The built environment in Missoula’s urban core is steadily going vertical and getting denser.

Two fairly sizable housing projects that will redevelop a formerly blighted parking lot and an industrial site, respectively, recently received Tax Increment Financing assistance from the Missoula Redevelopment Agency’s board of commissioners.

The first, called McElmurry Homes at 1515 South Ave. behind Blackjack Pizza on Malfunction Junction, is a $1.8 million combination of a three-story apartment building with ground-floor retail and an adjacent residential building. That project received approval for $20,000 in TIF reimbursement for improvements to public sidewalks and landscaping.

Tod Gass of the Missoula Redevelopment Agency said the project brings in “mixed-use development with vertical construction” along the South Avenue corridor.

“It conforms well with the vision for the area and current redevelopment activity,” he told the board.

Ruth Reineking, a member of the MRA board, said she’s glad the building is three stories and that density in Missoula is “starting to build upward.”

Chris Behan, the assistant director of the MRA, said the project offers the opportunity for infill development of an underutilized parking lot.

“The project will bring a fresh look to the location and new ideas for potential redevelopment opportunities along the Brooks and South corridors,” he told the board. “The development of this underutilized property and the vertical construction at this highly visible location sends a strong message that this area of URD III is transitioning to higher-density uses, and may act as a catalyst for further private investment in similar types of projects or redevelopment activity on South Avenue and the Brooks Street corridor.”

The vacant parking lot generated $2,963 per year in property taxes, and the additional taxes generated from the two new buildings will add $13,000 a year to city coffers. The TIF reimbursement is expected to be paid back within two years. The TIF assistance was approved at the MRA's June meeting.

The developer, Blaine McElmurry, has been constructing residential home projects for 14 years and is working with architectural firm Hoffmann Morgan and Associates. The project is expected to be complete by June 1, 2018.

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The second project is the final phases of the large Scott Street Village residential housing development in Missoula’s Northside neighborhood. The MRA board unanimously approved giving up to $524,868 in TIF assistance for the second phase and up to $162,028 for the third phase. That follows the $518,320 the developer, Edgell Building, Inc., received in TIF assistance in July 2015 for the first phase, which consists of 24 single-family homes. The TIF money mainly will be used to build new public streets, as well as sidewalks, sewer and water mainlines and engineering and traffic control permits.

Phase II consists of 18 townhomes and six single-family homes for a cost of $4.17 million, and Phase III is anticipated to be a $5 million, 50-60 unit apartment complex that will be constructed sometime around 2020, although that project depends on market conditions because there are so many apartments being built in Missoula right now. Either way, the MRA board wanted to reimburse the developer for utility and public street improvements for future development.

The project is located at the old Clausen Manufacturing site in the North Reserve/Scott Street Urban Renewal District. For Phase II, the additional property taxes generated by the development, compared to the property tax generated now, will be $40,000 per year. If the apartment building is built in Phase III, it could generate $50,000 more annually.

Behan said the MRA’s TIF assistance to the developer for public infrastructure upgrades will help the developer sell the homes at a “cost that is attainable to a large number of Missoula families.” Indeed, all of the homes and townhomes are being priced between $162,500 and $257,000, with many on the low end. The median home price in Missoula is hovering around $275,000 right now, according to the Missoula Organization of Realtors. All the houses in the first phase are either sold or under contract with backup offers.

"The escalating cost of land everywhere in Missoula coupled with rising construction costs, the high expense of installing basic infrastructure, and often the need to remediate and remove buildings has made construction of homes affordable even to median income families increasingly difficult,” Behan told the MRA board.

“This is true under either for-profit or subsidized home ownership models. The Scott Street Village target market is moderate income or ‘workforce’ families who desire to live in a neighborhood setting. From the immediate sale of all Phase I units and high interest in reserving units to be built in Phase II, this development model seems to be one of the missing residential inventory segments in Missoula at this time.”

One of the goals of Urban Renewal Districts is to spur development that creates “spin-off” investments nearby that generate more property taxes. Behan believes this project will do that.

“This project continues the first major housing development that includes home ownership in or near the Northside neighborhood in 30 years,” he said. “It is likely to attract more interest in the eastern portion of the new urban renewal district and perhaps additional infill projects within the previous neighborhood boundaries.”

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