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A. Council Minutes - Regular Meeting March 3, 1997am A REGULAR MEETING OF THE KALISPELL CITY COUNCIL WAS HELD AT 7:00 P.M. MONDAY, MARCH 3, 1997, IN THE COUNCIL CHAMBERS AT CITY HALL IN KALISPELL, MONTANA. MAYOR DOUG RAUTHE PRESIDED. COUNCIL MEMBERS JIM ATKINSON, CLIFF COLLINS, NORBERT DONAHUE, LAUREN GR.ANMO, DALE HAARR, PAM KENNEDY, DUANE LARSON, GARY NYSTUL, CITY ATTORNEY GLEN NEIER AND CITY MANAGER CLARENCE KREPPS WERE PRESENT. Mayor Rauthe called the meeting to order and led the Pledge of Allegiance. AGENDA APPROVAL Haarr moved to approve the agenda. The motion carried upon vote. CONSENT AGENDA APPROVAL A. Council Minutes -Regular Meeting The motion was seconded. B. Approval of Claims per Payables Register-$134,440.41 C. Change Order -Engineering -Liberty Street Water Improvements t` D. Change Order -Elks Sewage Lift Station E. Bid Award Generator F. Appoint Central School Selection Committee for Architectural Services Collins moved to approve the consent agenda. The motion was seconded. Upon vote the motion carried. HEARING THE PUBLIC Samaritan House Expansion Request Bruce Measure, attorney, representing Samaritan House, spoke in favor of the expansion request and would be available for any questions. Allen Ruby, 320 Hilltop, also spoke in favor of the Samaritan House expansion request. Sherry Stevens -Wulf, United Way Director spoke in favor of the Samaritan House expansion. Northwest Healthcare Conditional Use Permit Nancy Greer, Northwest Healthcare, said she would be available for 988 any questions regarding the Northwest Healthcare conditional use permit. PUBLIC HEARING Westside Urban Renewal District Proponents The following spoke in favor: Mike Stocklin, 400 Hilltop Richard Mendenhall, Westwood Properties Mark Guest, 411 Chestnut Drive Letters of support were received by the Clerk from: Robert Babb, 110 C Glenwood Drive Vonnie Gardner, BRATS Inc., President Ronnie Pack, P.O. Box 2104 Kalispell Chamber of Commerce, 15 Depot Park Opponents Clare Hafferman, 1337 3rd Street West Dale Williams, County Commissioner, read a letter to the Mayor and Council as follows: t As you are aware, Flathead County is the owner of a large parcel of land, known as the Flathead County Fairgrounds, which is scheduled for inclusion within the above referenced TIFD. As the Commissioners of Flathead County, we respectfully request that this property, located on the easterly boundary of the proposed TIFD be excluded from the district. Suffice it to say that now is not the appropriate time to consider the moving of the fairgrounds and the subsequent financing of the necessary structures for holding a fair. Sincerely, Flathead County Board of Commissioners Robert Watne Howard Gipe Dale Williams John Wells, 1288 North Meridian Road Mickey Dolfer, 25 Two Mile Drive Donald Buckallew, 896 North Meridian Road Ron Trippett, Trippett's Printing Dave Hedeman, 121 Bing Court WE Jim Shaw, 537 West Colorado Eloise Hill, 467 6th Avenue West North Gerry Robins, 637 Underhill Court Rauthe closed the public hearing. Ordinance 1259-Adopt TIF Westside Urban Renewal Plan -1st Reading The Kalispell City -County Planning Board considered Resolution No. 4309, a resolution of intent to create the Westside Urban Renewal Tax Increment Finance District Urban Renewal Plan. The proposed area of the Plan encompasses the area of the North Meridian Neighborhood Plan and an additional area south of Idaho Street in the 7th West North area. If the district is created there are several projects proposed for the area including revitalization of the Gateway West Mall, reconstruction of Meridian Road, and storm drainage improvements. The Plan has been drafted by Community Development outlining the various financing options available to the City in implementing potential projects. Tax Increment Financing will be the primary source of funds for the projects implemented pursuant to the plan. A copy of the FRDO Staff Report and a draft of the Plan were distributed. Since the Workshop, a Section XIV has been added which allows an abbreviated method of notice when adding property to the district or deleting property from the district. Under the method, notice of a proposed addition or 'deletion would be published and notice sent to the owners of property directly affect by the addition or deletion. Amendments or modifications involving substantive matters, ie. approval of Urban Renewal Plan remain subject to both personal notice and publication as set forth in the Urban Renewal law. Kennedy moved Ordinance 1259, an ordinance approving the West Side Redevelopment Plan Analysis for the City of Kalispell, Montana as an Urban Renewal Plan; providing for the segregation and application of tax increment in the West Side Urban Renewal Plan; establishing January lst, 1997 as the base year for calculating the tax increment; authorizing the manager to implement the plan with the powers contained in the Urban Renewal Law, establishing an amendment and modification procedure, and declaring an effective date. The motion was seconded. Gallagher -Thank you for the opportunity to answer questions. All of Meridian right of way from 2nd to this point here involves fairground property and the primary objective of creating this urban renewal area is to stimulate the redevelopment private investment and redevelopment of the Gateway West Mall. The second objective is the promotion of commercial development along Meridian _ Road by assisting in the reconstruction of Meridian Road. Later on the agenda you will be discussing the consulting engineer's recommendations and the cost figures. Meridian Road reconstruction 990 and rebuilding is the number one priority for urban system funding adopted by the City Council, the County Commissioners -and made part of the City/County Master Plan and Transportation Plan. So it was important to include all of that property that abutted Meridian from .Highway 2 to the intersection at 93 on the north end. That also encompassed the entire north Meridian Neighborhood Plan area, which also was the subject of a great deal of study and discussion by this Council and adopted by Council and the County Commissioners as an amendment to the City/County Master Plan. In addition to the Transportation Plan we have the North Meridian Neighborhood Plan which has specific goals and objectives. The third principle objective of discussing and suggesting the Urban Renewal Plan is the inclusion of a large block of residential area, the mitigation of storm water and surface drainage along Spring Creek and the northwest quadrant of the City. One of the things that the developers of the Gateway West Mall will face is how to mitigate the storm drain runoff which is increased significantly because of residential development, streets and roads and commercial development north of the Gateway West Mall. This would enable the City to use tax increment some time in the future if increment is available and assumed that the private investment is stimulated which will generate the increment to allow the City to use tax increment to supplement additional monies that will be needed to mitigate storm drain impacts throughout the entire area. With those three primary objectives there are many other goals and objectives stated throughout the plan document itself, but I think the County fairgrounds certainly was involved with the Neighborhood Plan, Transportation Plan and in fact generates a great.deal of traffic on Meridian and that area and the traffic congestion and the traffic generated by that facility could be mitigated with tax increment funds. It allows for an opportunity for the formation of a public/private partnership. The property generates zero in tax dollars and in fact could be classified as a net tax user. The City and County taxpayers, which includes residents of the City of Kalispell, now pay and will pay into the maintenance of keeping that facility a viable facility until, as Commissioner Williams stated, it may make good sense some time in the future to do something with that facility. Mr. Mendenhall did offer to answer questions later but I would like to point out that the Gateway West Mall dropped 36% of its value when Drug Fair moved out. The tax appeal to the State of Montana, which was approved by the County Commissioners and the State Department of Revenue, 36%, 2.65 million dollars of the value of that commercial retail center disappeared. The appetite for the tax dollars that were generated by that 2.65 million dollars did not disappear, and in fact passed 991 on to other commercial properties, City and County taxpayers. So the principle objective of the Urban Renewal Plan is to stabilize the tax base initially, to stop further tax appeals, depreciation, true depreciation and functional obsolescence of the commercial investment in that area. An obsolescence that is encouraged, induced by inadequate streets, sewer and water, storm drain runoff and all of the issues there that constitute blight and are adequately defined in the studies that you have. There was a comment that the consultant's reports may have included only your staff, I want to point out Carter -Burgess Transportation Plan was a $256,000 analysis by experts selected by the Montana Department of Transportation and paid for with taxpayer dollars. The County Commission was very much a part of that Urban Transportation Plan. The North Meridian Neighborhood Plan was done by the Flathead Regional Development Office Staff and other consultants and you currently have a study underway to investigate the storm drain impacts on Spring Creek. In addition to the information that you have compiled over the years from many, many experts, you have additional studies ongoing and the purpose of this Urban Renewal Plan is to allow you