Urban Renewal District III

Southgate Mall is in the midst of a major redevelopment that will include a new 900-seat dine-in Carmike theater and a specialty grocery store that has yet to be named.

The Missoula City Council’s Administration and Finance Committee this week gave initial approval to adjust the boundaries of an urban renewal district to include Southgate Mall and a nearby neighborhood.

On a unanimous vote with one abstention, the committee voted to expand URD III by eliminating a so-called doughnut hole in the middle, clearing the way for infrastructure improvements ahead of the mall’s proposed $64 million expansion.

The vote came with no commitment to spend tax increment financing on infrastructure improvements – a conversation that’s expected to take place next month.

“This could be really good for stimulating development in the area, and that’s the whole point,” said Ward 6 council member Marilyn Marler. “There’s quite a bit of land there, but it’s hard to get to it.”

Expanding the district would enable the city to direct tax increment financing toward infrastructure improvements, including a proposed extension of Mary Avenue to connect South Reserve and Brooks streets, along with curb and sidewalk needs in a nearby neighborhood.

According to the WGM Group, the area meets six conditions of blight under state law, including an inadequate street grid, obsolete platting and excessive land coverage. The property is also at risk of future blight, a concern driven by the failure of malls across the country.

Retail business trends have changed since the mall was constructed in the 1970s. While the owners of Southgate Mall have invested in internal renovations, surrounding improvements are needed help the mall and other proposed projects succeed.

“What we’re doing here is allowing the developers to change, as well as implement, what I think is good urban design,” said Ward 3 council member Alex Taft. “It follows our growth policy and our complete streets policy. It’s a very good effort to keep Missoula growing as we would like it to grow.”

The Missoula Redevelopment Agency and city leaders have said that a failed mall would drive down surrounding property values, including home values. It would also cost the city more to raze and repurpose the mall and the surrounding properties than it would to invest in infrastructure to help them thrive.

Jeremy Keene, principal owner of WGM Group, has said the larger project could lift surrounding property values by 15 percent and stabilize $10 million a year in property taxes within a one-mile radius of the mall.

“In the long term, it creates opportunities for $60 million to $70 million in future investment that could happen on other developable properties,” Keene told MRA at a recent meeting.

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Back in the 1970s, under different growth patterns, the mall was constructed on a former lumber site on the outskirts of Missoula.

The city has grown over the past 40 years, resulting in traffic issues and a lack of connectivity created by what planners are now referring to as a “superblock.”

“The pieces of blight, in terms of safety and transportation, all relate to breaking up that (superblock),” said Chris Behan, executive director of MRA. “It would have to be done slowly and incrementally over time, but the first step would be to get (the mall) included in the URD where the owners can have some assistance in doing that.”

The City Council approved the creation of URD III in late 2000, a move that didn’t include Southgate Mall and five blocks west of Eaton Street.

The owners of the mall have plans to expand and improve the property to include a movie theater, lifestyle retail store and other services. The projects are expected to break ground in the coming months, though some of the plans are contingent on infrastructure improvements.

Ward 4 council member Jon Wilkins challenged MRA to address the lingering misconceptions around the project, the process and what’s at stake. He also asked the agency to do a better job explaining how tax increment financing actually works.

“I’m hearing from people all over town asking why we’re helping Southgate Mall,” said Wilkins. “Somehow, we’ve got to get the PR out there that this is for Missoula, this is for connectivity, this is for sidewalks and infrastructure. It’s for us having a voice on how Southgate Mall is going to expand.”

The committee approved the measure and set a public hearing for Monday night before the full City Council.

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