Resort Tax Increase Proposed to Preserve Haskill Basin

Some retailers concerned about impacts to businesses

By Tristan Scott
Doug Chadwick speaks about protecting Haskill Basin's water during a press conference at Depot Park in Whitefish. Greg Lindstrom | Flathead Beacon

In 1929, the owners of Whitefish’s community water supply, F.H. Stoltze Land and Lumber Co. tendered an offer – $12 for the legal rights to a tributary of Haskill Creek, the primary source of municipal water for the community.

Thinking the cost exorbitantly high, the Whitefish city fathers refused to purchase the land.

The lumber company went ahead and built the intakes and pipeline anyway, allowing the city access to the property on a handshake deal that endures today.

But without any easement of record giving the city legal access to any Stoltze lands, that agreement could dissolve at any moment, and city leaders are trying to seize on an opportunity to secure it in perpetuity.

Today, however, the price tag to secure those legal rights has grown to $20.6 million, yet city officials say it’s a bargain that Whitefish can’t afford to turn down again, particularly with the property’s high development potential – more than half of the Whitefish Mountain Resort acreage, as well as the Iron Horse and Lookout Ridge subdivisions on Big Mountain, are located on former Stoltze lands, and in the past 20 years Stoltze has sold almost 1,200 acres for development.

If Whitefish were to lose access to Haskill Basin water, it would force the alternative of pumping and treating water from Whitefish Lake, costing an additional $500,000 annually, according to Whitefish Mayor John Muhlfeld.

Last year, Stoltze and the nonprofit Trust for Public Lands (TPL) reached a deal that would keep the land permanently protected for water, wildlife and recreation uses, while still allowing Stoltze’s sustainable timber management to continue.

Stoltze values the land at $20.6 million, but the company has offered to sell it to the city for $17 million, but TPL’s right to purchase the easement expires at the end of 2015.

“This truly is a one shot deal,” Muhlfeld said. “The benefits we will realize are untold.”

So far, all but $8 million has been raised to buy a 3,000-acre easement in Haskill Basin, located a couple miles northeast of Whitefish, and voters will decide this month whether to fund the remaining cost through a 1 percent resort tax increase.

“Fifty years from now, nobody is going to care how this deal went through, but they are going to say, ‘you got that for $8 million? That’s incredible,’” said former Whitefish Mayor Mike Jenson, who’s chairman of the nonprofit Protect Haskill Basin, a group supporting the resort tax increase.

Last month, the Whitefish City Council identified the 1 percent resort tax increase as the most equitable funding measure to pay for the easement in Haskill Basin, where the city derives 75 percent of its municipal water supply.

The council reached that decision after considering three funding options – the resort tax increase, a water rate increase or a water revenue bond – and Whitefish voters will either agree or disagree in a special election April 28. Mail ballots will be sent out April 8 to the city’s 4,133 registered voters.

If approved, the city’s resort tax on lodging, restaurant food and drinks and retail items would increase from 2 percent to 3 percent.

Muhlfeld said the council’s reasoning was that it was more equitable to distribute the financial burden through a resort tax increase affecting the half-million visitors Whitefish draws annually than on the backs of 5,200 households.

And while there has been no opposition to the goal of protecting Haskill Basin from development, preserving its recreational opportunities and public access, there is disagreement over whether a resort tax increase is the best funding mechanism, particularly from retailers.

Mike Gwiazdon, president and CEO of Sportsman & Ski Haus, said it took his business four years to recover when voters enacted the 2 percent resort tax in 1995, and with the Canadian dollar falling in value he’s seen a decline in business.

“I’m not against taking care of our water. I’m not against doing what it takes to get that done. And I don’t think any of us are. We just think the resort tax is not the answer and it is going to be very punishing to the retailers of our community,” Gwiazdon said.

Ron Brunk, owner of Glacier Cyclery and Nordic in downtown Whitefish, likewise supports the easement. It will protect access to a recreation area containing mountain biking and Nordic ski trails, and will benefit his business.

Still, he said, the resort tax, at least initially, will affect his business when it’s implemented.

“I would prefer another direction rather than the resort tax,” he said during a Feb. 17 city council meeting. “It took a while for business to come back after the resort tax was based and I do believe it will come back again after this.”

Muhlfeld explained that Whitefish’s resort tax has raised $25.8 million in the past two decades, with tax revenue increasing at an average of 6 percent each year. He said 75 percent of resort tax collections are used for street projects, 25 percent is rebated to property owners, 5 percent is set aside for park improvements, and the remaining 5 percent helps administer the tax.

Whitefish homeowners receive an average annual rebate of $126 from the current 2 percent resort tax, and under a 1 percent increase the property tax rebate would increase to $180, Muhlfeld said.

Earlier this year, the Haskill project received a funding boost from the U.S. Forest Service, which ranks such projects for funding through its Forest Legacy Program, awarding grants to states to purchase permanent conservation easements.

The agency has given the Haskill Basin Watershed Project its No. 1 spot, positioning it to receive $7 million in Legacy Project funding. An additional $2 million will come from the U.S. Fish and Wildlife Service’s Habitat Conservation Plan Land Acquisition Program. Together, the grants give the project significant purchase toward raising the $17 million needed to buy the development rights from Stoltze by the end of 2015, leaving a balance of about $8 million.

“That’s about 38 cents on the dollar for Whitefish, and I think that’s a pretty darn good deal,” Muhlfeld said. “As a community we consistently set a high bar for ourselves. I do think we can meet this goal.”

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