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HASKILL BASIN Working to Protect the Water Supply of the City of Whitefish ---PAGE BREAK--- Project Partners ---PAGE BREAK--- F.H. Stoltze Land and Lumber Co. Oldest continuously operated integrated wood products company in Montana. 100% family owned. Owns and manages almost 40,000 acres of commercial timberland in the greater Flathead Valley area. Employs roughly 120 full- time workers at its Columbia Falls mill, which produces more than 70 MBF of dimensional lumber every year. ---PAGE BREAK--- Located in the City’s Backyard ---PAGE BREAK--- Part of a Larger Picture ---PAGE BREAK--- Important Community Water Supply Values The City of Whitefish gets more than 75% of its municipal water supply from the property. Yet… despite owning the water, the city has limited legal rights to access the property, pipe water down from it or maintain the existing diversion structures. ---PAGE BREAK--- Despite owning the “wet” water rites….. No legal easement for the water lines between 1st, 2nd and 3rd Creeks No easement to maintain the diversion structure on Second Creek The intake on Third Creek is not owned by the City of Whitefish No easement of record giving the City legal access through any of Stoltze lands What the City Does Not Have Rites to… ---PAGE BREAK--- Second and Third Creek Intakes…. ---PAGE BREAK--- Development Potential... Could be legally subdivided into as many as 200 lots. Significant residential development is occurring immediately next door. Whitefish itself is one of the fastest growing resort communities in the Intermountain West. ---PAGE BREAK--- Stoltze Development Land Sales Over the past 20 years, Stoltze has sold almost 1,200 acres off for development immediately next door. More than half of the Whitefish Mountain Resort and the Iron Horse and Lookout Ridge subdivisions consists of former Stoltze- owned lands. ---PAGE BREAK--- “By harnessing forests as “natural infrastructure” to complement “built” infrastructure, water utilities can help keep costs down, reduce future risks to water supply, enhance resilience to climate change, and provide a suite of ancillary benefits for their customers…” ---PAGE BREAK--- Threats from Development, Wildfire, Disease ---PAGE BREAK--- Provided more water than the combined drainages of Second Creek and Third Creek Abandoned in 1975 due to coli contamination Sedimentation from development City’s First Creek Diversion Abandoned ---PAGE BREAK--- City of Whitefish Water Treatment Plant Operational Cost Analysis Haskill Basin (Blended) Additional Cost per Million Gallons Treated Lake Water Supply 500 GPM (33%) 1100 GPM (50%) 1500 GPM (67%) Lake Only (100%) Cost per MG $712 $1,148 $1,267 $1,437 $1,804 % Increase per MG 0% 61.3% 78.0% 102.0% 153.5% Impact to Taxpayers • $500,000 Increase in Annual Operational Costs (In Perpetuity) • 20% Increase in Water Rates • PLUS additional Infrastructure Cost to Increase Reservoir Capacity • Wastewater Plant Upgrade ---PAGE BREAK--- Important Scenic Values Highly visible from downtown Whitefish and all parts of the Flathead Valley. Important backdrop to Waterton-Glacier International Peace Park Scenic Drive. ---PAGE BREAK--- Important Connection To Expanding Whitefish Trail System ---PAGE BREAK--- Important Cross Country Skiing Resource ---PAGE BREAK--- This is truly a one-shot deal…. The Trust for Public Land has the right to purchase a conservation easement on the property through the end of 2015. The easement will prohibit all subdivision and development while allowing sustainable forest management activities to continue. The project will protect the city’s primary water supply, sustain local timber jobs, and preserve our viewshed. It will also guarantee permanent public access. ---PAGE BREAK--- How Much Will The Project Cost? The conservation easement has been preliminarily valued at $20.6 million. Stoltze has offered to sell the easement for a discounted price of $17 million. The conservation easement has been preliminarily valued at $20.6 million. Stoltze has offered to sell the easement for a discounted price of $17 million. ---PAGE BREAK--- Where