Economy, fees stall Glacier Town Center

By NANCY KIMBALL/Daily Inter Lake

The $100 million first phase of Glacier Town Center is on hold until the city of Kalispell decides what it's going to do about transportation impact fees - and until the economy shows some sign of straightening out.

"There will be no work done at this time due to the uncertainty of the current environment," Project Manager Chad Wolford said this week, "especially the unknown factor of impact fees."

Ken Kalvig, the Kalispell attorney for Chattanooga, Tenn.-based Wolford Development, said early this week that the proposed 485-acre regional mall and associated development north of Kalispell would take a $2 million to $4 million hit if the city's current proposal for road impact fees is implemented.

Kalvig and Kalispell City Attorney Charles Harball met this week to work through scenarios on how to calculate transportation impact fees and who may actually pay them. Harball said at one point the figures even reached to $6 million and up, but Wolford would need to submit some traffic usage numbers first to determine the exact amount of impact fees.

Beyond that, City Council members themselves would need to determine policy on how, and whether, to implement fees.

On Monday night, the Kalispell City Council walked away with no consensus after a meeting about impact fees, but with plans to take up the issue again at another workshop on Tuesday.

If Kalispell doesn't want to see a pattern of gun-shy retail developers, Wolford suggests the city drop all plans for transportation impact fees.

"A lot will depend on how the city of Kalispell handles this," Wolford said. "If they keep piling fees on … developers are going to stop eventually. They'll say, 'I can't justify the investment any more because it costs me too much to do business here.'

"There's a problem there and it really has to stop."

It's not only his 577,000-square-foot shopping center - for which Wolford said he already has commitments from anchor stores and peripheral shops - that wouldn't be able to pencil out a profit to land financing.

With banks more skittish about loaning money for any venture, he said Kalispell needs to realize that the luxury it enjoyed in recent years of attracting a plethora of commercial and residential developers is a thing of the past.

Add to that the up-front cost of impact fees, and it's a recipe for cold feet.

"Because of that, developers will be less willing to take these ridiculous low returns on their investment," Wolford said.

He's been trying to drive this point home for some time.

In a Jan. 15, 2008, letter to the city, Wolford itemized what he said is $22 million in expected contributions and donations from Wolford Development's project - extending Rose Crossing west to U.S. 93, connecting to West Reserve, improving Whitefish Stage, adding roundabouts and traffic signals, designating five acres for a community center, adding a water well to the city's system and making substantial park improvements.

The first phase of the five-phase project will cost at least $100 million, he said. Of that, $80 million will come from Wolford Development building the shopping center and another $20 million would come from other businesses putting up restaurants and office buildings.

"Once the entire project is built out, with the construction value of all houses, commercial buildings, and everything in there it will definitely be between $250 million and $500 million" in final value, he said, depending on whether moderate or high-end homes are built in the residential phase.

With the infusion of property tax money, he said, the city wouldn't have to implement impact fees to cover a budget deficit.

"And there's got to be a minimum of a 10- to 15-year buildout, so you're talking sustained construction jobs here" that could help fill local workers' wallets, he said.

After construction is finished, he said, the retail payroll would be nothing to sniff at either. Wolford said the average retail worker is pulling in between $25,000 and $30,000 a year, with managerial jobs paying much better.

He quoted Mark Zandi, chief economist and co-founder of Moody's Economy.com, who reported that back in the 1980s and 1990s the retail sector accounted for 63 percent of the nation's gross domestic product. Today it's about 71 percent.

"I think the citizens of Kalispell should really take a hard look at what we are bringing to the table economically and they would realize at least three things," Wolford said:

"If the tax revenue from our project were in place, we don't believe that the city would have a budget deficit this year or in the coming years.

"We have already mitigated the traffic impacts around our project by agreeing to make all of the necessary road upgrades around our project, and these [transportation impact] fees are not needed to support our project," he continued.

"The tax revenue from projects like ours could be used as part of the solution to upgrade the roads in the future, if needed."

Wolford Development began its quest for the project in January 2000. Since then, the company has spent "in excess of several million dollars," Wolford said, as the location and design of the proposal have changed several times.

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