APPLICATION (Executed) - TIF - PL - 5.1.2026
Kalispell, MT
West Side Urban Renewal – Core Area
Tax Incremental Financing District
TIF Application
Parkline Partners LP | Submitted as of May 1 , 2026
Kalispell, MT
TABLE OF CONTENTS
TIF Application
I. TIF Application
II. Job Creation Analysis | Labor & Wages
III. Project Cost | Proposed TIF Eligible Improvements
IV. Third -Party Financial An alysis Report by Economic & Planning
Systems, Inc.
V. Addendum : Proposed Project Scope Package
(At tached separately )
TIF
APPLICATION
Average wage per hour $ 1
City of Kalispell
Downtown Urban Renewal District and WestSide/Core Area Urban Renewal District
Tax Increment Financing (TIF) Application
(Application must be completed in full with all required documents attached)
APPLICANT INFORMATION
Name of Applicant: Parkline Partners LP
Mailing Address: 4809 Cole Ave., Suite 330, Dallas, TX 75205
Phone number: (214) 960-2818 E-Mail: Buck@shopcompanies.com
PROJECT INFORMATION
Business Name: Parkline Partners, LP
Business/Project Physical Address: 10, 20 & 30 N Main Street, Kalispell, MT 59901
Business Insurance Co: Dexter & Company
Tax ID # 99-3038498
Business Type (Corp, LLC, Partnership, etc.): Limited Partnership
Date business was formed: 4/30/2024
Date of property acquisition: 6/21/2024
Shareholders Name Address % Owned
*A current financial statement for each shareholder involved in the project may be required as well as
documentation of financial capacity. (This information will be kept confidential, subject to challenge
in a court of law.) Description of business (product or service provided, etc.):
Annual amount of property taxes: $304,683.37 (Mall Improvements & Land: $276,926.71 | US
Bank Improvements: $18,084.64 | Starbucks Improvements: $9,672.02)
Current on all property taxes: X Yes No
Employment: Please see attached Schedule A.
Number of retained positions: ; Full Time: Part Time:
Number of new positions to be created: ; Full Time: Part Time:
2
Attachment: Attach an Excel spreadsheet briefly listing and describing the job classifications with
the average wage noted by each job classification. Provide a schedule of when the positions are
anticipated to be created and filled.
Provide a summary of the fringe benefits provided to employees: TBD
Project Architectural Firm: Olson Kundig
Contact: Tom Kundig (Principal / Owner & Founder) / John Riordan (Principal)
Address: 159 South Jackson Street, Suite 600, Seattle, WA 98104
Phone: (206) 624-3730 E-mail: johnr@olsunkundig.com
Project Contractor: TBD (relationship with Martel Construction)
Address:
Phone: E-mail:
Has such contractor or architect ever failed to qualify as a responsible bidder, refused to enter into a
contract after an award has been made, or failed to complete a construction or development contract
within the last 10 years? No Yes If yes, explain:
STATEMENT OF QUALIFICATION AND FINANCIAL RESPONSIBILITY
Has the applicant or any individual or entity affiliated with the development of this project been
adjudged bankrupt, either voluntarily or involuntarily, within the past ten years?
No X Yes if yes, list date, place, and under what name:
Has the applicant or any individual or entity affiliated with the development of this project been
indicted for or convicted of any felony within the past 10 years?
No X Yes if yes, list the date, charge, place, court and action taken for each case:
3
PROJECT EXPENSE WORKSHEET
Proposed project description: Please see attached Schedule B.
Proposed Construction/Rehabilitation Costs:
(If additional room is needed, provide an Excel sheet of expenses)
Explanation: Cost: $
Explanation: Cost: $
Explanation: Cost: $
Explanation: Cost: $
Explanation: Cost: $
Explanation: Cost: $
Explanation: Cost: $
Explanation: Cost: $
Architectural Design/Supervision: Cost: $
Permitting Fees: Cost: $
Additional Fees: Cost: $
Additional Fees: Cost: $
Total Project Expense: $
Attachment: Attach bids for each proposed project expense
Proposed project schedule with start date and completion date: TBD
4
PROJECT FINANCING WORKSHEET
Project Financial Lending Institution: TBD (relationship with Glacier Bank, Peter Akey)
Contact:
Address:
Phone: E-mail:
Total Project Cost:
Land and Building if recently purchased (5 years): $
Cash invested in recent improvements (5 years):
Explanation:
$
Explanation: $
Explanation: $
Explanation: $
Subtotal: $
Total ‘Project Expense’ from page 3: $
Total Project Cost: $
Lender Commitments (Include letters of credit or other documentation.)
Lender Loan Amount Interest Term Payment/Period
$ % yrs $ /Month
$ % yrs $ /Month
5
TIF FUNDING REQUESTED
(Refer to appropriate Urban Renewal Plan– TIF District Policies for more information)
Public Impact Categories
X Shared Utilities Extension
Sidewalk Improvement
Tree Placement/Replacement
Private Investment Categories
Loan Programs:
Façade Improvement
Rehabilitation/Code Compliance
Grant Programs:
Historic Façade Improvement
Site Preparation and Demolition
(Additional grant or loan dollars may be available through the Kalispell Brownfields Program)
X Technical Assistance
X Public Infrastructure
6
CERTIFICATION
I (we), Buck Wheeler, as Member and Authorized Signatory of Parkline Partners GP LLC,
General Partner of Parkline Partners LP (please print),
certify that the statements and estimates within this application as well as any and all documentation
submitted as attachments to this application under separate cover are true and correct to the best of
my (our) knowledge and belief.
Name: Parkline Partners LP Name:
Signature: Signature:
Title: Member and Authorized Signatory Title:
Date: 4/30/2026 Date:
Return to:
City of Kalispell Community & Economic Development Department
201 1st Avenue East, Kalispell, MT 59901
406-758-7713
kking@kalispell.com
Required attachments:
• Excel spreadsheet briefly listing and describing the job classifications with the average
wage noted by each job classification. Provide a schedule of when the positions are
anticipated to be created and filled.
• Bids for each proposed project expense listed on page 3.
• Letters of commitment or documentation from any project lender commitment listed on
page 4.
