Whitefish downtown businesses are facing an average annual assessment of $355 if a special improvement district is approved to fund operation costs for the city’s planned parking structure.

Whitefish City Council last week directed city staff to draft a resolution of intent to form the SID. The district would provide $750,000 over 20 years for operation and maintenance costs for the garage, which is planned to be constructed with a new City Hall building.

The estimated annual assessment has a broad range for the 182 properties included in the district. The highest assessment at $2,800 per year would be for 122 Central Avenue, which houses The Toggery. The lowest assessment is for 33 Central Avenue, the small building next to the Great Northern Bar, and is estimated at 79 cents per year.

The assessments is based on a number of factors, including proximity to the parking garage, square footage of each property, and credit for parking spaces provided by the business. Properties are exempt if they are residential, vacant, federal properties or outside city limits.

As an example, the Whitefish Pilot is in the first tier, which is closest to the planned garage. The Pilot gets credit for four parking spaces and has a square footage of 1,500 feet. This figures into an annual assessment of $122.

Tier one forms a square of about 1/8-mile from City Hall. The northern boundary line is Depot Street and the southern line East Fourth Street. Properties between O’Brien Avenue and Spokane Avenue would be included.

Tier two is a square about 1/4-mile from City Hall. The northern boundary is Depot Street and the southern is Fifth Street. Properties between Miles Avenue and Kalispell Avenue are included in the second tier.

Tier one properties would pay double those in tier two.

City Manager Chuck Stearns explained that the assessment is based upon square footage rather than lot front footage as a way to make the assessment more fair to businesses that operate in a smaller building and likely generate less parking need.

As an example, Stearns pointed to Casey’s and the Red Caboose. Both businesses have similar front footage, but Casey’s is much larger in building size. If the SID is approved, Casey’s assessment is estimated at $1,062 annually. The Red Caboose is estimated to pay $145 annually.

“Multiple story buildings get assessed more,” he said. “We had to look at what drives parking demand.”

The assessment won’t likely be collected until November 2017. The city can’t assess properties until the parking structure is complete or almost complete.

Businesses will have to be re-evaluated annually to determine if changes have occurred that impact the assessment amount. Such as vacant lots that are developed or if a property converts from a residential to commercial use.

“We will need to redo this every year for development,” Stearns said. “Generally if development continues it’s likely that everyone’s assessments will go down.”

The city will mail notices to property owners that includes each owner’s estimated assessment amount.

Affected property owners can prevent the SID if those owners bearing more than 50 percent of the cost protest. There is a protest period of 15 days after the initial public notice is published in the newspaper.

Chris Schustrom said he has already spoken with more than 50 property owners who support the SID.

“There’s overwhelming support of the parking structure,” he said.

Dan Cutforth, who owns the Downtowner Inn, said he understands the need for the parking structure, but that he doesn’t agree with the method behind the assessment.

“I have 50 people that stay in my business every night,” he said. “Yet I have the third highest assessment. A business on Central might have 200 people go through their business in a day and they are paying less.”

In May 2013, council approved 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 fund operation and maintenance costs for the parking garage.

Expected costs for operation and maintenance are in the range of $50,000 to $70,000 annually.