Debate lively on tax district

There was lively discussion but no specific solutions Wednesday during a meeting on how to proceed with Kalispell’s Westside Tax Increment Financing District.

The meeting is part of the debate about whether to distribute some money from the $1.8 million tax-increment fund to taxing entities such as the schools and the city.

The district will expire in March 2012. Options currently before the council include cashing out the fund or finding a significant project to fund and possibly extending the life of the district.

In her remarks before the 10 business leaders in attendance Wednesday, Mayor Tammi Fisher acknowledged the City Council has mismanaged distribution of tax-increment funds in the past.

To inspire trust in the process, she hopes to establish an advisory board of five community members with no personal attachment to development in the area.

“You don’t create a TIF on a bunch of land and hope to gain a bunch of cash,” Fisher said. Instead, the district is supposed to be used along with an economic renewal plan to reduce blight in an area and spur economic development and jobs.

Bob Nystuen of Glacier Bank expressed concern about a lack of knowledge within the community. He said he worries the city is abandoning the district as not being worth resuscitation. He questioned what the city is doing to bring economic renewal to blighted areas.

“It can be an excellent tool to rejuvenate an area,” Fisher said, mentioning the effects of tax-increment funding in both Helena and Missoula. If the district is allowed to sunset, she said, it will be hard to finance any sort of urban renewal project.

According to council member Jeff Zauner, “to not use it would be a crime” in light of a lack of state funding.

Council member Tim Kluesner questioned how much the city is responsible for the disrepair of properties along U.S. 2 West, ranging from the former Eisinger Motors to the vacant Skipper’s building, and even for the financial plight of the school district.

“It’s not the taxpayers’ fault to take care of that,” he said.

“I don’t believe we should be coming to the rescue and fixing their problem,” he said. “Is it fair that a business that has let their property wither be rewarded” with money to tear it down?

In the past, some tax-increment money has been used to provide infrastructure, such as fiber optics, to incoming businesses. This sort of use is not against the integrity of the fund, Kluesner said. He warned about past use of tax-increment money as a subsidy to bring in business, which he said fostered distrust of the council.

Fisher countered, saying it isn’t a subsidy but also saying that in the current economy, it’s a buyers’ market and moves have to be made to lure businesses from going to other cities with better offers.

Kluesner brought up the city’s previous use of tax-increment money to tear down buildings to make way for the Hilton Garden Inn.

“The Hilton was a complete subsidy,” he said.

Fisher said the council’s decision then came with a long-term commitment from the hotel — and a number of jobs were created.

Zauner said he believes reinvestment would look better to developers.

Under a scenario presented last month by City Manager Jane Howington, Flathead Valley Community College would get about $35,000, Kalispell elementary schools about $315,000 and Flathead High about $206,000 if the tax-increment money were to be returned to the taxing jurisdictions where the money came from.

The state general schools fund would get just over $225,000 and the country’s noxious weed fund would get about $1,000. The city itself would receive the biggest distribution: $378,000.

Kluesner said he would not support giving money to the schools.

“We didn’t create the problems the school is facing,” he said. One-time money won’t fix the problem, he said. The districts need to learn to be fiscally responsible. He also cited the schools’ lack of participation in the current process.

A community member raised the question of why the money can’t be used to build more sidewalks, especially around the Flathead County Fairgrounds.

“The TIF is not a city slush fund,” Howington said. It should not be used to support rainy-day projects. Repairs to sidewalks should come from the street maintenance fund.

Despite nearly two hours of discussion, no specific plans about how to use the tax-increment money were mentioned.

Denise Smith, executive director of the Flathead Business and Industry Association, said her main concern was for the business community. She doesn’t want to see the money used just to use it if a suitable economic project doesn’t present itself before the district ends.

Fisher agreed and said that only projects that will spur job growth will be considered, and the city seeks to bring in a big anchor to fill the abandoned Eisinger property at Meridian Road and U.S. 2 West.

“There is interest and it’s legitimate interest,” she said.

Further discussion on what to do with the Westside Tax Increment Financing District is on the agenda for Monday’s City Council meeting. The meeting begins at 7 p.m. in City Hall.