LABOR
ANALYSIS
Occupied Vacant TOTAL Occupied Vacancy1 TOTAL
Existing Retail 90,868 SF 124,212 SF 215,080 SF 99,360 SF 8,640 SF 108,000 SF
Existing Hotel2 106,312 SF 0 SF 106,312 SF 106,312 SF 0 SF 106,312 SF
Existing Bank (Pad)3,000 SF 0 SF 3,000 SF 3,000 SF 0 SF 3,000 SF
Existing Starbucks (Pad)2,150 SF 0 SF 2,150 SF 2,150 SF 0 SF 2,150 SF
Retail (Proposed)0 SF 0 SF 0 SF 35,420 SF 3,080 SF 38,500 SF
Event Venue (Proposed)0 SF 0 SF 0 SF 30,000 SF 0 SF 30,000 SF
Hotel (Proposed)0 SF 0 SF 0 SF 115,000 SF 0 SF 115,000 SF
TOTAL:202,330 SF 124,212 SF 326,542 SF 391,242 SF 11,720 SF 402,962 SF
Low High Low High Hourly Annually Low High
Existing Retail Operational 90,868 SF Occ.1 per 550 SF 1 per 350 SF 165 260 $22.75 $47,310 $7,816,300 $12,282,757
Existing Hotel2 Operational 170 Rooms 0.5 per Room 1.0 per Room 85 170 $20.19 $42,000 $3,570,000 $7,140,000
Existing Bank (Pad)Operational 3,000 SF Occ.1 per 500 SF 1 per 300 SF 6 10 $26.44 $55,000 $330,000 $550,000
Existing Starbucks (Pad)Operational 2,150 SF Occ.1 per 250 SF 1 per 150 SF 9 14 $16.83 $35,000 $301,000 $501,667
TOTAL EXISTING:265 454 $21.55 $44,828 $12,017,300 $20,474,424
Low High Low High Hourly Annually Low High
Existing Retail (Remodel)Construction 108,000 SF 1 per 500 SF 1 per 350 SF 216 309 $29.44 $61,240 $13,227,840 $18,896,914
Existing Hotel2 Construction 170 Rooms --------
Existing Bank (Pad)Construction 3,000 SF --------
Existing Starbucks (Pad)Construction 2,150 SF --------
New Retail Construction 38,500 SF 1 per 550 SF 1 per 350 SF 70 110 $29.44 $61,240 $4,286,800 $6,736,400
Event Venue Construction 30,000 SF 1 per 1,250 SF 1 per 750 SF 24 40 $29.44 $61,240 $1,469,760 $2,449,600
Hotel Construction 152 Rooms 0.5 per Room 1.0 per Room 76 152 $29.44 $61,240 $4,654,240 $9,308,480
TOTAL CONSTRUCTION:386 611 $29.44 $61,240 $23,638,640 $37,391,394
Low High Low High Hourly Annually Low High
Existing Retail Operational 99,360 SF Occ.1 per 550 SF 1 per 350 SF 181 284 $22.75 $47,310 $8,546,767 $13,430,633
Existing Hotel2 Operational 170 Rooms 0.5 per Room 1.0 per Room 85 170 $20.19 $42,000 $7,140,000 $7,140,000
Existing Bank (Pad)Operational 3,000 SF Occ.1 per 500 SF 1 per 300 SF 6 10 $26.44 $55,000 $550,000 $550,000
Existing Starbucks (Pad)Operational 2,150 SF Occ.1 per 250 SF 1 per 150 SF 9 14 $16.83 $35,000 $501,667 $501,667
New Retail Operational 35,420 SF Occ.1 per 550 SF 1 per 350 SF 64 101 $22.75 $47,310 $4,787,772 $4,787,772
Event Venue Operational 30,000 SF Occ.1 per 1,250 SF 1 per 750 SF 24 40 $18.51 $38,500 $1,540,000 $1,540,000
Hotel Operational 152 Rooms 0.5 per Room 1.0 per Room 76 152 $20.19 $42,000 $6,384,000 $6,384,000
TOTAL OPERATIONAL:445 771 $21.09 $43,874 $29,450,205 $34,334,072
Low High Hourly Annually Low High
Total Estimated Post-Redevelopment Jobs:831 1,382 $24.95 $51,900 $53,088,845 $71,725,466
Total Estimated Net New Jobs:566 928 $26.55 $55,225 $41,071,545 $51,251,042
FOOTNOTES:
1 - This analysis assumes an 8% vacancy factor for all multi-tenant retail at stabilization.
2 - Analysis assumes existing Red Lion Hotel remains static, with no additional construction jobs; Red Lion is prepared to invest funding into a significant renovation once redevelopment plans are approved
3 & 4 - The assumptions for number of employees and average wages in this analysis were sourced from the following citations: BEA RIMS-II Handbook; RSMeans Building Construction Cost Data; BLS OEWS; STR Hotel Industry Metrics; International Council of Shopping Centers (ICSC).
Estimated No. of Jobs3 Average Employee Wages4 Total Est. Annual Wages
SUMMARY
REDEVELOPMENT ESTIMATE | OPERATIONAL
Use Type Basis / Assumption Estimated No. of Jobs3 Average Employee Wages4 Total Est. Annual WagesStaffing Ratios
Total Est. Annual Wages
ESTIMATED LABOR & WAGES ANALYSIS
EXISTING ESTIMATE
REDEVELOPMENT ESTIMATE | CONSTRUCTION
Staffing Ratios
Staffing Ratios
Job Category
Use Type Basis / Assumption
Average Employee Wages4 Total Est. Annual Wages
PARKLINE DISTRICT
Kalispell, MT
Labor Analysis as of April 2026
REDEVELOPMENTEXISTINGBUSINESS TYPE
BUSINESS AREA ANALYSIS
Job Category
Job Category
Estimated No. of Jobs3
Basis / AssumptionUse Type
Estimated No. of Jobs3 Average Employee Wages4
PROJECT
COST
$TIF Program
LAND:
3rd Avenue ROW Land Acquisition for Public Easement (±28,000sf at $25/sf)$700,000 Public Infrastructure
Total Land Costs:$700,000
HARD COSTS:
BUILDING:
Demolition of Existing Improvements $2,501,067 Public Infrastructure
Façade Remediation (New Building Façade ("Scar") along 3rd Ave)$5,066,583 Public Infrastructure
Subtotal Building:$7,567,650
SITE:
3rd Avenue Connection & Streetscape Improvements $2,528,912 Public Infrastructure
Streetscape Improvements (Central St. & 5th Ave.)$1,412,950 Shared Utilities
Traffic signal $467,500 Shared Utilities
Shared Utilities $2,248,031 Shared Utilities
Environmental Remediation1 TBD Public Infrastructure
Subtotal Site:$6,657,393
Total Hard Costs:$14,225,043
SOFT COSTS:
Architecture (Building & Landscape)TBD Per Associated Hard Cost
Engineering (Civil & MEP)TBD Per Associated Hard Cost
Traffic Study TBD Per Associated Hard Cost
Impact & Permitting Fees TBD Per Associated Hard Cost
Materials Testing & Survey TBD Per Associated Hard Cost
GeoTech TBD Per Associated Hard Cost
Environmental (Engineering, Testing, Reporting, Etc.)1 TBD Per Associated Hard Cost
Total Soft Costs:2 $1,991,600
TOTAL:$16,916,643
Public Infrastructure Subtotal:$12,210,162
Shared Utilities Subtotal:$4,706,481
FOOTNOTES:
1 - No Environmental Costs (Hard & Soft) are included in this cost estimate.
2 - This cost estimate assumes Soft Costs are approximately 14% of the total Hard Costs.
Proposed TIF Eligible Improvements
PARKLINE DISTRICT
Kalispell, MT
Summary of Estimated Cost of Proposed TIF Eligible Improvements as of May 1, 2026
Page 1 of 3
Demolition of Existing Improvements:Unit Qty.$/Unit TOTAL Remarks
Herberger's:
Contractor General Conditions LS $132,098
Mechanical, Electrical, Plumbing, Gas, Fire Demo LS 1 $37,096 $37,096
Remove AC units from the Building roof EA 8 $3,150 $25,200
Demolition of Building Pad SF 86,699 $9.01 $781,158 Includes disposal/haul-off of Debris
Demolition of CMU walls 944cy SF 38,293 $9.03 $345,786 Includes disposal/haul-off of Debris
Contingency %10%$132,134
Subtotal:$1,453,472
Mall (Selective):
Contractor General Conditions LS $103,656
Mechanical, Electrical, Plumbing, Gas, Fire Demo LS 1 $287,896 $287,896 Includes re-piping of Gas Lines feeding other tenants to remain
Remove AC units from the Building roof SF 5 $3,439 $17,194
Demo of columns and relocate, secure to girder SF 8 $6,771 $54,172
Demolition of old mall area Building slab SF 38,624 $10.13 $391,256 Includes disposal/haul-off of Debris
Disposal of demolition debris for cmu walls 944cy SF 8,784 $9.03 $79,320
Cut roof deck at termination point LF 351 $53.75 $18,866
Contingency %10%$95,236
Subtotal:$1,047,595
Total Demolition of Existing Improvements:$2,501,067
Public Road & Streetscape (3rd Avenue Connection):Unit Qty.$/Unit TOTAL Remarks
Asphalt Section SF 1,000 $9.48 $9,480 Fabric, 4" Asphalt, 3" - 3/4" Crush, 9" - 3" Material
Paver section SF 27,500 $35.00 $962,500 Road base, concrete sub base and pavers
Concrete Curb LF 1,750 $21.92 $38,360 Per Civil
Utility Relocations - Northwest Energy ALLOW 1 $85,000 $85,000 per Chris Beccari with Northwestern Energy
Utility Relocations - FEC ALLOW 1 $65,000 $65,000 Plug
Decorative Concrete SF 14,700 $22.43 $329,721 Integral colored concrete with decorative finish.
