The controversy of a proposed local option tax; details of a pending merger of Community Development Companies; an update regarding the GE Building; plans to convert the Corette industrial site to a park; and election of 2017 officers were among business before the joint meeting of the boards of Big Sky Economic Development Authority (BSED) and the Big Sky Economic Development Corporation (EDC), last week.
Local Option Tax
In a split vote, members of the BSED and EDC board changed their position on the proposed legislative issue of a local option tax. Despite an appeal from Billings Chamber of Commerce Executive Director John Brewer, who also serves an ex-officio position on the EDA Board, the boards voted to take a neutral position rather than support the concept of a local option tax, as they had previously.
“Nothing has changed, since you voted unanimously to support it,” said Brewer, whose organization has spearheaded the effort to pass a bill in the 2017 State Legislature, which would allow any municipality to vote on adopting a local option tax.
BSED/EDC Director Steve Arveschoug recommended that the boards take a neutral position on the local option tax until the legislation is introduced, “because it is a significant issue.”
Brewer asked whether BSED is an autonomous entity or “an extension of county government.” He was referencing objections voiced by County Commissioners Jim Reno and John Ostlund at last month’s meeting regarding the agency’s endorsement of the proposal.
Commissioner Ostlund suggested that it is “not a good idea” for the taxpayer –supported boards to take positions in opposition to the elected officials responsible for their funding. Both Ostlund and Reno have voiced opposition to any increase in taxes in the past. Ostlund said he thought the message from county government should be “consistent.”
Commissioner Reno said that any entity making decisions about taxation should be elected rather than appointed.
BSED is a county agency, created by resolution of the county commissioners, and supported by a levy on property taxes. The county commissioners determine the amount of the levy, as well as appoint the BSED board. EDC is a non-profit corporation, supported in large part by membership dues, but administered by public funded BSED staff, and the recipient of fees assessed for administration services of grants and other public funds.
During an executive committee meeting, Arveschoug explained that BSED has in the past taken positions on tax issues and other issues, looking at them through “an economic development lens.” The question to be asked he said is “what is the nexus to economic development?”
The Chamber of Commerce is advancing the local option tax (sales tax) as being important to economic development. Revenues generated on the sale of products and services within the city limits would help finance public projects that they believe would improve the quality of life in Billings and attract visitors and potential workforce.
The proposed legislation would mirror a similar taxing authority that is available in the state to communities that rely heavily upon tourism.
The concept for other communities has failed in several past state legislatures, because of opposition from smaller communities, who saw that they would be paying the tax when shopping in the larger cities. Billings Chamber representatives have been visiting with public administrators of the smaller communities, pointing out that the local option tax could serve their purposes as well. They hope that their efforts will reduce opposition in the 2017 State Legislature.
Under currently proposed legislation the possible tax rate would be capped at 3 percent. Each community in presenting their proposal to its citizens could set their own rate under that cap.
Any voter approved option tax would sunset in ten years, unless continued by another vote of the taxpayers.
The proposed legislation calls for a “citizen oversight panel” to present the measure to the voters and oversee the process of collecting the taxes. The details of how much tax and what would be taxed could be decided upon by the community that approves it — although the state legislature might make its own determination on that matter.
A proposal going to the voters of a community would also include a list of the projects that the revenues would fund.
What those projects might be for Billings is already being developed by a newly formed group called Billings Now. Arveschoug serves as a member of that group.
During the executive committee meeting, Arveschoug said that while he will not be able, as a member of Billings Now, to vote to support the local option tax proposal, he didn’t believe the new BSED position means he cannot continue to be part of the organization.
New Park for Billings
Arveschoug reported that meetings with the City Parks department have gone well in efforts to incorporate the former site of the Corette Plant as part of a proposed Coulson Park Redevelopment. The project is one that will be considered by Billings Now as a potential focus for the potential revenues of a local option tax. A buy-sell on the property is in place, he reported.
