City of Kalispell may forgive $890,000 mall loan

By JOHN STANG

The Daily Inter Lake

A 10-year-old city loan to expand Kalispell Center Mall appears to have met the conditions for it to be forgiven, Kalispell's City Council was told Monday.

In 1996, the city loaned WestCost Hospitality Group $890,000 to help it buy some neighboring property, destroy some grain elevators on the land and to expand the mall.

The deal had the condition that the loan- at 9 percent interest - would be forgiven if the mall-owned property value of $16.135 million in 1996 would increase by $6.6 million.

The rationale was that the extra tax revenue would exceed the $890,000 loan, according to a city staff memo to the council.

Since then, the state significantly changed how property is taxed. Consequently, despite major investments by West Coast Hospitality, the property's assessed value in 2005 had shrunk to $14.92 million, the city staff memo said.

But the mall's annual property tax payment to Kalispell increased from $353,296 in 1996 to $467,993 in 2005.

Mall owners recently spent $6.116 million to upgrade the Red Lion Hotel Kalispell, expanding it from 140 rooms to 170 rooms.

The mall also invested $1.1 million to help build a Heritage Bank branch on its site, plus another $644,600 in site improvements.

The mall also plans to build a new restaurant on its land.

The city staff memo predicted the mall's 2007 property bill will increase by $113,000.

"In every sense of the word, they've met the [1996 loan] agreement," said Council Member Duane Larson.

The council expects to vote in the near future on whether to forgive the 1996 loan.

Also Monday, the council:

. Decided to vote next Monday on whether to grant the Hockaday Museum of Art a new 30-year lease at a token rent to help the museum expand onto a neighboring property.

The city has budgeted $170,000 to help the Hockaday museum expand, with a proposal to forgive the loan after the museum expands. Several council members appeared Monday to favor this proposal.

. Decided to vote next Monday on whether to accept Ellen Bruyer Naumann's offer to donate her family's Bruyer Granary at 1355 Whitefish Stage Road to the city as a small park. The council appeared Monday to favor accepting the donation.

The family also is pledging a $25,000 trust fund to help maintain the 1909 granary, which recently was listed on the National Register of Historic Places.