Tree Grate EA 20 $2,635 $52,700 Steel 4'x6' grate or sim.
Street Tree EA 32 $2,150 $68,800 4" Cal. min. 14' ht min.
Ornamental Tree EA 12 $1,200 $14,400 3" Cal. Min. 12' HT min.
Planting Area SF 7,335 $24.00 $176,040 Mix of planting sizes, bed prep, mulch
Irrigation SF 7,335 $6.00 $44,010 Assume drip irrigation
Boulders ALLOW 1 $28,000 $28,000 Specimen boulders local to the flathead valley
Site Furniture ALLOW 1 $115,000 $115,000 Benches, bollards, tables & chairs, litter bins, bike racks, etc.
Lighting ALLOW 1 $135,000 $135,000 Street Lighting and Landscape accent lighting
Trailhead at Parkline Trail / 3rd Ave ALLOW 1 $175,000 $175,000 Signage, seating, bike racks, low wall, bike repair station, drink fountain, etc.
Contingency %10%$229,901
Total 3rd Avenue Connection:$2,528,912
New Building Façade along 3rd Avenue (“Scar”):Unit Qty.$/Unit TOTAL Remarks
Temporary Façade:
Contractor General Conditions LS $40,316
Frame new scar wall (351 l' x 26'-6") Labor SF 9,300 $12.50 $116,250
Frame new scar wall (351 l' x 26'-6") Materials SF 10,800 $11.50 $124,200 Assumed Metal Studs w/ Plywood Sheeting
Install roofing over scar wall LF 351 $19.00 $6,669
Install roofing flashing over scar wall LF 375 $12.50 $4,688
Insulate Scar Wall SF 7,184 $1.90 $13,650
2 layers 5/8 drywall, interior wall (351 l' x 23'-4")SF 7,184 $4.50 $32,328 For Fire-Rating
Tape and texture interior wall (351 l' x 23'-4")SF 7,184 $1.50 $10,776
Paint interior scar wall (351 l' x 23'-4")SF 7,184 $1.95 $14,009 Assumed 1-Color Finish
Exterior doors M&L on scar wall EA 6 $2,100 $12,600 Assumed Insulated Hollow-Metal Doors (Double 30/70)
Exterior facade M&L on scar wall (351 l' x 26'-6")SF 9,300 $17.50 $162,750 Assumed Hardy EIFS Panels w/ Metal Wainscot
Construction cleanup and waste disposal LS 1 $5,250 $5,250
Contingency %10%$54,348
Subtotal:$597,833
New Façade at "Scar":
Per Olson Kundig's Drawings LF 325 $12,500 $4,062,500
Contingency %10%$406,250
Subtotal:$4,468,750
Total New Building Façade along 3rd Avenue:$5,066,583
PARKLINE DISTRICT
Kalispell, MT
Detail of Estimated Cost of Proposed Eligible Improvements as of May 1, 2026 (Hard Costs Only)
Public Thoroughfare Connection (3rd Avenue)
Page 2 of 3
PARKLINE DISTRICT
Kalispell, MT
Detail of Estimated Cost of Proposed Eligible Improvements as of May 1, 2026 (Hard Costs Only)
Public Thoroughfare Connection (3rd Avenue)
Traffic Signal :Unit Qty.$/Unit TOTAL Remarks
Traffic Signal LS 1 $425,000 $425,000
Contingency %10%$42,500
Total Traffic Signal:$467,500
Unit Qty.$/Unit TOTAL Remarks
General - Mobilization LS 1 $123,961 $123,961
General - Construction Surveying LS 1 $32,978 $32,978
General - Quality Control Materials Testing LS 1 $22,116 $22,116
Transformer(s)LS 1 $228,500 $228,500
Gas LS 1 $217,000 $217,000
Water Main Removal LF 1,700 $87.00 $147,900
Sewer Main Removal LF 700 $93.00 $65,100
Storm drain Main Removal LF 3,000 $59.15 $177,450
8" Water Main Extension LF 1,500 $104.32 $156,480
8" Sewer Main Extension LF 1,000 $123.00 $123,000
Storm drain Manholes EA 20 $4,637 $92,740
12" Storm drain Main LF 2,600 $87.00 $226,200
Dry Utility LS 1 $185,000 $185,000 Site lighting, power re-routing
Contingency %25%$449,606
Total Public Utilities:$2,248,031
Unit Qty.$/Unit TOTAL Remarks
Concrete Sidewalk SF 7,500 $9.00 $67,500 Standard, Assume 4" thick concrete sidewalk
Decorative Paving SF 21,600 $35.00 $756,000 Decorative concrete and/or pavers with sub-slab
Street Tree EA 27 $2,000 $54,000 4" Cal. min. 14' ht min.
Canopy Tree EA 10 $1,200 $12,000 3" Cal min. 12' ht min.
Planting Area SF 8,000 $24.00 $192,000 Mix of planting sizes, bed prep, mulch
Irrigation SF 8,000 $6.00 $48,000 Assume drip irrigation
Site Furniture ALLOW 1 $60,000 $60,000 Benches, bollards, tables & chairs, litter bins
Lighting ALLOW 1 $95,000 $95,000 Street Lighting and Landscape accent lighting
Contingency %10%$128,450
Total Streetscape Improvements:$1,412,950
Public Streetscape & Sidewalk Improvements (Center St. & 5th Ave.)
Public & Shared Utilities
Page 3 of 3
THIRD-PARTY
FINANCIAL
ANALYSIS
PARKLINE DISTRICT URA
FINANCIAL ANALYSIS
REPORT
Prepared for: Prepared by:
City of Kalispell Economic & Planning Systems, Inc.
Parkline Partners LP
April 28, 2026
EPS #253118
DENVER OFFICE OAKLAND OFFICE SACRAMENTO OFFICE LOS ANGELES OFFICE
1600 Stout Street, Suite 1850 1330 Broadway, Suite 450 455 Capitol Mall, Suite 701 800 Wilshire Boulevard, Suite 410
Denver, CO 80202 Oakland, CA 94612 Sacramento, CA 95814 Los Angeles, CA 90017
303 623 3557 510 841 9190 916 649 8010 213 489 3838
epsys.com
Table of Contents
1. Introduction and Summary of Findings 1
Introduction .............................................................................................................................................................. 1
Limitations ................................................................................................................................................................ 1
Project Description ................................................................................................................................................. 1
Summary of Findings .............................................................................................................................................. 3
2. Project Description 5
Existing Conditions ................................................................................................................................................. 5
Redevelopment Plan............................................................................................................................................... 7
Phasing and Leasing Forecast ............................................................................................................................... 9
3. Development Costs 11
Development Costs .............................................................................................................................................. 11
Requested TIF Costs ............................................................................................................................................ 11
4. Financial Feasibility Analysis 12
Pad Sales ................................................................................................................................................................. 12
Net Operating Income ......................................................................................................................................... 13
Financial Metrics ................................................................................................................................................... 15
Cash Flow and Feasibility .................................................................................................................................... 17
5. Tax Increment Projections 19
Taxable Value ......................................................................................................................................................... 19
Incremental Tax Revenue Forecast ................................................................................................................... 21
Findings ................................................................................................................................................................... 23
List of Tables
Table 1. Mall Development Program ...................................................................................................................... 2
Table 2. Pad Site Development Program ............................................................................................................... 2
Table 3. Summary of 25-year Incremental Tax Revenue Forecast ................................................................... 3
Table 4. Summary of Financial Feasibility Analysis .............................................................................................. 4
Table 5. Development Program ............................................................................................................................... 5
Table 6. Phase I Pad Sites Development Phasing ................................................................................................ 9
Table 7. Pad Building Assumptions ......................................................................................................................... 9
Table 8. Mall Occupancy Forecast ....................................................................................................................... 10
Table 9. Development Costs ................................................................................................................................. 11
Table 10. Pad Sales/Lease Assumptions ............................................................................................................... 12
Table 11. Existing Net Operating Income ............................................................................................................. 13
Table 12. Post-Redevelopment Net Operating Income, Stabilized (2033)..................................................... 14
Table 13. Weighted Average Cost of Capital ....................................................................................................... 15
Table 14. Exit Cap Rates, West Region, 2025 ...................................................................................................... 16
Table 15. Development Cash Flows ....................................................................................................................... 18
Table 16. Retail Taxable Value Comparables ........................................................................................................ 20
Table 17. Hotel Assessed Value Comparables ..................................................................................................... 20
Table 18. Tax Increment Forecast .......................................................................................................................... 22
List of Figures
Figure 1. Existing Conditions Map ............................................................................................................................ 6
Figure 2. Conceptual Phasing Diagram .................................................................................................................... 8
Economic & Planning Systems, Inc. 1 Introduction and Summary of Findings
1. Introduction and Summary of Findings
Introduction
The Parkline District is the proposed reinvestment and redevelopment of Kalispell
Center Mall. Parkline Partners LP (“Parkline Partners”) purchased the mall
property and outparcels in 2024 and is proposing a major redevelopment and
renovation. Parkline Partners is requesting $16.9 million in financial assistance to
pay for public improvements and redevelopment costs that qualify as eligible
reimbursements through the City’s West Side Urban Renewal – Core Area Tax
Increment Financing District Assistance Program (West Side URA).
