Kalispell council faces decision on West Side TIF

At a special meeting on Wednesday, it’s do-or-die time for the Kalispell City Council to move forward with a project if it wants to extend the life of the West Side Tax Increment Finance District.

“It is their last chance to have a project come out of the chute that could be bonded and extend the life of the TIF,” City Attorney Charles Harball said. “Depending on which side of the fence you’re on, that would be good or bad.”

It will be the last meeting of the council before new member Phil Guiffrida III is sworn in to replace Duane Larson on Jan. 9, and the last meeting for departing City Manager Jane Howington.

For more than two years, the city has struggled to find an acceptable project in the tax increment district created in 1997 and on track to sunset in mid-March.

At their last meeting, council members refused to move ahead with a project that would acquire and raze the former Gateway West Movie Theater to build a 255-space public parking lot in its place.

Leery of that option, they asked for more time for other possible projects to materialize.

That set up one last scramble, with city staff trying to round up any fast-track projects that are worthwhile in their own right and capable of extending the tax district’s life.

Several more projects have since been put together. They were vetted through the Kalispell Urban Renewal Agency last week and now go before the council for consideration.

THE PARKING LOT project, estimated to cost up to $1.5 million, will return in the mix.

Under that option, the city would swap a parking lot it owns north of the former Gateway West Mall for the old movie theater, a blighted and flood-prone property owned by developer Phil Harris.

City Manager Jane Howington said razing the theater and building a parking lot in its place would clean up a blighted property, free a city lot for future private development and provide enough parking in the area to satisfy the conditions of a city lease with TeleTech Holdings Inc., which runs a call center in the former mall.

TeleTech leases 60,000 square feet owned by the city and Flathead County Economic Development Authority.

The city bought and renovated that space using tax increment funding and leases it to TeleTech rent-free if the company meets minimum employment targets.

Additionally, the city spent a total of $477,000 of tax increment funding in 2006 and 2007 to buy and develop the largely unused parking lot that it may swap for the movie theater site to build another parking lot.

Two other people are volunteering to sell property for the proposed parking lot, arguing that their vacant properties would be better located and cheaper to develop.

Jerry Begg is offering to sell 40,800 square feet at the corner of Glenwood Drive and Husky Street. It would cost an estimated $300,000 to $500,000 to buy that land and build a parking lot there.

Wayne Turner is offering to sell two acres of land in a swampy area south of the theater that would come with a fill permit.

All three parking lot proposals will go before the council.

THE OWNER OF the Kalispell Lumber building on West Idaho Street is interested in a $250,000 low-interest loan from the city to raze the building and prepare the property for sale and redevelopment.

Several other property owners are interested in the idea of a tax increment funded “scraping program” that would loan out money to help clean blighted properties, but they are not ready to move forward at this time, Harball said.

Based on that interest, city officials propose using up to $750,000 of tax increment revenue to start such a revolving loan fund. In this economy, “no one wants to purchase a property [for development] unless it’s cleared off first,” Harball said of the initiative.

Both proposals will go before the council with the Kalispell Urban Renewal Agency’s recommendation.

AT THE REQUEST of Kalispell Mayor Tammi Fisher, possible improvements to the Appleway Drive and Meridian Road intersection have been explored.

The estimated $75,000 project would install turn lanes and improve sidewalks, curbs and gutters.

It could be bundled with two other projects that would loop dead-end water lines for better water pressures and fire protection: a $56,000 project at Hawthorne Avenue and Two Mile Drive and a $188,000 project on Colorado Street.

All three projects come with the recommendation of the Kalispell Urban Renewal Agency.

COUNCIL MEMBERS WILL have to decide what projects, if any, should be added to the West Side Urban Renewal Plan; the first step toward making them eligible for tax increment funding.

An ordinance to formally amend the plan would go before the council at its next regular meeting Monday, Jan. 9.

To extend the tax increment district’s life, bonds must go out before it sunsets in mid-March, putting any possible project on a fast track that could beat the deadline by about a week at most.

Debt for any project would be paid off using tax increment revenue. That would extend the district for as long as some debt remains outstanding.

The outcome could affect the city’s future economic development efforts.

City officials project the tax increment district will generate more than $400,000 this year — money that can be used on projects in its boundaries to improve public infrastructure, eliminate blight and foster job creation.

As of today, the TIF fund holds $1.92 million that has been collected but not spent.

Extending the district’s life would give the council time to look for more projects and time to consider enlarging the district to overlay a West Side Urban Renewal Plan the council expanded late last year.

That renewal plan spells out redevelopment goals for a “core revitalization area” the city has identified.

Goals include major projects such as removing the railroad tracks that run through the city and relocating the two businesses that use them, improving the county fairgrounds, cleaning up 19 acres of blighted land and buildings, and improving streets, sidewalks and aging water and sewer lines in an expansion area that runs along the railroad tracks from Seventh Avenue West to the eastern city limit.

Letting the district sunset this March, an action favored by some council members, would lead to a one-time payout of its fund balance to the city, county, schools and state.

It would also mean the end of the district’s annual stream of tax increment revenue into city coffers.

Creating a new tax increment finance district to overlay the expanded West Side Urban Renewal Plan could take years to build a sizable tax increment, meaning money for big projects the city has targeted in that area would have to come from other sources.

The special meeting begins at 7 p.m. at Kalispell City Hall, 201 First Ave. E. Public comments will be taken.

Reporter Tom Lotshaw may be reached at 758-4483 or by email at tlotshaw@dailyinterlake.com.