Dr. Raymond C. Rask

Recently, a local group floated the idea of building a Hilton Garden Inn and Convention Center in Butte. Part of their vision to finance the facility was the idea of asking Butte-Silver Bow County to grant the group a 10-year tax abatement. The tax abatement would amount to around $463,000. over the 10-year period, and assuming the facility was built as envisioned, the County would receive about $1,000,000. in tax revenues over the same ten years. Generally, I believe most County residents including myself support the project; we all know Butte has fallen well behind the rest of the State in terms of quality hotel and convention facilities. While I think the timing of the project is difficult and frankly question whether it is large enough to be competitive with other facilities, those are issues the developers will have to face and decide on in conjunction with their funding sources. The project’s viability is not the point of this writing, nor is it up for debate here.

What is up for debate is really the overall issue of tax abatements, if they should be granted to anyone, and if they are going to be used by the County as an economic development tool, then how should they be used, who should be eligible to receive them, and what conditions should apply to those who receive them. 

What is very clear is most local business owners and many residents lack confidence in whatever the current process might be, as it is unclear, appears to be unfair to existing business owners, seems to be an ad hoc process, and quite frankly is very suspect.  For the most part, the current tax abatement debate has little to do with the projects that have received tax abatements in recent years or even the currently proposed project, but have everything to do with “the process.”

Lack of Local Business Development Program…  For some years now there has been considerable talk on the street about the lack of support for “existing local” Butte businesses.  I have discussed this problem countless times with County leaders, economic development agencies, including URA officials.  The answer is always pretty much the same, there is no money and/or programs to assist local business owners in their efforts to expand their businesses, or start new businesses.  Unless a business exists in the area covered by the URA or one of the other then active Tax Increment Finance Districts, no significant relevant business assistance program exists, as there are no funds for a program. 

Butte-Silver Bow County has an opportunity to create a significant solution for both the tax abatement issue, as well as developing a significant and equitable program to assist existing Butte business owners.   Here are my initial suggestions for the development of this solution:

1. Place any current requests for tax abatements on hold, including that of the Hilton Garden Inn and Convention Center. 
    
2. County Government leaders develop a board or commission to develop a Business Assistance Tax Abatement Program (BATAP) for submission to County Commissioners for approval.  This board or commission should be made up of 9 to 11 members.  The make up of the board/commission should be very diverse but significantly represented by small business owners, and no owners-operators or agents of same who have received or are asking to receive tax abatements now, or within 24 months of the program being developed.  My recommendation for the make-up of the board/commission would be:  
     -  Chairman of County Commission
     -  One County Commissioner, selected randomly
     -  Member of County Attorney’s Office
     -  7 Small Business Owners (must be Butte owned, with main office in Butte)
     -  One member of a local economic development agency (non-County government)
    
3. The board/commission would develop a program to actively make tax abatements available to existing Butte small and medium sized businesses, through a business retention and development program.  The program development would include setting up program funding rules, including such things as a method by which the program would determine the total annual amount the County could make available for the program; the qualifications required to apply for the tax abatement program; the maximum amount of tax abatements any one applicant/business could receive of the total annual allotment; the “factors of qualification” required to receive a tax abatement, an example would be (but not limited to this example) applicants must utilize Butte contractors for all work; purchase supplies for expansion (where possible) from local area businesses, etc.  The overall program goal would be to develop a process by which both new and existing local business could participate in an equitable tax abatement program, which had equal access for all applicants, with a extra-heavy emphasis on existing local business retention and expansion.  Projects such as the Hilton Garden Inn would be considered new business development and therefore would be able to apply to the program for a certain level of tax abatement, based on the maximums available with in the program for new business development and for the tax abatement period requested. 
    
4. The program board would work with County officials annually to set the level of total tax abatement dollars to be available in the next fiscal year.  The program would publish the number publically and qualifying applicants would apply to the program for their desired abatement request.  Applicant requests would be considered on a first come first served basis.  When the available tax abatement dollars for that fiscal year were allocated, then that would be it until the following year.  If there were two qualified applicants, who also applied on the same day for the same remaining dollars, and both projects met all requirements, then the dollars would be allocated to the applicant that had never received any other County business funding assistance in the past, or was not using any other County funding assistance as part of their current project.  If both applicants met all criteria, then the project with the earliest scheduled end date as listed on their initial application would be approved. 
    
5. The program would then be administered by a County board, which would recommend applicants for approval to the Council of Commissioners. 

A program of this nature would assure relatively equitable access to tax abatements by all qualified comers and through active promotion of the program would bring a much needed local business retention and expansion program to Butte.  Obviously, it would be wonderful if such a program also had some “cash” to offer, but short of that ability, the tax abatement program would be a great start, and something the County government could be very proud of….  And, would put to rest much of the contention and upset in the community over current tax abatement process and allocations.