A move by FedEx from its shipping facility south of Kalispell to the Old School Station has cleared its first hurdle with the city.

The Evergreen FedEx facility will remain in business.

The City Council voted 7-1 Monday night to use money collected from the Old School Station tax increment finance district to reimburse the developer for special improvement district fees.

Those improvement district fees are charged when water, sewer and other infrastructure go into the development.

But the developer, a firm called DCP Kalispell - headed by Ron Buchanan of Roswell, Ga., who builds facilities across the United States and leases them to FedEx - still will be on the hook for the full amount of fees if the tax increment money isn't enough to cover the bill.

That could happen if no development goes in other than Fun Beverage, already operating in the first lot, and FedEx on Lot 2.

Buchanan is working with Kalispell builder Terry Kramer of Kramer Construction on this project.

"The individual making the investment expects a long-term lease," City Attorney Charles Harball told the council.

It won't be just a warehouse, he added. It will be a hub where packages are shipped and tracked.

Partially because of that, the Georgia developer has to make improvements that are needed in a technology tax increment district - the type of increment district formed for Old School Station.

Glacier Bank, which is providing a portion of the financing for the project, asked the city to add two clauses to the developer's contract, allowing the bank to foreclose if the developer doesn't make payments and obligating the city to carry through on its agreement.

Council members added those without comment.

But two other suggestions for changes didn't fare so well.

Council member Bob Hafferman wanted to clarify a definition of "assessments," showing it means special improvement district assessments on Lot 2.

And he wanted to nail down a termination date for the contract - whether the contract ends at 15 years when the increment district is scheduled to sunset, or must be paid off if the city decides to sunset it earlier than scheduled.

"I think this is a good use of tax increment funds," Hafferman said, but he wants to ensure the revenue raised will be enough to pay for maintenance as well as replacement of infrastructure. And he wants a definite close-out.

"I don't want to see this used to extend the TIF," Hafferman said.

Council member Jim Atkinson was concerned that specifying an ending date could tie the city's hands in the future, leaving it without enough tax increment money to cover costs.

Council member Tim Kluesner, however, said it allows freedom to close out the increment district if it fills out earlier than expected and to find potentially better funds in the city budget for the reimbursement.

Harball had suggested including "other sources" in the phrasing that shows reimbursement money coming from the increment district. Council member Hank Olson wanted to specify the definition of those sources.

After considerable discussion, Hafferman's amendment adding a termination date to the developer's contract failed on a tie vote.

Because that failed, Hafferman said it didn't matter whether the "assessments" definition was clarified because he would vote against it anyway. The council ratified the agreement 7-1.

Reporter Nancy Kimball can be reached at 758-4483 or by e-mail at nkimball@dailyinterlake.com