The City Council passed a Council Initiative in October 2016 to have staff provide information to Council regarding Tax Increment Financing (TIF) and to give recommendations to the Council on developing policies and criteria for use of TIF funds. Staff made presentations on the initiative at Council Work Sessions in February, June and November of 2017. At the Work Session in November 2017, Council directed staff to draft a TIF Policy the Council could adopt through a resolution. Staff presented a draft policy at the Council's April 9, 2018 Regular Business Meeting and Council decided to delay action on the Policy at that meeting and form an ad hoc City Council initiated Committee (The TIF Policy Working Group) to rework the Policy and bring it back for Council action at its July 9 meeting. The Working Group met three times from late April through late May and is presenting the attached TIF Policy for Council consideration. The Council is scheduled to conduct a public hearing and consider adopting the Policy Resolution at this meeting.
 

City Council may:

• Approve the TIF Policy Resolution as presented; or,
• Approve the TIF Policy Resolution with modifications; or,
• Not Approve the TIF Policy Resolution

There is no direct financial impact to the City by adopting the TIF Policy. However, implementation of the Policy over time may help the City make more consistent and informed decisions in regard to TIF programs in the City's three Urban Renewal Districts.

The City Council manages all decisions regarding the use of Tax Increment Financing (TIF) funds in the three Urban Renewal Districts (URDs) in Billings. The Council has considered many funding applications and programs over the years that these URDs have been in place. There have been infrastructure projects to improve streets, water and sewer lines, sidewalks, lighting and storm water control. There have been building improvement projects to facilitate redevelopment of buildings and property. There have been programs to make building façade improvements, provide revolving loans, and partner to provide a medical clinic in an elementary school. The City Council wants to be consistent and in line with the state laws directing formation, expansion, management and use of TIF funding in its URDs.

During the April 9 meeting when the Council first considered the draft Policy, concerns and questions were brought up from representatives of the three urban renewal districts in Billings, East Billings Urban Renewal District (EBURD), Downtown District (Downtown Billings Partnership, DBP), and the South Billings Boulevard Urban Renewal District (SBBURD), as well as members of the public. The City Council also had questions and suggested edits that required significant discussion and review. The Council decided to refer the Policy to the TIF Policy Working Group to rework the Policy and bring it back for Council action. The Working Group met three times from late April through late May. The groups core participants that added all or most of the meetings were Council Member Brewster as Committee Chair, Council Member Ronning, Mayor Cole, support staff or board representatives from the EBURD, DBP and SBBURD. Members of the public also attended and provided public comment, and Billings Gazette Reporter Mike Ferguson also covered several of the meetings.

The main modifications to the Policy provided by the Committee since the version presented to the City Council in April include:

• Further summarized and modified the references to State Statute in the Whereas portion of the Resolution to focus on the general powers of the municipality. The Committee was concerned that only including some portions of the State Statute could cause confusion while including all of the applicable State Statute would defeat the purpose of the Policy. The general powers reference provided a concise reference to the City's powers.
• Provided specific reference to urban renewal plans in Section 1 of the Policy and clarified that individual urban renewal plans that are reviewed and adopted by the City Council may limit what TIF funds may be spent on given a certain districts goals and needs.
• Clarified in Section 2.a. that the $5 private investment to $1 of public investment should be a “preferred” threshold and the City Council reserves the right to approve any applications that do not meet this minimum.
• Clarified in Section 2.b. that grants may be made to for profit and nonprofit businesses of all types by striking the reference to "human service agencies."
• Clarified in Section 2.c. that bonding may be available at the discretion of the City Council in any District
• Struck the reference in Section 2 to the option for the use of revolving loan funds in Districts. The Committee did not think it was necessary to call out this specific program as it was only used in the Downtown District and had not been further applied to the other Districts. 
• Struck the entire original Section 3 on Recapture of TIF funds. The Committee discussed  that some City Council Members were concerned that a property owner would make money by turning around a property and selling it right after receiving TIF funds to make improvements. The Committee also discussed that TIF funds for a project are reimbursable at the time the project is complete. When a project is complete, the public benefit occurs since the property has been revitalized and redeveloped, so the public benefits regardless of the property ownership, or if the property is sold.
• The Committee added conflict of interest language to Section 3 URD Management. The Committee agreed conflict of interest language should be referenced in the Policy for District support staff. The Committee also agreed that language should be included in the Policy that states that language should be added to the MOUs with the advisory boards that if there is an appearance of a conflict, the issue would be reviewed by City Legal staff before moving forward.
• The Committee added language in Section 3 URD Management that requires advisory boards to carry insurance coverage.
• The Committee agreed to amend Section 3 a. to provide guidance to the make up of the advisory boards for the Districts. The Committee agreed that unless it is specifically authorized by the MOU, a majority of the board members must own or lease property in the District in which they serve on the board.

A legal notice of this public hearing was advertised on June 22 and June 29 in the Yellowstone County News. The draft resolution and policy have been shared through the TIF Working Group meeting process with the support staff and advisory boards of the three Urban Renewal Districts (EBURD, SBBURD, and DBP - Downtown). Any other members of the public may comment on this resolution and policy at the public hearing.

 

The City Council wants to be consistent and in line with the state laws directing formation, expansion, management and use of TIF funding in its URDs. Each of the three URDs in Billings has an urban renewal plan that identifies goals for the districts and has met the requirements of state law. Since the City has no other policy or plan aside from these urban renewal plans to direct administration of TIF programs in urban renewal districts, the adoption of a policy like the one attached will help further the Council's goal of managing urban renewal districts and projects to serve the community.