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Filling Stream space in Kalispell may take time
Local officials are optimistic that a new tenant or tenants can be found to replace Stream International, but they say the process could take up to a year.
By William L. Spence
The Daily Inter Lake
Stream announced two weeks ago that it would close its Kalispell call center at the end of August and lay off 330 people.
"We’ve had a full-court press on ever since," said Liz Harris, executive director of Jobs Now. "I’m extremely optimistic. Of the seven national site selection firms I contacted within 24 hours of the announcement, all of them have been back in touch with me."
Site selection firms work with companies that are looking to relocate or expand into other areas.
The industry is highly competitive, with communities around the country trying to attract new employers. While few of them have the type of recreational amenities that the Flathead has to offer, they often have something even more desirable: A trained work force and a building that’s ready to occupy.
"Something like 70 percent of first cuts are made based on having a facility," Harris said. "Companies don’t want to take the time to build or refit the work site, so having a turnkey facility is critical — and work force ranks even above that."
Until now, the Flathead hasn’t been able to compete on that basis. Most buildings here either haven’t been big enough to attract large employers, or they haven’t been wired for high-speed telecommunications, and there hasn’t been a large, well-trained technology work force.
That changed with Stream.
"They really raised the bar here, both in terms of wages and base skill set," Harris said. "We now have a world-class space available and 330 trained employees."
That gives her something she can really market.
Nevertheless, Harris cautioned against expecting anything to happen in the immediate future.
"Stream was a quick deal, and it took a year from first contact," she said.
Kalispell City Manager Chris Kukulski said the site selectors he’s spoken with indicate it could take up to a year to find another employer.
"That’s if we’re very aggressive from Day One," he said. "They also say it’s very unlikely that we’ll fill 63,000 square feet with one company."
The Stream facility is jointly owned by Kalispell and the Flathead County Economic Development Authority. Its layout is such that it could easily be split into two or three sections.
Stream is still on the hook for rent payments for the entire facility (see related story). Consequently, it’s actively working with the city to try and locate other firms willing to occupy some or all of the space.
"I think they’ll do as much as anyone to offer incentives (to new tenants)," Kukulski said. "If Stream chooses to discount someone’s rent, that’s fine — but whoever is in there has to cover our debt payment. We own the building, and fundamentally we have to make sure that asset is protected."
Reporter Bill Spence may be reached at 758-4459 or by e-mail at [email protected]
Who owes what: Details on the financial obligations related to Stream International
• Incentives — In return for opening a call center in Gateway West Mall and employing 500 people within three years, Stream was supposed to receive a $4.4 million incentive package.
The package included a $1 million loan for remodeling the work space, plus some training grants and a rent rebate worth $2.75 million over 10 years.
By the time the call center closes at the end of August, Stream will have received only about $2.4 million in incentives — including the loan, which must be repaid (at 11.5 percent interest).
• Stream’s financial obligation — The company is on the hook for repayments totaling $3.71 million.
The financial obligations include a $275,000 annual rent payment for the next seven years, a $140,000 minimum annual payment in lieu of property taxes for the next seven years, and the $806,000 remaining from the $1 million remodeling loan.
If the space is subleased, Stream can reduce its required payments.
• Kalispell’s financial obligation — Using a $2.5 million loan from the Montana Board of Investments, the city acquired 63,000 square feet in Gateway West Mall.
The annual interest on the loan is 2.5 percent. The annual debt payment is $339,000.
The Flathead County Economic Development Authority, which receives 2 mills from local property taxes, contributes $125,000 per year toward the debt payment. In return, it owns a third of the space.
Kalispell is responsible for the remainder of the debt payment. The rent it receives from Stream will more than cover that obligation.
During a City Council workshop last week, City Manager Chris Kukulski noted that, based on the number of jobs created over a three-year period, the actual incentives paid to Stream amount to less than $1,317 per job.
In return, the community got a $16 million annual payroll and a high-tech work space, and local residents got a lot of valuable training.
"I don’t think the community lost," Kukulski said.
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