to use what tools are available and there are very few tools available to you, tax if increment financed urban renewal is one of the few remaining to address"'and help mitigate those problems to stimulate private investment. It is assumed and hoped that if North Meridian is redeveloped and if Mr.' Mendenhall and his partners succeed in attracting new anchors to the Gateway West Mall and reestablishing a tenancy and occupancy of now vacant underutilized buildings, (they will not easily appeal the taxes in the future), that area will turn around and it will be a more attractive place for private investors like them to reinvest within the core area of Kalispell. If they do not succeed, the tax base will deteriorate, it will go down. We can state with some historical accuracy and certainty, there will be further depreciation, tax appeals and all the residential taxpayers, will pick up an additional disproportionate burden for the commercial property taxes that aren't paid. The boundaries themselves, the westerly boundary seems to be somewhat confusing, up to about Three Mile, it generally follows the westerly city limits of the City of Kalispell. Properties that are in the suggested Urban Renewal Plan area, that were not included in the North Meridian Neighborhood Plan, include everything south of Highway 2 between 7th Avenue West North and the city limits on the west with lst Street West from the south boundary along 1st Street West to Meridian Road, north along Meridian Road to the BN railroad easement, to be an extension of Appleway on the extreme south. 992' We have visited with all of the property owners north of Appleway and with the exception of one, there is general concurrence that they are interested in annexing sometime in the very near future before the end of this calendar year so that they too may be included in the Tax Increment District. There are opportunities for commercial development north of Appleway and they are inundated with' storm drain problems and are seeking some solution to help mitigate those problems and to include them at a later date. Because they are out of the city limits now there is a provision in the ordinance that those properties could be included in the Urban Renewal Plan when annexation is complete by notifying those property owners. Kennedy -Please explain about the boundaries of the Gateway West Mall, the reason for the Gateway West Mall's request of the Council for the establishment and where those funds for any infrastructure that might happen there would be coming from, where it will be generated and where the rest of the money generated, where those monies would be spent, ie. The Meridian Road development, sewer, where would that tax increment come from. Gallagher -Right now the value of all of the property that is currently under the Gateway West Mall ownership and property that they propose to purchase or either purchase or have options or control of at this stage, will encompass approximately 30.5 acres and Mr. Mendenhall is present, he can clarify these points. The approximate full fair market value of that real estate, land and improvements is some 7.8 million dollars currently. Keep in mind it is 2.65 million approximately less than it was two years ago. So it has already gone from almost over a 10 million dollar value to a 7.8. It is their proposal to stabilize that facility by bringing new retail tenants and redeveloping the entire area by including the Crop Hail building, the former Crop Hail Egghead building, it was Crop Hail and then purchased by Egghead and has been vacant property since Max Place abandoned it over 1&-� years ago. It is still owned by Egghead. The developer proposes to purchase that building primarily because of its proximity to the mall and the 11 acres that goes with it, that can be purchase in combination at a reasonable price. They have a request before you which you have previously approved to enable them to move a tenant that is currently located downtown on Main Street, National Flood Underwriters, from their current Main Street property to that building. We would be participating with another Tax Increment District. I would like to point out at this point perhaps there seems to be some confusion, this is not an extension of the existing Tax Increment District. This is not ' simply adding life to this district. 993 This Downtown Urban Renewal District will end in 2001, at which time all of the new tax dollars generated for that entire tax base will be available to all the taxing jurisdictions. Because you elected not to bond, this entire Tax Increment District will sunset in 2001. So this is a new district that will start with a base year January 1, 1997 taxable valuation of the real estate within this district. Currently Gateway west Mall is at 7.8. It is the developers desire to convert it to a retail complex or a mix of retail and professional and to bring the value of that facility to approximately 20-22 million dollars through private investment. The taxes generated by 20-22 million dollars full fair market value will retire the debt service on a bond in general in the 2 million dollar range. As the developers approached you they sought specifically approximately 2 million dollars in tax increment participation to help cover the costs of infrastructure, sewer and water and streets, curbs, gutters, sidewalks, and perhaps demolition of some of the existing improvements. In other words, the tax increment dollars would not be used for bricks and mortar, for construction on their site, it will. not be used and never has been used to build private buildings, it. would simply be used to provide the write down or the public infrastructure that will enhance and allow them to proceed with their development. In :other words it picks up approximately 2 million dollars of the development costs. That may be all the increment if the Gateway Nest Mall development to 20-22 million dollars is all that ever happens, that may ne all the tax increment that is available. And we will not have additional tax increment to pledge to these other activities that you would like to and be able to undertake. However, it is also assumed that if they stabilize that facility and bring in new tenants, new life blood, both professional and retail tenants, that it will bring other private investment along Meridian and if the fact the Meridian plans are moving along on schedule, 1999, if we can figure out how to pay, come up with additional funds to keep that going, I believe there will be renewed interest in that entire area from Center Street to Highway 93 North, which would in fact stimulate additional private investment, over and above what is there, if it occurs that will generate increment, then will enable you to consider the other objectives that you have which would be Meridian Road participation and storm drain mitigation. If you do not elect to proceed and the developers are unable to find the economics of spending an additional two million dollars of their own money for the infrastructure, if there is no demonstrated ability of the City to participate in the funding of Meridian and if there is a clear statement of public policy that the fairgrounds 994,. is going to remain a race track and a horse facility, because of lack of funding and lack of potential, I think that then will send a clear signal to those looking for an investment location in this community, as to where they ought to spend their dollars for the future. That is my own observation but it is certainly something that the developers and redevelopers and retailers that are seeking a home in Kalispell are considering. That is why your Staff, FRDO, your traffic engineers, your traffic consultants have all recommended this project because it meets many, many community objectives and the primary community objectives keep taxes reasonable for the City of Kalispell taxpayers and that is one of the responsibilities that you have asked your staff to come up with recommendations on. Atkinson -The Downtown Tax Increment District, is it true that the County Courthouse Complex is in that District? Gallagher -Correct. Atkinson -As much as the School District did in utilizing Tax Increment Funds to do some upgrading there, could the County have done that also on their buildings? Gallagher -Yes, they could and in fact, the library building, it is a County building, who have spent a significant sum on that building, the Hockaday was a County project and spent significant on that building. You have and can and do consistently spend, we tabulated approximately 2.4 million dollars thus far have gone to the direct benefit of School District 5 and other municipal and cultural buildings including the Hockaday, the library, the tennis courts, the parking at the High School, are all Tax Increment dollars. Atkinson -Let's say the County came in and said will you help us with infrastructure in the fairgrounds to build it back up again, could that be a legitimate tax increment project? Gallagher -It could be if you had the tax increment dollars. You have a luxury here that you had some tax increment dollars that you could consider those kinds of requests. But as I pointed out at the work session, right now the County fairgrounds is in tough shape, it needs work and that work will be paid for with taxpayer dollars. If you had tax increment dollars available to you, you could consider and one of the goals of the Neighborhood Plan, one of your goals is the highest and best use of property and to protect life, health, safety of the citizens. So in order to meet that objective, if you elected to use tax increment to help correct code deficiencies on a public building, that is an eligible use of 995 tax increment dollars. Even if the County Commissioners elect to stay there forever