The Whitefish City Council is willing to consider using a portion of the city’s tax increment finance district revenue to help make improvements to Whitefish’s aging high school.
Figuring out how to do that will be the next step.
At a Monday work session where no formal decisions can be made, there was a consensus among council members to direct the city staff to research a couple of funding options and outline the public process needed to facilitate a financial contribution to the school district.
Whitefish is in the throes of deciding how to spend accumulating tax increment revenue over the next nine years. If left untapped, the TIF fund would have an ending cash balance of about $10.7 million when the tax increment district sunsets in 2020.
The district by 2020 is expected to generate more than $4 million annually, for a total of $42 million in revenue.
Debt service payments of about $1.8 million annually from bonding the district in 2000, along with other projected expenditures, whittle down the ending cash balance.
When the Whitefish tax increment district was established, the Whitefish school district negotiated an interlocal agreement — unique in the state — that gives the school its share of the increase on residential properties.
The annual payment to the schools has increased to about $600,000 annually.
The tax district funnels any increases in taxes within its boundaries into a fund for projects to improve the value of property within the district.
One way for the city to help pay for high-school improvements would be to advance the $5.3 million the school district is scheduled to receive through 2020, City Manager Chuck Stearns said.
“Advancing the money would be the quickest and easiest because we’d be taking it out of what they’d be getting anyway,” Stearns said.
The city also could choose to release a certain amount of tax increment revenue to all of the tax jurisdictions that contribute to the TIF fund — the city of Whitefish, Flathead County, Flathead Valley Community College, state university system and the Whitefish elementary and high school districts. The council didn’t favor that option.
A third funding mechanism would be to make a direct contribution only to the school district, an idea the council agreed to consider.
The high school property isn’t part of the current TIF district, however, so the tax district boundaries would have to be altered to include it.
Council member Bill Kahle pointed to the TIF interlocal agreement between the city and school district that calls for collaboration and support for well-maintained schools.
“The first thing people look at when they relocate are the schools,” Kahle said, adding that most people are particularly concerned about finding a quality high school that can give their children a competitive edge in college readiness.
“If we’re looking at expanding the economic base, a strong viable high school is critical,” Kahle said.
The proposed 120,000-square-foot high school design — projected to cost $19 million — would renovate 40 percent of the existing high school and replace the remaining space with a new structure. Bayard Dominick of Steeplechase Development Advisors, the school district’s hired consulting firm for the project, said a financial commitment from the city would go a long way in raising money for the project.
The school district hopes to raise $4.5 million in alternative funding to bring down a bond request to about $15 million.
Former state Rep. Mike Jopek cautioned council members to step carefully if they decide to alter the TIF funding process.
“My advice is to follow the process, do it legitimately and don’t just assume you can do it,” Jopek said. “Hear what the public feels the money should be spent on.”
Jopek further advised the council not to jump into a funding scenario for political reasons.
“It smells like people want it to buy votes,” he said. “Take the politics out.”
Stearns told the council that state legislators carefully monitor how cities handle tax increment funding, and that several bills have been proposed through the years to scale back the use of tax increment finance districts.
“You don’t want to kill the golden goose by doing something [the Legislature] won’t like,” he said.
Several audience members said they’re not yet convinced that giving the school district a sizable portion of the tax revenue — estimates up to $5 million have been proposed — is an appropriate use of TIF money. It would take away a lot of funding that could be used for other urban renewal projects, they maintained.
Features editor Lynnette Hintze may be reached at 758-4421 or by email at firstname.lastname@example.org.