City rejects developers' money requests; debate continues over spending

The purse strings on Libby’s pot of gold got a lot tighter at Monday’s city council meeting.

Councilors voted 4-2 to deny giving money from its community development fund, valued at $1.5 million, to two entrepreneurs seeking money for work on buildings that are listed on the National Register of Historic Places.

Libby Lofts developers were seeking $138,000 to begin work on fixing the old high school. The building has set empty and unused for many years. A roof collapse due to heavy snow in 2017 left a gaping hole that will require considerable work to repair it. 

The developers, including Zach and Tracy McNew, Bruce Weatherby, Joan Oakland and Scott Curry, want to restore the 107-year-old structure, located on East Lincoln Boulevard, into apartments.

"Libby Lofts is still pursuing the project. While it would have been nice to hear some feedback specific to our application, the council’s decision does not deter us," Tracy McNew said. "We look forward to the council deciding how the community/economic development fund should be used and writing a new policy. Hopefully, we’ll be able to reapply."

The other developer seeking money is Friends of Historic Hotel Libby’s Gail Burger. Her plan of reviving the old hotel continued to build steam in 2023 when a new roof was put on the building, located on California Avenue.

Extra work during the roof project, on the eaves specifically, resulted in work that cost $18,000 more than projected. 

"We incurred the extra bill on the project and now, it's down to $4,172.50," Burger said.

Councilor Hugh Taylor made the initial motion to deny the requests and Ian Smith seconded it. Councilors Melissa Berke and Gary Beach joined Taylor and Smith in voting against giving the developers the money.

Council President Brian Zimmerman and Kristin Smith voted to give the money. Zimmerman initially abstained, saying he didn’t vote after Mayor Peggy Williams said the vote was 5-1.

“If a councilor abstains, a reason for it must be given,” Williams said.

Zimmerman hesitated before voting to give the money.

Before the vote, Zimmerman asked city Attorney Dean Chisholm if the city was facing a problem if it denied the requests.

“The policy seems to give wide discretion to decide. I believe council can deny,” Chisholm said.

Kristin Smith said she didn’t support denying the money.

“It’s unfair changing in mid-stream,” she said.

The fund money originated in 2001 when the city received $11.5 million from a federal earmark led by former U.S. Sen. Conrad Burns. The money was intended to assist in economic stimulation after the collapse of the timber industry and the discovery of asbestos in the community. While $3.5 million went to the hospital, the other $8 million went to the Libby Area Economic Development Company. 

It has helped pay for, among other things, the expansion of the Cabinet View Golf Course and the building of the club house. It also helped pay for new playground equipment in Fireman’s Park and the refurbishing of an old gymnasium now known as the Memorial Center.

Prior reporting in the Daily Inter Lake indicated that of the original $8 million award, only $750,000 was left at the end of 2004. There were criticisms of how some of the money was spent.

Later in the meeting, council members spent considerable time discussing their thoughts about the policy and possible changes to it.

Beach handed out copies of the policy with his suggestions on possible changes. Among those ideas were having another organization better suited with staff and knowledge review and administer grants for projects that fall under the criteria of gap financing for the purpose of job creation and capital investment expansion.

Beach also thought projects should be located within city limits and that money for any projects come from the previous year’s accrued interest.

Beach provided an example of a possible interest breakdown. For instance, if the earned interest was $40,000, two $10,000 and two $5,000 grants would be available while the city retained $10,000 for future projects. If money from the interest wasn’t awarded by the end of the calendar year, it would be added to the principal of the fund.

Beach also said the grants should be 50-50 matches and not skewed one way or the other.

The current policy doesn’t permit giving loans, but it’s still on the mind of some on the council.

Berke thought loans could be a good idea.

“We can get our money back with interest and keep the fund growing,” Berke said. “But we shouldn’t spend money on projects that have capital improvement plans.”

Councilor Ian Smith said the term, “infrastructure,” should either be defined or removed from the policy. It was a topic of discussion at the Feb. 20 meeting as councilors debated whether projects for infrastructure defined by state code should be funded.

At Monday’s meeting, the topic of who administers the money was discussed in more detail. Kootenai River Development Council and LOR were mentioned as two entities that could handle the job.

But others thought hiring a person whose specific responsibilities would be administering the fund was a better approach.

“To hire someone with the knowledge and expertise necessary to do the job would cost about $75,000 annually,” Kristin Smith said. “But that person, if properly chosen, would end up paying for themself and growing the fund. If council approves giving loans, those are things you gotta keep on top of because there is more risk and exposure. By having someone in charge of it, they are supposed to stay on top of things such as loans and making sure they get repaid.”

Beach said he wasn’t totally against loans, but, “historically we haven’t recouped a lot. Some defaulted and we lost out.

Mayor Williams said she didn’t hear much consensus, but that there were several ideas which deserved consideration.

The policy will be discussed again at a special council meeting at 7 p.m. Monday, April 8.