided information.
Big Sky Economic Development worked with the City and County on revising the tax abatement resolutions to better align with current Council and Commissioner directives.
The combined resolution incorporates all resolutions into one document, improves the resolution language and clarifies the requirements of the programs.
The revised resolution raises the minimum investment needed to be eligible to apply for a tax abatement to $500,000 or greater across each program.
The revised resolution adds additional requirements under job creation and payroll reporting by requiring notarized job creation and payroll reports each January on active abatements.
The proposed resolution will provide clear application and reporting requirements to applicants, Billings city staff, and BSED in navigating the tax abatement process. Additionally, the job retention, job creation, payroll reporting provides clarity to program results.