2. Redevelopment IncentivesCity of Kalispell
Planning Department
"d Street East, Suite 211, Kalispell, Montana 59901.
bsite: ali ell la i �, o
REPORT TO:
FROM:
Kalispell Mayor and City Council
Nara A. Wilson, senior Planner
James H. Patrick, City Manager
SUBJECT Kalispell Redevelopment Incentives
MEETING # November 1 , 2005 Work Session
BACKGROUND:, During their work on the architectural design standards, the Kalispell
Planning Board discussed redevelopment incentives as a. tool for reinvestment ent and
redevelopment in existing commercial areas. This mechanism is available to local
governments but has not been implemented by the City of Kalispell. During joint work
session between the Kalispell City Council and the Kalispell Planning Board earlier this
year, the planning board passed on this information and their recommendation that the
city council consider implementing this tool,
Because this is not Part of a. plannirig are or zoning document it was not appropriate for
the planning board to process or otherwise consider this programs.. However, all of the
members of the planning board felt this program is worthy of further consideration and
hopefully adoption by the city council.
Attached .t . this memo is the statute outlining the redevelopment incentive program and
brief diagram of how it works along with the necessary -y forms for filing for the deferred
taxes. The planning boar. would appreciate your careful and favorable consideration of
this pro ra-m.
Respectfully submitted,
Nar .a. A. Wilson " a.r es H. Patrick
Senior Planner City Manager
Report compiled: November 9, 200
c: Theresa White, Kalispell City Clerk
Att a.c rnent s : Redevelopment Incentives Outline
REDEVELOPMENT INCENTIVES
AS RECOMMENDED Y THE
KALISPELL PLANNING BOARD AND ZONING COMMISSION
Prepare. by the Kalispell Planning Board
December 2004
Introduction - REDEVELOPMENT INCEWES
Redevelopment and reinvestment in emsting properties and development is strongly
encouraged. It will result in the revitalization of existing neighborhoods, restrain the
premature development of land in the outlying areas and maintain property values in
the city. Incentives to redevelop and reinvest in existing buildings are encouraged as a.
strategy to develop a strong and stable economic base in established commercial areas
wile maintaining high development standards for the community. Typically there are
four stages of a. life cycle related to improved properties clue to ordinary physical
deterioration and market ket emand.
The Montana Code Annotated, 'title 15, Chapter 24, Special Property Tax Applications,
Parts 15, Remodeling of Buildings and structures, and Part 16, Historic Structures,,
provides enabling legislation for local governments to assist and encourage the
re .evelo me t of historically significant buildings, blighted uilc ing and buildings in
economically declining areas.
It is the City's intent to offer programs that will encourage the revitalization of
improved properties that will shorten the stagnation period and provide property
owners the opportunity to recoup some of their expenditures through property
appreciation and increased business. The City of Kalispell offers tax benefits to
property ow-ners whose taxable value has increased due to remodeling,
reconstruction or expansion as provided for under MCA Title 15, Chapter 24, Special
Property Tax Applications, Fart 15, Remodeling of Buildings and Structures as
follows:
• A property's taxable value is adjusted based upon its increase in taxable
value after remodel, .el, reconstruction or expansion.
Benefit is phased over a five year period.
0 Phase amounts are set at 20 percent per year until it reaches 100 percent.
• The grogram is administered through the Montana Department o
Revenue.
2
The Montana. Code Annotated, Title 15, Chapter 24, Special Property Tax Applications,
Parts 15, Remodeling of Buildings and Structures, and Part 16, Historic Structures,
provides enabling legislation for local governments to assist and encourage the
redevelopment ent of historically significant buildings, blighted building and. buildings in
economically declining areas.
15-2 -15o 1. Remodeling, reconstruction, or expansion of buildings or structures --
assessment ent provisions -- levy limitations. 1 Subject to 1 -10- 20 and the authority
contained in subsection section 4 of this section, remodeling, reconstr cti.o ., or expansion of
existing buildings or structures, which increases their taxable value by at least 2
1 2% as determined by the department, may receive tax benefits during the
construction period and for the following 5 years in accordance with subsections 2)
through and the following schedule. The percentages must be applied as provid.ed
ire subsections 3 and ) and are limited to the increase in taxable value cased by
remodeling, reconstr-uction, or expansion. -
Construction period.
