A decision on whether to dissolve and distribute roughly $1.8 million currently held in a tax increment fund was delayed for another three months by the Kalispell City Council Monday.
The funds are part of the Westside Tax Increment Finance (TIF) District, which was created in 1997 and is scheduled to sunset in March of 2012. In April, City Manager Jane Howington and City Finance Director Amy Robertson suggested distributing $1.5 million from the TIF to taxing entities like schools or the city health levy, which would leave about $730,000 in the account when anticipated payments later this year are received.
At its April 19 meeting the council opted to delay for a month its decision on the Westside TIF to see if any good development projects emerged.
Business groups have argued that the city should leave the TIF fund intact, since the construction of the alternate truck route through that area, along the intersection of Meridian Road and Idaho Street, may draw development projects that could be eligible for the funds.
“FBIA does not support spending the money simply to spend the money because it’s there, but neither do we support having the funds go into the black hole of public coffers,” Denise Smith, of the Flathead Business and Industry Association, said. “FBIA asks you to not make a rush decision in taking the money out of the TIF, just because you don’t agree with how some of the TIF dollars have been spent in the past.”
Those who favor releasing the money say it is merely laying dormant, with no viable development projects on the horizon, at a time when other public entities are squeezed by the economy and hurting for cash.
“It has been a drain on the city, the schools and the county for providing services to the taxpayers and what have we got for it?” Councilman Bob Hafferman, a longtime critic of tax increment financing, said. “Why don’t we show a little respect to the taxpayer for a change and give them back some of their money so we don’t have to raise taxes in order to provide services for these areas that are skimming the general fund and the school fund and the county fund?”
A TIF is a development tool where once the district is designated, tax revenue for entities is capped, and additional revenue from new buildings or increasing property values is set aside for capital improvements in that specific area, thus encouraging further development there.
Councilmen Duane Larson and Wayne Saverud also said they favored distributing the Westside TIF funds, though Saverud added that his vote did not mean he objects to tax increment funds in general.
“I can support redistribution at this point but has to be with the understanding that the city, by and large, has been a good steward with those resources and done some very important work,” Saverud said.
At that point, Councilman Jim Atkinson abruptly, and without comment, introduced a motion to delay voting on whether to dissolve the Westside TIF until August. Mayor Tammi Fisher and Councilman Tim Kluesner hesitated before supporting the motion, and it passed 5-4, with support from Atkinson, Councilman Randy Kenyon and Councilwoman Kari Gabriel.