Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Housing Development Tax Incentive topic
No spam. Unsubscribe anytime.
Committee approves five‑year prepaid tax exemption for residential subdivisions in SB 337 amid municipal concerns
Summary
Senate Bill 337, as amended to residential subdivisions, passed Senate Finance and Claims. The bill allows developers to prepay up to five years of property taxes on lots during subdivision development to reduce carrying costs; cities testified that the timing of revenue and service provision raised concerns.
Senate Bill 337, which provides a five‑year prepaid property tax exemption mechanism intended to lower carrying costs for developers during residential subdivision development, passed the Senate Finance and Claims Committee on March 5.
Sponsor Senator Greg Herts (SD 7) said the exemption is designed to lower carrying costs on lots so developers can bring housing to market faster. The bill as presented to the committee had been amended in the House to limit the exemption to residential subdivisions.
Proponents, including the Montana Association of Realtors and the Montana Building Industry Association, called the measure a modest incentive to accelerate homebuilding. Developers would prepay taxes on subdivided lots while construction proceeds; lots that achieve a habitable dwelling or reach a 95% completion threshold would lose the exemption and be fully taxed.
Several municipalities — most prominently the cities of Bozeman and Missoula — opposed the bill in committee testimony, saying a temporary exemption could create local revenue timing shortfalls for services that begin to be provided before full taxable value is realized. Bozeman's representative noted that rapid subdivision growth in Gallatin and Yellowstone counties means local governments already face service and infrastructure demands and that delaying property tax collections for up to five years could complicate municipal budgeting. Department of Revenue staff explained the fiscal note focuses on reclassification from agricultural classes (class 3 and class 10) to class 4 residential valuation when houses are built and said commercial subdivisions were not the primary driver of the fiscal estimate.
At executive action the committee passed SB 337. The sponsor said the bill targets carrying costs and incentivizes housing production, and the committee recorded passage and forwarded the bill.
