New FedEx Facility May Move to South Kalispell

By Beacon Staff

Kalispell City Council indicated approval Monday of a plan to use Tax Increment Financing funds as an incentive to build a new FedEx Ground shipping facility into the Old School Station industrial development.

The developer of the new FedEx Ground center, Devron Property Services Inc., is proposing an 18,000-square-foot facility that will replace the Evergreen facility, an investment of roughly $2.8 million. Construction on the facility could be underway as early as August or September. The expanded facility would add one part-time job, and retain the two full-time and 7 part-time jobs at the existing FedEx operation.

Kellie Danielson, the city’s director of community and economic development, pitched a plan to the city council to offer roughly $150,000 in the tax increment financing (TIF) funds to the developer. These funds, along with a $250,000 incentive by the Old School Station developers, would offset the nearly $370,000 in special improvement district (SID) fees Devron Property Services would be required to pay upon deciding to build at this location.

On top of the SID fees, the developer will also be required to pay $60,000 in impact fees and $46,000 in latecomer’s fees, which total more than $475,000 in upfront development costs for the new facility. Traffic impact fees, recently adopted by the city council, are estimated at $4,818.

Danielson stressed that all of these figures are projections, and hard numbers won’t be clear until Devron Property Services commits to the project. But she also said that in negotiations over the new FedEx facility, which have been ongoing since July 2008, the developer made clear some form of financial incentives were necessary to offset the upfront development costs, and keep the site competitive. The approximately $150,000 incentive from the city would be paid in increments to the developer over 10 years, beginning in 2013, when the FedEx facility comes on the tax rolls.

A TIF is basically a tool cities and states can use to encourage development in a certain area by using the increased property tax revenue in an improved area to finance the debt that was issued, usually through municipal bonds, to make those improvements that are helping raise property values. The Old School Station TIF was formed in 2006.

Council members seemed to approve of Danielson’s proposal, but no votes are allowed at a work session, so the council will formally decide on the matter at its May 18 meeting.

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