Kalispell Denies Tax Increment Funds for Gateway Center

By Beacon Staff

The Kalispell City Council Monday denied an application by the Gateway Community Center for approximately $600,000 in tax increment funds to pay for improvements to the hub of social service and nonprofit agencies located on the west side.

Though all council members praised the Gateway Center for the services it provides, particularly during a period of deep economic hardship, a majority agreed with the recommendation of the Urban Renewal Agency that the project did not meet some of the main criteria for funding, which include development that would expand Kalispell’s tax base and create jobs that pay a certain wage.

“This project is not in compliance with the guiding legislation we have now, so I’m going to have to vote no, as much as it pains me,” Mayor Tammi Fisher said.

The goal of tax increment finance (TIF) districts is to encourage economic development in a targeted area by setting aside a certain amount of tax revenue generated by that area, to make infrastructure improvements there, thus encouraging more development. The Westside TIF has raised about $1.9 million, but those funds have largely laid dormant in the absence of any new business development.

Gateway Center leaders have been seeking a portion of the funds to pay for improvements, like upgrades to phone, electrical and security systems, carpeting, window replacement and kitchen upgrades for the Meals on Wheels kitchen. But should the nonprofits eventually purchase the former Gateway Center mall, and apply for tax-exempt status, that would eventually remove $145,000 per year from Kalispell’s tax rolls, which some council members said defeated the very purpose of tax increment financing.

“If you’re going to pass this we need to have a plan in place of how we’re going to replace $145,000,” Councilman Tim Kluesner said.

Other council members, however, pointed out that the city considered dispersing Westside TIF funds to local schools in May at the urging of City Manager Jane Howington, but local business groups asked Kalispell to keep the fund intact, should new projects come forward. None have.

Councilman Randy Kenyon urged his colleagues to look beyond the strict criteria, and consider how much help Gateway Center agencies are providing hard-hit citizens during the downturn.

“It’s not always about money,” Kenyon said. “Sometimes there are valuable things that take place in the community that rise above money.”

“This is one of those important things where we have to look at those it serves,” he added. “If the community were to take a look at this I think they would feel the same way.”

As an alternative, Howington and Wade Elder, the city’s revolving loan fund manager, have recommended Gateway leaders fund the project through the state Community Block Grant Development program. But Sherry Stevens, executive director of the local United Way, said Gateway leaders hope to use block grant funds to purchase the Gateway mall building itself, “and to do that relatively soon.”

She and other nonprofit agency leaders, based out of the Gateway Center, said the expansion of space by relocating there has led to the creation of 12 new jobs so far, and will eventually create 30 total – even if those positions don’t pay the wage of $15.45 per hour called for by the urban renewal plan.

“Many of our positions are very, very close to the qualifying guideline in the TIF application,” Stevens said. “We look at this as human infrastructure.”

But the views of council members opposed to bending the criteria for the Gateway Center prevailed.

“I have to vote ‘no’ on this and it’s painful to say that,” Councilman Jeff Zauner said. “I cannot make this decision based on emotions.”

Council members Kenyon and Duane Larson voted in favor of Gateway Center’s application, while Fisher, Zauner, Kluesner and Bob Hafferman voted against. Council members Jim Atkinson and Kari Gabriel recused themselves: Gabriel because her work is related to the United Way and Atkinson because the Agency on Aging, where he is employed, is considering moving into the Gateway Center.

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