District short on TIF funds to cover overages

The Whitefish School Board Aug. 13 approved suspending its tax increment financing fund policy for one year to allocate money to the Whitefish High School building project. However, the TIF fund is not anticipated to have enough money in 2013-14 to cover the expected $267,000 overage in the construction budget.

District Clerk Danelle Reisch requested the board suspend the policy to ensure the district had the $1.2 million of TIF money in its high school building fund for what has already been committed to the construction project.

“I realized that if we continued to follow the policy we’d still be short,” she said. “I tried still maintaining the integrity of the policy for how we put money in the funds.”

Under an interlocal agreement with the city, the school district receives annual TIF payments from the city. The funds are given to the school bi-annually through 2020, when the TIF district sunsets.

The school district policy for managing the funds says that the money is to be distributed among district-designated special funds that set aside funds for professional development and facility maintenance, as well as reserve funds.

The board unanimously approved a plan that allows for some of the money that was targeted for the professional development and facility reserve accounts to be redirected.

An extra roughly $210,000 in TIF funds will be diverted into the WHS building fund, giving it enough to cover its obligations for 2013-14. The elementary facilities fund will also see a small increase of $35,000.

The school district needed $1.2 million for the high school building fund this year. Of that total about $200,000 was for matching funds for the gymnasium remodel and the rest was a commitment to match the funds the city gave the school district from its TIF fund.

Trustee Dave Fern asked if there was a concern about taking money out of the professional development account for the building project.

“We’re trying to build a war chest for professional development — this seems to take away a lot of resources,” Fern said, noting that the district is trying to train staff in preparation for changes to state education standards.

Superintendent Kate Orozco acknowledged that funding for professional development still remains a priority, but the need to build the high school is also important. She dismissed the idea that the district should pull from the money it has set aside for furnishing the new school to pay for construction.

“I would also like to move into a new high school with furnishings and the lab equipment that befit a new high school,” she said. “It makes me nervous to take away from the (furnishing and equipment budget).”

Despite borrowing money from itself, the district still doesn’t have enough TIF money set aside to cover the expected $267,000 overage in the WHS construction budget. Previously, the board agreed to use TIF funds to make up the gap, if necessary.

Fern asked how the district will come up with the funds it needs for the overage.

“Would we be better off to put more money in the high school building fund rather than adding any money to the reserve fund this year,” he asked.

Reisch pointed out that the TIF facility reserve account will have $200,000 in it at the end of 2014 and the district could draw from that account to help cover the overage.

However, she said she feels its too early to move that money out of reserve because the high school construction project is still ongoing.

“There’s more work that needs to be done with the design team to find savings (during construction),” Orozco added.

The district has identified the sale of the Whitefish Independent High School, estimated at $460,000, as another option for making up the gap.

It was reported Monday that a full-price offer has been made on the property.