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