and maybe evolve to a higher and better use, the coliseum has been discussed, a combination of uses and activities and move horse racing someplace else. I don't know what that might take', but this will enable you to then form that partnership. There is no disadvantage including them now. It costs the County nothing to participate in this district but gives a very clear signal of the potential that you have then to work with this County Commission on solving solutions as to how to make that property function better for the citizens of the Flathead Valley. Atkinson -If we include the fairgrounds in the Tax Increment District then I could feel like it might be a benefit to the fairgrounds if they are going to stay there because we could help with tax increment funds. I can feel like it could be a benefit if the County Commissioners could get the County voters to agree to a new fairgrounds is needed elsewhere and that we could enter into a partnership with tax increment, we could help utilize that to help buy a new fairgrounds. The County Commissioners do not want to be involved and that if they do go out to get a new fairgrounds that they don't want the City involved in that. The concern that I have then would be that in the decision that we make in leaving the fairgrounds in the Tax Increment District would be the fear from the�or the concern from the County Commissioners that it is kind of a railroad situation and that we have not allowed them full opportunity to do as they please. For the period that the tax increment district is in effect. How long is it? Gallagher -This project, because it is different than the one that we currently have in operation, like the airport project, will fall in that same category, will sunset within 10 years, that means within 10 years the bonds must be sold, legally, unless limits are changed on bonds, you could go out 20-25 years on bonds. This project as you recall, are special amendments to the existing State laws to extend that sunset provision, we are now in the 17th year and could still issue bonds but with this proposed Westside Urban Renewal District Plan it will have 10 year sunset unless legislation changes that in the future, the bonds could be sold in the final year for an additional 20. We anticipated in doing the calculation of the 2, could we afford 2, I talked to the developers of Gateway West Mall about 2 million dollars, we anticipated a 15- 20 year issue because realistically Tax Increment Revenue bonds are only sold 20 years out. I don't know of many 25 and I know of no 30 year issues. I would like to clarify the statement that the County tax payers are double jeopardized in paying twice. By using the example Doug 996 f did to amplify because I was involved in some of the discussions at that time we proposed to step forward and pay the County Commissioners the full fair market value for all of their real estate in the area. The full appraised value and we asked them to get an appraisal, their own appraisal of their choosing. I think the appraisal came in at 4 plus million dollar range. We would write them a check for that full value and then assist them in using tax increment to pay the actual costs to a limited extent of relocation. We would pay for that full acquisition over 4 million dollars with all the taxes generated off of the redevelopment of the fairgrounds, they would receive 100% of all the tax dollars generated off the private redevelopment of that fairgrounds. It would go directly to Flathead County for fairground purposes. They could take that money then and reinvest it and granted there would be, at that time there was a need for additional monies to do the kind of facility that they wanted. I do want to point out that 100% of the increment proposed to come off of the development was going to be paid to Flathead County and the risk would be on the part of the City of Kalispell in the coverage ratio, yes, there would have been some overhead and administrative costs but it would not have been a double jeopardy situation. Atkinson -For the County? Gallagher -For the County. Atkinson -I think what I heard Dale say is that it would be more or less for the City because the City would be buying that land and also giving the tax increment to the County. Rauthe-Currently it pays no taxes now. Atkinson -So it would not be a double jeopardy because they were not getting any taxes before. Gallagher -Correct, it generates no taxes now and the new taxes generated would go directly to the County. Haarr-We have a request from the Commissioners to leave it out, I'm in favor of that. Speaking to the motion, I would like to go back to the initial request from Mr. Mendenhall and Westfield Properties, they came to us to create an Urban Renewal District with the Tax Increment Fund that amounted to 39.5 acres. I am in favor of that proposal but I think the issue has been clouded to an extent when we have increased the size of that District by nearly 4 times to nearly 150 acres and more specifically to the purpose for which the increment for that district will be used. I would be prepared to vote on the specific request for Gateway 997 West Mall but I think we need a lot more information as to what we are going to spend this increment on for the balance of the project. It has been eluded to that we are going to spend it on Meridian Road and also for storm drainage. I would be in favor of spending some of this increment on Meridian Road to up the time when that construction can get started, as to the storm drainage issue, I think that is an issue that hasn't really been discussed to it's full extent. If you look at the map and those of us that have lived in the Northridge area, are familiar to where the water goes, the tax increment or the Urban Renewal District being proposed is a result of what has happened basically to the north and the west of that District. The City already has an opportunity through it's Storm Sewer District to sell the bonds, there is approximately $250,000 a year coming into that District and it should just be the people within that Urban Renewal District proposed and the improvements thereon that addresses that problem. I think all of us in the City should.address that problem. What happens if we take it out of the TIF district, roughly 38 or 40% of that is School money, 38 or 40% of that is County money and we are spending dollars of theirs for a project that is our problem. When Sherry Lane came off of Northridge Drive that opened the gates for all of the land north of that for the flowing of that water which ends up in this Urban Renewal District so I would like to hear how our present Storm Drainage District can handle this problem. Then that would leave us with -.the infrastructure involved at Gateway West Mall which is about 2- million dollars which we know what that includes, the additional monies that would be needed for Meridian and then I think a discussion of the boundaries, specifically to the west, and taking in Greenbriar and I know that blight has to exist in the area but Greenbriar is a brand new subdivision that drains into Spring Creek. They have not created a problem other than when Spring Creek crosses the highway. I would like to see us continue our discussion and bring up these issues and I would specifically like to know what we intend to spend on this Urban Renewal District because as we saw in the past we had the potential before the petition caused our Downtown District to sunset in 2001, the request was to run it out until 2015, which would have made it a 35 year district that those monies were kept from the School District and the County. I think it is very important that we know what everyone has in mind of how we are going to spend this money. Has the Hampton Inn come on the tax rolls prior to the lst of January or will this be a hole in the Tax Increment District? Gallagher -To the best of my knowledge the Hampton Inn is on the tax rolls already. They opened before Christmas and we assumed that all of that tax base is available to all the taxing jurisdictions. 998 With regard to how the money will be spent, it will be spent according to your wishes in the future, when and if increment is available and if we do this project, each budget year you decide on the tax increment budget, it is made part of the City budget, the activities are specifically voted by a majority of the City Council and tax increment dollars are only spent with Council approval. The developers will come with requests and your staff will come with recommendations and you will make the decision on how the tax increment dollars are spent if they are available and as I mentioned initially we are anticipating only enough at this time to address the Gateway West Mall redevelopment. We are hopeful that that development will stimulate enough private investment that you can consider using some tax increment for Meridian and any mitigation that might come down the road on storm drain. That simply gives you options which you then can deliberate and decide and I want to point out we have not spent a dime of tax increment money without specific Council approval and a majority of the Council must vote on. Every dime that is spent must be included in the budget. Haarr-Just to say that I think the question of storm drainage is real critical to whether or not it should be part of a Tax, Increment District or funds used for when we already have a vehicle set up to address storm drainage that should be involved with the whole City and that would include the Underhill Subdivision and should include it and before we start throwing things into this that we should explore that and make sure that is a vehicle that can be afforded and can be us.ed that way. I would hope that we would not vote on all of this tonight, that we would