2. Payment in Lieu of Taxes Policy ResolutionTel 406.758.7708
Fax 406.758.7771
charball@kalispell.com
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TO: Mayor Pamela B. Kennedy
and Kalispell City Council
FROM: Charles Harball, City Attorney
Myrt Webb, Interim City Manager
SUBJECT. Resolution Establishing the City Policy to Require an
Agreement for Payment in Lieu of Taxes for Ikon --
governmental Entities Receiving substantial valuable
Services From the City of Kalispell.
MEETING DATE: Monday, June 22, 2009 — City Council Work session
BACKGROUND,* The City of Kalispell provides services to the public, which
services include fire and police protection, amenities such as parrs and recreation
and other general public services. The City is only able to provide these valuable
services through the receipt of property tax revenues paid by city residents whose
property is taxed. Certain entities (non -profits) that own property in the city and
receive the valuable services of the city may apply for and receive a tax-exempt
status from the state of Montana Department of Revenue, in which case all
property taxes, including city taxes (not special assessments) are abated on the
theory that the community receives benefits from the entity that are equal to or
greater than the tax revenue otherwise generated by the entity. The City of
Kalispell is currently significantly challenged to continue to provide an adequate
level of services to its taxpayers, partly as a result of the number of entities that
have applied for and received tax exempt status although the City continues to
provide its valuable services to these entities.
RECOMMENDATION: ION: That the City Council review this issue and consider
passing a resolution finding that it is in the best interest of the City, its taxpayers
and citizens that nongovernmental entities, otherwise exempt from paying City
property taxes, that receive and benefit from the valuable services provided by the
City make reasonable payment to the City of Kalispell in the form of payment in
lieu of City taxes. The resolution should direct that at such time as a tax-exempt
nongovernmental entity applies to the City of Kalispell Planning Department for its
services, the Planning Department shall negotiate a PILT agreement ,with that
entity for the City of Kalispell. The Planning Department should also be directed to
prepare a cost of services analysis which shall include an estimate of the City taxes
Payment in Lieu of 'faxes Policy Memorandum
June 17, 2009
Page - 2
the nongovernmental entity would otherwise pay if it were not tax exempt as well
as a reasonable annual estimate of the cost of services the City provides to the
property. Upon reaching a tentative PILT agreement with the nongovernmental
entity the City of Kalispell Planning Department should be directed to provide such
agreement and cost of services analysis to the City Manager who shall present it at
the next regularly scheduled City Council meeting for review and approval by the
City Council.
FISCAL I .ACTs: The loss of revenue to the City from entities receiving tax
exempt status from the Montana state Department of Revenue is substantial. This
proposed policy would allow the City Council to evaluate such revenue loss at such
time that a tax exempt nongovernmental entity applies for services from the
Kalispell Planning Department and to require an agreement for payment in lieu of
taxes.
Respectfully subm 0 ted,
Charles Harball, City Attorney
Myrt Webb, Interim City Manager
Office of City Attorney
City of Kalispell
WHEREAS, the City of Kalispell provides services to the public, which services include fire
and police protection, amenities such as parks and recreation and other general
public services; and
WHEREAS, the City of Kalispell is only able to provide these valuable services through the
receipt of property tax revenues paid by City residents whose property is taxed;
and
WHEREAS, certain entities (non -profits) that own property in the City of Kalispell and receive
the valuable services of the City of Kalispell may apply for and receive a tax-
exempt status from. the State of Montana Department of Revenue, in which case
all property taxes, including city taxes (not special assessments) are abated on the
theory that the community receives benefits from the entity that are equal to or
greater than the tax revenue otherwise generated by the entity; and
WHEREAS, the City of Kalispell is currently significantly challenged to continue to provide an
adequate level of services to its taxpayers, partly as a result of the number of
entities that have applied for and received tax exempt status although the City
continues to provide its valuable services to these entities; and
WHEREAS, the City Council of the City of Kalispell finds that it is in the best interest of the
City, its taxpayers and citizens that nongovernmental entities, otherwise exempt
from paying City property taxes, that receive and benefit from the valuable
services provided by the City make reasonable payment to the City of Kalispell in
the form of payment in lieu of City taxes.
COUNCILf _10W, THEREFORE, BE IT RESOLVED BY THE CITY OF OF
KALISPELL, AS FOLLOWS:
SECTION I. That it shall hereby be the policy of the City of Kalispell to require an
agreement of Payment in Lieu of City Taxes (PILT) between the City of
Kalispell and any nongovernmental entity receiving a tax exempt status
from the State of Montana when that entity receives substantial valuable
services from the City of Kalispell.
SECTION II. That at such time as a tax-exempt nongovernmental entity applies to the
City of Kalispell Planning Department for its services, the Planning
Department shall negotiate a PILT agreement with that entity for the City
of Kalispell. The Planning Department shall also prepare a cost of services
analysis which shall include an estimate of the City taxes the
nongovernmental entity would otherwise pay if it were not tax exempt as
well as a reasonable annual estimate of the cost of services the City
provides to the property.
SECTION III. Upon reaching a tentative PILT agreement with the nongovernmental
entity the City of Kalispell Planning Department shall provide such
agreement and cost of services analysis to the City Manager who shall
present it at the next regularly scheduled City Council meeting for review
and approval by the City Council.
PASSED AND APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR of
THE CITY OF KALISPELL, THIS 6TH DAY OF JULY, 2009.
ATTEST:
Theresa white
City Clerk
Pamela B. Kennedy
Mayor