The City of Billings operates tax incentive programs under state law authority found in MCA 15-24-1401, 1501, 1502 and 1601.   FKCD LLP/360 Office Solutions Inc., located at 3723 Pierce Parkway, applied for a tax incentive under MCA 15-24-1501 and City Resolution No. 05-18377.  This program encourages existing building remodeling, reconstruction or expansion by exempting 100% of the new improvements' value from city and local school property taxes for five (5) years. 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 property's taxable value, property tax payments are current, zoning is correct and that the applicant identify the number and type of jobs that the investment will create.

360 Office Solutions submitted an application to abate taxes on $836,549 of building remodeling expenses that were completed in 2013.  This is the former Sportsman's Warehouse building that closed in February, 2010.  After making this investment, the company plans to add 30-38 full time employees over the next two (2) years.  Zoning is appropriate and taxes are current.    The City Council must conduct a public hearing before considering adopting the attached resolution that grants the tax exemption.

The City Council may approve or disapprove the application.

The property owner paid $40,000 in county, city, school and state property tax and about $7,600 of assessments/fees in 2013.  The 2014 value isn't available from the Montana Dept. of Revenue until later in the year, but the property value should increase since the building is occupied and generating income and due to the property improvements that are the subject of this incentive.  The property improvements could have a taxable value of about $16,400, so the owner could save an estimated $2,900 per year in City taxes.  Local school taxes are also abated if Council approves the incentive, but staff did not attempt to estimate the amount of tax.  Assessments are generally not affected by this tax incentive.   

Staff recommends that the City Council conduct a public hearing and approve the resolution granting the tax incentive for 360 Office Solutions.