The City of Billings operates tax incentive programs under state law authority found in MCA 15-24-1401, 1501, 1502 and 1601.  Home Training Tools, Ltd., dba Home Science Tools 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 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 is greater than $500,000, addd 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.

City Council may:

• Approve the resolution approving a property tax abatement for Home Training Tools, Ltd, or;
• Disapprove the resolution.

Home Training Tools, Ltd. submitted an application to abate taxes on an $1,838,000 investment to expand the company's warehouse and shipping operation, located at 665 Carbon Street.  The expansion is scheduled for completion this month.  The company assembles and sells educational science tools to schools, individuals and companies and 99% of those products are shipped outside of Montana.  The company predicts adding 5 full time and 2 part time employees after the expansion.  Zoning is appropriate and taxes are current.  The property has a 2015 market value of $947,000 prior to redevelopment, of which $402,800 is building value (MT Dept. of Revenue).  Home Science Tools received a 10 year tax exemption on the company's initial construction that was completed in 2006.  The building is being taxed at 90% of its market value in tax year 2015 and will be at 100% next year. The taxable value is approximately $17,900.  The property's taxes and assessments for tax year 2015 are $14,609.  If the new improvements have a market value of $1,838,000, the property's taxable value could increase by as much as $34,740.  If the City Council approves the abatement, the owner may save approximately $15,630 per year in City and local school taxes until the improvements are fully taxable in the 5th and subsequent years.  Property assessments, such as Street Maintenance, Arterial Construction, and Storm Water Management are not affected by these tax abatements.
 

Staff recommends that the City Council conduct a public hearing and approve the resolution granting a five year tax abatement on new investment to Home Training Tools, Ltd., dba Home Science Tools for property located at 665 Carbon Street.