Kalispell’s plan to extend the West Side Tax Increment Finance District continues to take shape, with the Kalispell City Council holding a first vote Monday to add three projects to the West Side Urban Renewal Plan.

The 15-year-old district sunsets on March 17 unless the city issues new debt for a project in its boundaries before then.

In a first reading of the ordinance, the council voted 8-1 to add the projects to the urban renewal plan. That’s the first step toward making them eligible for tax increment funding that would be used to pay off the debt.

Projects include looping a dead-end water line along West Colorado Street — estimated to cost $300,000 to complete two phases — and improving the intersection of Appleway Drive and Meridian Road.

The intersection work was previously estimated to cost $75,000, but the council on Monday approved spending up to $11,000 for a traffic study by Stelling Engineers to help determine the cost and scope of the project.

“We know there are right-of-way issues there,” City Attorney and Interim City Manager Charles Harball told the council.

“The study would let us know how much negotiation will be needed, whether a simple left hand turn [lane] would be adequate; it would give us a much better guess on what the total costs would be on that project.”

At the request of council member Tim Kluesner, the council voted 8-1 to amend the ordinance to say the city will, rather than may, set up a revolving loan fund to help property owners tear down and clean up blighted buildings. That’s the third project being added to the plan.

Any amendments to the West Side Urban Renewal Plan must also be approved by the Montana Department of Revenue.

Ben Johnson, the city’s bond counsel, told council members that debt for a project must be issued before March 17 to extend the life of the tax increment district. Debt the city issues to extend the district will set the parameter for how long the district can be extended.

“If you set a three-year term, you would have to amortize this and any future debt [in the district] within that term,” he said.

Extending the tax increment district is meant to keep it alive as a development tool and give the council time to find more projects and consider expanding it to overlay a recently expanded West Side Urban Renewal Plan that includes a number of new goals, like taking out the railroad tracks that run through the city and relocating the two businesses that use them.

Harball said even a $300,000 project like the water line looping could likely be financed over 20 to 25 years.

But the city will seek financing with no prepayment penalty so the debt can be paid off and the district sunset earlier if so desired.

A fund for the tax increment district holds about $2 million. The district is projected to generate about $400,000 of tax increment this year — money coming in over and above taxable value caps set 15 years ago that can be used to improve infrastructure, eliminate blight or foster development and job creation.

If the district sunsets, the money in its fund would be reimbursed to the general funds of the city, county, schools and state, which would have received the tax income if the district was not in place.

Council member Bob Hafferman was the only vote against amending the West Side Urban Renewal Plan to add the three projects and against paying for the traffic study.

“I’ve stated before, this whole proposal is nothing more than a ruse. These are projects to hoodwink the public,” Hafferman said.

“This means there will be no tax relief for Kalispell taxpayers, even though the existing TIF district has fulfilled its objective. We’re talking about tax relief of about $2 million already in the kitty and $400,000 of property taxes skimmed off annually that taxpayers have to make up.”

Others, including leaders of the Kalispell Chamber of Commerce, Kalispell Downtown Association and Kalispell Business Improvement District, spoke in favor of the three projects and extending the life of the tax increment district.

“These dollars can’t be utilized for downtown projects, but we recognize this area is our entrance to the downtown core,” Pam Kennedy Carbonari, director of the Kalispell Downtown Association and Kalispell Business Improvement District, said of the West Side Tax Increment Finance District. “If we can see improvements and the relocation of the railroad and a couple of businesses, this could be a real asset for downtown.”

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