Lockwood TEDD hits trouble with city talk of annexation

Whether the TEDD in Lockwood will be able to move forward in the development of a successful industrial park is currently in doubt.

The TEDD (Targeted Economic Development District) is a tax increment finance district created to help fund the creation of a “turn –key” facility for industry to locate and expand in Yellowstone County. It is located at the intersection of Johnson Lane and Interstate Highway 89, outside the city limits of Billings.

Concern about whether the City of Billings will be able to capture property tax revenue, as the industrial park develops in the future has prompted Billings City Administrator Chris Kukulskito insist that property owners within the TEDD waive their right to protest any future annexation proposal, before agreeing to expand the boundaries of the Lockwood Water and Sewer District. Acquiring water and sewer service will be essential to facilitate the success of the industrial park, which therefore necessitates expanding district boundaries to include it.

Property owners are refusing to relinquish their protest rights, which leaves the future prospects for the TEDD uncertain, according to Woody Woods, a member of the TEDD Advisory Board. Woods explained the situation in a report to county commissioners about the next year’s work plan for the TEDD.

Woods told the commissioners that the TEDD Advisory Board will be sending them a formal letter expressing their concerns and asking that they take up the matter with the city. The County Commissioners hold the ultimate authority in administering the TEDD.

Formation of the TEDD / industrial park was spearheaded by Big Sky Economic Development in a process that began some three years ago. The project was initiated by BSED following a feasibility study which identified the need for an industrial park in Yellowstone County that would provide the infrastructure that would give potential new industry the ability to locate quickly and easily in the Billings area.

The Lockwood site was identified as the best prospect for such development, located as it is with easy access to transportation such as the railroad and the interstate, as well as utilities. The proposed Billings bypass which will begin construction this fall will advance construction over the next two years to pass through the TEDD.

The development plan for the industrial park is dependent upon the LWSD expanding its boundaries to include it within its service area. However, the Lockwood Water and Sewer District has an agreement for sewage treatment with the City of Billings that requires city approval to expand the district’s boundaries.

Under that agreement the Lockwood sewer district pays the city for sewage treatment based upon the level of use, and in addition the district pays the city a monthly reserve capacity fee for potential future expansion. That fee has fluctuated since the agreement went into effect in 2008, but is currently $21,491 a month, plus a monthly surcharge of six percent, which brings the total monthly payment to about $23,000.

In a conversation the county commissioners had with Kukulski a couple months ago, they posed a unified front in opposing the idea of annexation.

Woods said that the BSED will also be sending a letter to the City Council expressing their opposition to efforts to force the property owners to accept future annexation.

Several years ago the City of Billings declined the idea of annexing Lockwood after conducting an assessment of the costs involved to bring its infrastructure up to standards. City officials at that time said the expense would greatly exceed any potential tax revenues they would receive from Lockwood property taxes.

County Commissioner John Ostlund replied to Woody Woods that “it doesn’t seem to make a lot of sense to incorporate industrial properties into the city because it takes away the opportunity to recruit business to develop in areas of lower taxes. If they are going to do that, what is the point of having a TEDD?”

He said there is a reason that the state legislature exempted industrial properties from forced annexation into cities.

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