The URL can be used to link to this page

Home My WebLink AboutResolution No. 4157, Color World New and Expanding Tax Abatement Application Commission Memorandum REPORT TO: Honorable Mayor and Commission Members FROM: Anna Rosenberry, Finance Director Chris Kukulski, City Manager SUBJECT: Resolution No. 4157 – Public Hearing on the Application of Color World Printers for Tax Reduction under Section 15-24-1401, et seq, Montana Code Annotated, and City of Bozeman Commission Resolution No. 2660. MEETING DATE: April 6, 2009 RECOMMENDATION: Adopt Resolution No. 4157, after the required public hearing. BACKGROUND: On February 27, 2009 the City received Color World Printer’s application for “New and Expanding Industry” tax abatement. State law allows local governments to grant property tax reductions for businesses that are new or expanding, and that make substantial investments in business equipment or real property (MCA 15-24-1401.) The local government is required to approve the application before the Department of Revenue will make the necessary adjustments to the property tax bill. Year – Tax Billing Taxable Value of New Property Tax Abatement (Savings) 1st year 50% of value. 50% 2nd year 60% of value. 40% 3rd year 70% of value. 30% 4th year 80% of value. 20% 5th year 90% of value. 10% 6th year 100% of value. None. Taxed at full value. 431 Request for 2008 tax assessment treatment: In their letter, Color World Printers requests that the City approve this abatement for the 2008 tax year. Administrative Rules for New and Expanding Industry classification are specific with regards to the timing of applications and tax benefits, leaving the city no discretion in this case. ARM 42.19.1235(2) - An application must be filed on the form available from the department and received by the taxing jurisdiction before January first of the tax year for which the incentive is to be considered. Under this administrative rule, Color World Printer’s tax abatement would come into effect for the 2010 tax year. The City’s resolution approving the abatement includes a section stating that the property tax benefits are to become effective as soon as allowed under law. In support of their request, Color World has submitted supporting documentation (permits, invoices, lease agreements) that are on file with the Finance Director. Downtown TIF: Color World Printers is located in the Downtown Tax Increment Financing District (TIF), where the taxes generated by new building improvements and equipment go to benefit the TIF district. This property tax reduction will decrease the amount of new money that would have come to the TIF under normal tax treatment. The TIF will receive 50% of the resulting taxes in the 1st year of abatement, 60% in the 2nd year, 70% in the 3rd year, and so on as described above. County Taxes: The City received notice that Color World has also requested Gallatin County to abate their portion of property taxes under this same law. That public hearing is scheduled for April 15, 2009. The City’s abatement process stands alone and can move forward regardless of action by the County. County taxes make up a portion of the TIF; Gallatin County’s approval of the abatement will have the same effect on TIF dollars as the City’s approval. Gallatin County has requested the City respond as to whether we support the abatement. The results of this hearing will be submitted for their records. 432 FISCAL EFFECTS: Because this property is in the Downtown TIF, the fiscal effects of abating a portion of property taxes will decrease the tax revenues the TIF would have received under standard tax treatment for this property. According to ARM, this tax abatement will take place in 2010, and will be subject to the tax levies and valuation rules in place at that time. Because property tax rules for phase-in values and business equipment are currently under debate in the Legislature, we have not tried to estimate the dollar-values involved. In calculations for TIF bond payments, we did not expect improvements to the Color World property; approving this application will not interfere with scheduled bond payments. ALTERNATIVES: As suggested by the City Commission. Respectfully submitted, Anna Rosenberry, Finance Director Chris Kukulski, City Manager Attachments: