Whitefish City Council has decided it favors above-ground parking at the new City Hall site and that it still wants to create an assessment district to pay for upkeep of the structure.

During a March 17 work session, city staff asked council to make a number of decisions regarding the City Hall and parking structure project. Council chose to move forward with early architectural and engineering work for the new buildings while it continues to hammer out the details of paying for maintenance of the parking structure.

Last year the city held a design competition to select an architectural firm to design a new City Hall and parking structure. During the competition, CTA Architects proposed an underground parking garage with a surface lot above. The firm claimed such a design would save the city $3 million compared to an above-ground structure, although about 50 spaces would be lost.

It was noted that a similar underground parking garage was constructed at The Lodge at Whitefish Lake.

After debating the issue, most councilors said they’re against further investigation of underground parking.

Councilor Richard Hildner said The Lodge is a different site from City Hall and such a design might not even be feasible.

“We don’t need to vet this — let’s just go ahead,” Hildner said.

Councilor Frank Sweeney, however, said he would like to have the City Hall site examined. He noted that previous studies for an underground garage were targeted for having multiple levels of parking above ground.

“My sense is that there is something different here,” Sweeney said. “Is this an opportunity that is different than what we’ve seen in the past, and if it is, it’s worth looking at.”

Councilor John Anderson said constructing underground parking is a large unknown, even if the site is evaluated.

“I’m just not comfortable putting the city at risk for a multi-million dollar fix on a project,” he said. “I don’t think it’s even worth considering.”

In May last year, council approved moving forward with designing a new City Hall to be built at the current site along with an attached parking structure. At the time, council also said some kind of funding district needed to be established to pay for operation and maintenance costs for the parking garage. Expected costs are in the range of $50,000 to $70,000 annually.

Last fall, council decided to move forward with a special improvement district as the funding mechanism to pay for the upkeep. However, City Manager Chuck Stearns and City Attorney Mary Van Buskirk have since researched the matter in greater detail and believe an SID wouldn’t be allowed.

Combining a parking structure with a new City Hall is estimated to cost about $11.5 million. Tax-increment finance funds are suggested for construction of the project.

Stearns said that although an SID can be used for maintenance costs for a building, state law prohibits the use of an SID in this case because the garage construction would be financed through TIF funds.

Council last week, however, decided it would still like to create some type of funding district to pay for maintenance. Exactly what that district will look like still has to be determined.

Sweeney said an assessment district would give the city a stable funding source.

“The right way here seems to be to fund the operation and maintenance costs through an assessment district,” Sweeney said.

The city is again looking at using a business improvement district — a type of district that is initiated by a petition of business owners who ask to create it. Council last year disregarded the possibility of using a BID in favor of an SID.

Councilor Andy Fuery suggested the city not give up on an SID. He said it might be possible to create an SID for part of the construction costs, thus allowing for an SID to be used for the maintenance. Alternatively, he suggested that if an SID is used for construction costs, then the city could divert some of the money previously slated for construction into a maintenance fund.

City staff will further research the types of assessment districts and return to council.

Revenue from leased parking space could also play a factor in collections for the assessment district.

Anderson said revenue from leased spaces could be used to reduce the amount paid by businesses that are part of the funding district.

“I’d like to use a blend of the two,” Anderson said. “I envision an offset of the district assessment with the leases.”

Sweeney noted that leased revenue could be used to fund additional parking in other areas of downtown rather than for maintenance.

“Leasing revenue could provide for other parking,” Sweeney said. “We know we’re going to need more parking over time, but not how we’re going to pay for it.”

Council gave a preliminary OK for the basic framework for the assessment district, as recommended by members of a working group tasked with studying the district.

The district will assess business properties. Exempt will be residential, vacant land that doesn’t generate parking demand, those who have more than 50 percent of the lot area outside the assessment boundary, federal properties and those that are outside city limits.

The boundary for the assessment district will likely include two zones around City Hall.

Those properties that will be assessed will likely be done with set criteria. A higher assessment is expected for those within a one-eighth mile of the parking structure. A second tier would be for those in the one-quarter of a mile area. Also factored into the assessment would be square footage of floor space in any improvements on the parcel and the availability of existing onsite parking space on any parcel.