The Kalispell City Council tonight considers partnering in a federal grant application for money that would help develop the Flathead County Rail Park.

Working to design and develop the rail park, Flathead County Economic Development Authority is targeting highly-competitive funding available through the Transportation Investment Generating Economic Recovery grant program. It offers grants ranging from $1 million up to $10 million.

Montana has been awarded four grants to date, city staffers said. The most recent was a nearly $10 million grant for a freight hub in Shelby.

Projects that are awarded grants must be prepared to start spending money by September 2013.

Flathead County Economic Development Authority has hired an engineering firm that can write the grant application due in June and is prepared to provide necessary matching funds with about $3 million available to develop the rail park at the former McElroy and Wilken gravel pit.

The economic development authority bought the 40-acre gravel pit in February 2012 using a $1.1 million grant from the U.S. Economic Development Administration.

The property sits along Whitefish Stage Road just outside Kalispell city limits and would likely be annexed when developed.

The rail park could play a key role in Kalispell’s core area revitalization plans by providing a place to relocate the city’s last two rail-served businesses, CHS Kalispell and Northwest Drywall and Roofing. That would allow Kalispell to pull out the railroad spur that splits the city and then redevelop a large swath of underutilized, formerly industrial land.

Rail park designs are ongoing. So are talks with those two businesses and Burlington Northern Santa Fe Railway.

Kellie Danielson, president of Flathead County Economic Development Authority, said talks are exploring the possibility of moving the last two rail users in Kalispell to the new rail park but also exploring options with other possible tenants who have expressed interest in the rail park.

CITY COUNCIL IS also being asked to apply for a $750,000 federal grant to add to Kalispell’s revolving loan fund program.

Launched with United Stated Department of Agriculture Rural Development grants awarded in 1992 and 2006, city staffers are seeing more interest in the commercial lending program.

It made six loans totaling $296,000 in the last 14 months. Those loans leveraged $479,500 in participating bank financing and $57,000 in owner equity.

With $629,689 already loaned out by the revolving loan fund program, those loans leave Kalispell with $91,394 left to loan.

“The revolving loan fund program has two applications in process and has been contacted by two more parties who are interested in the loan program,” Community Development Manager Katharine Thompson wrote in a memo to the city council. “It is anticipated that the city would have no funds available for relending in the event that even two of these applications were approved.”

Low-interest loans are available for eligible business expansion and job creation projects. They are processed by the city’s Revolving Loan Fund Committee. As loans are paid back they provide money to repay the original federal grants with 1 percent interest over 30 years and generate more money to be loaned out.

The request for additional funding is due in June. If approved, the money would be available starting in September.

IN OTHER BUSINESS tonight, city council considers:

• A $77,900 contract for Ace Roofing to replace the roof liner at the wastewater treatment plant.

• Issuing up to $1.271 million of revenue bonds to repair the primary digester tank at the wastewater treatment plant.

• A three-year contract for Galusha, Higgins and Galusha to do the city’s annual financial audits for $39,000 per year.

• Appointments to various city advisory boards and to the Tourism Business Improvement District Board.

• A preliminary plat for the Cliff View Subdivision at the west end of Mile High Court.

• A final transfer of the Gateway West Mall to the Flathead County Economic Development Authority.

• The second and final reading of a planned unit development overlay for two lots owned by Gardner Investments at the southeast corner of U.S. 93 and Willow Glen Drive. One is the proposed site for a new Glacier Volkswagen car dealership.

Tonight’s meeting starts at 7 p.m. in Kalispell City Hall, 201 First Ave. E. It is open to the public.

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