Resolution No. 4157 Color World Request Letter 2/27/2009 Gallatin County Letter 3/27/2009 433 COMMISSION RESOLUTION NO. 4157 A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA, APPROVING THE APPLICATION OF COLOR WORLD PRINTERS FOR TAX REDUCTION UNDER SECTION 15-24-1401, ET SEQ, MONTANA CODE ANNOTATED, AND CITY OF BOZEMAN COMMISSION RESOLUTION NO. 2660. WHEREAS, Color World Printers of Bozeman, Montana, has made application for tax reduction based upon improvements to their business pursuant to Section 15-24-1401, et seq, M.C.A., and City of Bozeman Commission Resolution No. 2660; and WHEREAS, Section 15-24-1401, et seq, M.C.A., authorizes local government to grant tax reduction for qualifying improvements or modernized processes in new or expanding industries whereby said qualifying improvements or modernized processes may be taxed at 50 percent of their taxable value in each of the first five (5) years after the construction permit is issued, and that in each year thereafter, the percentage of taxation shall be increased by equal percentages until the full taxable value is attained in the tenth (10th) year and that in subsequent years, the property shall be taxed at 100 percent of its taxable value; and WHEREAS, the Bozeman City Commission enacted Commission Resolution No. 2660 to implement the tax reduction specified in Section 15-24-1401, et seq, M.C.A., to qualifying new or expanding industry; and WHEREAS, Color World Printers of Bozeman, Montana, sets forth in its New or Expanding Industry Classification Application (Exhibit A) certain information regarding the improvements and modernized processes made to its business which appear to qualify Color World Printers for said tax reduction; and 434 WHEREAS, Section 15-24-1402(2), M.C.A., requires the governing body to give notice of a public hearing to hear comment, as set forth in Section 76-15-103, M.C.A. NOW, THEREFORE, BE IT RESOLVED by the City Commission of the City of Bozeman, Montana, does hereby approve the application of Color World Printers, Bozeman, Montana, as described in the New or Expanding Industry Classification Application (Exhibit A), finding that Color World Printers qualifies for tax reductions under Section 15-24-1402, M.C.A. NOW, THEREFORE, BE IT FURHTER RESOLVED that said New or Expanding Industry Classification tax benefits shall be made for Color World Printers on the earliest tax bill allowed by law. PASSED AND ADOPTED by the City Commission of the City of Bozeman, Montana, at a regular session thereof held on the 6th day of April, 2009. _________________________________ KAAREN JACOBSON Mayor ATTEST: _________________________________ STACY ULMEN, CMC City Clerk APPROVED AS TO FORM: _________________________________ GREG SULLIVAN City Attorney 435 NOTICE OF PUBLIC HEARING PUBLIC HEARING ON RESOLUTION NO. 4157 - THE APPLICATION OF COLOR WORLD PRINTERS FOR TAX REDUCTION PURSUANT TO SECTION 15-24-1402, MONTANA CODE ANNOTATED, AND CITY OF BOZEMAN COMMISSION RESOLUTION NO. 2660. NOTICE IS HEREBY GIVEN that the City Commission of the City of Bozeman, Montana, on Monday, April 6, 2009 at 6:00 p.m. of said day at a regular session of the Commission of the City of Bozeman in the Commission Room in the Courthouse Community Room, 121 N. Rouse Avenue, will hear public comment on Resolution No. 4157, the application of Color World Printers for tax reduction pursuant to Section 15-24-1402, Montana Code Annotated, and City of Bozeman Commission Resolution No. 2660, whereby qualifying improvements or modernized processes which represent new or expanding industry may be taxed at 50 percent of their taxable value in each of the first five (5) years after the issuance of the construction permit and that in each year thereafter, the percentage of their taxable value shall be increased by an equal percentage of their taxable value until the full taxable value is attained in the tenth (10th) year and thereafter taxed at 100 percent of its taxable value. For additional information, please contact Stacy Ulmen, City Clerk, at 121 N. Rouse Avenue, Bozeman, Montana or telephone 582-2321. DATED this ____th day of ___________ 2009. __________________________________ STACY ULMEN City Clerk Legal Ad Publish: Sunday, March 22, 2009 Sunday, March 29, 2009 437 438 439 440 441