Editorial: Wrong fund for a new city garage

Kalispell’s request to use tax-increment financing for a new city garage fits the bill under the letter of the law. Criticism is justified, however, over whether it’s the best use of a fund intended to spur economic development and expand the tax base.

While state code allows tax-increment dollars for public building projects, the Kalispell Urban Renewal Agency was correct to scrutinize the proposal at its August meeting. The board tabled its vote alongside a funding request from Flathead County for fairgrounds improvements.

Kalispell is seeking $10.4 million from the West Side Core Area tax-increment financing district to construct a new garage to accommodate an expanding fleet of vehicles. The sum would fund the purchase of the property on West Wyoming Street immediately north of the fairgrounds, as well as construction of the building and site improvements.

As the city grows, the need for more garage space is understandable. That’s not the issue. The Urban Renewal Agency board raised a flag over the proposal because the city’s argument that it will generate new tax revenue, a key requirement in the tax-increment financing assistance program, is questionable.

In making a case for the funding, Kalispell Development Services Director PJ Sorensen noted the 3.7-acre property is overgrown with weeds, with some dilapidated vehicles parked on-site. The garage project, Sorensen contends, would clean up the blight and make the neighborhood more attractive for new development.

Removing blight is important, but the addition of a fenced vehicle garage hardly smacks of the type of redevelopment that will spur meaningful economic activity. Developers aren’t clamoring to build new commercial or mixed-use residential projects next to a maintenance yard that brings traffic and noise to a neighborhood. More importantly, a city-owned garage eliminates the property from tax rolls and erases the potential for tax-generating private redevelopment.

The city should still budget for the project on the selected site if it has determined the location is the ideal fit, but it’s fishing for funds in the wrong pond. Tax-increment dollars should be put to work on projects that will clearly expand the tax base and benefit city coffers in a more meaningful way. 

Studies suggest public-private partnerships offer the most reliable return on a tax-increment investment. A city-owned maintenance garage isn’t that.

The county’s fairgrounds improvement project, meanwhile, passes the initial smell test but lacks detail on how the tax-increment funds would be used.

Everyone would like to see the widely used property spruced up a bit, but the county has more work to do before the Urban Renewal Agency board can feel confident in a $2.5 million disbursement.

Unlike Kalispell, county officials have an easy case to make for how fairgrounds improvements will boost economic development in the West Side Core Area. They simply need to provide the same level of detailed documentation required of all other tax-increment applicants so the board can feel assured in its recommendation.