The Kalispell City Council on Monday discussed paying incentives for a developer to build an 18,000-square-foot FedEx Ground distribution center in the Old School Station industrial park.

City staff is recommending that the council provide the developer, Devron Property Services Inc., with approximately $150,000 collected through the industrial park's tax-increment financing district.

In a tax-increment financing district, property taxes collected above a specific amount are set aside in a special fund to pay for infrastructure work to boost economic development.

The proposed tax-increment payment from the city and a $250,000 reimbursement to the developer from the Old School Station industrial park are meant to offset special improvement district fees.

The developer, based out of Atlanta, Ga., still would be required to pay an estimated $105,000 in impact and latecomer fees.

The building and land costs for the facility, which would be a coordination point for 10 delivery routes, are estimated at $2.8 million. Construction is expected to begin in September, making the facility operational by May 2010.

Council members heard Monday that the developer plans to use a Montana-based construction firm, but the bidding process has not yet begun.

FedEx Ground wants a 10-year-lease of a 4.69-acre lot in the Old School Station industrial park, an island of incorporated land south of the city.

A study by a Bozeman firm found the facility would contribute a one-time economic impact of $4.8 million and an ongoing, five-year economic impact of $39.1 million.

Without tax-increment financing district money, the deal between FedEx Ground, the developer and Old School Station most likely would fall through, according to city staffers.

Council members appeared generally supportive of the proposed measure, which is expected to come before them for a formal vote on May 18.

Reporter Nicholas Ledden may be reached at 758-4441 or by e-mail at nledden@dailyinterlake.com