Bill Summary – FastDemocracy

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68th Legislature 2023                                                                                           SB 523.1
                                               SENATE BILL NO. 523
                                            INTRODUCED BY G. HERTZ
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  A BILL FOR AN ACT ENTITLED: “AN ACT GENERALLY REVISING TAX INCREMENT FINANCING LAWS;
  REQUIRING THE QUALIFIED ELECTORS TO APPROVE A TAX INCREMENT FINANCING PROVISION;
  REQUIRING THE QUALIFIED ELECTORS TO APPROVE THE ISSUANCE OF BONDS PAID WITH TAX
  INCREMENT; REMOVING SCHOOL LEVIES FROM THE CALCULATION OF THE TAX INCREMENT;
  LIMITING TAX INCREMENT FINANCING PROVISIONS TO 20 YEARS; PROVIDING THAT EXISTING TAX
  INCREMENT FINANCING PROVISIONS THAT EXCEED 20 YEARS MAY ONLY RETAIN INCREMENT
  SUFFICIENT TO PAY BONDS; REQUIRING THE LOCAL GOVERNING BODY TO APPROVE ALL
  EXPENDITURES OF TAX INCREMENT; PROHIBITING THE ADOPTION OF A TAX INCREMENT
  FINANCING PROVISION IF THE INCREMENTAL TAXABLE VALUE OF ALL URBAN RENEWAL AREAS
  THAT HAVE ADOPTED TAX INCREMENT FINANCING PROVISIONS EXCEEDS 7% OF THE TOTAL
  TAXABLE VALUE OF THE TAXING JURISDICTION; LIMITING THE EXPENDITURE OF TAX INCREMENT
  FOR ADMINISTRATIVE COSTS; PROHIBITING THE USE OF TAX INCREMENT TO PURCHASE LAND;
  ALLOWING THE USE OF TAX INCREMENT FOR ROAD CONSTRUCTION; REVISING DEFINITIONS;
  AMENDING SECTIONS 7-15-4206, 7-15-4210, 7-15-4211, 7-15-4215, 7-15-4221, 7-15-4232, 7-15-4233, 7-15-
  4258, 7-15-4259, 7-15-4282, 7-15-4283, 7-15-4286, 7-15-4288, 7-15-4289, 7-15-4290, 7-15-4291, 7-15-4292,
  7-15-4301, 7-15-4302, 7-15-4324, 17-6-316, 70-30-102, AND 71-3-1506, MCA; AND PROVIDING A DELAYED
  EFFECTIVE DATE AND AN APPLICABILITY DATE.”
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  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
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          Section 1. Section 7-15-4206, MCA, is amended to read:
          "7-15-4206. Definitions. The following terms, wherever used or referred to in part 43 or this part,
  have the following meanings unless a different meaning is clearly indicated by the context:
          (1)      "Agency" or "urban renewal agency" means a public agency created by 7-15-4232.
          (2)      "Blighted area" means an area that is conducive to ill health, transmission of disease, infant
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68th Legislature 2023                                                                                                SB 523.1
  mortality, juvenile delinquency, and crime, that substantially impairs or arrests the sound growth of the locality.
  city or its environs, that retards the provision of housing accommodations, or that constitutes an economic or
  social liability or is detrimental or constitutes a menace to the public health, safety, welfare, and morals in its
  present condition and use, by reason of:
          (a)   the substantial physical dilapidation, deterioration, age obsolescence, or defective construction,
  material, and arrangement of buildings or improvements, whether residential or nonresidential;
          (b)   inadequate provision for ventilation, light, proper sanitary facilities, or open spaces as determined
  by competent appraisers on the basis of an examination of the building standards of the municipality;
          (c)   inappropriate or mixed uses of land or buildings;
          (d)   high density of population and overcrowding;
          (e)   defective or inadequate street layout;
          (f)   faulty lot layout in relation to size, adequacy, accessibility, or usefulness;
          (g)   excessive land coverage;
          (h)   unsanitary or unsafe conditions;
          (i)   deterioration of site;
          (j)   diversity of ownership;
          (k)   tax or special assessment delinquency exceeding the fair value of the land;
          (l)   defective or unusual conditions of title;
          (m)      improper subdivision or obsolete platting;
          (n)   the existence of conditions that endanger life or property by fire or other causes; or
          (o)        any combination of the factors listed in this subsection (2).
          (3)        "Bonds" means any bonds, notes, or debentures, including refunding obligations, authorized to
  be issued pursuant to part 43 or this part.
          (4)        "Clerk" means the clerk or other official of the municipality who is the custodian of the official
  records of the municipality.
          (5)        "Elected" means chosen by vote or acclamation or appointed to a vacancy in an otherwise
  elected position.