The City is requiring an independent financial analysis of Parkline Partners’
development plan to help them determine:
• If the project has a financing gap that justifies awarding TIF funding (a “but for”
analysis), and;
• The amount of TIF that is appropriate to award considering the financing gap
for the project and the costs of project eligible to be funded with TIF
consistent with the West Side URA and City policies.
The City of Kalispell referred Parkline Partners to Economic & Planning Systems
(EPS) to prepare a financial analysis of the project and incremental tax revenue
projections. Parkline Partners then hired EPS to complete the analysis contained
in this Report with input and guidance from the City of Kalispell.
Limitations
This report strives to balance providing enough information for the City to review
the project, and to protect confidential information that could affect ongoing
negotiations the developer is having with prospective tenants. In addition, Montana
Law restricts disclosing real estate sale prices. Therefore, there are areas of the
analysis where information such as costs, land sale revenues, and lease revenues
are aggregated and reported as a property-wide average or in broad categories.
Project Description
Kalispell Center Mall is a 321,000 regional mall on 22.45 acres. The northern
boundary of the site is bounded by the Parkline multi use trail on a former Great
Northern Railway rail bed. The current tenant mix is comprised of 137,908 sq. ft.
of anchor space (tenants larger than 40,000 sq. ft.) including the vacant 87,000
square foot former Herberger’s department store and J.C. Penny (51,000 sq. ft.).
The Red Lion Hotel attached to the east side of the mall building is 111,000 sq.
ft., and there are about 72,000 square feet of smaller inline mall tenants.
PARKLINE DISTRICT URA FINANCIAL ANALYSIS
Economic & Planning Systems, Inc. 2 Introduction and Summary of Findings
The proposed development plan will reposition and “right size” the Mall to be
more attractive to prospective tenants. The Herberger’s space will be demolished.
Other tenant spaces will be reconfigured and demolished to reduce the mall
building footprint to about 108,000 square feet, excluding the Red Lion Hotel.
These proposed changes result in a reduction of 102,700 square feet of leasable
area in the Mall. The land under the Herberger’s space and on the west side of the
mall will be subdivided and the development plans propose several free-standing
buildings. The current development plans envision a hotel, events center or
entertainment venue, and two freestanding multi-tenant retail buildings. Table 1
shows the proposed development program for the Mall redevelopment, and Table
2 shows the development assumptions used for the pad sites.
Table 1. Mall Development Program
Table 2. Pad Site Development Program
Description Existing Proposed Change
Mall (Sq. Ft.)
Anchor 137,908 51,257 -86,651
Red Lion Hotel 106,312 106,312 0
Inline 77,172 61,167 -16,005
Total 321,392 218,736 -102,656
Existing Outparcels (Sq. Ft.)
Total [1]4,872 4,872 0
Proposed Outparcels (Acres)
Total 0.0 7.4 7.4
[1] U.S. Bank and Starbucks
Source: SHOP Companies; Economic & Planning Systems
Description Acres FA R Building
Retail NW 1.65 0.25 18,000 sf
Event Venue 1.61 0.40 28,000 sf
Hotel 2.07 ---201 rooms
Retail NE 2.07 0 22,500 sf
Source: Economic & Planning Systems
PARKLINE DISTRICT URA FINANCIAL ANALYSIS
Economic & Planning Systems, Inc. 3 Introduction and Summary of Findings
Summary of Findings
Tax Increment Projections
EPS prepared a tax increment revenue projection for a 25-year period from 2026
through 2050. Over this time period, the project is expected to generate a large
increase in assessed value in the West Side URA. The current base assessed value
for the property is $15.75 million and is estimated to grow to $130.4 million in
2050 through new construction, redevelopment, and appreciation in market
values after the construction period (Table 3). The incremental assessed value
growth is therefore $114.7 million, which translates to a taxable value increase of
$2.18 million. The cumulative incremental property tax generated from 2026
through 2050 is estimated at $22.2 million over this time period.
Parkline Partners is requesting $16.9 million in assistance from the West Side
URA. The tax increment projections estimate that the Project will generate $22.2
million in cumulative property tax increment revenues, which is enough to pay
back the TIF investment in the Project. The financial feasibility (pro forma)
analysis contained in this report assumes that the TIF investment of $16.9 million
is paid out in approximately 2 to 3 years upon substantial completion of a defined
scope of work that qualifies for reimbursement under the West Side URA TIF.
Table 3. Summary of 25-year Incremental Tax Revenue Forecast
Assessed Taxable Incremental
Year Value Value Property Tax
1.90%681.93
2025 Base $15,750,000 $299,250
2050 $130,414,594 $2,477,877
Total Increment in 2050 $114,664,594 $2,178,627 $1,457,764
on 2049 taxable value
Cumulative through 2050 $22,206,538
Source: Economic & Planning Systems
PARKLINE DISTRICT URA FINANCIAL ANALYSIS
Economic & Planning Systems, Inc. 4 Introduction and Summary of Findings
Financial Feasibility
EPS prepared cash flow analysis of the project over the 11-year project
development schedule that has been estimated. The cash flow analysis evaluates
the financial feasibility of the development with and without the TIF investment.
Without the TIF investment, the project is not feasible and has a financing gap of
-$27.2 million (net present value), as shown in Table 4. The total net cash flow is
estimated at $8.8 million over 11 years. The internal rate of return (IRR), the
annual rate of return on the investment, is estimated at 1.65% which is well below
the 11.0% threshold for a real estate development investment.
With the requested $16.9 million in TIF reimbursements, the project achieves
$22.2 million in net cash flow over 11 years and achieves a net present value of
-$22.3 million. The IRR is 3.89%, which is still well below the 11.0% hurdle rate.
The project still has a significant financing gap that the developer will need to fill
with other sources. This analysis does show that the award of TIF does not
unreasonably inflate the developer’s return beyond market-based expectations for
rates of return on real estate.
