The Whitefish City Council starts the new year with an old headache of how to handle a cost overrun for the new City Hall and parking structure.

Mike Cronquist, the owner’s representative for the City Hall and parking structure project, will give a progress report on the construction project at the beginning of tonight’s meeting. The city is building the facility on the location of the former City Hall, at the northeast corner of Baker Avenue and Second Street.

Later in the meeting the council will discuss and review an updated budget spreadsheet for the City Hall project. A cost overrun of close to $1 million has been shaved to $882,699.

According to City Manager Chuck Stearns, $162,000 of the funding gap can come from capitalizing three years of lease revenue from the retail space, borrowing those funds from the tax-increment fund and repaying that amount back to tax increment over three years.

“While this amount would reduce the gap to $720,699, it is still a project budget increase over the heretofore approved budget limit of $14,952,636, which was approved on June 15, 2015,” Stearns noted in his council report. “Please bear in mind that this [$720,699 gap] can and will continue to change and could go up or down.”

Stearns also urged the council to bear in mind that the City Hall and accompanying parking structure “is a large and complex project.” The total cost overrun from the budget is 5.9 percent.

Using the lease money as new, non-tax-increment funds, the gap drops to 4.2 percent, he noted.

“A cost overrun of 5 to 6 percent, while unfortunate, is not the crisis that some of the media or public have made it out to be,” Stearns said in his report.

The council will discuss additional proposals for reducing the cost of the City Hall/parking complex. Among the options presented in Stearns’ report are reducing the owner’s representative’ hours, eliminating new furniture purchases, allocating up to $150,000 of resort tax revenue for sidewalks, street lights and street furniture, delaying Depot Park improvements and reallocating the money to the City Hall project, and rebidding the concrete and rebar work.

Incoming Whitefish City Council member Katie Williams, along with incumbent council members Richard Hildner and Frank Sweeney and Mayor John Muhlfeld, will be sworn into office tonight as the council gathers for its first meeting of the new year.

A deputy mayor also will be elected to serve if Muhlfeld is absent.

The council has three public hearings on the agenda.

Potter’s Field Ministries is asking for a conditional-use permit for a parish house of up to six ministry staff and interns at 943 Second St. E.

The other two hearings deal with requests to convert the zoning on two properties from a county to city suburban residential designation. The properties are located at 2722 and 2424 Carver Bay Road and 1750 and 1770 U.S. 93 W.

The Parks and Recreation Department is asking the council to authorize $35,000 of resort tax funding to build a full basketball court in the southwest corner of Memorial Park near Whitefish High School.

Over the past year the city has made various improvements to Memorial Park, including a pickleball court and a new playground. These improvements were made with resort tax revenue. Five percent of Whitefish’s resort tax revenue is earmarked for park improvements.

The resort tax monitoring committee had recommended $25,000 for resurfacing the existing basketball courts, but a Memorial Park steering committee later recommended moving the basketball court to the southwest portion of the park. The Parks Department got a quote of $60,000 for the project, which is $35,000 more than the allocation, according to a report by Parks Director Maria Butts.

The resort tax fund has an ending cash balance of $195,727 reserved for park improvements.

The council meets at 7:10 p.m. at the interim City Hall, 1005 Baker Ave.

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