have a good discussion about it and have a work session and bring it back for our next meeting. Rauthe-I would make an observation that our discussion in extending our existing Tax Increment District was to the year 2006, extending it 10 years from the time of re -bonding which would have been an extension of 5 years of the actual District. Haarr-One proposal was to 2015. Rauthe-The one we were discussing to vote on was to 2006. The other observation that I would make is that with a tax increment potential of funding storm drainage improvements in that area there would be no additional costs to the residents that currently live in that area to receive the benefit of mitigation of the problems that may have been caused by earlier development. But if there is a Special Improvement District formed then all of that will be born by the formation of those occupants of the Special Improvement District whether or' not they caused the problem. They are the 999 recipients of the benefit and those who caused it perhaps would be included in the Special Improvement District and if it was simply a bond repaid by that fund for storm drainage in the City of Kalispell then I would submit that every citizen of Kalispell would pay more in order to mitigate a problem that is localized by the western edge of Kalispell even if it is caused by those you eluded to and with the tax increment opportunity if we are successful in attracting an additional improvement in that area then the new improvement and development, that increment would go toward the problems that exist because of past development. At no additional costs to the residents that live in that Tax Increment District. Granmo-We are pretending that the taxpayers are not paying it, the taxpayers are paying it. The development is the additional taxes, the increment would be going to all of the taxing districts if the development did proceed. There are developments, there are several brand new ones on Meridian, the Hampton Inn, these were all done without benefit of Tax Increment District and all of those taxes go to our General Fund, to the County, to the School District and all other taxing entities and by withholding those monies from those taxing, entities I think probably they have to raise that money somewhere else and they only get it from taxpayers. If it is not _ money that is paid by the taxpayers and if we are able to put it in our special fund to use as we desire as it accumulates which is in our history. As we"accumulate money we spend it, find someplace for it, a Tax Increment District is not free money and I don't think a Tax Increment District this large will help improve or increase the improvements. They are going along really good right now. There is no Tax Increment District and historically proves what will happen in the future. I believe that Gateway West Mall, their proposal, their request, is legitimate use of the Tax Increment District, it is to provide infrastructure for the benefit of that development, that is all they are asking, just infrastructure. That is what it is all about and it doesn't affect the General Fund which is probably going to be a little bit in trouble this next budget year anyhow nor the County or the School District. Nystul-Your honor, I understood you to say that if we sold a Storm Sewer Revenue bond that addressed this west north area that the citizens in the rest of the City would be paying to correct a problem in the west north and not their part of the city. Rauthe-I just pointed out that all of the citizens in Kalispell would pay for that. Nystul-Which is exactly what they did in 1978 when we had the $445,000 revenue bond to address the storm sewer on the east side 1000 of Kalispell so it seems only reasonable that since the west north folks have been paying the assessment for all these years, that mechanism now be directed in their direction. From the time frame I am hearing from Larry this evening it could be 4,5 or 6 years down the road before we get increment that we could use for storm sewer and the problem is there now. It would seem that we ought to be, with the study that John Wilson has got under way on Spring Creek, that Spring Creek as well as Meridian, that may well have to be addressed by a Revenue bond similar to what we have done in the past. Rauthe-I would submit the estimates are far above the $445,000 that you just quoted. They are a couple million and more and would probably require a creative funding combination in order to get it done any time soon. Nystul,-When will more than 2 million dollars be available for Meridian Road or storm sewer? Gallagher -I can't offer a best guess even as Mr. Mendenhall mentioned to you in several work sessions, it is going to take them approximately a year or longer to obtain the necessary commitments to even know if there is any increment. I guess historically and r from experience, I can tell you what will not be available if the Gateway West Mall does not attract new private investment, if Meridian is not constructed, it will not attract new private investment and I think your taxpayers will be further burdened to pick up the taxes that may be appealed in the future and the drop in valuation so this is to give you another tool to use in combination with SID or storm drain mitigation or perhaps even a grant. They are not completely gone yet. If you remember we were able to leverage $200, 000 of tax increment and the $650, 000 of public investment on the Tidyman's project. So because we had tax increment we got an excellent bang and got an EDA grant to do that. The other concern that I have is that is because this water all goes down hill, that the Gateway West Mall and those commercial developers are going to be asked to pick up, in order to deal and redevelop their properties, to make sure there is not additional burdens placed on those developments to pick up mitigation for up stream run offs. I would like to clarify that the Hampton Inn, the new office building, all of the new development that is out in that neighborhood now, is on the tax rolls and the taxpayers will enjoy the full benefit of all of those tax dollars that will not be incremental value increase. So to leave the impression that we are going to snap up the tax revenues generated off the Hampton Inn or the new office building or any other new construction that is in place today, is wrong. It is simply that new investment that will occur and go on the tax rolls starting after January 1, 1997. 1001 Nystul-Larry you mentioned that it will take Westfield Properties at least a year or year and a half to put things together, if they do not put things together and we have created the District, where are we then? I realize it is a tool for us to use, but would we since we have gone through the process and had the hearing and placed it under consideration, would it not be more appropriate to proceed when they are ready? Gallagher -Perhaps I will answer that question but I would ask that you put it to Mr. Mendenhall, the developer, because it is their 20+ million dollars that they are talking about putting on the line here. They need some assurance that the City has the tools and will use the tools available. They need the Tax Increment District in place before they continue to invest hundreds of thousands of dollars in pursuing the development in that place. Their development dollars have legs and they can go to other locations. I think without and with what Mr. Mendenhall has, he can answer the question, without the incentives that could be available through tax increment, there is no other way of making up this 2 million dollars in gap, it does not make economic sense for them to pursue development. If they fail completely and walk away from the project, and the tax increment is in place, that will enable you then to work subsequent developers or anybody else willing to spend money -,in that area. There is no disadvantage to having the district in place. If there is a district in place and in fact there is a few tax increment dollars generated that you don't want to spend, you have the discretion at budget time to redistribute those tax dollars back to all the levying agencies pro rata on the same basis on which they are collected. That too is your decision. Any money which you do not elect to hold for tax increment purposes, so all the staff is doing and all this recommendation for an urban renewal project is to give you the tools to make those decisions and I would ask that you point some of those questions at Mr. Mendenhall because he can answer them-. Nystul-So in your opinion that Exhibit A of the ordinance, which is the Urban Renewal Plan and it makes reference to this specific project, then does not preclude us from down the road, amending this ordinance and if there were some other group to step in in place of Westfield Properties. Gallagher -No, and you could deal with any developer without an amendment to the plan. Are you talking about additional land area? Nystul-No, within the same district. Gallagher -In the same district you would not need to go through an 1002.. amendment. Glen Neier-You are giving the authority under this to create this or any other urban renewal project doesn't necessarily require a full amendment. The only change we made over the ordinance now that caused this being in downtown Kalispell, we have allowed for an abbreviated addition or deletion of land from Tax Increment District by notice to only those parties affected. Rauthe-What Glen said is that the main difference in this enabling ordinance.that it allows an easier request to be added to the Tax Increment District or to be deleted from the Tax Increment District than what the Downtown District did. So that is something in the scope of the enabling legislation. Haarr-Loren's Auto is