Southgate Mall

A rendering shows the proposed improvements to Southgate Mall, which could begin in January if the city renews Urban Renewal District III.

The Missoula Redevelopment Agency and the owners of Southgate Mall are asking the city to consider extending the life of a redevelopment district that’s just now showing signs of life, and could see tens of millions of dollars in development in the years to come.

But whether the City Council will move to renew Urban Renewal District 3 to aid future development will likely involve further debate and a possible vote in the weeks or months ahead.

Ellen Buchanan, director of MRA, told the City Council’s Administration and Finance Committee on Wednesday that the district’s redevelopment potential was partially hampered by the recent recession.

But interest in the district has returned, sparked in part by the Woodbury Corp.'s redevelopment of the former Kmart property. The district follows the Brooks Street corridor from roughly Mount Avenue south to Reserve Street.

“It takes a number of years before these urban renewal districts get to the place where there’s a significant amount of revenue reinvested in the district,” Buchanan said. “We’re in that place with District 3 right now, where we have enough revenue to begin to realize the goals in those two studies (Southgate Area Redevelopment Plan and URD III Plan).”

Ward 2 Councilmember Adam Hertz, who chairs the committee, suggested earlier this month that District 3 had achieved its goals and should be allowed to sunset.

Buchanan believes otherwise, citing the two studies and their vision for the area south of the mall. That vision hasn’t been realized, she said, though growing interest among developers and businesses could help the district turn the corner, driving up the tax base and padding property values.

“The underlying assumption with urban renewal districts is, if they didn’t exist, a lot of this private investment would never happen,” Buchanan said. “You’d be hard pressed to find anybody to tell you that downtown Missoula would look like it does today had it not been for the urban renewal district and the use of tax increments for people to make private investment.”

The city created its first urban renewal district in downtown Missoula in the late 1970s. When the district ended in 2005, it had injected $20 million in tax-increment reinvestment back into the district, leveraging more than $200 million in private and other investment in the city’s core.

With the recession over, the economy strong and interest in Missoula on the rise, similar investment is expected to find its way to District 3 and south Missoula, including plans at Southgate Mall where the owners have a vision for the area's underused and vacant land.

Peter Lambros, a representative of Southgate Mall Associates, said the vision to create a new urban-style development depends in part on the availability of tax-increment financing.

“Transformation of a neighborhood never happens as quickly as we wish it would,” said Lambros. “Development is hard, and it’s hard to do the type of development we wish we could do. When you think of this district, the bar has been set pretty low for a long time.”

The mall last week unveiled plans to create a new urban-style neighborhood built around redevelopment of its property, including a $50 million addition expected to break ground in January if the city supports the district’s renewal.

But Ward 4 Councilman Patrick Weasel Head, who was appointed to the council this year after Caitlin Copple resigned her seat to take another job, questioned the value of the mall’s project and the use of tax increment financing.

“I have three major issues,” Weasel Head said. “What are the real costs to taxpayers? Will you be sucking the life out of downtown? And what’s the quality of life? I know most of these businesses have minimum wage. That’s not quality of life for Missoula.”

Lambros said similar projects completed elsewhere in the nation have attracted new business opportunities due in part to the addition of new amenities.

Growth on North Reserve Street hasn’t killed downtown, he said, and he noted his family’s plans to build a 500-bed student housing project downtown at a cost of roughly $35 million this summer.

Growth at the mall and its surrounding properties would also help grow the city’s tax base if allowed to flourish, Lambros said.

“A shopping center of this nature can literally go from full to empty in a year,” Lambros said. “We have some people willing to invest in Missoula, and it’s a moment to capitalize on.”

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