The Downtown Billings Partnership (DBP) Board reaffirms the project (See attached September 2025 DBP Board Minutes) and recommends the City Council conditionally approve a maximum reimbursement of $745,000, starting with annual payments as specified below in the fiscal year following the year in which the project is completed, from Downtown Urban Renewal tax increment finance district funds to Old Billings Hardware Development Venture, LP for its mixed use project at 2802 Montana Avenue. The conditions of approval are as follows:

1. The applicant sign a development agreement with the City of Billings and DBP within 60 days of City Council approval.
2. 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.
3. This TIFD reimbursement is approved per the condition that it be broken down into to five disbursements of $149,000 each within five continuous fiscal years following the year in which the project is completed.
4. If funds are not available, reimbursement can be carried over to the next fiscal year or when funds are available based on prior District bonding and debt obligations.

The City Council at its September 8, 2025 meeting discussed this application and ultimately voted to delay action until its November 10, 2025 business meeting. The Council did direct DBP staff to have the DBP Board re-affirm its recommendation to award the TIF grant for the project before the November meeting. The DBP Board met on September 25 and voted unanimously to reaffirm its commitment to the project and the TIF grant and to recommend the City Council approve it and require execution of the Development Agreement within 60 days of Council approval.

Since the September 8 Council meeting, the following changes/updates to the project status have occurred:

• The Applicant has received unconditional approval from the National Park Service for its Historic Tax Credits Application for the project
• Developed 90% construction documents to review for final pricing from the contractor
• The applicant continues to work with a major downtown local bank on financing
• Completed and now circulating a Marketing Package through Coldwell Banker Real Estate for marketing of the building spaces
• Preparing to submit permits to the City Building Division for the remodeling

During the September 8 Council Meeting, Council Members expressed frustration at the long delay in the project and that such a delay might have meant that other projects in the Downtown District area might have been delayed or turned away because this project was still moving ahead for funding. DBP staff has confirmed that no known projects were delayed due to this project remaining under TIF award approval. DBP staff also confirmed that projects are only turned away if they do not meet the criteria for projects laid out in State Law, the City TIF Policy and the priorities of the DBP Board per the Downtown Urban Renewal Plan. The current DBP TIF Forecast is attached to this memo and demonstrates both that this project remains in the budget and that there is additional funding available for projects to be considered at any time.

The City Council on September 12, 2022 first approved this award. At the time, one of the conditions placed on the approval was the applicant sign a development agreement (DA) with the City of Billings and DBP within 365 days of City Council approval or after completion of Phase II of obtaining Historic Tax Credits, whichever occurred first. The 365-day time period elapsed before the applicant was ready to sign a DA as they were working on the historic tax credit process and other logistical issues. Recently, the applicant and DBP staff contacted the City for execution of the DA and the time limit condition imposed by Council was found. The applicant had not realized this condition was in place until it was noticed by City staff. City PCSD and City Legal staff agreed the application needed to return to Council for consideration due to the unusual condition and the ongoing viability of the project.

On June 30, 2025 DBP staff contacted City staff to prepare a development agreement (DA) for execution with Old Billings Hardware Development Venture, LP. The DA was for a project the City approved in September 2022. Old Billings Hardware Development Venture, LP had submitted an application in July 2022 to the DBP requesting TIF assistance to renovate the Old Billings Hardware Building to accommodate a variety of commercial spaces and loft-style apartments. The DBP Development Review Committee considered the application and recommended approval to the full DBP Board. The DBP Board met on August 26 and voted unanimously to recommend the City Council award this project a TIF funding grant. Council approved the award with conditions on September 12, 2022.

While three years have passed since the approval, the project is ready to move ahead, is still viable, the TIF award is still critical to the success of the project, and the applicant is ready to sign the DA and begin remodeling. The project will result in a total of 24 residential units and the basement and ground level will be activated by businesses and tenant amenity space.  The apartments are described as mid-level market rate units (the applicants estimate rents ranging from $1,550 to $1,900 depending on number of rooms and floor). The business activity will increase foot traffic at this corner of Montana Avenue and Broadway and offer an improved pedestrian experience in this area of the downtown. The project involves a total rehabilitation effort of the 2802 Montana Avenue building both inside and outside. This building is unique along the Burlington Northern and Sante Fe (BNSF) tracks as the property under the building is also owned by the building owners. Many buildings along the railroad in Billings have ground leases from the railroad, limiting their uses. Housing is a use BNSF has more recently restricted where they own the ground.

The lower & ground levels of the building will be occupied by businesses as well as some amenities for tenants. The second and third floors will include a total of 24 energy efficient, market rate residential units; 4 two-bed units in the second floor and 8 one-bed units, and then 5 two-bed units in the third floor and 7 one-bed units. There will be minimal parking available in the back of the building. There will also be a communal space on the rooftop to be utilized by the residents. Some of the exterior improvements will include facade repairs, lighting & security, windows & entrances/exits, storefront as well as minimal landscaping & hardscaping improvements. The interior will involve adding a fire suppression system, utility upgrades/additions and ADA compliance, much of which did not exist before.

