Staff recommends City Council approve the resolution declaring the City's intent to dispose of the City-owned property at 802 Yellowstone Avenue, and authorize staff to proceed with the required public notice and hearing process in accordance with Billings, Montana City Code Article 22-900 and Montana Code Annotated Section 7-1-4127.

The City of Billings owns the property at 802 Yellowstone Avenue.  The attached resolution initiates the statutory process required for the potential sale, exchange, or donation of City-owned real property.  Approval of the resolution authorizes staff to proceed with the disposal process necessary before the City Council may take final action regarding disposal of the property.  The public hearing was advertised on April 10, April 17, and April 24, 2026.  Notice was posted on the property on April 15, 2026.

At this meeting and action on the resolution to dispose of the property, the City Council has the opportunity to impose restrictions on the property sale to guide staff in the expectations of the sale. An example of possible conditions of a sale is the Community Development Board's recommendation to the City Council at its March 2026 meeting providing some housing development incentive recommendations to the City Council regarding property in the City’s land disposition program (See attached ComDev Board Surplus Land Housing Priority Recommendation document).

The City of Billings currently owns the property at 802 Yellowstone Avenue, Billings, Montana.  The property is zoned as N-1 and identified in the Montana Cadastral system as geocode 03-0927-05-1-06-13-0000 and is legally described as:

Lot One (1), in Block Three (3), of Rickman Subdivision, Yellowstone County, Montana.

The Code Enforcement Division opened a nuisance structure case at this property in 2022.  The building was creating an attractive nuisance and was in poor condition, with large sections of the roof missing, crumbling walls, and vegetation growing into the structure.  As the case evolved, mediation between the parties was held in July 2024.  At that time, the owner of the property opted to transfer ownership of 802 Yellowstone Avenue to the City of Billings.  The City closed on the property in December 2024.  

The City of Billings entered into a loan agreement with Big Sky Economic Development for the amount of $84,848.00 under the US Environmental Protection Agency Brownfields Revolving Loan Fund for the purpose of remediating the property.  The loan covered the cost of all environmental testing, asbestos abatement and demolition of the building, which was awarded to SafeTech during the bid process.  The loan also covered the required EPA oversight by Granite Peak Environmental.   These were two separate contracts under the single loan amount.

At the December 1, 2025 City Council Work Session, the result of the neighborhood survey was shared with Council, as well as several options for redevelopment of the property.  At that meeting, City Council decided to sell the property rather than develop it.  As per the loan documents, sale of the property will result in the repayment of the revolving loan as stipulated in the Loan Agreement section 4 Security, subsection (d), which reads:

If Borrower sells all the real property described in the Trust Indenture for fair market value in a bona fide arm's length sale and purchase transaction (such sale, a "Sale"), all proceeds from the Sale (the "Proceeds") shall be applied to the obligations secured by the Trust Indenture (the "Obligations"), including but not limited to the outstanding balance of the Promissory Note. If the Proceeds are insufficient to satisfy the Obligations in full (the amount of any such shortfall, the ("Shortfall"), then so long as Borrower is not in default under this Loan Agreement, the Promissory Note, the Trust Indenture, or any other agreements between Borrower and Lender, the Lender will forgive the Shortfall.

Or as stipulated in the Loan Agreement section 4 Security, subsection (f), which reads:

If the Borrower sells the property at below fair market value to achieve a specific public benefit (i.e. workforce housing or a neighborhood grocery store), and the proceeds are insufficient to satisfy the Obligations in full (the amount of any such shortfall, the "Shortfall"), then so long as
Borrower is not in default under this Loan Agreement, the Promissory Note, the Trust Indenture, or any other agreements between Borrower and Lender, the Lender will forgive the Shortfall.

Depending on the sale amount, either subsection d or subsection f will apply.

Under Billings City Code 22-902, disposal of City-owned property requires a two-step public process:

1.  Resolution of Intent (Step 1)

• City provides public notice (including posting on the property for at least 7 days)
• City Council holds a public hearing
• Council must find the property is no longer needed for City use or that disposal serves the public interest
• Council adopts a resolution of Intent (requires minimum of 6 votes)

2.  Final Approval (Step 2)

• City provides a second public notice and publishes the Resolution of Intent
• City Council holds a second public hearing
• Council votes on the actual sale, exchange, or donation (requires minimum of 6 votes)

Sale with Conditions
At this meeting and action on the resolution to dispose of the property, the City Council has the opportunity to impose restrictions on the property sale to guide staff in the expectations of the sale. Providing conditions of the sale enable staff to place Council-directed parameters on the property sale without coming back to Council multiple times during the sale process.

An example of conditions is the Community Development Board's recommendation to the City Council at its March 2026 meeting providing some housing development recommendations to the Council regarding property in the City’s land disposition program (See attached ComDev Board Surplus Land Housing Priority Recommendation document). The CD Board’s approach while Council Member Shaw and then Council Member Kennedy have been Council Liaisons to the CD Board was to consider how the City might encourage affordable housing development on some of the properties it may dispose of this year. The Board heard a presentation at the January CD Board Meeting from PRPL Director Gavin Woltjer about how the City is moving ahead with property disposition, so the CD Board could see how it might interface with this process as it comes to the Council. The Board made the recommendations to the Council in March to include in information going to Council during the property disposition process in 2026. With the decision to break up the disposition process into a few properties now and more later in 2026, the CD Board's recommendation material is provided with this memo.

The Council retains discretion to determine the method of sale (auction, bid, or negotiated) and may impose conditions (as noted above) or reject all offers.  Approval of the attached resolution initiates Step 1 of this process only and does not authorize a sale or transfer of the property.
 

Approval of the resolution itself has no fiscal impact.

If the City ultimately proceeds with disposal of the property, the fiscal effects will depend on the final terms of the transaction and would be presented to the City Council for approval at a later date.  Any proceeds from this sale up to the full amount of the revolving loan shall be used to satisfy the loan agreement.

A valuation of the property has been requested and will be provided to Council at a later date.

• The City of Billings
• Potential buyers
• The neighborhood surrounding the property

The public hearing process will provide an opportunity for community input prior to any final decision regarding the disposal of the property.

Approve the Resolution of Intent, allowing staff to proceed with the public notice and hearing process required for the potential disposal of the property (Step 2).

Delay consideration of the resolution and request additional information from staff.

Decline to approve the resolution, in which case the City would retain ownership of the property and no disposal process would be initiated.