A second look at beach expansion

The Whitefish City Council took up the idea of expanding City Beach at its Feb. 1 meeting and unanimously agreed to begin negotiations with the owner of an adjacent property. A Park Board subcommittee will assist city manager Chuck Stearns in the talks.

The city's Park Board on Jan. 12 unanimously recommended that the city pursue acquisition of the property after it learned the property is currently listed at $2 million.

A $3.19 million bond election to purchase the property in October 2007 was turned down by White-fish voters by nearly a 3-2 margin in the city's first all mail-in election.

The city had no tax-increment financing (TIF) funds available at the time, so it proposed a 13.94 mill levy to pay for the property. That translated into about $93 per year on a median-priced $325,000 home.

"Comments received at the time indicated that the public, in general, supported the concept of expanding City Beach, but that the price for the property was simply too high," city attorney John Phelps told the council.

But the state's recent property tax reappraisal 'significantly benefited the tax-increment fund," Phelps said. "Despite the difficult position of the city's general fund, the city's tax-increment fund is healthy, and the city anticipates continued growth in the tax-increment fund."

Phelps told the council the city could pay off the purchase price in the next two to four years "if the seller is willing to provide financing."

Councilor John Muhlfeld, who favored the acquisition, said the 400 percent jump in property taxes will likely force the owner to drop the price even further. Councilor Turner Askew echoed that feeling.

"Two million is not the final price," he said. "Prices on the lake are 50 percent of what they were two years ago."

The 0.44-acre L-shaped parcel includes 100 feet of lakeshore and is 211 feet deep along its eastern boundary. With resort-residential zoning in place, the parcel could support five units with a conditional-use permit.

According to minutes from the Park Board's Jan. 12 meeting, Phelps said the city is "looking at more than a million dollar increase in tax revenue a year" in the TIF fund. Board members include Donnie Clapp, Susan Schnee, Benny Bee, Laurabeth Michels, Fred Jones, Julie Baldridge and councilor Chris Hyatt. The subcommitte includes Bee, Jones and Baldridge.

Baldridge told the board her concern about voters thinking the city was "going around them after voting it down" was allayed after she saw the numbers — 1,565 residents voted and the difference between yea and nay was 273. She said she'd hate to see the property 'slip away."

Hyatt told the board he was a "fan" of the idea, but he noted there are a number of projects or programs competing for the TIF money.

The TIF district was established about 18 years ago. The amount of revenue from property taxes going to the city's general fund was fixed at that time. Additional revenue as property values increased through subdivision and development went into the TIF fund, where it is invested and used for public projects, including:

¥ The $3.8 million purchase of Depot Park, concluded last fall, was made with TIF funds and money from the sale of lots in Baker Commons.

¥ The city last year sold $16.7 million in TIF-backed bonds. About half the money will pay for the new Emergency Services Center, and the other half was used to refinance outstanding TIF bonds issued from 2000, 2001 and 2004 at lower-interest rates.

The bond money could also be used for the $300,000 match needed for a $900,000 federal appropriation that Sen. Jon Tester secured last year for the Emergency Services Center.

¥ City manager Chuck Stearns has proposed using TIF money to promote new construction in Whitefish. TIF money would be used to reimburse impact fees for projects inside the TIF district. Impact fees for a new single-family home start at $5,560.

The stimulus program would be capped at $50,000 per project and $500,000 for the entire program, which would run from March 1 through June 30. Tax-exempt properties would be ineligible.

The council's consensus was that Stearns' plan would have little impact except with small remodeling projects. But they agreed with Stearns that the city needed to do something for "perception," and they directed him to come back with a plan that went to Aug. 31. The vote was 5-1, with councilor Phil Mitchell opposed.