Whitefish Council talks potential change to resort tax rebate

Whether to change the percentage of funds returned to property owners from resort tax collections will be the topic of discussion during a Whitefish City Council work session Monday.  

Whitefish’s resort tax sets aside 25% for property tax relief. The tax was approved by voters in 1995 and at the time the relief amount was a selling point leading to the tax's approval.  

This winter questions arose about whether the 25% relief should be adjusted as circumstances in Whitefish have changed with an increase in development and growth, along with more second homeowners, and significant increases in property values. 

City Council meets at 7:10 p.m. at City Hall, 418 E. Second St. The work session begins at 6 p.m.  

The resort tax is a 3% tax collected on “luxury” retail sales, lodging, at restaurants and for prepared food and alcoholic beverages. 

Under state law, communities collecting resort tax must provide at least 5% in property tax relief to reduce the city tax levy. All resort tax revenues received in excess of what the city has budgeted to spend must also be used for the relief.  

During the work session, City Manager Dana Smith will present Council with several options for how the percentage could be adjusted.  

One option would be to provide the minimum 5% of relief to all property owners and then take the 20% and refund it to taxpayers whose primary residence is within the city limits in an equal amount for all properties regardless of value. Taxpayers would have to apply for the refund and any unclaimed funds would then be moved into another area where resort tax funds are allocated such as parks, streets and community housing.  

As an example of what that refund might look like, Smith says that if there is $1.4 million for property tax relief when divided by 3,000 primary residences that would result in $480 paid to primary residence taxpayers.  

A second option would be to direct a percentage to primary residence property taxpayers and a percentage to the community housing fund to assist with the workforce rental assistance program.  

A third option would be to allocate the 20% of property tax relief on a flat rate basis to all property taxpayers, both residential and commercial.  

A fourth option would be to reduce the 25% to a lower percentage and allocate funds to other categories where tax funds are spent since all residents receive the value through usage of those services.  

Smith in a memo to Council points out that the change should be easy to understand and implement, and that certain options may require additional staff to manage the distribution of property tax relief.  

The options that include providing a check to taxpayers “could result in thousands of refund checks to be issued and mailed after the applications are reviewed and residency is confirmed on an annual basis,” Smith said.  

Any change would ultimately require voter approval. Unless Council calls for a special election the next opportunity for a vote is November 2025.  

During the regular meeting, a request to abandon an undeveloped alley section between West Eighth and West Ninth Street will go before Council. Neal Bartleson, who owns the property at 411 W. 8th St., and Kerry Kvigne, who owns the property at 334 W. 9th St., are asking for the city-owned alley to be abandoned.  

The Public Works Department is recommending that Council deny the request after reviewing the request considering such factors as future property development, traffic access and fire safety.  

Public Works Director Craig Workman said the presence of larger lots zoned for potential infill development highlights the importance of maintaining the north-south connection provided by the alley.  

“We also believe the request is based on encroachments into the unimproved alley, which have been ordered to be removed due to zoning violation complaints,” Workman said in a memo.  

Council will consider a resolution establishing several no parking zones in the city. The Public Works Department occasionally receives requests to evaluate various traffic and parking restrictions and brings them to Council for consideration.  

Requests include no parking on either side of East Eighth Street between Spokane Avenue and Kalispell Avenue; no parking on Karrow Avenue between West Second Street and West Seventh Street; no parking on Shiloh Avenue between JP Road and Whitefish Avenue, no parking on Woodside Lane within 100 feet of Wisconsin Avenue.

Council will consider awarding a bid for the city’s 2024 roadway overlay project, which includes roadway milling, overlay paving, concrete sidewalk and curb replacement, adjusting existing manholes and valves to grade and updating pavement markings.

The Public Works Department is recommending awarding the bid to Nelcon for $1.19 million. Work is set for West Lakeshore Drive, a section of Spokane Avenue and section of East Second Street, East Fourth Street, Pine Avenue, Ashar Avenue, Birch Drive, Wedgewood Lane and some downtown alleys.

Deputy Editor Heidi Desch may be reached at 758-4421 or hdesch@dailyinterlake.com.