Will The Money Come From? $7 million will come from the federal Forest Legacy Program, (ranked as the President’s top national priority in 2014). $2 million will come from the U.S. Fish and Wildlife Service via its Habitat Conservation Plan Land Acquisition Program. $4 million will come from Stoltze. The balance ($8M) will need to come from the community. ---PAGE BREAK--- City’s Request for Technical Assistance • Funding quilt • Conservation options • GO Bonds • Resort Tax • Revenue Bonds • Water Rates • Property Tax • Philanthropy • Election analysis ---PAGE BREAK--- Option 1. Water Revenue Bond Option 1. Water Rate Increase – Impact on Average Residence1 10 Year Bond 30 Year Bond Net Funds Needed $8,000,000 $8,000,000 Total Bond with Issuance and Debt Service $8,532,000 $8,201,000 Percent Increase in Water Rates 46.84% 17.24% Residential Financial Impact Average Annual Water Bill $467.52 $467.52 New Average Annual Bill $686.52 $548.16 Increase per Year $219.00 $80.64 Average Water Bill $38.86 $38.96 New Average Bill $57.11 $45.68 Increase per Month $18.25 $6.72 Total Cost over Bond Cycle $2,190.00 $2,419.20 1 Average consumption rate of 4,300 gallons ---PAGE BREAK--- Option 1. Water Revenue Bond Option 1. Water Rate Increase – Impact on Average Commercial Property1 10 Year Bond 30 Year Bond Net Funds Needed $8,000,000 $8,000,000 Total Bond with Issuance and Debt Service $8,532,000 $8,201,000 Percent Increase in Water Rates 46.84% 17.24% All Commercial Properties Financial Impact (Including Restaurants) Average Annual Water Bill $1,926.84 $1,926.84 New Average Annual Water Bill $2,829.36 $2,259.00 Increase per Year $902.52 $332.16 Average Water Bill $160.57 $160.57 New Average Water Bill $235.78 $188.25 Increase per Month $75.21 $27.68 Total Cost over Bond Cycle $9,025.20 $9,964.80 1 Includes motels and hospitals (higher use) and office/retail (lower use) ---PAGE BREAK--- Option 1. Water Revenue Bond Option 1. Water Rate Increase – Impact on Average Restaurant1 10 Year Bond 30 Year Bond Net Funds Needed $8,000,000 $8,000,000 Total Bond with Issuance and Debt Service $8,532,000 $8,201,000 Percent Increase in Water Rates 46.84% 17.24% Average Restaurant Financial Impact Average Annual Water Bill $2,879.88 $2,879.88 New Average Annual Bill $4,228.80 $3,376.32 Increase per Year + $1,348.92 + $496.44 Average Water Bill $239.99 $239.99 New Average Water Bill $352.40 $281.36 Increase per Month + $112.41 + $41.37 Total Cost over Bond Cycle $13,489.20 $14,893.20 1 Includes average of all restaurants ---PAGE BREAK--- Option 2. General Obligation Bond Option 2. General Obligation Bond 20 Year Bond 10 Year Bond Net Funds Needed $8,000,000 $8,000,000 Total Bond with Issuance and Debt Service $8,040,000 $8,040,000 Annual Debt Service $540,414 $942,533 Number of Mills Based on Current Mill Value 23.63 41.21 Percent Increase in Total Number of Mills 4.25% 7.42% Free Market Value of Average House $276.981 Annual Effect on Average Residential House $102.13 $178.12 Total Cost over Bond Cycle $2,042.60 $1,781.20 ---PAGE BREAK--- Option 3. Resort Tax Option 3. Resort Tax Increase from 2% to 3% (through June 30, 2025) 10-Year Bond Cycle Fiscal Year 2016 - 2025 Year 1 2016 Year 9 2024 Ten Year Totals 1% Increase in Resort Tax Revenues $1,157,333 $1,709,908 $13,808,723 - $1,049,735 2014 Revenue @ 5% Growth Revenue Less 25% for Property Tax Rebate $852,723 $1,259,860 $10,174,267 - Approximate Property Tax Rebate $304,610 $450,048 $3,634,456 Revenue Needed for 10 Year Loan at 2.5% $1,073,710 $638,925 $9,913,135 Revenue after Property Tax minus SRF Payment -$220,987 $771,664 $261,132 ---PAGE BREAK--- Option 3. Resort Tax – What This Means to The Average Homeowner…. • $3,634,456 in Additional Tax Relief over 10 Years • $363,445 Additional Tax Relief per Year • Current Average Residence Currently Rebated = $126 / YR • Raising the Resort Tax to 3% will Rebate An Additional 50% or $63 Per Year for a Total Annual Rebate of $189 / YR • Assumes 5% Growth • Resort tax has returned an average of 6.13% since inception and 7.3% the past 4 years (range 5.2% to 10.3%) ---PAGE BREAK--- ---PAGE BREAK--- 2015 Legislative