Old School Station: Unpaid taxes, fees pile up for vacant lots

Envisioned as a cluster of vibrant technology businesses in south Kalispell, Old School Station today is trying to make it through a protracted lull in the economy.

Eleven of 17 lots at the 55-acre business park remain vacant nearly six years after its creation.

The empty lots have new streets, sidewalks, water and sewer lines, fiber optic cable and other “state-of-the-art” infrastructure that Kalispell borrowed $4.5 million to install back in 2006, counting on special improvement district fees paid by future owners to retire the debt.

But unpaid property taxes and special improvement district fees have been piling up, and those vacant lots slowly are slipping from the hands of developers Paul Wachholz and Andy Miller, who with the city’s help launched the business park as Montana Venture Partners.

“We don’t have any conclusion right now,” Wachholz said last week of the vacant lots that remain for sale and the roughly $2 million in special improvement district fees that are still owed on them. “It’s all up in the air.”

According to the Flathead County Treasurer’s Office, five vacant lots at Old School Station already have been picked up by someone for tax liens, leaving Wachholz and Miller with $315,000 of taxes, fees and interest to redeem by July 2013 if they want the lots back.

Five more vacant lots could be picked by Flathead County or someone else as soon as this July, with more than $661,000 in unpaid taxes and fees amassed on those lots from 2008 to 2011.

Flathead County may be hesitant to take possession of lots for any period of time. That’s likely because of the large special improvement district fees due every year from every lot in Old School Station through 2026.

How large are those fees?

The total tax bill for one vacant lot at Old School Station that’s just two years delinquent was $65,797 last year. Of that, $59,580 was for Kalispell’s special improvement district fee.

One concern is that those recurring fees may keep someone from wanting to acquire the properties. In that case, property taxes and special improvement district fees could continue to go unpaid and possibly threaten Kalispell’s ability make its roughly $400,000 annual bond payment without tapping some other funding source.

Kalispell is planning to budget $100,000 of its bond reserves as a contingency to help cover this year’s bond payment, if needed. The reserves were a condition of the 20-year special improvement district bond and about $450,000 of the initial $4.5 million was set aside.

“I’m hoping we don’t need it. It’s kind of a worst-case scenario,” Kalispell Finance Director Amy Robertson said of the transfer, which is yet to be approved as the Kalispell City Council works through a preliminary budget for fiscal year 2013.

Businesses operating successfully at Old School Station — including FedEx, Fun Beverage and Morrison-Maierle — continue to stay current on their property taxes and special improvement district fees.

Their payments make up a large chunk of Kalispell’s $400,000 annual bond payment; hence the limited shortfall, if any, that would materialize.

As an incentive for businesses to locate at Old School Station, Kalispell set up a tax increment finance district that channels some of the property taxes businesses there pay into a special account and then back to the businesses to help them pay the large special improvement district fees that otherwise could be a discouragement.

“The $100,000 transfer is just in case,” City Attorney Charlie Harball said.

“So far people have picked up the tax deeds so the payments are coming in ... We have reserves in the bond account to help make those bond payments [if needed], but we don’t really like digging into them.”

Old School Station was a good idea, but today is a prisoner of the slow economy, Harball said.

“It’s got high-grade, industrial-strength infrastructure and that’s what will eventually attract businesses out there. It will be really nice when completed, but it’s trying to survive the lull right now.”

Beyond someone making good on the unpaid taxes and special improvement district fees and keeping up on them going forward, Kalispell’s main hope continues to be that someone will buy and develop the vacant lots at Old School Station, Harball said.

“We’re hoping a white knight will come across the horizon and make everybody happy.”

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