The Kalispell City Council on Monday refused to bite on a proposed project to acquire and demolish the former Gateway West Theater and build a 255-space public parking lot in its place.

That sets up one final scramble as the council asked city staffers to look for other last-minute projects that could be used to extend the life of the West Side Tax Increment Finance District.

Set up in the late 1990s, the financing mechanism is on track to sunset next March.

But the proposed parking lot project isn’t dead yet. At the council’s request, it will be reintroduced at a special meeting Wednesday, Jan. 4, along with any other possible tax-increment projects that can be put together for the council to consider.

“We feel like the good Samaritan who’s providing CPR and waiting for the ALERT helicopter to arrive. We’re running out of time,” City Attorney Charles Harball told the council.

Under the proposed project, which has a $5,500 appraisal being done, the city would swap a parking lot it owns north of the mall for the vacant and flood-prone theater building owned by developer Phil Harris.

The city then would raze the theater and build a public parking lot in its place.

Bonds issued to pay for the estimated $1 million to $1.5 million project would be paid off using tax increment revenue. That would extend the life of the TIF district for as long as the debt is outstanding, and give the city time to look for other tax increment projects and consider expanding the tax increment district to overlay a recently expanded West Side Urban Renewal Plan.

City Manager Jane Howington repeated her pitch for the parking lot project.

She said it would scrape a blighted and flood-prone property, free a city-owned lot for future private development and provide enough parking spaces for the city to meet its agreement with TeleTech, a company leasing 60,000 square feet of space at the mall from the city and Flathead County Economic Development Authority.

Council members Jim Atkinson and Randy Kenyon voted in favor of adding the project to the West Side Urban Renewal Plan, the first step toward making it eligible for tax increment funding. The rest of the council opposed that course. The council vote was 6-2.

Council member Bob Hafferman called it a “ruse” to hang onto $2 million in the TIF fund and keep the $400,000 that it generates every year flowing into city coffers — money that can be used to eliminate blight, improve infrastructure and foster job creation. “I have too much respect for the taxpayers to go along with this scheme,” Hafferman said.

Arguing it could be cheaper, other council members asked city staffers to instead look at using a vacant, 40,800- square-foot property owned by Jerry Begg at the corner of Glenwood Drive and Husky Street.

Howington agreed, but stressed that property is perfectly capable of being developed as it sits, unlike the former theater. “If you’re going to spend tax dollars to take a property off the tax rolls, wouldn’t it be better to spend it to take a blighted, flood-plain property off the rolls that couldn’t be built on anyway?” she asked.

Mayor Tammi Fisher asked staffers to explore improving the intersection of Appleway Drive and Meridian Road as a possible tax-increment project.

Fisher said she supports continued efforts to find a suitable project to extend the life of the TIF district. “If we had more economic development tools I would be all for using something else. But this is it,” she said.

The special meeting on Jan. 4 will be Howington’s last as city manager.

Reporter Tom Lotshaw may be reached at 758-4483 or by email at tlotshaw@dailyinterlake.com.