presently under construction up there, which has not had benefit of city infrastructure or any special considerations, would we have the opportunity to hold that out of there so it wouldn't be in increment this year? Gallagher -All of the property within the boundaries of the Tax Increment District would be in the base year. Loren's Auto, the value of the land prior to its reconstruction and redevelopment is in the district already, only the incremental value will be realized. As you are aware, there could be offsetting devaluations. The Gateway West Mall could completely redevelop and there could be a fire, a major depreciation and tax appeals in other areas. What we are dealing is on balance, we're not dealing property by property, but we are dealing with the taxable valuation of the entire 495 acres, and any decrease in value offsets increases and you experienced that in this current Tax Increment District, the one we have now, we had a drop in one year of 34.7% of the value of the property disappeared. And each time the State of Montana reappraised the property they dropped the basis on which the taxable valuation is determined and resulted in another negative drop. So there have been no windfalls to this City, but if Loren's comes in at full value, it will be blended in with any increases that do occur, but also there will be offsetting and true depreciation, for example, as Gateway did two years ago, 2.6 million dollars disappeared, it took a lot of single family residents to make up the taxes that that used to generate. Loren's Auto, that value that will come on the tax rolls in January of 1998 will be increment, that was there on the rolls in 1997, is not increment, that is base year distributed to everybody. Rauthe-That does not increase that facility's taxes by being in the Tax Increment District, so there is no saving grace for what their tax liability would be. Also they are receiving benefit of City 1003 infrastructure and would certainly receive benefit of a healthier developing and commercially area out there. That is the intent of Tax Increment Urban Renewal and there are players in before and after the January 1997 date. It doesn't raise his taxes. Gallagher -The promise that rising tides raise all ships, if in fact the Gateway West Mall and 39 acres becomes a 22 million dollar facility instead of a half dark, 7.8 million dollar facility, Loren's Auto value will enhance as well, it will be part of a thriving retail area instead of all alone out there right now, wondering who the neighbors will be in the future, so that value may in fact improve and there will be reappraisals in the future, sometime certainly in the next 10 years, reflecting changes in value, we hope upwards, could be downwards. That is another important consideration, is the beneficial impact on Loren's Auto to have a whole bunch of successful neighbors. Mr. Mendenhall -I'm not certain there are any new issues other than ones we have previously discussed at work sessions. I think the discussion tonight about the inclusion/exclusion of the fairgrounds is a new issue as far as our participation in that, of course that is a local issue that we don't have much opinion on. I'm happy to address any concerns or answer any questions about the current state of affairs of our efforts. As indicated earlier we are optimistic, we continue to make progress, we continue to invest time and money in this project based on the preliminary indications of the, City Council and work session as well as the City/County Planning Board meetings, that this seems to be the community's interest and we are very optimistic about our ability to bring this project together. Our job as a developer is to bring capital, entrepreneurial skill and capacity and real assets in the form of real estate in this case, together and create something that has a higher and better value. All the components are here, there are some difficulties and some challenges to this site that don't exist on virgin sites that haven't been previously developed and to correct some of those problems that are inherent to this particular sector of your town are the reasons that we are encouraged to request an Urban Renewal area be created. So if we can eliminate some of those pre-existing conditions that gives this to some extent a even economic opportunity with some of the alternatives that exist outside of the City boundaries. In Kalispell, to satisfy the tenant command and tenant ambition to locate their businesses in this community. More so today than it has been in the past, we are finding that the tenants whom would become large revenue generators, major employers and significant economic influences in your community are dependent on a centered location. There is less interest on significant tenants parts on locating on a free standing basis without adjacent 1004 F<, tenants with traffic flow and pedestrian and vehicular interactive capability. We believe that this site provides that opportunity, we are very optimistic about the ability of this site to be able to be linked that is within walking distance to the central core of Kalispell, walking distance of your existing urban renewal area and we believe that the completion of the 93 Bypass is an element that will make this a very dynamic corridor on Highway 2 West and are very confident with it's ability to succeed. We do need to proceed diligently, there are other opportunities that are being presented to tenants whom we would be negotiating with for this site. We will be able to define in short order, meaning over a series of perhaps six months, what will be the highest and best use for this site. In our request we have suggested that it is unclear as to whether mixed use, regional retail or community retail will end up being the highest and best use. It depends on how a number of elements are resolved as it relates to the disposition of current properties that are owned by different parties, as to which of the tenants are looking to locate in the Kalispell market will go here versus go somewhere in the County and those issues will all be resolved in the next six months or so. t' Currently with that resolution we would be implementing immediately and initiating the development process which can take anywhere from 12-18 months, particularly if we are dealing with retail properties, there are mechanizing cycles to take into consideration and tenants will only open 2 month windows at half way points through the year so they can catch the spring and summer merchandising cycle. By way of update, I believe that is where we are at, if there are any specific questions I would be happy to answer those. Nystul-So what you are saying is that you need this in place to facilitate your negotiations and that the fact that the Council has the ability with conducting the hearings and could do it at any time, is in your opinion not sufficient to deal with your proposed property. Mendenhall -Correct, we are dealing with institutional lenders who will be going through an underwriting process on this type of project that will need to see for certainty that before tens of millions of dollars are invested that the Council has previously made the commitment to proceed with your urban renewal area provided that we can prove the capability to create the value. Unless I am mistaken Larry, I don't think the city has any exposure through the creation of this urban renewal area, you don't have any bonding that will occur without our demonstrating economic value being added to the tax roll and what is used to repay those bonds 1005 will be that increment of tax that has been established. If we fail to establish that increment, it becomes our liability. As we go through that process it is very important that it be in place first; second, we are very confident about the outcome of the development process and as those are determined we are able to put the commitments in place that will allow the capital to be invested. The capital is the last component that will occur to facilitate the redevelopment. Larson -I need to speak in support of the Tax Increment District and the boundaries as they are presented. I don't have a great deal of problem with taking the fairgrounds out of that district since the County does not want to be a partner at this point in time. We could add it later. I'm thinking back to our public hearings late last summer when we were talking about extending the downtown tax increment time frame. We received a lot of testimony from folks that are involved with Gateway West Mall, property owners in that area, business owners and residents. I think that unless I am wrong the jest of that testimony was they thought Tax Increment financing was a good tool for cities to use, however that they hadn't benefitted from it. Our answer to that was they couldn't benefit from it because they weren't in the district and if you are f in the district and you make a formal request for an eligible project then we want to look at that project and see if we can in some way. As I recall almost all the testimony was along those lines. They thought it was a good tool but they didn't benefit from it. So now we are giving them an opportunity to benefit from that. The other thing that kind of strikes me as odd is we are concerned about the Hampton Inn and we received a letter from one of the major developers of the Hampton Inn supporting the Tax Increment District. I think sometimes we develop problems that really aren't there and try to speak for other people when really we are not capable of doing that. It is a little hard to come out in favor of this project when there has been so much testimony against it. I assume that there was a lot of misconceptions about Tax Increment financing and Districts and taxes and the way they are used and so