Subdivide and conquer

Five years ago, at the peak of northwest Montana's real estate boom, the city of Whitefish suffered through growing pains. But it probably didn't hurt as bad as this.

Ahead of Whitefish's May 17 budget review, city officials find themselves staring into empty coffers, largely due to the slowdown in development. A third-quarter financial report shows the city's general fund and its property tax-supported funds total $81,725, about $1.1 million less than at the same point in 2009, and about $1.5 million less than in 2008. The city projects a negative operating cash balance through June, the end of its fiscal year.

"The biggest problem financially and in the budget up here has just been the drop off of building permits and development revenue," explains City Manager Chuck Stearns.

As of March 31, planning fees stood at 27 percent of budget and zoning fees at 36 percent, signaling that Flathead County's sluggish subdivision activity in 2009 has continued into 2010. Last year the Flathead County Planning and Zoning Office approved only 21 subdivisions containing a total of 242 lots, compared to the "speculative high water mark" of 134 subdivisions and 1,690 lots in 2005. So far this year, planners say, the majority of applications are for single lot splits, not for large subdivisions as in years past.

"We were the fastest growing community in Montana," says Stearns, referring to when Whitefish's population jumped more than 60 percent between 2000 and 2007, "and we had staffed up to help process those [subdivision] permits and applications, and it really just dropped off a cliff."

Whitefish's predicament can be attributed to other factors, too. Stearns cites the state Supreme Court's ruling last fall that the city violated a couple's rights when it denied them a building exemption permit. It cost the city about $400,000.

"That was a major unanticipated factor," Stearns says.

What might have been anticipated, given that property tax appraisals in the Flathead have skyrocketed in recent years, is the unusually high number of protested property taxes and delinquencies, which account, Stearns says, for about $80,000 of the city's current shortfalls.

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