In one year, Kalispell has kept the West Side Tax Increment Finance District alive, enlarged the district’s boundary and adopted a long-term plan to revitalize the city’s tired railroad corridor.

With $2.5 million cash and a mature tax-increment district generating $400,000 a year for 25 more years, Kalispell possibly can afford to pursue its biggest goal: Removing the railroad spur and moving the last two businesses that use it to a rail park at the edge of town.

The cost of that goal and of building a new linear park in place of the tracks is being explored in a feasibility study due by March.

But revitalizing Kalispell’s core area also will mean lots of smaller programs and projects.

The city envisions new streets, parking, sidewalks, bike paths, new water and sewer lines and new mixed-use development to fill a railroad corridor that has gradually lost its industrial base. How to craft policy and channel money to make those things happen is the next question.

One person is already testing Kalispell’s willingness to spend tax increment money. More interest is expected. And the city finds itself with few of its envisioned programs in place and little structure to manage what are bound to become competing demands for large but limited amounts of money.

“We are running to catch up and get this launched,” Kalispell Planning Director Tom Jentz said. “We would like to have an application or two coming in every month, to see people excited to make things happen. But we don’t have a process to handle that right now.”

Urban Renewal Agency members and city staffers are meeting to review criteria and priorities for spending tax increment money in light of the larger district and its new urban renewal goals.

The agency advises the Kalispell City Council on tax increment use. Its volunteer members meet again this week to continue a task some have called overdue.

“We need to set parameters,” member Shannon Nalty said. “For 20 years there has been a lack of definition and that puts us all in an awkward position.”

THAT PROCESS of setting parameters is colliding with Kalispell’s first tax increment funding request in some time.

Paul Roybal is reopening the Kelly-Main Street building for his carpet and flooring business. The former furniture store has been empty for most of a decade at Center and Main streets, one of the downtown’s busiest corners.

Hoping to improve the building more than he otherwise could, Roybal’s application asks Kalispell to pitch in $170,921 of tax increment money.

It’s almost a dollar-for-dollar match request, but one that city staffers are presenting to the Urban Renewal Agency as a pilot project.

Of that amount, $67,513 would restore the 88-year-old building’s brick pillar and window facade. About $45,500 would install fire suppression needed to inventory flooring materials.

Another $37,065 would run a water line to the building. A prior owner did not maintain the line and instead piped water in through a second building’s line.

Because of the change of owners, Kalispell now wants Kelly-Main Street to have its own water line. But tapping the trunk line under Main Street is a costly project requiring a lane closure on U.S. 93.

The last $20,843 would pay impact fees Kalispell plans to charge Roybal. City policy says if any building has its tap removed, the owner must pay impact fees for a new tap if 18 months have passed.

“People with a lot more more money than me have passed up the opportunity,” Roybal said about making something happen at Kelly-Main Street, one of downtown’s biggest vacancies. Without some help, some things just won’t get done.

“I am definitely counting on the TIF funds to come through so I can deliver on what I promised to do. And that’s work with the city to make this building the sharpest thing on the block and create income and more jobs,” he said.

ALL OF THE requests are eligible uses for tax increment funding. The question is to what extent they are appropriate and should be supported, Jentz said. Urban Renewal Agency members had no clear answers last week.

There are many lingering questions:

• Should Kalispell pay costly impact fees to incentivize development in targeted areas?

• Should it pay for a water line or fire suppression system for one building? What if they serve two or more?

• Should it pay for facade improvements or sidewalk repairs? To raze a blighted building to make a lot easier to sell or redevelop?

Other questions center around amounts. Whether tax increment money should be granted or loaned out or awarded in some combination, how much should be spent for every $10 of private investment and how or why exceptions are made.

There are broader questions about how the city’s tax increment resources align with other programs. Kalispell has revolving loan funds that can lend some money for commercial property improvements. It also has brownfield grant money to help assess and cleanup potential contamination issues.

GOING FORWARD, the hope is to create a structure of development assistance programs with predictable processes and outcomes for the core area. That’s so people can know what city programs will support.

It’s also so the city “doesn’t have to evaluate every project like it’s the only one in the world,” City Attorney Charlie Harball said.

Programs must help developers improve Kalispell’s oldest and most blighted areas, leverage what public resources are available with private investment and connect worthy projects with the most appropriate tool.

Kalispell can’t afford to throw money to the wind or play Santa Claus, but needs to help where and how it can, Jentz said.

“It’s easier to go to the edge of town where there’s nothing around and build. But what happens to the core of the city?” he said. “We’re trying to make it a level playing field so people can invest in our core area. So we can take care of our brownfield sites and our dilapidated structures and give the downtown another 100 years.”

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