Table 4. Summary of Financial Feasibility Analysis
Description Factor Total
PROJECT CASH FLOWS
Net Project Cash Flows $8,871,627
Construction Costs -$65,330,572
Commercial Pads $14,222,618
Mall NOI $22,735,744
Mall Disposition Income $37,243,836
Net Present Value 11.00%-$27,177,976
Internal Rate of Return 1.65%
PROJECT CASH FLOWS WITH PUBLIC SUBSIDY
Net Project Cash Flows $22,828,933
Construction Costs -$65,330,572
Commercial Pads $14,222,618
Mall NOI $22,735,744
Mall Disposition Income $37,243,836
TIF Contribution $13,957,306
Net Present Value 11.00%-$22,295,845
Internal Rate of Return 3.89%
Source: Developer; Economic & Planning Systems
Economic & Planning Systems, Inc. 5 Project Description
2. Project Description
Existing Conditions
Currently, only 55% of the existing tenant space is occupied, or 177,000 square
feet of the total 322,000 including Red Lion. Looking at the Mall only, there are
about 215,000 square feet of leasable area of which 71,000 square feet are
occupied, an occupancy rate of 33%. As described in the Summary of Findings,
the proposed redevelopment plan will modernize and reposition the Mall. A
notable outcome is a reduction in leasable area of about 102,000 square feet,
thus “right sizing” the mall for current market conditions and reconfiguring the
design for more current lifestyle retail trends (Table 5).
Several other malls across the U.S. have undergone similar transformations that
reduce leasable area and turn the mall “inside out” to make it more visible and
accessible to the outside, creating a more defined place with an attractive
pedestrian environment. Key features include more tenant store fronts on the
exterior, more exterior access points, and design and placemaking features on the
exterior of the building. Foothills Mall in Fort Collins, CO, Gallatin Center Mall in
Bozeman, and 29th Street in Boulder, CO are regional examples of these
renovation strategies.
Table 5. Development Program
Description Existing Proposed Change
Mall (Sq. Ft.)
Anchor 137,908 51,257 -86,651
Red Lion Hotel 106,312 106,312 0
Inline 77,172 61,167 -16,005
Total 321,392 218,736 -102,656
Existing Outparcels (Sq. Ft.)
Total [1]4,872 4,872 0
Proposed Outparcels (Acres)
Total 0.0 7.4 7.4
[1] U.S. Bank and Starbucks
Source: SHOP Companies; Economic & Planning Systems
PARKLINE DISTRICT URA FINANCIAL ANALYSIS
Economic & Planning Systems, Inc. 6 Project Description
Figure 1. Existing Conditions Map
PARKLINE DISTRICT URA FINANCIAL ANALYSIS
Economic & Planning Systems, Inc. 7 Project Description
Redevelopment Plan
This section contains a summary of the redevelopment plan as envisioned as of
this writing. Figure 2 shows a conceptual diagram of the project phasing. The
more detailed sequencing of specific improvements may change.
Phase 1 – Public Improvements and Pad Sites
Phase 1 includes the following redevelopment activities:
• Demolish the Herberger’s department store
• Subdivide the western portion of the site into four pad sites
• Extend 3rd Avenue West through the property to complete the street grid
• Repair and renovate the building “scar” where Herberger’s joined the main Mall
building
The pad site development is the first phase. The pad sites are anticipated to be
sold or ground leased to third parties. Parkline Partners is currently marketing the
properties to prospective buyers. The southwest corner is envisioned as a hotel
site, potentially associated with an event venue to the east. Two freestanding
retail buildings are envisioned on the north side of the site.
Phase 2 – Mall Reinvestment
Next, the interior and exterior mall renovations begin. These costs include
extensive changes to the exterior façade and interior spaces. There is expected to
be extensive “below slab” work on the interior that will disrupt the mall business
operations, resulting in business interruptions and potentially closures and
additional vacancies that will need to be re-leased.
Phase 3
There may be future reinvestment or redevelopment opportunities on the east
side of the property. Those, however, are not known or defined at this point and
are not within the scope of the TIF application or this analysis.
PARKLINE DISTRICT URA FINANCIAL ANALYSIS
Economic & Planning Systems, Inc. 8 Project Description
Figure 2. Conceptual Phasing Diagram
PARKLINE DISTRICT URA FINANCIAL ANALYSIS
Economic & Planning Systems, Inc. 9 Project Description
Phasing and Leasing Forecast
The construction phasing is an important input into the forecasted vertical
construction, renovations, and lease up period (Table 6). Starting with the Phase 1
Pad Sites, it is assumed that the NE Retail pad will be the first sold in 2028 after
the property has been subdivided and prepared for development.
In 2030, this analysis assumes that Parkline Partners sells the NE retail site and
has executed ground leases for the potential event venue and hotel sites.
Construction of those buildings would be done by third parties and are outside of
Parkline Partners’ proforma. Parkline Partners will only receive revenues from the
land sales or ground leases, not the vertical real estate. The vertical real estate –
hotel, event venue, and retail – are assumed to all be operating in 2032. The
vertical development assumptions for the pad sites are shown in Table 7.
Table 6. Phase I Pad Sites Development Phasing
Table 7. Pad Building Assumptions
Pad Sale PS
Ground Lease Start GL
Construction C
Operating O
Description 2026 2027 2028 2029 2030 2031 2032
Phase 1 Pad Sites
Retail NW PS C O
Event Venue GL C O
Hotel GL C O
Retail NE PS C O O O
Source: SHOP Companies; Economic & Planning Systems
Description Acres FAR Building
Ass'd Value
per sq. ft.
Ass'd
Value
Year
Complete
Year
Taxable
Retail NW 1.65 0.25 18,000 sf $318 $5,724,000 2031 2032
Event Venue 1.61 0.40 28,000 sf $300 $8,400,000 2031 2032
Hotel 2.07 ---201 rooms $175,000 $35,175,000 2031 2032
Retail NE 2.07 0 22,500 sf $318 $7,155,000 2028 2029
Totals $56,454,000
Source: Economic & Planning Systems
PARKLINE DISTRICT URA FINANCIAL ANALYSIS
Economic & Planning Systems, Inc. 10 Project Description
For the mall, the first major activities are expected to be in 2026 beginning with
the demolition of the Herberger’s space. Nearly 100,000 square feet of leasable
area will be removed (Table 8). This reduces the total leasable area to 218,736
sq. ft. including the Red Lion hotel. There are currently, and projected in 2026,
41,284 sq. ft. of vacant inline tenant space in the Mall, meaning that the Mall
building (excluding Red Lion) will be 18.9% vacant starting in 2026. It is estimated
that the Mall building will not be ready for new tenant occupancy until 2030 due
to construction disruptions and the time needed to re-lease vacant space. In
2030, there are projected to be 27,196 square feet vacant (12.4%). With Parkline
Partners’ input, we project that it will take 6 years from 2026 for the Mall to be
fully leased in 2032.
Table 8. Mall Occupancy Forecast
Description 2026 2027 2028 2029 2030 2031 2032
Total Sq. Ft.218,736 218,736 218,736 218,736 218,736 218,736 218,736
Demolished Sq. Ft.-97,116 0 0 0 0 0 0
Operating (Sq. Ft.)
Anchor 51,257 51,257 51,257 51,257 51,257 51,257 51,257
Red Lion 106,312 106,312 106,312 106,312 106,312 106,312 106,312
Inline 19,883 19,883 19,883 19,883 33,971 49,028 61,167
Total 177,452 177,452 177,452 177,452 191,540 206,597 218,736
Vacant (Sq. Ft.)
Anchor 0 0 0 0 0 0 0
Red Lion 0 0 0 0 0 0 0
Inline 41,284 41,284 41,284 41,284 27,196 12,139 0
Total 41,284 41,284 41,284 41,284 27,196 12,139 0
Occupancy Rate 81.1% 81.1% 81.1% 81.1% 87.6% 94.5% 100.0%
Vacancy Rate 18.9% 18.9% 18.9% 18.9% 12.4% 5.5% 0.0%
Total (Sq. Ft.)
Anchor 51,257 51,257 51,257 51,257 51,257 51,257 51,257
Red Lion 106,312 106,312 106,312 106,312 106,312 106,312 106,312
Inline 61,167 61,167 61,167 61,167 61,167 61,167 61,167
Total 218,736 218,736 218,736 218,736 218,736 218,736 218,736
Source: SHOP Companies; Economic & Planning Systems
Economic & Planning Systems, Inc. 11 Development Costs
3. Development Costs
Development Costs
The total project cost is estimated currently at $65.3 million (Table 9). Most of the
cost is in acquiring the property and the hard construction costs (materials and
labor). Within the $49.7 million in acquisition and hard costs, most of that cost is
construction. Permitting fees, design, engineering, and other “soft costs” are
estimated by Parkline Partners at $15.6 million. These costs include the Phase 1
site development costs and the Phase 2 mall repositioning costs.
