Regular 4.
Regular City Council Meeting
- Meeting Date:
- 08/10/2015
- TITLE
- Tax Abatement Application for Shipton's Big R, Inc.
- PRESENTED BY:
- Bruce McCandless
- Department:
- City Hall Administration
Presentation:
PROBLEM/ISSUE STATEMENT
The City of Billings operates tax incentive programs under state law authority found in MCA 15-24-1401, 1501, 1502 and 1601. Shipton's Big R, Inc. 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 during construction and for the following four (4) tax 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. The City Council must conduct a public hearing before considering adopting the attached resolution that grants the tax exemption.
ALTERNATIVES ANALYZED
City Council may:
- Approve the application for a tax abatement, or
- Disapprove the application
FINANCIAL IMPACT
Shipton's Big R Inc. submitted an application to abate taxes on $7.1 million of building construction that was completed in January, 2015 at 524 and 525 Jerrie Lane. The company predicts adding up to 40 full time and 30 part time employees at the new store. Zoning is appropriate and taxes are current. The properties were valued at $1.95 million prior to redevelopment, including $816,000 in building value. The properties produced $35,517 in taxes and fees in 2014. If the new improvements have a value of $7.1 million, the taxable value could increase by as much as $126,000 compared to the 2014 value. If Council approves the abatement, the owner could save approximately $60,000 annually in City and school taxes. Property assessments, such as Street Maintenance, Arterial Construction and Storm Water Management, are not affected by these tax abatements.
RECOMMENDATION
Staff recommends that the City Council conduct a public hearing and approve the resolution granting a tax abatement authorized by 15-24-1501 and City Resolution 05-18377 to Shipton's Big R Inc. for property located at 524 and 525 Jerrie Lane.