Session ---PAGE BREAK--- 30 Gauge Voter Support for Resort Tax Increase Q3. If the vote on this measure were held today, would you vote yes in favor or no to oppose it? To protect and preserve water quality and quantity, including the source drinking water supply for the municipal water system of the City of Whitefish, through the acquisition of a conservation easement or other interests in and around Haskill Basin, shall the existing resort tax rate be amended from two percent to three percent effective July 1, 2015 and ending on January 31, 2025, with resort tax revenues resulting from the 1% rate increase to be used as follows: • at least 25% for property tax relief that is in addition to the existing property tax relief; • not more than 70% to secure and be pledged to the repayment of a loan or a bond to finance a portion of the costs of, or to otherwise pay for, the acquisition, of the conservation easement or other interests; and • 5% for merchants’ costs of administration? ---PAGE BREAK--- 31 A solid majority offers initial support for the measure. Q3. Total Yes 61% Total No 32% If the vote on this measure were held today, would you vote yes in favor or no to oppose it? 57% ---PAGE BREAK--- 32 Supporters primarily identify the need to protect water quality as a reason to vote “yes.” Q4a. (Open-end) Asked of “Yes” Voters Only In a few words of your own, why would you vote to APPROVE this ballot proposition? Protect the watershed/Clean water/Water quality Resort tax won’t affect us/Is for tourists General support In favor of the tax Preserve open spaces/land Protect the environment Need more information Better for health Other Don’t know ---PAGE BREAK--- 33 A majority of “no” voters are opposed to raising taxes, and two-in-ten don’t believe the funds raised will be used as promised. Q4b. (Open-end) Asked of “No” Voters Only In a few words of your own, why would you vote to REJECT this ballot proposition? ---PAGE BREAK--- 34 Two-thirds of voters do not think raising the Whitefish Resort Tax will have a negative impact on the City’s economy. Q6a. I would like to mention some statements about the City of Whitefish. Please tell me if you agree or disagree with that statement. Total Agree 29% Total Disagree 68% Raising the City of Whitefish Resort Tax will hurt our economy by driving customers and businesses to Kalispell. ---PAGE BREAK--- 35 Voters strongly oppose alternative funding mechanisms to protect the City’s water supply Q7. Split Sample Total No Total Yes 85% 13% 75% 19% 74% 24% 82% 16% The final source of funding for this measure has not been determined. I am going to read you a list of possible options. Please tell me whether you would vote yes in favor of the ballot measure or no to oppose it if that funding mechanism were used. ---PAGE BREAK--- 36 Q3 & Q5. Total Yes 61% Total No 32% If the vote on this measure were held today, would you vote yes in favor or no to oppose it? 57% Total support for the Resort Tax increases and intensifies after voters hear an explanation of the measure. Definitely yes Probably yes Undecided, lean yes Undecided, lean no Probably no Definitely no Undecided Initial Vote Total Yes 71% Total No 26% 67% Vote After More Information ---PAGE BREAK--- 37 Polling Conclusions • Most voters are largely unaware that other resort communities are using the full allotted three percent Resort Tax. • At the same time, most voters reject the idea that an increase in the Resort Tax will drive business out of Whitefish. • Based on these and other key survey findings, an increase in the Resort Tax appears both feasible and the most viable prospect for securing funding for conservation of the Haskill Basin. Nearly three in five voters initially favor the measure Support gains significant intensity – and becomes somewhat broader – after voters hear more about it Opposition messages do not significantly reduce support for the measure Alternative funding options – like increasing water rates or property taxes – are rejected by wide margins. ---PAGE BREAK--- Next Steps • Public Hearing on Proposed Resolution Tuesday February 17 7:10 PM City Hall THANK YOU!!!