The city of Kalispell is considering its options on what to do with $2.1 million in Westside Tax Increment Financing money. And with no immediate candidates for the urban-renewal money, local schools have asked for their share back.

Kalispell Public Schools recently submitted a request for early disbursement of the tax-increment money.

School Superintendent Darlene Schottle submitted a letter to the city on March 28. There was no specific amount requested.

The Kalispell Elementary district’s portion currently totals $442,259, or 20.99 percent of the Westside TIF Fund. The Kalispell High School district portion is $289,712, or 13.75 percent. The state’s general schools fund would get $316,050 or 15 percent.

The school district’s request does not specify what the money would be used for.

“They’re just saying, ‘Don’t wait until it sunsets,’” City Manager Jane Howington said.

The Westside TIF District expires in March 2012. If the city does not obligate the money or extend the district by then, the funds would go back to various taxing entities, including schools and Flathead County.

However, Kellie Danielson, president of Montana West Economic Development, is making a push for private developers to come forward with projects so the tax-increment money can be spent before the district ends.

In a column in Monday’s Flathead Business Journal, Danielson noted that Montana West and the Flathead Business and Industry Association do not want the money returned to the school district early. They prefer that the city would find projects that “create value and create jobs for the citizens,” Danielson wrote.

Howington said another option is expanding the Westside TIF District to include property from Center to Idaho Streets west of Main Street.

Over the next few months, the city’s Urban Renewal Agency will discuss the school district’s request as well as the possibility of expanding the district, Howington said. The school district’s request likely will come before the committee in May.

The Urban Renewal Agency will next meet at 4 p.m. Wednesday at a conference room at City Hall.

Another idea is to use Westside tax-increment money for a civic or convention center. There was a slight expression of interest by the county fairgrounds to develop a center there, Howington said. However, the fairgrounds are not inside the tax-district boundaries, according to Wade Elder, the city’s Revolving Loan Fund manager.

In tax-increment districts, property tax payments to government agencies such as the county and schools are capped for a period of time. As redevelopment and reappraisals occur in a district, the additional property-tax revenue goes entirely to the city’s tax-increment fund for that district.

Tax-increment money can be used for improvements to public infrastructure such as land acquisition, demolition of buildings, planning for utilities or utility upgrades and rezoning issues, according to Danielson.

The general purpose of a TIF district is to encourage development so that eventually there will be a bigger and better tax base to create revenue for public entities such as schools. But the type of development allowed is actually quite broad in scope, as long as it is not used to fund private business improvements.

Other examples include school infrastructure improvements; expanding Internet fiber and water utilities to serve an area; storm drainage; street planning, construction or expansion; park improvement; sidewalks, curbs and gutters; traffic control; street lighting; landscaping; environmental remediation; bridge construction and repair; parking structures; libraries; and emergency service facilities.

The Westside TIF previously funded the city’s acquisition of 67,000 square feet at Gateway West Mall to house a call center (now occupied by TeleTech) and improvement along Meridian Road, Two Mile Drive and the surrounding area.

Previous requests by Ashley Square Mall and Gateway Community Center for Westside TIF District money were turned down by the city.

Reporter Caleb Soptelean may be reached at 758-4483 or by email at csoptelean@dailyinterlake.com.