forth so I'm looking at that we have been told in the past any significant project causes an impact on the surrounding area. If we simply include the 39.5 acres in the Tax Increment District we've done nothing to mitigate the impact on the surrounding area of that 39.5 acres. We talk about using Storm Sewer funds to correct storm sewer problems and that is all fine and good and that the basis of any good government budgeting, is to the proper fund for the proper use, however, these problems are significant in that area, drainage and storm sewer problems, we haven't been able to address those 1006 problems in the past by using the Storm Sewer funds, we don't want to put an additional Special Improvement District burden on the people in that area to solve the problem. So this is a good legitimate tool to be able to maybe take care of those problems and without increasing the individual tax burden on the people in the area. I think that we all realize that we have significant storm drainage problems throughout the City and it takes that fund to address all of those problems. We just don't have the money and haven't had the money and I don't foresee in the future that we are going to have the money in that fund to divert it all to that area. I can't help but think that this is a win -win situation, it just is going to help everyone in that area and it is not going to hurt anyone so I fully speak in favor of leaving the boundaries the way they are except for perhaps the fairgrounds. Collins -I have a problem with the residents north of the fairgrounds, between there and Underhill Court being a part of this. The reason for that inclusion is for storm drainage. Gallagher -The reason for that inclusion was the items addressed in the Neighborhood Plan, storm drainage was one but also pedestrian movements in and around the area and it is assumed that whatever development occurs will have impacts, so one of the Neighborhood Plan objectives for the Underhill Court area is to encourage the orderly development of that area by providing adequate infrastructure. Infrastructure includes pedestrian, streets, curb and gutters, sidewalks, paths, bikeways, connections to schools and other• activities. Without going back to the plan and we did not want to go in and severe portions of the North Meridian Neighborhood Plan. You adopted it as a total neighborhood plan. It is a community, it is an identifiable piece of geography and we included all of it that you had adopted. Collins -I can understand improvements taking place on Meridian, with what you say sounds great to them, but they're concerned that will there really be any improvement along that line and Highway 93. Gallagher -If I could answer that question indirectly, there may not be any money for any improvement in Underhill Court or in a lot of these residential areas but it will cost them nothing and will not have an adverse impact by including them. Their taxes will not and should not go up, in fact, their taxes should remain reasonable if the Gateway West Mall picks up more and more of a burden of the cost of the public infrastructure in that area. That is the intention. There is no adverse impact, you are not 1007 taxed any differently in a Tax Increment District than you are outside of a Tax Increment District. There is no tax disadvantage, in fact, there could be and I want to emphasize the could be, and only if there is private redevelopment in the area to raise the tax base above what is necessary to provide the incentives to the Gateway West Mall, the 2 million dollars and if that is successful and if there is additional money invested then you could consider a request by the residents of Underhill Court to do some public improvement in their neighborhood. But in the interim their taxes are not going to go up and in fact we hope to stabilize them and keep them reasonable by getting commercial property to pay more. Collins -Then in the area of Adams Addition, they are concerned for the use of this tax increment money I can see infrastructure around the mall, North Meridian improvements and storm drainage improvement, they're concerned that it would be in that order. They want storm drainage improvement as of 20 years ago. That is the reason for Adams Addition being included? Gallagher -It is the reason to include all of the residential neighborhoods other than those that abut Meridian immediately so you have some flexibility in the future. I don't want to allow any of the folks that are here to walk away with the assumption that immediately tax increment funds are going to be available for storm drain mitigation because I don't believe they will be for some time in the, -, -future, but the other important message they leave here with is the.ir taxes, they will be taxed no differently than they are today because of your decision to create a Tax Increment District. But when there is a need to address that storm drain problem, without tax increment, it is all on the burden of a City-wide Revenue Bond, which you have admitted is not adequate to cover all of the problems or to create a Storm Drain District, an SID out there, which would directly impact them, which it may be necessary to do that, but wouldn't it be much easier to have some additional increment that you could bring to the table because of additional commercial development to make their burden a little bit easier. There will be a need to address storm drain mitigation and right now your tools to address that are very limited. This simply gives you another one with no added tax burden on the property owner at this time for that inclusion. Collins -People have inquired about Greenbriar, the reason for that is not only drain but for improvement for Two Mile. Gallagher -Two Mile Drive and drainage is an issue there and storm drainage and the impact of that project on surrounding properties and the need the City may have in the future. You have just commissioned a study, it is unfortunate we don't have it in front of us and your study is going to tell you what the issues are in 1008 that immediate neighborhood. When the study results come back, by including it in the Tax Increment District, it will enable you to use some tax increment to do that. We've used tax increment to do all of the storm drain around Sykes, all of the storm drainage in the central business district have been paid for with tax increment, 100%. All of the surface drainage and all of the storm drain. Because we were very successful in attracting Kalispell Center Mall and Tidyman's and a few other major projects. Collins -My final comment would be that I'm in favor for all the reasons Duane mentioned. Rauthe-I would invite Commissioner Williams back to the microphone for another comment. Williams -There was some urgency in Larry's comment in regard to inclusion of the fairgrounds as it would benefit with a Meridian project should that come to fruition and what I suggest on that is an obvious partnership, if I can use that term and simply cure that problem with the granting of easements and a permanent right of way should that project come to fruition because I can't imagine the reasonable men and women at this juncture would fail to see the benefit of that project and not be willing to reasonably work out a right of way through permanent easement. Rauthe-I would relish that offer because that is a very pertinent part of a discussion that is going on here with the City right now and the engineers and if we could enter that partnership and obtain that right of way, that would allow us to phase Meridian Road project in much more quickly. Williams -Certainly, we're not unaware of the problems that presents and we're certainly not unaware of the support that we have given to some of the plans that go into that area. Collins -From what you heard here tonight, how strong still is your objection to having the fairgrounds included? Williams -I simply don't feel as I stated earlier, and I believe here I can speak for all of us on the Board of Commissioners that we do not feel that this is that correct moment in time to have that included and that we would strongly suggest it be excluded at this point. Knowing full well that at a later date should circumstances change and other occurrences come about that make that project worthwhile either to review again or look outside of the confines of the City, that the City would not act cooperatively at that time in conjunction with any offers to put that back into a TIF District. 1009 Granmo moved to amend to modify Section I Exhibit A as to remove the County owned property which is used in conjunction with the fair from the boundaries of the Tax Increment District. The motion was seconded. Rauthe-Is that an accurate description of the County Commissioners intent? Williams -I would certainly think so in fact I took the liberty to redesign what you had in the notice of public hearing, if I could go by that you have a northern boundary beginning at the intersection of Highway 93 and Meridian Road then southeast along Highway 93 to Colorado then heading west along Colorado to 7th Avenue West North then south to Wyoming then west to Meridian, now I realize that would leave some of the property on the north side of Wyoming that is currently county owned in the TIF and I don't think that there is any major objection to that -west to Meridian then south to Highway 2 then east to 7th Avenue West North then south to 1st Street West and then continue with that description. Granmo-I am proposing to remove all of the County owned property that is used in conjunction with the fair and not just that south of Wyoming because that portion north was as I understand it purchased for the sole purpose of parking during the fair time. Williams -This is true, I did this only for the ease of description. I have no objections. Rauthe-I guess what you have said is entered into the tape as a description and Mr. Granmo has clarified his intent that he meant that little white piece of property that is north of Wyoming. Williams -We certainly would not have any objections to that being included. Rauthe-That is what you meant and that is what the second understood. Granmo-Yes, it was just called to my attention that on Page 5 of the plan there is a paragraph that is related to the fairgrounds, would this motion properly remove that as well? Rauthe-I guess if this motion passes that should delete it and I guess it would probably be the same people voting the same direction in both of those issues so if you want to include that in your motion to amend. Granmo-If the second would allow? 