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Additional resort tax percentage on horizon

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Water and Sewer District approves 1 percent Resort Tax Proposal

By Michael Somerby EBS STAFF

BIG SKY – Back in April, Senate Bill 241 finally reached the desk of Gov. Steve Bullock. A similar bill had been rejected in 2017 after a tough battle in the Legislature in Helena.

The bill, sponsored by Sen. Jeffrey Welborn, R-Virginia City and ultimately signed by Bullock on May 2, gave 10 communities and districts that currently rely on resort tax the ability to levy an additional 1 percent resort tax should individual communities vote to implement it within their respective boundaries.

As opposed to the standing 3 percent resort tax levied on luxuries, goods and services, which has been in effect since 1992 in Big Sky, funds from this additional percentage can only be used for infrastructural projects, and collections using the flex percentage point may only take place for the duration of a publicly approved project.

Back in November, both Virginia City and West Yellowstone’s citizens voted the incremental percentage point into fruition with overwhelming favor—84 percent and 68.2 percent of voters approving the increase, respectively.

Now a pressing project, that of a critical water and sewer plant upgrade spearheaded by the Big Sky Water and Sewer District, will force Big Sky residents to come to a decision of their own.

Over the last few months, subcommittees from both the Big Sky Resort Area District tax board and BSWSD met four times to iron out details for a plan and proposal, and on Dec. 18 the BSWSD board of directors ratified their joint 1 Percent Resort Tax Proposal. 

Under that proposed agreement, the new, full 1 percent resort tax will match the existing charter for 12 years. It would also fund the Water Resources and Recovery Facilities Phase 1 Expansion and Upgrade up to 60 percent of total project cost. The initial total project cost estimate, not including interest, is currently $35 million.

With amortization over 20 years, the total cost is $40-45 million and 60 percent would be $24-27 million. This percentage was agreed upon by the joint committee because approximately 60 percent of the resort tax revenue is generated within the boundaries of the BSCWSD, and approximately 60 percent of the registered voters of the BSRAD reside within the boundaries of the BSWSD.

Current projected rates have resort tax collections growing at a rate of 3 percent year-over-year, meaning the $35 million sum will be reached in around 11 years.

In return for the funding, the BSWSD will agree to commit capacity at the WRRF, after the Phase 1 Expansion is operational, for up to 500 single-family equivalent (SFE) housing units dedicated to deed-restricted affordable housing within the district or annexed parcels. SFEs represent the projected water use by a typical nuclear family, helping the BSWSD estimate when the town’s development would outpace water treatment capacity.

Resort tax will also be applied to fund 100 percent of a lift station near the intersection of Highway 191 and Lone Mountain Trail and a wastewater forcemain up the Lone Mountain Trail corridor to the WRRF. An effluent pipeline will then be installed to bring treated effluent to the Canyon Area for groundwater discharge.

“This is the culmination of a long process, “ said BSWSD General Manager Ron Edwards. “This is the first time in a long time that we moved to release more SFEs, address affordable housing issues, looked towards annexing parcels, and began to address directly future developments in the Canyon such Scott Altman’s Quarry Big Sky project.” 

For other organizations seeking consideration for levying the incremental percentage point, a time limit looms.

“We’ve set a Dec. 23 deadline for applications,” said Big Sky Resort Area District Manager Daniel Bierschwale. “That’s the cutoff for someone to come to us and say ‘I’ve got a project [and] I think it qualifies for the 1 percent.’ We want to solicit the community and make sure there aren’t things floating around out there that we don’t know about.”

As of presstime, Bierschwale said BSRAD had received two other applications.

At BSRAD’s Jan. 7 open meeting, board members and staff will review all applications and at that point vote on a resolution to potentially bring this increase to a community ballot on May 5, 2020.

Bierschwale thinks the community’s awareness and general call for affordable housing options and other community priorities outlined in the Our Big Sky Community Visioning Strategy plan will yield favorable results during a tentative May vote, should the water and sewer upgrade resolution pass BSRAD vote before a hard Feb. 10 deadline.

“I think it bodes well for them to have a SFE component to their plan,” Bierschwale said. “The community wants to see collaborative solutions to the housing problem coming forward.”

Since 1992, the resort tax board’s mission has been to bring funding to areas of need in Big Sky, appropriating nearly $70 million in that 27-year span—and unlike federal and state taxes, those resort tax collections are used only for needs in Big Sky, including those gathered from the tentative increase.

“These (resort) taxes are going straight back into the community,” Bierschwale said. 

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