HomeMy WebLinkAbout10-22-07_Tax Abatement for Historic Preservation_14Commission Memorandum
Memorandum created on October 17, 2007
REPORT TO: Honorable Mayor & City Commission
FROM: Courtney Kramer, Assistant Planner and Staff Liaison to the Bozeman Historic
Preservation Advisory Board (BHPAB)
SUBJECT: Tax Abatement for Historic Preservation
MEETING DATE: Monday, October 22nd, 2007
RECOMMENDATION: That the City Commission discuss current Tax Abatement for Historic
Preservation policies and consider scheduling further discussion at a future Thursday Policy meeting in order
to give direction on policy questions to staff and the BHPAB. Tonight’s discussion is meant to be an initial
discussion to be followed by further consideration and direction to the BHPAB.
BACKGROUND:
The Department of Planning has received two letters of interest in Tax Abatement for Historic Preservation.
Although a tax abatement ordinance was enacted in 1989 no formal application packet or procedure has been
developed. Therefore it is necessary for Staff, BHPAB and the City Commission to agree on criteria and
procedures pertaining to tax abatement prior to further processing these inquiries.
State Statute in current Montana Annotated Code enables Certified Local Governments to offer tax
abatement for property owners in historic districts to spur appropriate preservation projects. In 1989 the City
of Bozeman’s City Commission passed Commission Resolution Number 2766 further enabling the citizens of
Bozeman use of the Tax Abatement. At the time the City Commission directed the Bozeman Historic
Preservation Advisory Board to establish an application and review process to certify properties eligible for
the tax abatement. Unfortunately the BHPAB never completed this task and is now in need of guidance as to
the financial and policy specifics of the abatement.
Planning staff has conversed with Anna Rosenberry, Directory of Finance for the City of Bozeman, and Patty
White, Gallatin County Area Manager for the for the Montana Department of Revenue, in addition to
numerous conversations amongst the Planning and Policy Subcommittee of the Bozeman Historic
Preservation Advisory Board, along with the full BHPAB, and would like to include all interested parties in
such a discussion with the City Commissioners.
UNRESOLVED ISSUES: Current State Statute and Commission Resolution outline what properties are
eligible, how long the abatement is to run for, limits the abatement to 100% of the increase in taxable value
and delineates the penalty imposed if owners adversely alter the property for which they received abatement.
Questions inherent in creating an application and review process for abatement that the BHPAB sees as
Commission decisions are:
1. Quantifying the amount a property owner is required to invest in a property to be eligible for the
abatement.
2. Does the Commission want to include all mills levied as abate-able?
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Commission Memorandum
Memorandum created on October 17, 2007
3. Does the Commission want to continue to limit eligible properties to only those in a historic district?
FISCAL EFFECTS: The purpose of the abatement is to increase taxable value by encouraging appropriate
maintenance and investment in historic properties while offsetting some of the cost. Tax revenues on the
property do not go down, rather the increase in tax is delayed for five years.
ALTERNATIVES: As suggested by the City Commission.
CONTACT: Please email Courtney Kramer at ckramer@bozeman.net if you have any questions prior to the
public meeting.
APPROVED BY: Andrew Epple, Planning Director
Chris Kukulski, City Manager
CC: Bonnie Martin, Chair of the Bozeman Historic Preservation Advisory Board
Jim Webster, Chair of the Planning and Policy Subcommittee of the BHPAB
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Rough Idea of Where Bozeman’s Tax Abatement for
Historic Preservation Could Be Headed
... and where the BHPAB needs guidance from the City Commission.
The BHPAB Needs Direction from the Commission on:
1. Deciding a benchmark of money invested to be eligible. Should an owner have
to invest $20,000? $50,000? $100,000?
2. Does the Commission want to include all local mills levied as abate-able?
Should school taxes continue to be abated?
3. Does the Commission want to continue to require properties to be within a
historic district, or expand the location requirement to include everything
within the City of Bozeman over 50 years of age?
Who:
• Is eligible?
o Property owners who spend a certain amount of money on property
improvements that received an Abatement Certificate of
Appropriateness.
The BHPAB needs direction from the City Commission on how
much money a property owner should have to invest.
• Do property owners contact to learn more?
o The Preservation Planners in the City of Bozeman’s Department of
Planning.
What:
• Is “Tax Abatement”
o The purpose of the abatement is to increase taxable value by
encouraging appropriate maintenance and investment in historic
properties while offsetting some of the cost. Tax revenues on the
property do not go down, rather the increase in tax is delayed for five
years.
• What taxes are “abated”?
o The tax abatement applies only to the number of mills levied for high
school and elementary school district purposes, and by the local
governing body approving the abatement. The abatement may not
apply to statewide levies.
o Would the City Commission like to amend the ordinance to exclude
abatement for certain mills? Schools? Fire and Police? The BHPAB
needs the City Commission to give direction on this.
