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Panel approves five-year prepaid tax exemption for subdivisions amid municipal concern
Summary
Senate Bill 337 would allow developers to prepay five years of property tax during subdivision development to lower carrying costs; proponents argued it encourages housing, while Bozeman and Missoula warned it would create local revenue gaps and planning uncertainty.
Senator Greg Herts introduced Senate Bill 337 to allow a five-year prepaid property-tax exemption for residential subdivision development with the aim of reducing carrying costs for developers and encouraging homebuilding. Herts said the exemption targets fast-growing markets and could help lots be developed faster in areas where carrying costs impede new housing.
Proponents from the Montana Association of Realtors and the Montana Building Industry Association said the measure would be a modest incentive that helps developers redirect funds into construction. Opponents, including representatives from the cities of Bozeman and Missoula, said the fiscal note shows a concentration of eligible properties in Gallatin and Yellowstone counties and warned the exemption could hurt municipal revenue and the cities’ ability to finance infrastructure and services during the five-year window.
Department of Revenue economists and property-tax division staff answered questions about scope and classification; the fiscal-note discussion focused on class 3 and class 10 lands reclassified to class 4 residential upon building (the exemption applies until a habitable dwelling is constructed on each lot, and full taxation resumes when a lot is occupied or deemed habitable).
During executive action the committee moved a due-pass recommendation for SB337 and recorded a roll-call passing the bill in committee.