0%
First year following construction
2 %
Second year following construction
o%
Third year following construction
0%
Fourth year following construction
o
Fifth year following construction
100%
Following years
1 %
(2) In order to confer the tax benefits described in subsection. ), the governing body
of the affected county or, if the construction will occur within an incorporated city or
town,, the over ing body of the incorporated city or town shall approve by resolution
for each remodeling, reconstruction, or expansion project the use of the schedule
provided for in subsection 1 or a schedule adopted pursuant to subsection .
(3) The tam benefit described in subsection (1) applies only to the number of mills
levied and assessed for high school district and elementary school district purposes
and to the number of mills levied and assessed by the local governing body approving
the benefit. The benefit described in subsection (1) may not apply to statewide levies.
(4) A local government may., in the resolution required by subsection (2), modify the
percentages contained in. subsection 1 that apply to the first year following
construction through the fourth year following construction. A.local government may
not modify the percentages contained in subsection 1 that apply to the fifth year
following construct -ion or years following the fifth year. A local government may not
modify the time limits contained in subsection 1. The modifications to the
percentages in subsection 1 adopted by a local government apply uniformly to each
remodeling, reconstruction, or expansion project approved by the goveming Jody.
3
. -2 -1502. Tax exemption and abatement .t for remodeling, reconstruction, or
expansion of certain commercial property -- approval. a subject to the conditions
of this section, remodeling, reconstruction, or expansion of are e sting commercial
building or structure that increases its taxable value by at least 5%, as determined by
the department, may receive a property tax exemption during the construction period,
not to exceed 12 months, and for up to 5 years following completion of construction.
The property tax exemption is limited . to 100% of the increase in taxable value caused
by remodeling,, reconstruction, or expansion.
(b) (i) In addition to the properly tax exemption described in subsection (1)(a), the
buildings and structures may receive a property tax reduction for 4 years following the
exemption period as provided in this subsection (1)(b). The percentages must be
applied to the increase in tameable value caused by remodeling, reconstruction, or
expansion according to the following schedule. -
First year following the exemption period
20%
Second year following the exemption period
%
Third year foil owing the exemption period
0%
Fourth year following the exemption period
80%
Fifth year following the exemption period
1.00%
Following years
100%
(1-1)Mill levies are assessed against the reduced taxable value of the remodeling,
reconstruction,, or expansion determined under subsection 1) i •
(c) To be eligible for the property tax exemption and the property tam reduction, the
commercial building or structure may not have been used in a business for at least 6
months immediately preceding the date of application to the governing body for
approval under subsection (2).
(2) In or lcr to confer the tax benefits described in subsection (1), the goveming
body of the affcete l county or consohdated government or, if the construction will
occur within an incorporated city or town, the governing body of the incorporated city
or town shall approve by resolution for each rcmo eling, reconstruction, or expansion
project the use of the property tax exemption and property tax reduction.
(b) The governing body may not grant the property tax benefits described in
subsection if property taxes on the buildings or structures are delinquent.
1. -2 4 - 16 0 1. Purpose, The purpose of this part is to provide legislation and
guidance for the administration of a property tax abatement program for the
restoration., rehabilitation, expansion, are.d new construction of certified residential and
commercial properties located within national register historic districts and properties
listed in the National Register of Historic Places. The abatement does not apply to the
tax on personal property.
4
15-2 -1bog. Definitions. As used in this part, the following definitions apply:
(1) "Board" means the local review board as provided in 1 -2 -160 .
(2) „Certification" means approval by the board or state historic preservation office
of a property's qualification for the property tax abatement under the terms of this
p art .
(3) "Contributing" means a building, site, structure, or object with historic
architectural qualities, historic association, or archaeological value for which a
property is significant because:
(a) it was present during a. period of significant local or state history and possesses
historic design or a-rchit et .ral integrity reflecting its character at that time or is
capable of yielding important information about the period; or
(b) it independently meets the criteria for listing in the National register of Historic
Places.
