The City of Billings operates tax incentive programs under state law authority found in MCA 15-24-1401, 1501 and 1502.  All American Pharmaceuticals (Golini Real Estate, LLC), located at 2376 Main Street, applied for tax abatement under 15-24-1501 and City Resolution No. 05-18377.  This program encourages existing building remodeling, reconstruction or expansion by exempting 100% of the improvements' value from city and local school property tax during construction and for four years following the construction period. In the fifth and subsequent years, the improvements are fully taxable.  Minimum requirements are that the construction cost at least $500,000, it adds at least 2.5% to the taxable value, property tax payments are current and that the applicant identify jobs that the investment creates. All American Pharmaceuticals submitted an application to abate taxes on a 33,000 sq. ft., $2,000,000 building expansion.  The company plans to add 5-10 full time employees within two years of the expansion.  The company received a tax abatement on a 2007 building remodel.  Zoning is appropriate and taxes are current. The City Council must conduct a public hearing and at its conclusion, may approve, disapprove or conditionally approve the application for tax abatement and the attached resolution.     

The City Council may approve, disapprove or conditionally approve the application and the resolution. 

The tax abatement's financial impact is difficult to accurately determine because the MT Dept of Revenue consistently undervalues commercial property and the Legislature artificially adjusts real property taxable values.  Assuming that the applicant's cost/value estimate of $2 million is correct, the city tax abatement would be approximately $7,720/year and local school levies would also be abated.  The City will continue assessing for special services such as street and storm maintenance, arterial construction, etc.     

Staff recommends that the City Council conduct a public hearing and adopt a Resolution granting a tax abatement per MCA 15-24-1501 and City Resolution No. 05-1837 for All American Pharmaceuticals.