1010 Larson -Yes. Granmo-I so move that Flathead County fairgrounds on page 5 of the Urban Renewal Plan be stricken. The motion was seconded. Gallagher -Just a point of clarification, your dealing with that paragraph on page 5 refers to 57 acres and that includes that acreage north of Wyoming which the Commissioners said they would be willing to leave in. Granmo-But is in the motion being stricken. Gallagher -Commissioner Williams graciously offered the right of way necessary for Meridian, that right of way is included in the description to be excluded and we want to make sure your intent and the intent of this motion is to include all of that right of way that is necessary to reconstruct Meridian that is currently owned by Flathead County. Williams -I don't think that this is the intent or would be our intent to include that right of way, I've got two other partners at the Commissioners office and so I can't speak for them, I am speaking as practical and being reasonable, that I can't conceive that an appropriate agreement cannot be reached between the City and the County as to future right of way consideration. If and when that project comes to fruition, we don't even know in the tax increment yet if that will come to pass. Rauthe-The Meridian Road project, the area that you are eluding to is probably Phase I. Williams -We hope maybe it is. Atkinson -Your Honor, due to maybe a potential conflict of interest, I will abstain from voting on this particular amendment. Kennedy- I would like to speak on the amendment. I had hopes that we would be able to come to an understanding this evening to include the fairground properties because I do believe that it has potential to help both the County and the City at a later date. I do have fears about not .including it and not being able to come to some sort of a compromise, a decision, some help with regards to the rebuild of Meridian Road, however, in an effort to have City/County cooperation, something that I think this Council, the County Commissioners and the residents of the City of Kalispell and Flathead County have long been calling for, cooperation between the government agencies. I think that it is important that we do pass this amendment this 1011 evening in as much as we did receive a letter signed by all three County Commissioners specifically asking to be excluded. I take Mr. Williams at his face value and know that we can sit down at a table and work out the agreement to aid us in the easement that we will need, right of way to be able to do Meridian Road and putting in the necessary bike and pedestrian paths in that area for the best interest of all the citizens of Kalispell, so I would speak in favor of the amendment although I was hoping it would come to a different resolution this evening. Rauthe-I guess this would be my opportunity to comment the same, I don't believe that we have been without cooperation between the City and the County, at least the years that I have been involved, I think we have been on the opposite sides of issues from time to time and that is healthy and probably logical in as much as we represent a slightly different group of voters and I think that we have always been able to talk with the County Commissioners and work with the County Commissioners so I'm looking forward to continuing that and I too hope that the County Commissioners would see as I saw it but they don't and I'm starting to see it their way a little bit but knowing that the possibility was there that this solution might happen I look for and found that this provides, this enabling ordinance, provides them the opportunity to request that it be added and that it shouldn't be a very difficult process in the future if they so choose. So with that said, I believe. if the opportunity to develop that area comes up, whoever is on the Council at that time should be invited to look at having that added back to the Tax Increment District, so I will support the amendment as well. The amendment carried with Atkinson abstaining. Nystul-In my packet I have a letter from Larry Gallagher to Clarence Krepps relative to meeting with School District 5 and a suggestion for an inclusion. Gallagher -The School District 5, Board of Trustee members and School Superintendent Bill Cooper met with staff on Monday. They requested that you consider including in the ordinance the language that is set forth in that memorandum. There has been a little bit of discussion since then, the Mayor had the last conversation with Bill Cooper. I would recommend that if you feel it is in your interest to include the language, that is a concern that they have. I would like to point out that it is not the intent of this project to stimulate a lot of impact on schools, the primary objective is stated, those 3 projects, 3 activities but it is important:to School District 5, they have been a good partner throughout all of the Tax Increment Districts that we have formed and we certainly encourage you to keep that relationship with the Schools and the 1012 County. Kennedy -Can you show us on the map Larry what your memo states as far as the included area where you would do the boundaries? Gallagher -All it states in the memo to you is should there be an impact on schools and should this project stimulate residential development that will impact schools that you will consider utilizing some tax increment to help mitigate the impact on the elementary schools. You have Peterson School and Russell School which are both just outside of the proposed district, and they are schools that are impacted, and to what extent you can use City funds to help mitigate impacts on schools. Kennedy -That is my question, with those 2 schools, there aren't any schools in the proposed district so how could we use tax increment funds on those schools unless we amend the boundaries to include one of the schools and utilize the funds solely on that school? Gallagher -Or the middle school and that too is outside the district. Atkinson -Are they asking to come into the district? Gallagher -That was not a request. Rauthe-And there are ways I believe within the enabling legislation to make well with the School District on some of the issues. If nothing else, an agreement to give excess increment on an annual basis back to School District 5. There are ways that is done elsewhere and in fact, we just read about that relative. to Whitefish giving too much back to the School District recently and asking to be reimbursed. I think that the intent of this agreement was the School District was concerned that we might forget that they exist and that they have problems that may be compounded by any encouragement that we give to higher density residential in the Tax Increment District, which is not one of the goals of this Tax Increment or Urban Renewal District. It is clearly discussed in the Neighborhood Plan that encompasses this area as well as the Master Plan that has been thoroughly reviewed and adopted. So I guess I would like you to know early on in this discussion that this wording was transmitted to School District 5, Mr. Cooper and I had a discussion and he called me back today saying that they would not be here this evening, that School District 5 would not be represented and to inform the Council that this wording, if adopted is adequate for School District 5. Collins -I can understand the sentiments behind this request but on 1013 the other hand did you have conversation beyond the vagueness of this wording. Willingness to consider to help mitigate to the extent feasible could be allocated and that is pretty vague. Rauthe-It is pretty hard to pin down. Collins -I know it is hard to come to agreement like this with such vague wording. Gallagher -They weren't looking for a black and white agreement, they were simply looking for a legislative intent, that you will keep those communication lines open and this is what was proposed and appears acceptable. The City Attorney did help in drafting, I simply stated the results of the meeting and what they asked us to include. Larson moved to amend Ordinance 1259 to include the following language: in the event the implementation of the Westside Urban Renewal Tax Increment Finance District Urban Renewal Plan increases student enrollment for elementary schools serving the area. The City of Kalispell will consider utilizing a portion of the tax increment that may be generated in excess of that needed for development or redevelopment to mitigate the impact on School District 5 schools. The motion was seconded. Atkinson -I am really at a loss at how that can be done and to what extent 'that this statement charges us to do that. If it is merely something to put in there to say gee we have worked with the School District in the past to help them and gee we still want to do that, fine, but it looks to be more than that to me and until it is delineated or, I am not in favor of this. Larson -As maker of the motion, I think Jim that maybe we are looking for problems where they don't exist again, the School District is happy with this language, I think that it is the honorable thing that we do since they are not here protesting the district by verbal agreement they said they would not protest if we would insert this language so our legislative intent is clear. And that is all they are looking for, there is nothing here that says, that ties anything down in black or white, dollar amounts, or when or how, it is simply a matter of honor as far as I'm concerned. Donahue -Having read this thing I think it says absolutely nothing. It is just pie in the sky and if we feel good we will give them something and if we don't we won't. We might ask Flathead County, the Community College and the Mosquito Control Board if they want one in, it says absolutely nothing but they want it in, fine, put it in. I think the whole thing is so vague. 