Table 9. Development Costs
Requested TIF Costs
Parkline Partners is requesting $16.9 million in reimbursements from the West
Side URA. The eligible costs that comprise this $16.9 million request are detailed
in separate documentation and discussions between Parkline Partners and the
City.
Description Total % Total
Development Costs
Land, Hard Costs (Labor & Materials)$49,736,635 76.1%
Soft Costs (Development Fees, Design Costs)$15,593,936 23.9%
Total Costs $65,330,572 100.0%
Source: SHOP Companies; Economic & Planning Systems
Economic & Planning Systems, Inc. 12 Financial Feasibility Analysis
4. Financial Feasibility Analysis
The financial feasibility analysis assesses the financial performance of the project
with and without the TIF contribution. The purpose of the analysis is to estimate
if the project will have a financing gap, meaning it does not generate a sufficient
profit or rate of return to be attractive to a typical real estate investor. It is good
public policy only to provide financial incentives to projects that would not occur
“but for” the public investment. The feasibility analysis uses a real estate proforma
cash flow model to estimate revenues, costs, and the resulting net present value
of the investment (NPV) and other financial metrics. This chapter documents the
major assumptions and estimates used by EPS.
The revenues for the project are summarized in sections in this chapter and are
comprised of:
• Pad land sales and ground leases from Phase 1
• Existing ground leases from Starbucks and US Bank
• Lease revenue from existing mall tenants and future mall tenants
Pad Sales
The estimated revenues from the Phase 1 development pad sites are summarized
in Table 10. The NW Retail Site is estimated by EPS and Parkline Partners to be
worth $2.4 million (approx. $33 per sq. ft.), and the NE Retail Site is estimated to
be worth $2.9 million (approx. $32 per sq. ft.). The potential Event Venue site is
estimated to lease for $160,698 or $2.30 per sq. ft. of land annually. The potential
hotel site is estimated to lease for $516,529 or $5.74 per sq. ft. of land annually.
Table 10. Pad Sales/Lease Assumptions
Pad Sales/Leases Structure Year Amount
Retail NW Fee Simple 2030 1.7 acres $2,358,667 one-time
Event Venue Ground Lease 2030 1.6 acres $160,698 annual
Hotel Ground Lease 2030 2.1 acres $516,529 annual
Retail NE Fee Simple 2028 2.1 acres $2,900,000 one-time
Source: Economic & Planning Systems
Size
PARKLINE DISTRICT URA FINANCIAL ANALYSIS
Economic & Planning Systems, Inc. 13 Financial Feasibility Analysis
Net Operating Income
The mall currently generates approximately $1.3 million in gross income from
leasable space and operating expense reimbursements (Table 11).This income
translates to $5.24 per occupied square foot and includes the roughly 100,000
square foot Red Lion Hotel that pays rent on its building. Rents for current inline
tenants range from approximately $12 to $18 per square foot per year. Anchor
spaces have rents in the $4.00 to $6.00 per square foot range. After deducting
operating expenses, the property generates just over $500,000 in NOI today.
Table 11. Existing Net Operating Income
Description Total
Revenue
Rental Income
Mall Leaseable Space $930,495 $5.24 per occ. sq. ft.
Existing Ground Leases [1]$158,624 $32.56 per sq. ft. of land
Other Income
NNN Reimbursements $255,267
Total Revenues $1,344,386
Expenditures
Operating Expenditures
CAM -$367,191
Management Fee -$47,054
Tax -$202,994
Insurance -$214,704
Total Expenditures -$831,942
Net Operating Income $512,444
[1] U.S. Bank and Starbucks
Source: SHOP Companies; Economic & Planning Systems
Per Sq. Ft.
PARKLINE DISTRICT URA FINANCIAL ANALYSIS
Economic & Planning Systems, Inc. 14 Financial Feasibility Analysis
After renovations and re-leasing renovated space, the average rent for the
property will increase to $14.97, generating an estimated $3.6 million in annual
gross revenue in 2033 (Table 12). This average rent is skewed by the Red Lion
Hotel’s unusual lease arrangement for its building and its large amount of space.
Rents for new inline spaces are targeted to be in the mid- $30 per square foot
range. Parkline Partners will be targeting national tenants and brands for the
repositioned mall and is aiming to achieve rents well above the current market.
The resulting net operating income (NOI) for the Project (Mall plus Ground
Leases) at stabilized occupancy is estimated to be $3.04 million in 2031.
For the Mall plus Red Lion (not including ground leases), the NOI in 2033 is
estimated at $2.7 million which generates a value of $35.56 million or $162.57
per square foot in 2033.
Table 12. Post-Redevelopment Net Operating Income, Stabilized (2033)
Description Total
Revenue
Income
Mall Base Rent $3,093,636 $14.97 per sq. ft.
Ground Leases 371,423 $166.28 per sq. ft. land
Expense Reimbursements 810,126
Total Revenues $4,275,186
Expenditures
Operating Expenditures
CAM -$591,917
Management Fee -136,632
Tax -271,622
Insurance -236,767
Total Expenditures -$1,236,938
Total Project Net Operating Income $3,038,248 $14.71 per sq. ft.
Mall Only with Red Lion
Mall Base Rent $3,093,636
Expense Reimbursements 810,126
CAM -$591,917
Management Fee -136,632
Tax -271,622
Insurance -236,767
Mall Net Operating Income $2,666,825 $12.19 per sq. ft.
Property Value (Rounded)7.50%cap rate $35,560,000 $162.57 per sq. ft.
[1] U.S. Bank and Starbucks
Source: SHOP Companies; Economic & Planning Systems
Per Sq. Ft.
PARKLINE DISTRICT URA FINANCIAL ANALYSIS
Economic & Planning Systems, Inc. 15 Financial Feasibility Analysis
Financial Metrics
Two important financial metrics need to be selected to determine the value of the
project’s income stream after redevelopment: the discount rate and the income
capitalization rate. The financial pro forma looks at the revenues and costs over
the project development period (a time series analysis), and the analysis needs to
account for risk and uncertainty in the future, such as economic slowdowns,
construction delays, or slower than expected leasing. The analysis assumes a 10-
year holding period for the investment and that it is sold in Year 11. The sale price
of the project is based on the value of the project’s annual income stream.
Discount Rate
The discount rate is used to convert the value of future rental and property sale
income to its value today. The discount rate accounts for the “time value of
money,” which is explained by the phrase “a dollar today is worth more than a
dollar in the future.” Money expected to be received in the future is worth less
than it is today because of the risks described above.
A discount rate of 11.0% was used to calculate the net present value (NPV) of the
revenue streams (Table 13) The discount rate is the Weighted Average Cost of
Capital (WACC), calculated using the rates of return needed from debt and equity
investors. Assuming a typical project financing structure of 60% debt (e.g., bank
loan) and 40% equity, the WACC is calculated from the cost of each funding
source. Interest rates for construction loans are approximately 6.25% and equity
(cash) investors require a rate of return of approximately 18% for higher-risk
investments like real estate development, compared to investing in lower risk
stocks or bonds. The weighted average rate of return or WACC of these two
sources of funds is 11.0%.
Table 13. Weighted Average Cost of Capital
Description Total
Debt 60.0%
Equity 40.0%
Total 100.0%
Cost of Debt 6.25%
Cost of Equity 18.00%
WACC 11.00%
Source: Economic & Planning Systems
PARKLINE DISTRICT URA FINANCIAL ANALYSIS
Economic & Planning Systems, Inc. 16 Financial Feasibility Analysis
Income Capitalization Rate
The income capitalization rate or “cap rate” is used to convert the annual income
stream into the value of the real estate:
Asset value = (Net Operating Income) / (Cap Rate)
There is therefore an inverse relationship between the cap rate and the value of
the asset: a lower cap rate translates to a higher asset value.
