Local Tax Abatement
This incentive may be useful for developers who plan to make substantial improvements to existing historic structures or build new buildings in the Uptown district. Local property taxes are abated for a period of five years if certified historic structures are rehabilitated according to local design guidelines. New buildings must be compatible with existing historic structures in Butte’s National Historic Landmark District.
The assessed value of the current structure or vacant property is established for the current year. Taxes on the property are frozen at the established level during the construction period while improvements are made. Taxes on the improvement are phased in over a five-year period at 20-percent increments.
In Butte-Silver Bow County, property tax liability is calculated as follows:
Tax Liability = assessed value x tax rate x mill levy
2003 Property Tax Rate = 3.4%
2003 Mill Levy = 588.96 mill
Federal Rehabilitation Tax Credit
A 20 percent tax credit is available to developers who rehabilitate certified historic structures. Certified historic structures are those listed in the National Register of Historic Places or are a contributing element in a National Register District. The credit allows a maximum of 20 percent deduction from the developer’s federal tax liability. The actual amount of the credit is determined by multiplying the total cost of rehabilitation by 20 percent.
To qualify for the tax credit, the developer’s building rehabilitation must be approved by the National Park Service (NPS), the U.S. Department of the Interior, and Montana’s State Historic Preservation Office (SHPO). In general, the NPS is looking for compatible uses that will enhance and preserve the historic structure. The rehabilitation must conform to architectural design guidelines that preserve the historical integrity of the certified structure. By following the guidelines and working closely with the SHPO and the NPS throughout design and construction, this substantial credit can be procured. Mainstreet Uptown Butte can assist developers with the application process.
Example:
A business decides to locate in a certified historic building in Uptown Butte. The owners invest $100,000 to rehabilitate the building for commercial use. (Rehab. Cost) $100,000 x 20% (Tax Credit) = $20,000 Tax Credit
There is an additional 5 percent state tax credit available to developers who take advantage of the federal tax credit.
Example:
A business decides to locate in a certified historic building in Uptown Butte. The owners invest $100,000 to rehabilitate the building for commercial use. (Rehab. Cost) $100,000 x 20% (Tax Credit) = $20,000 Federal Tax Credit (Rehab. Cost) $100,000 x 5% (Tax Credit) = $5,000 State Tax Credit. Total Tax Credits = $25,000
The rehabilitation must comply with the Secretary of the Interior’s Standards for Rehabilitation. Design assistance is available from the Butte-Silver Bow Urban Revitalization Agency and application assistance is provided by Mainstreet Uptown Butte.
Urban Revitalization Agency Incentives
The Urban Revitalization Agency offers incentives to developers and business owners to encourage investment in Uptown Butte. This local county government agency was established in 1980 through the creation of a tax increment financing district for the Uptown district. Funds for grants, loans, and other activities are derived from property taxes levied on new development in the district. Basically, this incremental tax revenue is set aside in a specific fund.
The incentives offered by the local URA can be used in different combinations and with other incentives, like the Federal Tax Credit. However, URA funds cannot be used if the local tax abatement is used.
The incentive is in the form of a low-interest loan. The buildings must be in the defined URA district contact the URA for thr latest boundaries). All applications must be reviewed by the URA board and are approved after review by the Historic Preservation Commission. Total funds available in each year vary based on the activity of the loan fund. For the latest details, contact the URA at 155 W. Granite Street, Butte, MT 59701, by phone at 406-497-6465 or send email to kbyrnes@bsb.mt.gov.
Also, for questions about investment opportunities, or questions about investment incentives for Uptown Butte, write to Mainstreet Uptown Butte, P.O. Box 696, Butte, MT 59703; call (406) 565-2249, or send e-mail to Mainstreet Uptown Butte.