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City council approves pair of redevelopment incentives

February 14, 2017 GMT

The Billings City Council Monday approved up to $700,000 in tax increment financing as part of $4.65 million in planned improvements to the McDonald Building, 124 N. 29th St.

The vote was 10-1, with Councilman Chris Friedel voting against the proposal.

Completed in 1907, the building was the first YMCA in Montana and, most recently, a Wendy’s franchise restaurant and corporate offices.

The proposal is for A&E Architects to occupy the ground floor and 12 residential units to be constructed on the second and third floors.

The TIF grant will be paid over three years following completion of the redevelopment.

“This is exactly what downtown Billings needs,” said Councilman Al Swanson.

“If you buy into urban renewal at all, this project fits the bill,” said Councilman Larry Brewster. “Projects like this are a key to redeveloping downtown.”

“When a structure is no longer contributing to the economic vitality of an area, that’s when we need to look at revitalizing it,” said Councilman Rich McFadden. “That’s a form of blight.”

The project “looks fantastic,” Friedel said, “but my issue is, what is the public benefit for taxpayers? That property has been empty for only a year.”

Following another public hearing, the council voted 10-0, with Councilman Brent Cromley abstaining, to approve a tax abatement for 7th Avenue Hospitality LLC for developing the 95-room extended stay Home2 Suites by Hilton at 2611 Seventh Ave. N.

The abatement, applied during construction, which was completed late last year, and for four years following, is on property taxes on $6.7 million of what the Montana Department of Revenue said will be assessed in the $8 million range.

At the most, that will be about $50,000 annually that’s abated, affecting both city and school district coffers, according to Assistant City Administrator Bruce McCandless.

Twenty-six jobs, including 16 full-time and 10 part-time jobs, have been added as a result of the hotel opening, said Patrick Klugman with Big Sky Economic Development, which administers the tax abatement program for the city. Hourly workers will be paid $10-$15 per hour, with salaried workers earning $35,000 to $55,000 annually.

Don Cape of Bozeman, the developer, said the abatement will help the hotel to hire additional staff to help keep guests safe at night. Some of the hotel furniture has already been “borrowed,” he said. “We hope to get it back,” he told the council.

“It’s a great hotel, but not necessarily in a great neighborhood,” he said.

The project also received federal New Markets Tax Credits. Without those credits, the hotel “would not be sitting there,” Cape told the council.

As part of its consent agenda, the council unanimously approved a request to reject all the bids and to re-bid replacing the pool operations center at Rose Park. A 2016 arson fire heavily damaged the current bath house.

At about $1.9 million, the lowest bid to build the new operations center was about $500,000 higher than expected. Parks Director Michael Whitaker said the current bath house will be used one more season, with construction of the operations center to begin in August, after the swimming season concludes.

“We hope better weather and an expanded construction season will bring the bids in lower,” Whitaker told the council.

Value engineering will save about $159,000 on the Yellowstone Kelly Interpretive Site project. The new contract price is about $349,000.

Bill Cole, who’s spearheaded project fundraising, said the value engineering won’t reduce the project’s quality. The interpretive site, at Swords Rimrock Park, is expected to be completed this year.

The council voted unanimously to put off until Feb. 27 a public hearing on a proposed ordinance allowing hobbyist beekeeping within city limits.