A cap rate is similar to a price-earnings ratio for a stock in which the annual
dividend has a relationship to the price per share. Exit cap rates (sale of an
existing asset) for regional malls in the western U.S. are summarized in Table 14.
Exit cap rates for malls range from about 7.00% in coastal markets to 8.50% in the
Rocky Mountain region including Denver and Salt Lake City. To be conservative in
estimating the financial feasibility gap for the project, we have selected a 7.5%
cap rate, which generates a higher asset value than a higher 8.00-8.50% cap rate.
Table 14. Exit Cap Rates, West Region, 2025
Description Rate
West Region
Boise, ID 7.00%
Denver, CO 8.50%
Las Vegas, NV 8.25%
Los Angeles, CA 7.25%
Oakland, CA 8.00%
Orange County, CA 7.75%
Phoenix, AZ 8.50%
Portland, OR --
Sacramento, CA 8.00%
Salt Lake City, UT 8.50%
San Diego, CA 8.00%
San Fransisco, CA 8.00%
San Jose, CA 7.00%
Seattle, WA 7.50%
Average 7.87%
Selected Cap Rate 7.50%
Source: IRR Viewpoint 2025; Economic &
Planning Systems
PARKLINE DISTRICT URA FINANCIAL ANALYSIS
Economic & Planning Systems, Inc. 17 Financial Feasibility Analysis
Cash Flow and Feasibility
The annual cash flow estimated for the project is summarized in Table 15 from
the initial construction costs and land acquisition (Year 0) to sale of the completed
and stabilized asset in Year 11. The cash flow is shown with and without the
public subsidy from the tax increment investment.
Before TIF Investment
As shown, the cash flow for the project is negative from Year 0 through Year 3,
meaning the developer is continually drawing from debt and equity sources to pay
for construction. The cash flow is forecasted to turn positive in Year 4 as mall
leasing begins and after the Phase 1 pad sites are sold and leased. The project is
projected to be near full occupancy and have stabilized NOI in Year 6 (2032), with
NOI of $2.68 million as shown below.
In Year 11, we assume that the Mall is sold on $2.9 million in NOI and a cap rate
of 7.50%, which generates a sale price of $38.4 and sale revenue of $37.2 million
after transaction costs (3.0%). Total revenue in 2037 is estimated at $46.5 million,
but the present value of that at an 11.0% discount rate is $14.7 million. The Net
Present Value (NPV) of the project, the sum of the discounted cash flows from
each year, is estimated at -$27.2 million, indicating that the project is not feasible.
The Internal Rate of Return – the annual rate of return on the investment – is
1.65%, which is well below the WACC and discount rate of 11.0% that is needed
to justify the risk of the project.
With TIF Investment
The analysis assumes that $16.9 million in TIF is awarded to the project, which is
the estimated cost of the public improvements provided by Parkline Partners. The
next Chapter contains the estimated incremental property tax revenues that are
forecasted to exceed the requested amount over 25 years. For the purposes of
the financial analysis, we assume that TIF is paid to Parkline Partners in the year it
is generated.
Adding the TIF investment results in an NPV of-$22.3 million and an IRR of
3.89%. The project’s IRR still falls below the 11.0% WACC threshold, meaning
that Parkline Partners will need to find ways to increase revenues or decrease
costs, and draw from other sources to fill the financing gap. This analysis does
show that the award of TIF does not unreasonably inflate the developer’s return
beyond market-based expectations for rates of return on real estate.
PARKLINE DISTRICT URA FINANCIAL ANALYSIS
Economic & Planning Systems, Inc. 18 Financial Feasibility Analysis
Table 15. Development Cash Flows
2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037
Description Factor Total Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11
PROJECT CASH FLOWS
Net Project Cash Flows $8,871,627 -$19,136,734 -$14,058,095 -$19,964,407 -$6,995,545 $4,284,674 $2,558,706 $3,043,942 $3,044,649 $3,046,453 $3,249,432 $3,297,019 $46,501,533
Construction Costs -$65,330,572 -$19,648,484 -$14,594,295 -$23,510,768 -$7,577,024 $0 $0 $0 $0 $0 $0 $0 $0
Commercial Pads $14,222,618 $0 $0 $2,900,000 $0 $2,708,667 $357,000 $364,140 $371,423 $378,851 $386,428 $394,157 $6,361,951
Mall NOI $22,735,744 $511,750 $536,200 $646,361 $581,479 $1,576,007 $2,201,706 $2,679,802 $2,673,226 $2,667,602 $2,863,003 $2,902,862 $2,895,745
Mall Disposition Income $37,243,836 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $37,243,836
Net Present Value 11.00%-$27,177,976 -$19,136,734 -$12,664,950 -$16,203,561 -$5,115,082 $2,822,448 $1,518,468 $1,627,415 $1,466,481 $1,321,937 $1,270,283 $1,161,159 $14,754,161
Internal Rate of Return 1.65%
PROJECT CASH FLOWS WITH PUBLIC SUBSIDY
Net Project Cash Flows $22,828,933 -$19,136,734 -$14,058,095 -$19,956,163 -$6,995,545 $4,284,674 $2,558,706 $3,389,312 $3,893,206 $4,078,925 $4,302,233 $4,360,718 $56,107,696
Construction Costs -$65,330,572 -$19,648,484 -$14,594,295 -$23,510,768 -$7,577,024 $0 $0 $0 $0 $0 $0 $0 $0
Commercial Pads $14,222,618 $0 $0 $2,900,000 $0 $2,708,667 $357,000 $364,140 $371,423 $378,851 $386,428 $394,157 $6,361,951
Mall NOI $22,735,744 $511,750 $536,200 $646,361 $581,479 $1,576,007 $2,201,706 $2,679,802 $2,673,226 $2,667,602 $2,863,003 $2,902,862 $2,895,745
Mall Disposition Income $37,243,836 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $37,243,836
TIF Contribution $13,957,306 $0 $0 $8,244 $0 $0 $0 $345,371 $848,556 $1,032,472 $1,052,801 $1,063,699 $9,606,163
Net Present Value 11.00%-$22,295,845 -$19,136,734 -$12,664,950 -$16,196,869 -$5,115,082 $2,822,448 $1,518,468 $1,812,065 $1,875,195 $1,769,954 $1,681,849 $1,535,777 $17,802,036
Internal Rate of Return 3.89%
Note: TIF contribution assumed to be collected in year generated through 2036. In 2037, the value shown is the present value of remaining years of TIF reimbursement at 6.0%
Source: Developer; Economic & Planning Systems
Economic & Planning Systems, Inc. 19 Tax Increment Projections
5. Tax Increment Projections
This Chapter summarizes the analysis used to estimate the property taxes for the
Project and the incremental tax revenue generated in the West Side URA.
Taxable Value
Mall
The taxable value for the Mall including Red Lion, Starbucks, and U.S. Bank was
estimated using the income approach, as summarized in the following steps.
• The existing value from the Department of Revenue (DOR) was used for 2025
through 2027, with a 2.0% escalation for 2027 representing the odd year
reappraisal cycle. The assessed value (DOR’s estimate of market value) is
$15.75 million in 2025 and is estimated at $16.39 million in 2027.
• From 2028 on, the income approach was used to value the property. The NOI
was divided by a 7.5% capitalization rate to calculate the assessed value, and a
10% discount in value was also applied to account for the potential that the tax
appraisal process may slightly undervalue the property. In 2033, the year when
income and expenses are estimated to stabilize, this results in an assessed
value of $32.2 million or $147 per square foot (including Red Lion).
• No escalation was applied to the assessed value in this step because the lease
revenues were escalated in the revenue analysis. The leases were escalated by
2.0% per year every five years.
