The fervor of the crowd at a town hall meeting Thursday in Whitefish was best seen in the blue stickers many wore marked with the phrase “protect our water.”

About 100 people attended the meeting to discuss a proposed conservation easement in Haskill Basin, which serves as the primary source of Whitefish’s water supply.

Mayor John Muhlfeld told the crowd the deal is a one shot opportunity to permanently protect Whitefish’s water.

“The issue is with the land and the potential for development,” he said. “There could be up to 200 lots there — that’s significant development.”

The project would permanently protect 3,000 acres of working forestland in Haskill Basin through a proposed deal between The Trust for Public Land and F.H. Stoltze Land and Lumber Company. Nearly $8 million is still needed by the end of the year to complete the deal.

While most at Thursday’s meeting favored the easement, opinions were mixed on how to fund the project.

City Council is leaning toward an increase in the resort tax to cap the funding. On Tuesday, Council will consider a resolution calling for a special election asking voters for an increase in the resort tax from 2 to 3 percent.

The city also could ask voters to approve a general obligation bond or raise water rates to generate funds for the easement.

Jack Garlitz said he supports protecting water, but raising the resort tax impacts those not using the water.

“This should be paid for by the users, not by the whole community,” he said.

A number of business owners also expressed concerns about a resort tax hike.

Sam McGough, owner of McGough & Co. jewelry, said he often pays the resort tax himself to make a sale.

“The resort tax hurts us,” he said. “I’m for this project, but the water users should pay for it.”

Whitefish Mountain Resort president Dan Graves said visitors come to Whitefish because of the value. He, too, cautioned against raising the resort tax.

“Tourists have choices where they spend their money,” he said. “We need the water, but we need to be careful about putting that on the back of tourists.”

Sarah Lundstrom countered that the project goes beyond water, pointing to the many recreational uses available on the Stoltze property.

“We need to think about the community resource and the heritage here,” she said. “We need to keep forest jobs here, this is not just about water.”

The Trust for Public Land has secured an option to purchase the development rights for the Stoltze property through the end of this year. The overall purchase was expected to cost $20.6 million, but Stoltze agreed to contribute $4 million to the project, while the Forest Service is expected to provide a $7 million grant, and a $2 million grant from the U.S. Fish and Wildlife Service also is expected.

Proponents of the deal say that if the property were to be developed it could damage the Haskill watershed, which provides about 75 percent of the city’s water supply. The other portion comes from Whitefish Lake.

Several audience members Thursday asked questions about the project and potential funding options.

One person wanted to know if there is a contingency plan if the resort tax doesn’t collect enough money needed to cover bond payments.   

City Manager Chuck Stearns pointed out that the only time the resort tax saw a decrease in collections was for two years during the Great Recession.

“We assume the increase will continue, but we did make a conservative estimation,” he said. “We can pledge to have the water fund as a back up source of funds, then repay the water fund later.”

Another asked if donations could cover the $8 million.

“What we’ve heard is there is philanthropic fatigue,” Muhlfeld said. “The same handful of people are being asked for donations. This will be closed in seven to eight months and we didn’t feel we could launch a significant campaign to make up the difference.”

Whitefish resident Ben Cavin asked if the valuation of the Stoltze property could change by the time the easement is finalized.

Muhlfeld said the property will be reappraised when the deal is complete, but Stoltze has committed to the $17 million purchase price and is willing to increase its donation, if necessary, to retain that price.

One person wanted to know if the city could obtain an easement for a smaller piece of property.

Muhlfeld said the deal with Stoltze is for the entire 3,000 acres and the federal grants already secured are contingent upon an easement on the whole property.

“We are also talking about protecting the entire watershed and not just the immediate water intake areas [at Second and Third creeks],” he said.

A question was asked about a back up plan if voters reject the resort tax increase.

“There is only one outcome with this project and we’re going to get the deal done,” Muhlfeld said. “If we don’t get the vote, we will be looking at one of these other options pretty quickly.”

If approved, the increase in resort tax is expected to generate about $1 million in additional funds annually. That money would be used to pay for a revenue bond. The city is projecting about a 5 percent increase in resort tax collections per year.

The city could also ask voters to approve a general obligation bond. Under the 20-year bond, the cost for an average house would be about $100 per year for the life of the bond. Under a 10-year bond, the cost for an average house would be about $180 per year for the life of the bond.

Another option is for City Council to approve an increase in water rates to pay for a water revenue bond. Under a 30-year bond, the average residential water bill would increase by about $80 per year. For a 10-year bond, the average residential water bill would increase by about $220 per year.