1014 Rauthe-I hope we are not diminishing the effort the School District sincerely entered into with us to negotiate this. And spending time of their staff and Board to request this so I take it seriously, the 2 phone calls I had this afternoon I took it very seriously and encouraged them to come and speak to that this evening if they would. Mr. Cooper indicated that they would not need to. The amendment carried with Atkinson voting against. Donahue -I am in favor of the ordinance as far as the mall project is concerned, I am in favor of it as far as Meridian Road is concerned, the balance of it is so vague, so open ended it is pie in the sky and I just can't support the ordinance if it is going to contain all that stuff and it looks to me like this is another opportunity to get a great big sum of money from someplace to be spent on things that we don't know anything about at this time so for that reason I will probably oppose this ordinance. Kennedy -I would speak in favor of the trban Renewal District and basically sum it up by saying that I concur with Larson and the items he said, I think that the creation of this District and the size that we are talking about will hopefully stimulate some new growth in the area which will in turn, turn into new taxes, which ' will in turn be able to allow us to be able to spend funds in the future for the development of Meridian Road and hopefully some storm drainage problems and a much needed problem with Two Mile Drive. I am sorry Mr. Wells is gone this evening, I feel sorry that he feels that we have been harassing and picking on the residents of the Meridian Road area and would hope that this project would be a way that the City of Kalispell is truly giving back to that area and trying to help the area with the needed problems. We have been as a Council, I know over the last 7 years, promising improvement to Meridian Road, promising dealing with the problem of pedestrians in that area. Each and every time we have a public hearing in that entire area, we have said, we know and now it is time to come to the table and to actually get it into the construction of Meridian Road, to get those improvements done and to look for the pedestrians in that area. I am excited about the extent of the area because of the fact that it will allow us and give us the tools to be able to do some projects in that area. Each and every one of them will come before the City Council, we will make a decision at this level as to which project it is that gets funded through the additional taxes that are generated in the area from new growth. I think to be able to utilize it in that area is going to be a big benefit to those residents and I whole heartedly speak in favor of the district, the size that it is for those reasons. 1015 Nystul-I support the ordinance, I think that the mall project, the assistance out there is what tax increment is intended for. We have an opportunity to use City/County, School District resources on Meridian Road, I do not concur with the entire area, the fact that we can have a simplified boundary change in here will facilitate that for the moment, and I will support it. Haarr-I am very much in favor of the initial request and the opportunity to use funds for Meridian but I think we are leading the citizenry astray by saying that we are going to have any money here for drainage problems, I think that is an issue that needs to be addressed immediately, I think that is going to have to be done with the sale of bonds with the present district that we have which includes the whole City and I will support it and I will call for an early discussion on the water problems that are going to occur as the temperature rises. The twice amended motion carried upon roll call vote with Atkinson, Collins, Granmo, Haarr, Kennedy, Larson, Nystul and Rauthe voting in favor and Donahue voting against. Ordinance 1260-TIF Amendment Airport Area -1st Reading The City Council on June 17th, 1996 approved the Kalispell City - County Airport/Athletic Complex Redevelopment Plan (Ordinance No. 1242). The Plan and the Ordinance contained references to the Montana -,Urban Renewal law, Title 7, Chapter 15, Parts 42 and 43 and discussed Tax Increment as an option to financing improvements to the Airport and Ballfields. The County Assessor established January 1, 1996 as the base taxable value date for calculating increment to the District. After discussing the Ordinance and Plan with the City's.bond counsel, Mae Nan Ellingson, it was determined that the City should amend the Ordinance to clearly state that the City would segregate tax increment funds accruing to the district and apply those funds to projects. It would also be appropriate to recognize January 1, 1996 as the base taxable value date for the District. Kennedy moved Ordinance 1260, an ordinance amending Ordinance No. 1242 to provide for the segregation of and application of tax increment in the City Airport/Athletic Complex Redevelopment Plan and confirming January 1st, 1996 as the base year for calculating the tax increment. The motion was seconded. With a roll call vote the motion carried with Atkinson, Collins, Donahue, Granmo, Haarr, Kennedy, Larson, Nystul and Rauthe voting in favor. Samaritan House Expansion Request Samaritan House has requested the City's assistance in expanding 1016 the homeless shelter on 2nd Street and 8th Avenue. The total project will be accomplished in three phases resulting in a total of 97 beds. In Phase One Samaritan House proposes to construct a 32 x 100, two-story, structure containing 21 rooms with 35 beds. Samaritan House is in the process of drafting a CDBG Block Grant Application for $400,000 and is requesting City assistance in matching money of $100,000. Community Development, Housing Division, has budgeted $100,000 for this year in low income housing. The Grant application requires a 25% match and must be completed by May. Housing Division staff time will be limited on the Phase One application because of prior commitments. Larson moved the City participate in the expansion of the Samaritan House by pledging matching funds in the amount of $100,000 to the Samaritan House expansion. The motion was seconded. Kennedy, Larson, Donahue and Rauthe spoke in favor of the motion. The motion carried with a vote. Northwest Healthcare Conditional Use Permit -Expansion of Day Care Center Northwest Health Care has made an application for a conditional use permit to expand their day care center at Conway Drive and U.S. 93 North from 12 to 24 children. The proposal was reviewed by the Kalispell City -County Planning Board at the February llth, 1997 meeting. The Planning Board recommended approving the CUP (7-0) with two conditions. Collins moved to approve the conditional use permit for Northwest Healthcare for the expansion of the day care center. The motion was seconded. With a vote the motion carried unanimously. Meridian Road Consultant A letter was received from Peccia and Associates to John Wilson, PWD, discussing the costs anticipated in the Meridian Road Reconstruction Project. The costs of the project exceed the funds available by $2.96 million. Peccia has prepared a list of items for elimination which reduces the deficit to approximately $1.5 million. Eventually the Council will be required to consider these, as well as other changes in the project, in order to reconstruct Meridian Road. John Wilson explained the memo. Nystul moved to approve the scope of services as explained by John Wilson and as included in his memorandum dated March 3, 1997 1017 regarding Meridian Road reconstruction. The motion was seconded. Upon vote the motion carried. Resolution 4319-Authorize MDOT Agreement -Idaho Street Lighting The MDOT has agreed to install sidewalk curb ramps at two intersections and twelve (12) luminaries on Idaho, Street between Glenwood and 7th Avenue West North. MDOT has delivered a contract for the installation and requested the City authorization to proceed. Larson moved Resolution 4319, a resolution that the City agreement of Federal Aid Project No. STPHS 0002(267) with the State of Montana, acting by and through the Department of Transportation, is adopted,by this City Council; and the Mayor of Kalispell is hereby empowered and authorized to execute said agreement on behalf of the City Council of the City of Kalispell. The motion was seconded. With a roll call vote the motion carried with Atkinson, Collins, Donahue, Granmo, Haarr, Kennedy, Larson, Nystul and Rauthe voting in favor. Greenacres Questions Referred to the next work session. FOR YOUR INFORMATION Kennedy requested the Airport Authority meeting be held after the next Council meeting. It was agreed to do so. Next Work Session March 10, 1997 7:00 p.m. Next Regular Meeting March 17, 1997 7:00 p.m. City Councils/County Commissioners Joint Meeting March.31, 1997 7:00 p.m. ADJOURN The meeting was adjourned at 10:22 p.m. Douglas D. Rauthe, Mayor ATTEST: Debbie Gifford, CMC Clerk of Council