Staff recommends the City Council approve the Loan Application for the US EPA Brownfields Revolving Loan Fund Program for abatement and demolition of 802 Yellowstone Avenue, accept the loan if awarded to complete the work and authorize the City Administrator (or Mayor) to execute any documents necessary to effectuate the loan.

The property at 802 Yellowstone has been a nuisance property for the neighborhood and the City for over 20 years. Code Enforcement has a record of cases for the property dating back to 2005. These cases included violations of graffiti, open storage, nuisance weeds, boarded building, and nuisance structure. In 2024, the City filed in district court to get the property into compliance. Ultimately through mediation, the owner agreed to deed the property to the City as he was not able to meet the compliance requirements. The City also saw this as an opportunity to utilize the Brownfields program to access clean up resources both professional and financial. The City also wants to ensure the property is redeveloped in a way that fits the neighborhood and the neighbors' interest in having a property that contributes to the area again as it did decades ago.

Since late 2024, Big Sky Economic Development (BSED) and the city have been working on the assessment and cleanup of 802 Yellowstone Avenue ( former Meat House and Lockers). With the cooperation of the previous owner, Granite Peak Environmental (BSED's consultant for the Brownfields program), assessed the presence and extent of hazardous building materials in the structure, developed an Analysis of Brownfield Cleanup Alternatives (ABCA), and conducted a public meeting with City staff at City Hall on February 27, 2025 to discuss the findings. The City obtained ownership of the property in December 2024. Through the Brownfield Revolving Loan Fund, BSED can provide funding for the abatement and demolition of the building.

The winning quote for the abatement and demolition of this structure came back at $70,447. The oversight required by the EPA to ensure proper abatement and disposal is an additional $14,401, for a total of $84,848. The City Administrator has signed off on these two separate quotes per the City Purchasing Policy and his approval authority. However, the City Council must approve application and acceptance for the Loan so that the City Administrator and staff may continue the cleanup process and move to redevelopment options with the Council (see draft Loan Agreement attached). A redevelopment strategy will ultimately be a decision for City staff and City Council to make. Staff is already in discussions with Community Development staff, Parks staff and Finance staff to evaluate options for redevelopment, consider further neighborhood engagement, and preparing to bring options to the City Council for direction on moving ahead with redevelopment activity.

The BSED Brownfield Revolving Loan Fund offers subgrants to municipalities and non-profit organizations. BSED's plan with the City is to write this initially as a loan with no interest and no fees and with no repayment due for a sufficient period (three years) for the City to decide what they will do with the property. If the City sells the property, any proceeds from the sale will be used to repay the loan. Any amount remaining will be forgiven as a subgrant. If the City uses the property for a public purpose (like a park) or donates it to an entity to foster or encourage a public purpose, like affordable housing, BSED would forgive the entire loan as a subgrant (Also see information in Fiscal Effects portion of this memo).

This project contributes to the overall goals of the BSED Brownfield program in the following ways:

• Alignment with Community Needs – The community members in attendance at the initial public meeting were overwhelmingly in favor of cleanup and demolition of this structure. It is currently a blighted property in the middle of a primarily residential neighborhood and invites potential squatters and transients. Possible redevelopment options include multi-family housing, a neighborhood commercial activity, or park/open space.
• Local Government and Community Partnerships – Partnership with the City will help promote BSED’s RLF program while also creating a template to use Brownfields funding for future cleanup of blighted and condemned properties the City would like to acquire.
• RLF Funding – This would be BSED’s first RLF project and would help meet requirements in BSED’s EPA RLF workplan. 

The Billings community is a stakeholder in this effort, but the neighbors in the area around 802 Yellowstone will finally receive some significant benefit for having this nuisance property completely cleaned up so that it is ready for future redevelopment in the neighborhood. The residents of Billings also benefit from the City's use of the US EPA Brownfields program administered by Big Sky Economic Development and the option to utilize the revolving loan fund (RLF) for this project. Approaching cleanup of this property through this program, after years of challenges in getting it addressed, benefits the City by not using significant City resources to fund cleanup work and flexibility in what the City may reimburse the RLF program in the future. 

City Council may:

• Approve the Loan Application and Acceptance, if awarded, of the EPA Brownfields RLF for 802 Yellowstone Avenue; or
• Not Approve the Loan Application and Acceptance, if awarded, of the EPA Brownfields RLF for 802 Yellowstone Avenue. Not approving the loan application and use of the loan funding would result in the property not being cleaned up by late September 2025 and likely years more delay in abatement of the property.

There is no financial impact to the City's budget by approving of the loan application and use of the loan for this project. Future redevelopment of the property, guided by the City, that benefits the community and meets the US EPA Brownfields program goal of remediating a property to enable redevelopment, means the City would not be obligated to pay back the loan based on the redevelopment scenario. If any portion of the loan were to be paid back, it would come in two cases:

• From profit the City made from selling the property outright and not insuring community benefit.
• If the City ensures the property is redeveloped to achieve community benefit through possible residential, commercial or open space uses of the property, loan repayment would be limited to any profit the City made after carrying out one of these redevelopment scenarios.

Options for redevelopment will be brought to the Council at a separate meeting in alignment with cleanup of the property for redevelopment activities.