Phase 1 Pad Site Developments
Retail
The assessed value for the retail spaces on the north side of the Phase 1 pad sites
was estimated from comparable property research. EPS obtained assessed value
data from the DOR’s ORION web portal and compiled the data shown in Table
16. The properties shown are freestanding multitenant buildings and one single-
tenant building on the perimeter of Hutton Ranch Plaza in Kalispell. The weighted
average value of these four buildings is $318 per square foot.
PARKLINE DISTRICT URA FINANCIAL ANALYSIS
Economic & Planning Systems, Inc. 20 Tax Increment Projections
Table 16. Retail Taxable Value Comparables
Hotel
Parkline Partners had an independent taxable value estimate prepared by a
licensed real estate appraiser to estimate the taxable value of a prospective hotel
that Parkline Partners is in discussions with for building on one of the sites. The
Appraiser estimated a value of $175,000 per room for the 201-room potential
hotel, or a total of $35.2 million. This falls in the upper range of the taxable value
or hotel comparables shown in Table 17. However, the types of hotels being
recruited for the development will likely be in the upper upscale to luxury
segments with higher room rates (and market values) than what currently exists in
Kalispell. With the 2.0% escalations in odd years, the value of the hotel after it is
projected to be complete is estimated at $38.8 million in 2032.
Table 17. Hotel Assessed Value Comparables
Total Building Value per
Retail Parcel Value Sq. Ft. Sq. Ft.
Hutton Ranch - Freestanding Multi Tenant 07407831203040000 $5,554,500 18,072 $307
Hutton Ranch - Freestanding Multi Tenant 07407831203030000 $2,077,800 5,610 $370
Hutton Ranch - Freestanding Multi Tenant 07407831302020000 $2,040,000 6,600 $309
Hutton Ranch - Freestanding Single Tenant 07407831203200000 $1,756,900 5,684 $309
Weighted Average $318
Source: Economic & Planning Systems
PARKLINE DISTRICT URA FINANCIAL ANALYSIS
Economic & Planning Systems, Inc. 21 Tax Increment Projections
Incremental Tax Revenue Forecast
The incremental tax revenue forecast from all components of the development is
shown in Table 18. In 2025, the base assessed value (AV) for the project area was
$15.75 million. This is the base AV on which the incremental AV is calculated; the
URA will receive the property taxes generated from the incremental AV above the
$15.75 million base value. Due to demolition and construction, the assessed value
in the project area is likely to drop in 2028. When the first retail pad comes online
in 2029 (+$7.6 million), the total AV is estimated at $15.3 million. In 2031, the AV
is estimated at $42.4 million, which is $26.7 million higher than the base. At the
State’s 1.9% assessment ratio, the taxable value is $506,000. There is about a one
year lag between AV and property tax collection (property taxes are paid in
arrears), so the taxable value generates $345,000 in property tax in 2032.
The total assessed value of the project is projected to grow to $130.4 million by
2050, assuming 2.0% escalations in the odd-year reappraisals. The total
incremental AV is therefore $114.7 million in 2050. The cumulative incremental
property tax is therefore $22.2 million for the 25 years from 2026 through 2050.
The project is therefore able to pay back the $16.9 million TIF request.
The estimated reimbursement schedule to the developer, which is an input to the
pro forma cash flow, is shown in the rightmost column of the table.
PARKLINE DISTRICT URA FINANCIAL ANALYSIS
Economic & Planning Systems, Inc. 22 Tax Increment Projections
Table 18. Tax Increment Forecast
Incremental Incremental Incremental Estimated
Year Mall [1]Retail NW Retail NE Events Hotel Total Ass'd Value Taxable Value Prop Tax Reimbursement
Income App. $318 PSF $318 PSF $300 PSF $35,175,000 AV 1.90% 681.930
2026 15,750,000 0 0 0 0 15,750,000 0 0 0 0
2027 16,386,300 0 0 0 0 16,386,300 636,300 12,090 0 0
2028 6,434,402 0 0 0 0 6,434,402 0 0 8,244 8,244
2029 7,756,337 0 7,592,943 0 0 15,349,281 0 0 0 0
2030 7,756,337 0 7,592,943 0 0 15,349,281 0 0 0 0
2031 18,912,085 6,319,759 7,899,698 9,274,279 0 42,405,820 26,655,820 506,461 0 0
2032 18,912,085 6,319,759 7,899,698 9,274,279 38,836,042 81,241,862 65,491,862 1,244,345 345,371 345,371
2033 32,157,619 6,575,077 8,218,846 9,648,960 38,836,042 95,436,544 79,686,544 1,514,044 848,556 848,556
2034 32,157,619 6,575,077 8,218,846 9,648,960 40,405,018 97,005,520 81,255,520 1,543,855 1,032,472 1,032,472
2035 32,011,218 6,840,710 8,550,887 10,038,778 40,405,018 97,846,611 82,096,611 1,559,836 1,052,801 1,052,801
2036 32,011,218 6,840,710 8,550,887 10,038,778 42,037,381 99,478,974 83,728,974 1,590,851 1,063,699 1,063,699
2037 34,834,349 7,117,075 8,896,343 10,444,344 42,037,381 103,329,492 87,579,492 1,664,010 1,084,849 1,084,849
2038 34,834,349 7,117,075 8,896,343 10,444,344 43,735,691 105,027,803 89,277,803 1,696,278 1,134,739 1,134,739
2039 34,556,137 7,404,604 9,255,755 10,866,296 43,735,691 105,818,484 90,068,484 1,711,301 1,156,743 1,156,743
2040 34,556,137 7,404,604 9,255,755 10,866,296 45,502,613 107,585,406 91,835,406 1,744,873 1,166,988 1,166,988
2041 37,616,412 7,703,750 9,629,688 11,305,294 45,502,613 111,757,757 96,007,757 1,824,147 1,189,881 1,189,881
2042 37,616,412 7,703,750 9,629,688 11,305,294 47,340,919 113,596,063 97,846,063 1,859,075 1,243,941 1,243,941
2043 37,927,315 8,014,982 10,018,727 11,762,028 47,340,919 115,063,971 99,313,971 1,886,965 1,267,759 1,267,759
2044 37,927,315 8,014,982 10,018,727 11,762,028 49,253,492 116,976,544 101,226,544 1,923,304 1,286,778 1,286,778
2045 38,337,109 8,338,787 10,423,484 12,237,214 49,253,492 118,590,086 102,840,086 1,953,962 1,311,559 1,311,559
2046 38,337,109 8,338,787 10,423,484 12,237,214 51,243,333 120,579,927 104,829,927 1,991,769 1,332,465 1,332,465
2047 41,729,633 8,675,674 10,844,593 12,731,597 51,243,333 125,224,830 109,474,830 2,080,022 1,358,247 373,155
2048 41,729,633 8,675,674 10,844,593 12,731,597 53,313,564 127,295,061 111,545,061 2,119,356 1,418,429 0
2049 41,392,322 9,026,171 11,282,714 13,245,954 53,313,564 128,260,726 112,510,726 2,137,704 1,445,253 0
2050 41,392,322 9,026,171 11,282,714 13,245,954 55,467,432 130,414,594 114,664,594 2,178,627 1,457,764 0
Total $22,206,538 $16,900,000
[1] Includes U.S. Bank and Starbucks
[2] 1-Year Lag
[3] Baseline market value is frozen at 2025 value.
Source: Economic & Planning Systems
Assessed Value
PARKLINE DISTRICT URA FINANCIAL ANALYSIS
Economic & Planning Systems, Inc. 23 Tax Increment Projections
Findings
The project has a financing gap estimated at -$27.2 million (NPV) to achieve an
11.0% unleveraged rate of return. The financing gap is larger than the amount of
TIF requested to fund eligible costs, at $16.9 million. Awarding the full $16.9
million on a reimbursement basis request brings the rate of return (IRR) on the
project to 3.89%, which is still well below a market-based requirement (“hurdle
rate”) for a rate of return of about 11.0% (unleveraged, average of debt and
equity). The award of TIF will therefore not create excessive profit or returns for
the developer as this analysis has shown that there is a financing gap with and
without the public investment.