Where:
• Do properties have to be located?
o Stay within the existing State Statute and Commission Resolution?
Created by: Courtney Kramer, on behalf of the Bozeman Historic Preservation Advisory Board
October 17, 2007 1
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State Statute: “certified residential and commercial properties
located within national register historic districts and properties
listed in the National Register of Historic Places.”
Commission Resolution: “within a historic district” “commercial
and residential properties or new construction that meets design
review criteria compatible with an historic district.”
o State Statute and Commission Resolution currently pinpoint eligible
properties to just those within a historic district or individually listed.
This has the benefit of potentially generating interest in new historic
district. Unfortunately, it also excludes a handful of historic properties
in Bozeman that are not within a district or individually listed at this
time.
The BHPAB has expressed interest in making every property over
50 years of age eligible, but needs the City Commission to give
direction on this.
• Do property owners fill out necessary paperwork?
o At the Department of Planning and the Montana Department of
Revenue.
When:
• Do property owners let the City of Bozeman know they are interested in
pursuing tax abatement?
o When they fill out or drop off their Certificate of Appropriateness
application.
• Does the abatement start?
o January 2 of the next year (this is how the Department of Revenue
counts years).
So if the City Commission approved abatement on July 15 of
2007, the actual abatement would run in tax years 2008- 2012.
How:
• Would the process work?
o Phase I: Planning and Construction
Ideally property owners will meet with a Preservation Planner
at the Department of Planning prior to submitting a Certificate
of Appropriateness (COA) application. At that time the planner
will ask if they want to pursue a regular COA or an Abatement
COA (the preservation standards of the Abatement COA- which
still needs to be developed- will be much more strict and
essentially mimic the National Park Service standards for tax
credits).
If the property owner pursues an abatement COA, the planner
will have the property owner fill out the necessary forms (which
still need to be developed) and supply the necessary paperwork,
including the property owner’s most recent tax bill.
Created by: Courtney Kramer, on behalf of the Bozeman Historic Preservation Advisory Board
October 17, 2007 2
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The property owner proceeds with the project, and notifies the
Planner when the project is complete.
o Phase II: Review and Recommendation
The planner “inspects” the property after work is completed to
ensure the project was completed as planned.
The planner also forwards the project to the BHPAB for review,
following all of Montana’s Open Meeting Laws.
The BHPAB reviews the project and makes a recommendation
to the City Commission.
o Phase III: Decision by the City Commission
The City Commission reviews the projects, hears both the
planner and the BHPAB’s recommendation, and either
approves or denies the application.
o Phase IV: Follow Up
Following approval, the planner forwards all necessary
paperwork to the Montana Department of Revenue.
• The Department of Revenue re-appraises a property and
the abatement starts on the next year’s tax bill and runs
for five years.
Planning Department monitors COA applications to prevent or
mitigate an “adverse” effect on properties given an abatement.
Created by: Courtney Kramer, on behalf of the Bozeman Historic Preservation Advisory Board
October 17, 2007 3
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Quick Facts about Bozeman’s existing Tax
Abatement for Historic Preservation
These details come from the existing Montana Annotated Code 15-24-1601 and City of
Bozeman Commission Resolution 2766 passed December 4, 1989.
Who is eligible:
State Statute: “certified residential and commercial properties located within national
register historic districts and properties listed in the National Register of Historic Places.”
Commission Resolution: “within a historic district” “commercial and residential
properties or new construction that meets design review criteria compatible with an
historic district”
For how long:
State Statute: “during the construction period, not to exceed 12 months, and for up to 5
years following completion of the construction”… “Property that receives a tax benefit
under this part is not entitled to any other exemption or special valuation provided by
Montana law during the period of the abatement.”
Commission Resolution: Same, Defines “construction period” as: “a period of time from
the date of issuance of the required building permit until the project is substantially
completed or a period of twelve (12) months from the date of issuance of said building
permit whichever period is shorter.”
How much money:
State Statute: “The tax abatement is limited to 100% of the increase in taxable value
caused by the rehabilitation, restoration, expansion, or new construction.”
The Tax Abatement applies only to the number of mills levied:
i. for high school and elementary school district purposes
ii. be the local governing body approving the abatement
iii. the abatement may not apply to statewide levies
Commission Resolution: Same
What happens if later alterations adversely effect those elements that qualify it as
historically contributing?
State Statute: “If a historic property that has received a tax abatement under this part is
disqualified, the owner is liable for back taxes, interest, and a penalty.” (see 15-24-1607
(1) and (2))
Created By: Courtney Kramer on behalf of the Bozeman Historic Preservation Advisory Board
October 17, 2007 1
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