Yellowstone County on Tuesday approved a tax break sought by Phillips 66 oil refinery in Billings for a $298 million project to improve crude oil processing and sulfur recovery.
The project qualified for the tax reduction under a county program for qualifying new or expanding businesses.
Two Phillips 66 employees spoke for the tax break; no one opposed it.
Commission Chairman John Ostlund said the county traditionally has honored requests for the tax incentive and noted the large investment by the refinery.
Meanwhile, Phillips 66 is appealing its 2017 valuation by the Montana Department of Revenue.
What was different about Phillips 66’s tax reduction is that it cut the refinery’s taxable value on the improvements by 75 percent for the first five years of the 10-year incentive. Taxable value will increase by 15 percent a year for years six to nine and be at 100 percent in year 10.
The 2017 Legislature changed the program to give counties the option to tax at 25 percent of the taxable value. The previous rate was 50 percent for the first five years and is still an option.
County commissioners chose the lower rate, based on recommendations from Phillips 66 and Big Sky Economic Development, which processes applications.
Phillips 66's reduction to a 25 percent taxable value is the first time the county has approved the lower rate.
Phillips 66 spent $289.8 million on its vacuum improvement project, which will improve crude oil processing efficiency and sulfur recovery while increasing capacity to meet growing regional demand for gasoline, refinery officials said. The project also improved overall refinery safety and reliability.
The project began in 2015 and was completed in June.
The project added 18 full-time positions, bringing total workforce to 320 full-time and two-part time positions. Average wage of new employees is $71.30 per hour, including benefits.
To qualify for the program, the refinery had to invest $50,000 with more than 50 percent of its gross income coming from out of state.
In 2016, the refinery distributed 54 percent of its products out of state, in Washington, Wyoming, Utah, North Dakota, South Dakota and Idaho, the company said.
Chad Polak, a refinery adviser from Denver, thanked commissioners for considering the application and talked about its benefits to operations and to the community.
Phillips 66 also is appealing to the County Tax Appeal Board its 2017 valuation. The appeal was filed in September, the same month as its tax incentive application.
The refinery is appealing a MDOR market value of $685.1 million for land and building and improvements. The refinery is requesting a valuation of $327 million, with the dispute focused on the methods used to value the buildings and improvements.
In a Sept. 1 letter to Phillips 66, Seth Carlson, MDOR’s industrial appraiser, said an informal review determined no adjustment was appropriate for the property. Carlson said a preliminary report from the refinery lacked “the depth and supporting documentation to warrant adjustment.”
Phillips 66 had 30 days to appeal the valuation with either the county or state tax apparel boards.