The City Parks Department is putting together a scope of work for a master plan for the park development. It will then be necessary to obtain $25,000 to $50,000 to do the planning. “The goal of this planning effort will be to develop a clear vision for the future of Coulson Park and to encourage the Parks Board and City Council to move forward with its development,” said Arveschoug.
EDC/ MCFC Plan Merger
An update regarding the proposed merger between Big Sky Economic Development Corporation (EDC) and Montana Community Finance Corporation (MCFC). Helena, was given by Brandon Berger, EDC Director of Business Finance. He said the final agreement will be presented to the board for approval in January. In the meantime a committee of staff and board members will review and set the final details of the agreement.
The combined organization, which will serve businesses throughout the state, will be called Big Sky Finance. It will be licensed as a Certified Development Company and regulated by the SBA (US Small Business Administration), as both agencies are now. Big Sky Finance’s role will be to package, process, close and service SBA 504 loans.
Berger said that the board and staff of MCFC have been very receptive to the merger, which is being pursued by EDC in order to increase its volume of loans and to increase investment in other areas of the state.
EDC in Billings will be the main office, with the office in Helena serving as a satellite location. The staff will initially include five qualified, full-time professional staff to market, package, process, close and service SBA 504 loans statewide.
The two loan portfolios will be merged into one.
Big Sky EDC was approved as a CDC for the state in 2005 and has obtained over $100 million in loan approval to assist over 150 small businesses. The EDC has a three person staff that manages a loan portfolio of 113 loans totaling over $43 million.
Since its formation in 1984, MCFC has obtained over $161 million in loan approvals involving over 430 businesses. MCFC currently has a three-person staff managing a loan portfolio of 113 loans totaling over $43 million.
Berger said that merging the two agencies results in cost savings and there appears to be opportunity to increase their SBA 104 loan portfolio, which gives him confidence in the long-term success of the merger. “With the combined history and experienced staff, Big Sky Finance will be a strong partnership,” he said.
Big Sky EDC and MCFC have averaged 18 loans totaling $12 million per year over a four year period. Berger conservatively projects that achieving $13.5 million in loans is break-even for the merged organizations, which he believes is quite achievable given past performance. He projects goals for 2018 through 2020 of $13.5 million, $15 million and $17 million.
Future of GE Building
Arveschoug reported that BSED has been exploring the options available to them in regard to the GE Center of Excellence building, which BSED owns. GE officials have committed to working with BSED to seek a third-party option for the facility.
That commitment involves working to develop a “turn-key” opportunity by retaining core GE staff through 2017 “so that we have a true turn-key opportunity to present to other parties.” It also includes keeping intact the furniture, fixtures, and operating equipment. And, GE will dedicate “staff resources to supporting and implementing a recruitment plan in partnership with BSED.”
In April, GE announced that it is divesting itself of all GE Capital business, which was intended to include the Center of Excellence in Billings. Billings retained 100 jobs in the sale and gained a new member in the Billings business community with the addition of the Bank of Montreal. Wells Fargo also expanded its presence as a result of the transaction, pointed out Arveschoug.
GE’s lease on the building expires in January 2021. The time frame gives BSED ample time to decide whether they want to keep the building or sell it.
According to Arveschoug, at the end of the GE lease, BSED will be left with approximately $3 million of debt on the building, $1.2 million in building maintenance reserve, and a building appraised at approximately $11 million.
A written work plan will be developed that details the roles and responsibilities of GE and BSED during the transition period, said Arveschoug.
2017 Officers
BSED and EDC board officers were elected for 2017. The new officers for BSED will be: Chair, Sheri Nicholson; Vice Chair, Jennifer Smith; Sec/Treasurer, Cory Moore; Immediate Past Chair, Kevin Gustainis; and Member at Large, Robin Rude. New Officers for EDC will be: Chair, David Trost; Vice Chair, Eric Simonsen; Sec/Treasurer, Mike Nelson; Immediate Past Chair, Duncan Peete; and Member at Large, Steve Loveless.
County Commissioners approved appointments to the BSED board of Greg McDonald, Dana Pulis, and Paul Neutgens.

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