A tourism business improvement district may be a matter of survival - or at least of thriving - for Kalispell's tourism trade, a local hotelier said Monday night.

"Regionally, we're still competitive even with this tax added on," said Chris Walters of the Hilton Garden Inn. "If we don't [institute] this tax, the competition will continue to add money to their marketing efforts."

Creation of the district and its structure must be approved by the council before it can go into force, so the Kalispell City Council got a preview of plans at its Monday work session.

The city's 16 lodge, hotel and motel owners are working with the Chamber of Commerce to craft a tax district that includes just the hotel properties themselves, not the surrounding business or residential properties.

As with the city's downtown business improvement district, it would impose what amounts to a tax on each of the member properties.

That 2.95 percent tax - the current proposal - would be added onto the state's 4 percent bed tax and 3 percent sales tax when figuring nightly or weekly room fees.

The $500,000 it would raise annually, based on 2008 revenues, would be used in a marketing campaign to promote visitors to the Kalispell area and to the specific lodging ventures in the district. It far outstrips the city's current $30,000 share of state bed tax money.

The 2.95 percent figure, Kalispell Chamber President Joe Unterreiner explained, was just enough to raise a usable pot of money while keeping the overall room tax fees under what local hoteliers perceived as a "ceiling" of 10 percent.

The resulting 9.95 percent would be less than the national average of 13.4 percent and lower than surrounding cities from Spokane to East Glacier, he said.

Montana's Legislature changed the business improvement district law two years ago to allow districts to include only selected properties.

But council member Hank Olson wanted to know whether hoteliers outside Kalispell city limits could become part of the district. City Attorney Charles Harball didn't have an immediate answer but said he could envision associate memberships.

A petition is being drafted and, after being checked for legalities, will be circulated to potential district members. Sixty percent of them must approve it before it goes to the council, but Aero Inn owner Gib Bissell told the council he thinks 80 percent of the lodging owners back the idea now.

After receiving the petition, the council would issue a resolution of intent to form the district, hold a public hearing, allow a protest period and eventually vote on the ordinance to form the district.

Bissell also said the district could help synchronize events and better publicize the broad range of events in the area, helping to even out the boom-and-bust weekends typical of bookings at city hotels.

District organizers are working on whether to assess fees by room count or square footage, whether to collect the money on property tax bills, who will be board members and how much bookkeeping and oversight the city will have to provide.

Council member Bob Hafferman voiced a concern that a tourism business improvement district would siphon money away from the city's future ability to perform its sole legitimate purpose of providing emergency services.

Winnie Storli, whose family has owned the Blue & White Motel for eight decades, said if the district doesn't bring the promised results down the road, "there will be a cut-off point and it will be dropped."

She also promised a tight rein on administrative costs and a list of specific initiatives for use of the money.

"Maybe this isn't a good idea. I hate taxes," Storli said. "But we've got to do something and this is a part of the something we're trying to do."

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