          (6)        "Federal government" means the United States of America or any agency or instrumentality,
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68th Legislature 2023                                                                                              SB 523.1
  corporate or otherwise, of the United States of America.
          (7)      "Local governing body" means the elected members of a council or other elected members of a
  legislative body charged with governing a municipality or consolidated city-county.
          (8)      "Mayor" means the chief executive of a city or town.
          (9)      "Municipality" means any incorporated city or town in the state.
          (10)     "Neighborhood development program" means the yearly activities or undertakings of a
  municipality in a blighted area of an urban renewal area or areas if the municipality elects to undertake activities
  on an annual increment basis.
          (11)     "Obligee" means any bondholder or agent or trustee for any bondholder or lessor conveying to
  the municipality property used in connection with an urban renewal project or any assignee or assignees of the
  lessor's interest or any part of the interest and the federal government when it is a party to any contract with the
  municipality.
          (12)     "Person" means any individual, firm, partnership, corporation, company, association, joint-stock
  association, or school district and includes any trustee, receiver, assignee, or other person acting in a similar
  representative capacity.
          (13)     "Public body" means the state or any municipality, township, board, commission, district, or
  other subdivision or public body of the state.
          (14)     "Public officer" means any officer who is in charge of any department or branch of the
  government of the municipality relating to health, fire, building regulations, or other activities concerning
  dwellings in the municipality.
          (15)     "Public use" means:
          (a)      a public use enumerated in 70-30-102; or
          (b)      a project financed by the method provided for in 7-15-4288.
          (16)     "Real property" means all lands, including improvements and fixtures on the land, all property
  of any nature appurtenant to the land or used in connection with the land, and every estate, interest, right, and
  use, legal or equitable, in the land, including terms for years and liens by way of judgment, mortgage, or
  otherwise.
          (17)     "Redevelopment" may include:
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68th Legislature 2023                                                                                                  SB 523.1
          (a)      acquisition of a blighted area or portion of the area;
          (b)      demolition and removal of buildings and improvements in a blighted area;
          (c)      installation, construction, or reconstruction of streets, utilities, parks, playgrounds, and other
  improvements necessary for carrying out in the blighted area the urban renewal provisions of this part in
  accordance with the urban renewal plan; and
          (d)      making the land available in a blighted area for development or redevelopment by private
  enterprise or public agencies, including sale, initial leasing, or retention by the municipality itself, at its fair value
  for uses in accordance with the urban renewal plan. If the property is condemned pursuant to Title 70, chapter
  30, the private enterprise or public agencies may not develop the condemned area in a way that is not for a
  public use.
          (18)     (a) "Rehabilitation" may include means the restoration and renewal of a blighted area or portion
  of the area in accordance with an urban renewal plan by:
          (i)      carrying out plans for a program of voluntary or compulsory repair and rehabilitation of
  buildings or other improvements;
          (ii)     acquisition of real property and demolition or removal of buildings and improvements on the
  property when necessary to eliminate unhealthful, unsanitary, or unsafe conditions, to lessen density, to reduce
  traffic hazards, to eliminate obsolete or other uses detrimental to the public welfare, to otherwise remove or
  prevent the spread of blight or deterioration, or to provide land for needed public facilities;
          (iii)    installation, construction, or reconstruction of streets, utilities, parks, playgrounds, and other
  improvements necessary for carrying out in the area the urban renewal provisions of this part; and
          (iv)     subject to 7-15-4259(4), the disposition of any property acquired in the urban renewal area,
  including sale, initial leasing, or retention by the municipality itself, at its fair value for uses in accordance with
  the urban renewal plan.
          (b)      Rehabilitation may not include the development of the condemned area in a way that is not for
  a public use if the property is condemned pursuant to Title 70, chapter 30.
          (19)     "Urban renewal area" means a blighted area that the local governing body designates as
  appropriate for an urban renewal project or projects.
          (20)     "Urban renewal plan" means a plan for one or more urban renewal areas or for an urban
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68th Legislature 2023                                                                                                SB 523.1
  renewal project. The plan:
          (a)        must conform to the growth policy if one has been adopted pursuant to Title 76, chapter 1; and
          (b)        must be sufficiently complete to indicate, on a yearly basis or otherwise:
          (i)        any land acquisition, demolition, and removal of structures; redevelopment; improvements; and
  rehabilitation that is proposed to be carried out in the urban renewal area;
          (ii)       zoning and planning changes, if any, including changes to the growth policy if one has been
  adopted pursuant to Title 76, chapter 1;
          (iii)      land uses, maximum densities, building requirements; and
          (iv)       the plan's relationship to definite local objectives respecting appropriate land uses, improved
  traffic, public transportation, public utilities, recreational and community facilities, and other public
  improvements.