(4) "Rehabilitation PP means the process of returning a. property to a state of utility
through repair or a.lteration that makes possible an efficient contemporary use while
preserving those features of the property that are significant to its historical,
architectural., and cultural vales.
(5) " Re storation P I means the process of accurately recovering the form., details, and
setting of a property as it appeared when it was originally built or constr-ucted by
removing later work or replacing missing earlier work.
1 -2 - i o3. Historic property tax abatement -- levy limitations. 1. Subject to 15--10-
20, a historic property undergoing rehabilitation, restoration, expansion, or new
construction that meets criteria cstabl.is .e . by the review process describe. in 15- -
1 o5 or i 5-2 - bob may receive a tam abatement . n'ng the constr ction period, not
to cxccc . 12 months, and for up to 5 years following completion of the construction in
accordance with subsections and (3). The tax abatcment is limited to 100% of the
increase in taxable value caused by the rehabilitation, restoration, cxpansion, or new
construction.
(2) In order to confer the tax benefits described in subsection (1), the governing
body of the county or incorporated city or town where the improvement occurs shall
establish by resolution the process for the use of the tax abatement provisions
described in subsection (1).
(3) Property that receives a tax benefit under this part is not entitled to any other
exemption r special valuation provided y Montana law during the period of the
abatement.
(4) (a) The tax abatement applies only to the number of mills levied:
(i) for high school and elementary school district purposes; and
(ii) by the local governing body approving the abatement.
5
(b) The abatement .may not apply to statewide levies.
1 - 2 - 60 . Eligibility. A property that meets the design review criteria in 1 - 2 -
1 o5 is eligible for the property tax abatement if it is:
(1) located within the boundaries of a national register historic district and
contributes to the district, as determined by the stake historic preservation office;
(2) a newly constructed property within the boundaries of a national register
historic district that meets design review criteria as being architecturally compatible
with the histonc district, as determined by the local review board or the state historic
preservation office; or
(3) listed individually in the National Register of Historic Paces,
15 -2 -1 0 . Responsibilities of local governing bodies -- local review board -- design
review process. 1 local gover mg body that approves the tax benefit may designate
a. local review board to establish are application. and review process to certify eligible
properties. The review process must include design review criteria based on the
secretary of the interior's standards for preservation projects or other standards
approved by the state historic preservation office.
(2) The board shall include:
(a) at least three members with professional expertise in history, planning,
archaeology, architectural history, historic archaeology, or another historic
preservation -related discipline;
(b) at last one architect; and
(c) up to two members of the general public.
(3) The board shall determine whether a property is eligible under 15-24-1604 and
is qualified for the tax abatement. The board shall approve or decry an application for
the tax abatement and report its recommendation to the local governing body.
1 -2 - . o . Responsibilities of the state historic preservation office. 1) If the local
governing body approving the tax abatement does not appoint a board under the
provisions of 15 -2 - 1605, the state historic preservation office shall provide design
review assistance and certification for qualifying properties.
(2) The state historic preservation office shall evaluate design review standards
submitted to it for approval by the board.
1 -2 -1 0 . Responsibilities of the state historic preservation office. 1) If the local
governing body approving the tam abatement does not appoint a board under the
provisions of 1. --24- l o , the state historic preservation office shall provide design
review assistance and certification for qualifying properties.
(2) The state historic preservation office shall evaluate design review standards
submitted to it for approval by the board..
The City of Kalispell Community Development Department also has
re evelopmcnt and reinvestment incentives through Community Development
Block Grants, Urban Renewal District funding and. Revolving Loan Programs.
Specific cn4teria needs to be met for each of these programs in order to qualify.
Both the Airport and the W stsid.e Urban Renewal Districts (tax increment finance
or "TIF") are able to proved dollar for match .t . the IRP and/or CDBG Economic
Development funding sources within the applicable le districts. This assistance is
derived from the existing 'CIF fund. Eligibility is driven by job creation as well as
need for the gap financing. cing. Existing business expansion r. p .oyment and new
business are the eligible.
Additionally, developers may apply for TIF funding for infra.str .ct .re work on the
private developer's site. 'these funds are limiter to 10% of the total project cost..
Interest rates are prime and terms will be determined by need.
7