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  Regular   7.d.       
Meeting Date: 09/27/2021  
TITLE:    Public Hearing and Resolution Approving Tax Abatement for Coca-Cola
PRESENTED BY: Chris Kukulski
Department: City Hall Administration  

RECOMMENDATION
The City Council grant a 50% tax abatement to Coca-Cola in support of their $50 million investment to construct a new bottling facility within the City. 
BACKGROUND (Consistency with Adopted Plans and Policies, if applicable)
Coca-Cola Bottling Company High Country (High Country) are building a $45-$50 million new bottling facility.  Their investment is an exciting project growing High Country from 60 to 110 full time permanent jobs (50 new jobs) in Billings.  High Country will be building the ~130,000 square foot facility on their 13 acre site located in the Harnish Business Park south of Interstate I-90.  High Country has requested annexation of their project site, and they will extend city utilities west to their property in compliance with a signed development agreement.  The utility extensions are anticipated to cost approx. $1.75 million.  The City has committed to contributing $250,000, matching Big Sky Economic Development's $250,000 contribution.  If/As neighboring properties connect to the utility extensions all three entities will be reimbursed for a portion of their investments into the utility extension (High Country, City and BSED).  The utility extension provide two additional benefits beyond Coca-Cola.  Approx. 95 acres of prime undeveloped commercial/industrial property will now have utility access, promoting further investments and job creation within the City.  The extension also helps the city get closer to looping the water system within the southwest region of the city.  Unfortunately, substantial commercial development has taken place over the past two decades in the area outside the city limits.  The utility extension has no formal tie to the tax abatement, but I felt it was important to highlight the collaberation.

City Resolution 05-18376 allow the City Council to grant a 50% tax abatement (see attached).  Montana expanded its tax abatement law recently to allow either a 50% or 75% 10 year tax abatement.  The attached application requests the city and county consider a 75% abatement.  Allison Corbin from Big Sky Economic Development will be presenting the economic impacts of the project.  Our staff and BSED encouraged Coca-Cola to submit their eligible tax abatement for your consideration.      
ALTERNATIVES
City Council may:
  • Approve; either a 50% or 75% tax abatement or,
  • Not Approve a tax abatement.
FISCAL EFFECTS
The numbers calculated on the attached spreadsheet assume a $25M Real Property and $20M in Personal Property investment by Coca-Cola.  The investment will result in a total tax liability of approx. $1,741,508.66 over 10 years.  A 50% abatement award will reduce this to $870,754.33.  Without Coca-Cola's investment and annexation into the city limits, the city will not receive any direct tax benefit from the project. 

The water and sewer utility extensions are anticipated to cost approx. $1,750,000 and, per the development agreement, are the responsibility of High County.  The City and BSED are each contributing $250,000 to the utility extension to offset some of the cost and extend utilities into the Harnish Business Park.  All three entities (High Country, City, BSED) will receive some reimbursement for the utility investment as properties along the utility extension connect to the utilities. 

In year one, the City anticipates $75,957 in tax revenue from the project with a 50% abatement (real property $42,402 + personal property $33,545).  Over 10 years, the City property Tax revenue is estimated to be $789,855 ($583,809 + $215,046).
SUMMARY
The City Council consider the enclosed tax abatement application for Coca-Cola's new facility project in the Harnish Business Park. 

Attachments
Draft Resolution - Messinger
High Country Abatement Application
City Tax Abatement Resolution
BSED summary
Real and Personal Property Tax Estimate Spreadsheets


    

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