The applicants outlined several elements of this project that illustrate its creativity and alignment with various plans and policies of the DBP and City:
1. Historic Redevelopment: The historic redevelopment of OBHB shall rehabilitate and celebrate historic elements while achieving Federal Historic Tax Credits.
2. Urban Revitalization: Revitalizing the existing, vacant building will preserve the density of downtown Billings, boost the vitality and longevity of the neighborhood, and reduce demolition waste and building materials. The building shall contribute to as many of the Downtown Billings Alliance 9 strategic goals as possible
3. Ultra-High Performance: The building shall be energy and water efficient to minimize operating costs and to responsibly minimize environmental impact. The building shall use, at a minimum, 50% less energy from the grid than the baseline energy code (through the combination of energy efficiency and on-site renewable power generation.)
4. Provide Workforce Housing: The building shall provide at least 24 market rate living units that support a healthy, vibrant downtown neighborhood and hit the range of 79%-86% of Average Median Income in Billings.
5. Boost Commercial Vitality: The building shall assist in boosting commercial vitality of the neighborhood by providing tenants space for restaurants, retail, and/or entertainment venues.
6. Economically Profitable: The building shall be economically profitable for the owners, investors, and commercial tenants.
7. Public Safety Benefits: Activation of the building at the street level and adding 24-hour residential activity will improve the safety int he area of the buiding and along Montana Avenu, with the improvements also addressing CPTED strategies. 

Cost Adjustment for Overall Project
The total project now in 2025 is estimated at $8.6 million, up from $7.4 million in 2022. The construction costs for the project are estimated at $6.6 million. The TIF award in 2022 was based upon qualifying expenditures (QEs) of 80% of $7.4M = $5.9M (QE)  x 16.67%  (max TIF grant allowed)= $988,000.  The applicant asked for and was awarded $745,000 or 12.57% of QEs.  With the escalation in costs since 2022, the $745,000 award is now 11.35% of QEs. The TIF award continues to be critical to the completion of the project as far as the funding components of the renovations.

2022 Review Process
The application was vetted by staff and presented to the Development Committee on August 8, 2022 with a TIF request of $745,000. The Development Committee reviewed the proposal and made a recommendation to the DBP Board for a TIF grant of $745,000. The recommendation was presented to the DBP Board on August 26, 2022, and the DBP Board made its recommendation to City Council (See attached Minutes of DBP Board discussion). The reasoning for support of the application by DBP are its alignment with its current goal of support of additional housing in the downtown core, the elements/goals of the DBA Strategic Plan, North 27th Street Urban Renewal Plan, City TIF Policy and MCA.

The Board of Directors of the DBP as well as the Development Committee support this project and recommend approval. This project complies with the Montana Code Annotated as well as City’s TIF Policy in regards to the 5:1 preferred threshold (this project is 11:1) of private to public investment & eligibility of qualified expenses. Furthermore, this project conforms with many goals & elements of the Urban Renewal Plan as well as the Downtown Billings Strategic Plan such as housing, safety, activation of vacancies, & retail recruitment. This density will add more shopping capacity, potential workforce for businesses, natural surveillance to enhance safety, and new downtown visitations of the new businesses.

  Table 1.

Qualified Improvements	DBA Strategic Plan	City TIF Policy	Urban Renewal Plan	Montana Code Annotated
Site work and safety - Some interior and exterior demolition; Concrete work for sidewalk areas Building Exterior and Facade and work - ground floor windows, doors, framing of entrance areas, millwork on store frontage, some structural steel work Building Safety and Utility work to code - Roof/skylight work; mechanical, plumbing, electrical, HVAC; fire/life safety system	Vibrant &Connected Downtown – includes downtown living P.13 Strong Downtown Identity –P.13 Transformative Initiative - P. 15 - Increase Downtown Residential Population Through Targeted Downtown Housing Initiatives	Permitted uses of TIF Funds: Demolition and structure removal - P.2 Private infrastructure with Public Benefit and Public infrastructure –P.2 Financial Assistance Through TIF – (grants may be for for-profit businesses) P.2	Infrastructure Improvements– includes improvements to support workforce housing and loft and condo housing development - P.55 Crime Prevention and Public Safety -P.55	7-15-4288

 


 

City Council may:

• Re-approve the recommendation from the DBP Board for the expenditure of these TIF funds consistent with some elements/goals of the DBA Strategic Plan, North 27th Street Urban Renewal Plan, City TIF Policy and MCA.
• Modify the past recommendation from the DBP Board for the expenditure of these TIF funds before taking action, or;
• Disapprove the recommendation from the DBP Board for the expenditure of these TIF funds. If the Council chooses not to approve this TIF application, specific reasoning for the denial is necessary to provide further direction to the DBP Board and staff, and City staff for future applications.

The recommendation is for up to a maximum of $745,000 to be reimbursed to Old Billings Hardware Development Venture, LP for the identified existing site and building renovations. The estimated total project cost is about $8.6 million, making the private to public investment ratio for this total project about 11:1. The funds are payable per the conditions of approval outlined above in the DBP recommendation, pending satisfactory submission of all paid invoices showing actual cost incurred for the project, and per the reimbursement being broken down into to five disbursements of $149,000 within five continuous fiscal years following the year in which the project is completed. The earliest the project would be eligible to request reimbursement is FY27, as the project may only be completed in late FY26. If approved, payments will continue to be incorporated into future year budgets (this project has been accounted for in the Downtown DBP TIF budget forecast (see attached) since it was originally approved). Current estimates of the future Downtown District revenues continue to be able to cover this project in FY27 and later, as well as support known future planned projects and bonding. However, ongoing monitoring of the budget based on annual valuation of the District could delay payments to future years per the conditions of approval for this TIF grant award.