          (21)       (a) "Urban renewal project" may include undertakings or activities of a municipality in an urban
  renewal area for the elimination and for the prevention of the development or spread of blight and may involve
  redevelopment in an urban renewal area, rehabilitation or conservation in an urban renewal area, or any
  combination or part of redevelopment, or rehabilitation, or conservation in accordance with an urban renewal
  plan.
          (b)        An urban renewal project may not include using property that was condemned pursuant to Title
  70, chapter 30, for anything other than a public use."
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          Section 2. Section 7-15-4210, MCA, is amended to read:
          "7-15-4210. Resolution of necessity required to utilize provisions of part. A municipality may not
  exercise any of the powers authorized by part 43 and this part until after its local governing body has adopted a
  resolution finding that:
          (1)     one or more blighted areas exist in the municipality by finding that at least three of the factors
  listed in 7-15-4206(2) apply to the area or a part of the area; and
          (2)        the rehabilitation, redevelopment, or both of an area or areas are necessary in the interest of
  the public health, safety, morals, or welfare of the residents of the municipality."
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68th Legislature 2023                                                                                            SB 523.1
             Section 3. Section 7-15-4211, MCA, is amended to read:
             "7-15-4211.   Preparation of comprehensive development plan for municipality. For the purpose
  of approving an urban renewal plan and other municipal purposes, a municipality may:
             (1)    prepare, adopt, and revise from time to time a comprehensive plan or parts of a plan for the
  physical development of the municipality as a whole, with consideration for the county and school districts that
  include municipal territory;
             (2)    establish and maintain a planning commission for that purpose and related municipal planning
  activities; and
             (3)    make available and appropriate necessary funds for municipal planning activities to address
  blight."
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             Section 4. Section 7-15-4215, MCA, is amended to read:
             "7-15-4215. Notice of hearing on urban renewal plan. (1) The notice required by 7-15-4214(1) must
  be given by publication as provided in 7-1-4127 and by mailing a notice of the hearing, not less than 10 days
  prior to the date of the hearing, to the persons whose names appear on the county treasurer's tax records as
  the owners, reputed owners, or purchasers under contracts for deed of the property, at the address shown on
  the tax record.
             (2)    The notice must:
             (a)    describe the time, date, place, and purpose of the hearing;
             (b)    specify the proposed boundary of the urban renewal area affected;
             (c)    outline the general scope of the urban renewal plan under consideration;
             (d)    specify the goals the municipality has in the rehabilitation and renewal of the area; and
             (e)    indicate the method of financing the urban renewal area and whether the municipality intends
  to use tax increment financing and request voter approval for bonds to be paid from tax increment financing."
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             Section 5. Section 7-15-4221, MCA, is amended to read:
             "7-15-4221. Modification of urban renewal project plan. (1) An urban renewal project plan may be
  modified at any time by the local governing body. If modified after the lease or sale by the municipality of real
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68th Legislature 2023                                                                                             SB 523.1
  property in the urban renewal project area, the modification is subject to any rights at law or in equity that a
  lessee or purchaser or the lessee's or purchaser's successor or successors in interest may be entitled to assert.
          (2)      An urban renewal plan may be modified by ordinance.
          (3)      (a) Before modifying an urban renewal plan to provide tax increment financing for the district or
  to use bonds as provided in 7-15-4218, the municipality shall provide notice to the county and the school district
  in which the urban renewal district area is located and provide the county and the school district with the
  opportunity to meet and consult in a public meeting with the opportunity for public comment regarding the effect
  on the county or school district.
          (b)      The tax increment financing provision must be proposed with consideration for the county and
  school districts that include includes municipal territory.
          (4)   All urban renewal plans approved or modified by resolution prior to May 8, 1979, are validated.
          (5)(4)   A plan may be modified by:
          (a)      the procedure set forth in 7-15-4212 through 7-15-4219 with respect to adoption of an urban
  renewal plan;
          (b)      the procedure set forth in the plan, which must include a public hearing and approval by the
  local governing body of all expenditures of revenue from tax increment financing."
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          Section 6. Section 7-15-4232, MCA, is amended to read:
          "7-15-4232. Authorization to assign urban renewal powers to municipal departments or to
  create urban renewal agency. (1) When a municipality has made the finding prescribed in 7-15-4210 and has
  elected to have the urban renewal project powers exercised as specified in 7-15-4233:
          (1)(a)   such the urban renewal project powers may be assigned to a department or other officers of
  the municipality or to any existing public body corporate; or
          (2)(b)   the legislative body of a city may create an urban renewal agency in such the municipality, to
  be known as a public body corporate, to which such the powers may be assigned.
          (2)      The local governing body shall approve all expenditures of revenue from tax increment
  financing."
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