Money to Flow Into Downtown Kalispell

By Beacon Staff

Big changes might be in store for downtown Kalispell.

After being tied up in litigation for nearly three years, the Kalispell Business Improvement District (BID) is back on its feet, freeing up more than $100,000 to be spent on revitalizing downtown and opening up the possibility for hundreds of thousands of more dollars in the coming years.

A Flathead County District Court judge ruled on June 12 that the BID, approved in 2004 but challenged in court by a partnership of property owners within the district, was established in a fair and legal manner. For Tom McElwain, the president of the Kalispell Downtown Association, the court ruling comes as a relief.

“Finally it looks like we have some funding that we can use to improve the business atmosphere in the heart of the valley in downtown Kalispell,” McElwain said.

Business improvement districts have been gaining traction nationwide and in Montana in recent years as cities look for ways to keep downtown vibrant in the face of constantly multiplying box stores and urban sprawl.

Montana’s first BID was established in Helena in 1986, though the capital city was far ahead of its peers. Most of the state’s seven others have been established this decade. Livingston is currently in the process of creating the eighth.

By state law, 60 percent of property owners within the proposed district must approve it by petition, and then the city government has to pass it. Though Kalispell’s was approved by the necessary parties, several property owners who voted against it filed a lawsuit on the grounds that the district was created improperly. The judge sided with the city and the BID’s board.

One of the property owners in the case declined comment and another couldn’t be reached after several phone calls.

Business improvement districts are designed to revitalize and maintain downtown, a multi-faceted endeavor that includes stimulating the core economy; improving infrastructure and landscaping; filling building vacancies; marketing the area to potential business owners and shoppers; working on parking solutions and lobbying for downtown causes. In short, it is used for anything downtown. The board works directly with city officials.

In Kalispell it will generate around $80,000 per year, said Bill Goodman, president of the BID board. Other cities make upwards of $200,000 annually, including Missoula and Helena. Kalispell already had collected more than $100,000 before the lawsuit stalled efforts.

Since the 1980s, Montana communities have made concerted efforts to revitalize their historical downtowns, though only within the past decade have the efforts been so widespread. Rod Austin, director of Missoula’s improvement district, said downtowns in many Montana towns during the 1980s were dead, including Missoula. He pointed to Helena as an example of a city completely reshaping its core, largely through the BID.

“You could see what it’s done there,” Austin said. “Helena was pretty dire straights before that.”

Helena’s BID is either solely or partly responsible for a series of downtown mainstays, such as a concert series many other Montana cities have emulated; a public trolley system; a variety of landscaping and infrastructure improvements; and helping to keep major businesses from leaving the heart of town as well as bringing more in.

Both Austin and Jim McHugh, Helena’s director, said there are few options for downtowns to generate money. Downtown associations receive only limited funds through membership fees. Cities can utilize urban renewal and tax increment-financing (TIF) districts, though these phase out and are limited in their scope. Kalispell has no downtown TIF district.

Also, McHugh said, Montana has no sales taxes to dip into and only less-populated communities qualify for resort taxes, like Whitefish. When Helena’s TIF district ended years ago, he said, the BID became downtown’s primary financial engine.

“I don’t think there would be a mechanism in place without it,” McHugh said.

With an improvement district, money is collected from businesses within the designated boundaries through property taxes. The amount varies from city to city, with some using a flat rate, some using a system based on property values and others using formulas based on a combination of several criteria.

Kalispell’s system is based on property value, with typical one-lot properties paying around $300 per year, Goodman said. Helena has a fixed rate of $400 combined with a percentage of the property value and a penny per square foot, while Missoula charges $200 for core properties and $150 for fringe properties.

Austin said Missoula’s BID is young and the long-range effects are yet to be determined, but so far several of its efforts have been popular, including its cleanup program. Through the program, hired workers clean graffiti off walls as well as litter of the streets weekly, which is substantial considering Missoula’s college bar scene, Austin said.

Also, the district is one of the main funding sources for hiring consultants to help formulate the city’s downtown master plan.

“It will be a catalyst for everything happening (downtown),” Austin said. “More businesses will come downtown. More people will come downtown to work and live – and that’s the goal. I think it’s going to make a huge difference.”

One of most important roles of a BID, proponents say, is that it gives a credible voice to downtown advocates. McElwain concedes, “I’m not sure that we have a consistent vocal group” in Kalispell.

It’s a lot harder, McHugh said, to ignore the concerns of a group of businesses with financial backing than an individual business.

“It’s a very multi-disciplined component that keeps downtown active and vibrant,” he said. “With just one business at a time, it’s tough.”

Austin and McHugh both encouraged Kalispell’s efforts.

“I would recommend that any community in the state have one,” Austin said.