Resort tax request aims to preserve critical Haskill Basin

Whitefish voters face a major decision next month about how to pay for the long-term protection of the city’s water supply.

Mail ballots will be sent out April 8 to the city’s 4,133 registered voters, asking for approval of a 1 percent increase in Whitefish’s resort tax through a special election April 28. 

If approved, the city’s resort tax on lodging, restaurant food and drinks and luxury retail items would increase from 2 to 3 percent.

After considering three funding options — a resort tax increase, water rate increase or water revenue bond — the Whitefish City Council last month decided the resort tax increase would be the most equitable way to spread the cost of buying a conservation easement to preserve 3,024 acres in Haskill Basin.

The city is looking for a way to raise the remaining $8 million of a $17 million easement for the forested acreage in Haskill Basin that is owned by F.H. Stoltze Land & Lumber Co.

Time is of the essence because the legal option to secure the conservation easement expires at the end of this year.

Whitefish gets 75 percent of its drinking water from Haskill Basin. The other 25 percent comes from Whitefish Lake.

For more than 100 years the city’s ability to use water from Second and Third creeks on Stoltze land has been enabled by nothing more than a handshake agreement, Whitefish Mayor John Muhlfeld pointed out. There’s no legal easement for the water lines between First, Second and Third creeks, no easement to maintain the diversion structure on Second Creek and the intake on Third Creek is not even owned by the city.

The Trust for Public Land, a California-based national nonprofit that strives to preserve land for natural areas and open space, became interested in the conservation project in 2013 and began negotiating with Stoltze for an option to buy the easement.

The land is valued at $20.6 million and Stoltze has offered to sell the easement for a discounted price of $17 million.

The funding scenario is this: $7 million will come from the federal Forest Legacy Program as a grant; $2 million will come from the U.S. Fish and Wildlife Service via its Habitat Conservation Plan Land Acquisition Program; and Stoltze will put in $4 million.

That leaves $8 million for the city of Whitefish to contribute.

Muhlfeld and other supporters say they believe the conservation deal is a one-shot opportunity to permanently protect Whitefish’s water. As time goes on there’s more pressure for Stoltze to sell portions of its timber acreage to developers.

Over the last 20 years the family-owned timber company has sold about 1,200 acres for development. The 3,000-plus acres in the proposed easement area could be subdivided into 200 lots, and that amount of development could jeopardize the city’s water supply, Muhlfeld said.

Stoltze Vice President Chuck Roady said the company gets inquiries several times each month about selling acreage to private parties.

“Ninety percent of the people who knock on our door probably won’t want the land to grow trees,” he said.

There’s no doubt Stoltze can make much more money by selling its lands for development. Roady pointed to one transaction in which 10 acres of the company’s land was sold for $1 million.

But the matriarchs of the Stoltze family — two granddaughters in their 80s — want to keep the land open for public use, he said.

“I feel the stars have aligned” for this easement, Roady said. “We have the right mix on the board ... it’s the right time for Stoltze and the city.”

Former Mayor Mike Jenson, who is leading a nonprofit effort called Protect Haskill Basin to promote the resort tax increase, said he believes it behooves the city to take advantage of this “window of opportunity” offered to purchase the easement.

“We don’t know what a possible successor [to ownership of the Stoltze land] would do,” Jenson said.

More than half of the Whitefish Mountain Resort acreage, plus Iron Horse and Lookout Ridge subdivisions on Big Mountain, are located on former Stoltze land.

Muhlfeld pointed out that Whitefish’s First Creek diversion, a source that provided more water than the combined drainages of Second and Third creeks, was discontinued in 1975 due to E. coli contamination and sediment from development.

If Whitefish were to lose access to Haskill Basin water, the city would have to pump and treat water from Whitefish Lake at an additional cost of at least $500,000 per year, Muhlfeld said. This additional cost would result in an increase in water rates for Whitefish residents.

In the late 1990s the city evaluated groundwater wells as an alternative to surface water. Exploratory wells were drilled in various locations around Whitefish, and it was discovered that high levels of manganese and iron would require extensive filtering and softening. 

Consultants at that point recommended the city continue to use the Haskill Basin water supply as its primary source for the roughly 4 million gallons per year required by Whitefish.

If voters agree to raise Whitefish’s 2 percent resort tax to 3 percent — the maximum amount of resort tax Montana allows to be levied by cities with a resort designation — the extra 1 percent is expected to generate $1 million per year for 10 years.

Whitefish’s existing resort tax, started in February 1996, has raised $25.8 million since collections began in 1996. Tax revenue has been increasing by an average of more than 6 percent per year.

About two-thirds of the existing resort tax revenue is used for street projects, with 25 percent of the revenue rebated to property owners. Five percent goes to park improvements and 5 percent is used to administer the tax.

The extra 1 percent would be split roughly in the same manner, with the lion’s share of revenue — 70 percent — used for the conservation easement, either to repay a loan or a bond. 

Twenty-five percent of the tax increase would be earmarked for property tax relief and would generate roughly $3.6 million in tax relief for city property owners over the 10-year life of the tax. Five percent would go to administration.

Currently, city homeowners get an average annual rebate of $126 from the 2 percent tax. The extra 1 percent tax would increase the annual property tax rebate to about $189.

There are eight communities in Montana that have resort taxes. All seven of the other resort communities levy the full 3 percent resort tax allowed by law; only Whitefish has set its rate lower at 2 percent.

A campaign funded by a nonprofit group called Vote Yes for Water, Project Haskill Basin, has been making presentations to community groups and putting up yard signs that say “Vote Yes for Water.” 

The group has a Facebook page and a website at www.ProtectWhitefishWater.org.

Ancillary benefits of the easement, supporters say, include preserving the scenic value of the Haskill Basin area as an important backdrop to Waterton-Glacier International Peace Park Scenic Drive, and the continued use of the land for recreation.

Alan Wood, resource conservation manager for Region 1 of the Montana Department of Fish, Wildlife and Parks, said the state agency supports the conservation easement proposal because it allows Stoltze to retain access to the land for logging and allows sustainable forest management to continue.

Online:

www.protectwhitefishwater.org.

Features editor Lynnette Hintze may be reached at 758-4421 or by email at lhintze@dailyinterlake.com.