Business district ruling appealed

Downtown Kalispell's business improvement district may not be a go just yet.

After three years of being stalled in court over a legal challenge to the way the business district's boundaries were drawn, a June 12 district court ruling had seemed to give it the green light.

That green light quickly turned yellow.

Opponents filed an appeal July 3, keeping it in limbo at least until this fall or until the Montana Supreme Court can issue an opinion on the matter.

"It's too bad, because I'm not necessarily against a business improvement district," Dennis Green said. Green is a lead plaintiff in the lawsuit.

"I am a member of downtown and I want to see downtown flourish," he said. "It remains to be seen whether that can be accomplished," given that U.S. 93 bisects the downtown shopping area and "hurts the ambiance."

But what he takes issue with is the seemingly arbitrary boundary line.

It stretches from U.S. 2 / Idaho Street along the north side of Flathead Industries thrift store (formerly Sportsman & Ski Haus) to the Fourth Street area on the south, bumps to the east to include the former Tidyman's store and The Loading Dock businesses, then runs along the alley between First and Second Avenues East. But on the west the line stops short of several West Center Street businesses, jogs in and out among others along First and Second Avenues West and excludes Kalispell Center Mall entirely.

"Sixty percent of the property owners within the defined boundaries have got to be in favor," downtown Realtor Bill Goodman said. That approval came, and the district was formed. A later expansion of the district drew no protests, and was adopted by the city.

"But then they protested that the map of the boundaries wasn't the same as they had received in their mailing," Goodman said. "The fact is that the boundaries were never set in stone until all the petitions were sent to the city. It was in a state of flux, it changed as we thought we could get more signatures."

Goodman was instrumental in getting the district formed, but does not sit on the business improvement district's board of directors and is not named in the suit.

Green ticked off a long list of excluded businesses that he feels are a natural part of downtown Kalispell's commercial climate. And he claimed Kalispell Center Mall "didn't particularly think they should be included, so they gave the city $10,000 and got out of it."

FORMATION of the district required 60 percent approval from affected property owners. Green said boundaries constantly shifted throughout the petition process until the district board of directors found the right mix.

"My point is, the map boundaries are arbitrary, and maybe for a good reason," he said. "They had to get 60 percent in order to get it passed. I told them in person I would be glad to work with them to get it in place. I think they could get it approved if they did it right."

The city first established a business improvement district in May 2003, then the Kalispell City Council approved a final district in 2004. It put in place the special taxation district to market the downtown area, fill vacant buildings and rejuvenate the historic shopping district.

The city began collecting the district tax, and today has more than $100,000 in escrow, awaiting a court decision.

But a group of property owners objected, filing a lawsuit in 2005 against the city of Kalispell and its officials, the business district and its board of directors.

It was based on three complaints.

The suit claimed the district was created illegally. Petitions circulated to get the 60 percent buy-in carried at least four different maps at different times, Green alleged. Also, it said, the city didn't consider protests to the district. In turn, the city argued that a boundary map was filed along with the first petitions and that when later petitions were filed they included the initial map by reference.

Second, the suit accused the city of gerrymandering the boundaries.

State law doesn't require the city to restart the process when boundaries change, the city argued. District Judge Stewart Stadler found the plaintiffs' charges of gerrymandering were unfounded because the city expanded the boundary to make it financially more viable, in response to business owners' concerns, and adopted the new boundary when it received no protests from the expanded area.

Finally, opponents said the city failed to establish property assessments for each member of the district and, therefore, had no overall assessment to establish a district budget. Stadler struck that down when the plaintiffs filed an earlier action, and stuck by it in his June 12 decision.

The suit asked for a restraining order against collecting any more district taxes, a permanent injunction against the city until it complies with state law, and a refund of taxes already paid, with interest.

After hearing oral arguments on May 20 this year and considering applicable laws, Stadler denied their requests in his June 12 decision.

On July 3 the clock started ticking again when plaintiffs beat the 30-day deadline to file an appeal with the Montana Supreme Court.

Jim Bartlett, the plaintiffs' attorney, said his July 3 notice of appeal gives the Flathead County Clerk of Court's office a couple of weeks to forward documents to the state Supreme Court.

He then will receive a notice to submit his brief to the high court within 30 days. The plaintiffs follow with their own answering brief, the city and district respond with a second brief, and then the court schedules its consideration when it has an opening. He said the last Supreme Court case he handled took two years to be heard.

Reporter Nancy Kimball can be reached at 758-4483 or by e-mail at nkimball@dailyinterlake.com