The Whitefish City Council tonight must decide how to deal with a funding gap between a $13 million cost limit it approved in March for a new City Hall and parking structure — and the latest cost estimate of about $14.8 million.

The council will hold a public hearing and hear a presentation from the architect before voting on the design and cost issues.

Funding the large project is a complicated scenario.

Options for trimming the project or accommodating the higher cost are laid out in a detailed memorandum provided by Whitefish City Manager Chuck Stearns to council members prior to tonight’s meeting.

Stearns pointed out that tax-increment finance district revenue that’s been saved for the City Hall/parking garage construction, plus the multimillion-dollar tax-increment bond to be used for the project, do not affect or increase Whitefish residents’ property taxes.

The council passed a number of motions at its March 2 meeting that made the final decisions for the schematic design of the project.

“Those decisions basically set the cost limit, at that time, for a City Hall/parking structure with a smaller basement, not building the third floor at this time and doing the 3,000-square-foot retail space in the parking structure at $13 million,” Stearns said.

That cost limit didn’t include another $1 million that includes the cost of leasing an interim City Hall for up to two years, moving into the new facility and the maximum cost of the owner’s representative contract.

Once Martel Construction was chosen as the general contract, a more detailed cost estimate of roughly $14.8 million emerged. That figure also doesn’t include the $1 million for the interim City Hall and other costs.

A subcommittee worked with Mosaic Architecture and Martel to find ways to reduce the cost, such as eliminating the eastside parking garage basement and add two bays to upper tier without losing any parking spaces. Another idea was to eliminate a second concrete masonry unit wall. The city’s building official said because the city owns both structures, only one such fire wall is needed.

After further whittling they recommended three more cost reductions: Reducing the number of parking spaces, not finishing the basement walls and reducing the basement square footage. Those additional changes would lower the cost to $13.95 million.

The council has three options to consider for the overall cost.

First, it can accept the cost reductions spelled out in the $13.95 million scenario. This option is the one city staff is recommending the council approve, along with the $1 million for interim City Hall and other costs, for a total of $14.95 million.

Second, the city can go even further with cost reductions to try to get the total cost, including a contingency, to $13 million, as approved by the council.

“Reductions at this point would likely sacrifice many of the exterior architectural elements,” Stearns said. “The subcommittee has generally been very unwilling to eliminate these elements as many think that it is these elements that are vital to community acceptance of a parking structure.”

The subcommittee includes Stearns, Mayor John Muhlfeld, council member Jen Frandsen, Sherri Baccaro with the Public Works Department, City Clerk Necile Lorang, local developer Ian Collins and business owner Rhonda Fitzgerald.

Third, the council could opt to increase the size of the tax-increment bond to cover the latest $14.8 million cost estimate.

“That may be possible,” Stearns said, “but we are very close on our bond coverage and other financial limitations, so we would have to do research to verify we could fund this size of project.”

The council meeting begins at 7:10 p.m. tonight at Whitefish City Hall.

Features editor Lynnette Hintze may be reached at 758-4421 or by email at lhintze@dailyinterlake.com.