Kalispell City Council will have a controversial decision to mull over when it tackles a proposal tonight to distribute money accumulated in the Westside Tax Increment Financing District this year.

Nearly $1.8 million is sitting in the coffers right now as available cash — after the final payment this spring to retire a 10-year bond. That bond, approved in 2000, allowed a long list of improvements along Meridian Road, Two Mile Drive and surrounding areas.

The money left over from that debt service could remain in the fund until the Westside TIF district sunsets on March 11, 2012, or it could be distributed before June 30 to a list of 16 taxing entities that collect on property inside the district.

In addition to the $1.8 million, another $150,000 in second-half tax payments are due in June and July, bringing the total by July to just over $1.9 million.

City Manager Jane Howington and Finance Director Amy Robertson will present the proposal at tonight’s council meeting to distribute $1.5 million of the $1.9 million cash balance.

Recipients would get a share of the money based on the tax levies that are due. The two biggest are the city itself — $344,400 for the city and $34,000 for the city health levy — and Kalispell Public Schools’ elementary district, which would have $315,000 coming to it. General schools would get $225,000 and Flathead High would get $206,000.

If those and the remainder of the distributions were to be made before the 2010 fiscal year ends in June, the balance would be combined with about $300,000 anticipated to come into the district in fiscal year 2011, leaving about $730,000.

That money would be available for distribution or projects at a later date.

The Westside district stretches generally from U.S. 2 West north to U.S. 93, where it meets Heritage Way. It includes the Greenbriar subdivision on the west and cuts a long narrow swath to the east where U.S. 93 and Sunset Boulevard meet, but excludes the Flathead County Fairgrounds.

When the tax increment district was formed in 1997, property tax collections each of the entities received were frozen. As property values increased with rising land values and with additional building, that extra tax money went into the tax increment financing fund. It’s to be used for projects solely within that geographic area that would, in turn, increase the district’s value, or be returned to the entities when it sunsets.

The council could decide to close out the district — sunset it — sooner than the scheduled 15-year life span that ends on March 11, 2012.

A couple development projects — at Ashley Square and at Gateway West — have come before the council asking for help from the TIF money. Neither gained council approval.

“Staff does not see anything in the pipeline that qualifies in the next couple years, but we see a need for a different TIF district,” Howington said, after the U.S. 2 Alternate Route is built this year and changes traffic patterns and volumes in that area.

“But the property in the current TIF is not what will need rehabilitation,” she added. And “most of the property in the TIF is not in need of or eligible for funding,” she added.

Dire financial straits for many have made a case for returning the money to government entities that are struggling now. Others argue that a distribution now essentially would amount to frittering away what could be a substantial pool of money for a significant improvement project in the Westside area.

“The TIF’s value-added (amount) belongs to all the taxing entities,” Howington said.

“The city is responsible to the other taxing entities to be a good steward, to try to help grow the property values for all of them,” she said. “If we have money in the TIF bank and we see no properties needing money in the next couple years, is it responsible to let it just sit there in the bank?”

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