Council to give TIF money to firm, schools

After plenty of debate, Kalispell City Council members Tuesday night released money from a tax increment district and allowed a change in the use of some money from a second tax district.

The length of discussion and dissension among council members increased as each request came up on the agenda.

Much debate focused on a $43,964 request from TeleTech to help pay for a redundant fiber-optic line. The council finally voted 5-3 to give TeleTech $20,982.

One council member opposed the plan to distribute $465,000 to the taxing entities involved in the West Side district, including $153,400 to Kalispell Public Schools.

The council unanimously approved a request to allow $110,277 from the Old School Station tax district to be used to pay the special improvement district obligation for one lot in that district.

The council agreed with a recommendation from the urban renewal board to allocate $20,982 of the $2.2 million West Side tax fund toward the fiber-optic project, not the $43,964 that TeleTech sought. TeleTech will spend between $70,000 and $90,000 on the project, site Manager Tory Graham said.

TeleTech is required by its client to have a redundant fiber-optic line connected to its computer system, according to Wade Elder, the city’s revolving loan fund manager. When TeleTech began operating in the Gateway Mall, there was a dual fiber-optic line in place, satisfying that requirement.

However, a couple of months ago TeleTech officials discovered that somehow that second line disappeared, City Manager Jane Howington said.

The new fiber-optic line will run from the Gateway Mall to the Lone Pine area, providing more fiber access to businesses or residents in that part of the community, Elder said.

Council member Tim Kluesner was the most vocal opponent of the TeleTech request. He opposed using the city’s money to pay for private infrastructure.

“It’s not right and we shouldn’t be looking at it,” Kluesner said.

Kluesner acknowledged that TeleTech is a major employer, but said the city has “bent over backwards for them.”

Council member Bob Hafferman also opposed giving TeleTech the money. He said tax district money is to be used to help create jobs and installing a fiber-optic line owned by a private utility wouldn’t do that.

Council member Jim Atkinson disagreed, saying the only real way for the city to fund economic development is through such tax districts.

“It’s their money,” Atkinson said. “Let’s let them spend it and increase their business and over time increase our tax base.” He said the Montana Legislature allows the tax districts as a method for a city to increase its tax base.

Council member Randy Kenyon also supported the allocation for the fiber line.

“This is exactly what TIF districts were created for,” Kenyon said. The more fiber-optic lines that are available in Kalispell, the better off the city is, he said.

Kenyon pointed out that only 23 percent of the tax district money belongs to the city.

Tom Lund, a member of the urban renewal board, said that group didn’t want the issue to become a chink in the relationship with TeleTech. Those little kinds of issues often build up and result in big firms leaving communities, Lund said.

Hafferman, Kluesner and Jeff Zauner voted “no” on the motion to allocate the money to TeleTech. Atkinson, Kenyon, Wayne Saverud, Duane Larson and Kari Gabriel voted in favor of giving the funds to TeleTech.

No economic development projects that could benefit from the West Side tax funds are looming, council members and city officials acknowledged. That tax district will dissolve in March unless a project is developed by then. When the district dissolves, the money, unless otherwise allocated, would be distributed to the taxing entities that haven’t received their share of that revenue each year that the district was in place.

Kalispell schools Superintendent Darlene Schottle said the school district needs the $153,400 to make repairs at Flathead High School. The city’s fire chief has identified life and safety issues in the building, she said, which school leaders want to repair as quickly as possible.

School officials had expected to pay for those repairs with proceeds from a bond issue, Schottle said. But voters defeated the bond question.

School officials opted not to wait until March when the tax district likely will sunset, Schottle said, because the City Council could choose to extend the tax district or a project could develop between now and then that the city wants to direct the money toward.

Hafferman said he was willing to distribute the entire $2.2 million that is being held in the West Side district to the involved taxing entities.

Kluesner worried that the council was setting a precedent in distributing some tax district money before a district sunsets.

The city is saying “if you need money, here’s a pot to go after,” Kluesner said. In spite of its own financial troubles, the city hasn’t asked for early release of TIF money, he said. Kluesner cast the lone “no” vote on the motion to distribute the $465,000 the taxing entities.

Larson disagreed with Kleusner’s position that the city was setting a precedent.

“You don’t always set a precedent by making a decision,” Larson said.

And, Larson pointed out, that since there are no proposed major projects where the tax district money would be needed, it made sense to help the school.

Saverud said if any viable projects do surface in the next nine months, there still would be about $2 million in the tax district account.

“We’re not backing away from having the ability to take advantage of opportunities,” Saverud said.

Now that the council approved the partial distribution, money will be released to Flathead County, which in turn issues the appropriate percentage of tax revenues to the involved entities: the county, the school district, the 911 center, the city and county health districts, the weed district, the Sheriff’s Office, the mosquito district, the Montana University System, Flathead Valley Community College, the soil and water district and the city.

Directing money from the Old School Station technology district to pay off the special improvement district for the lot owned by Glacier Investment Properties drew less disagreement from council members.

In February, the council approved a resolution to allow TIF money to be used to pay off special improvement district obligations, leading to the request from Glacier Investment Properties for the lot and building it leases to Morrison-Maierle Inc.

Glacier Investments asked for $277,000, but the urban renewal board members recommended the city allow $110,277 to be directed toward the special improvement district payment.

Reporter Shelley Ridenour may be reached at 758-4439 or by email at sridenour@dailyinterlake.com.