. Kalispell, county agree on fate of close to a million dollars

A long-standing dispute over almost a million dollars in tax increment revenue was amicably resolved on Tuesday, when Kalispell Mayor Pam Kennedy presented the Flathead County commissioners with a check for $197,979 - and a promise of more to come.

The dispute arose in 2002 when Kalispell's downtown tax increment program came to an end.

The program allocated more than $30 million in tax increment revenue to the city over a 23-year period, providing money for a long list of economic development, urban renewal and infrastructure projects.

More than $890,000, for example, was loaned to the owners of Kalispell Center Mall in 1997 as part of a failed expansion plan.

When the tax increment program

ended in 2002, that loan was (and is) still being repaid, as was another $58,000 loan on an unrelated project.

State law clearly says that any tax increment money left over when a program ends is supposed to be distributed to the original taxing jurisdictions - in this case, the city, the county and various school districts.

The law is unclear, though, regarding whether these loan repayments still qualify as tax increment.

Some attorneys, including the state's bond counsel, were of the opinion that Kalispell could keep all the money and reuse it in its own economic development revolving loan program.

The county, however, was prepared to challenge that interpretation in court.

Rather than go that route, the city agreed to split the money.

The $197,979 represents the county's and schools' share of loan repayments received to date. The county's share amounts to about $43,430, with the remainder going to schools.

Another $691,000 in loans are still outstanding. As those repayments are received in coming years, the money will be distributed accordingly, with the city keeping about 23 percent, the county taking 17 percent and schools getting 60 percent.

The Legislature also addressed this issue during the last session, approving Senate Bill 345. The bill, which was not retroactive, allows municipalities to retain any loan repayments received after a tax increment program ends.

Reporter Bill Spence may be reached at 758-4459 or by e-mail at bspence@dailyinterlake.com