A massive housing development is under construction on Missoula’s Northside, a project that will transform both a former blighted industrial complex and the entire neighborhood.
The Scott Street Village project, which eventually will consist of approximately 120 units of a mix of single-family homes, townhomes and apartments that will be priced between $162,500 to $257,000, is being built by Edgell Building Inc. of Missoula.
The project also is an example of how public tax dollars – in the form of Tax Increment Financing – can encourage huge amounts of private investment that ultimately generates more property tax revenue for city coffers.
The site lies within the North Reserve/Scott Street Urban Renewal District, and the developers say that without assistance from the Missoula Redevelopment Agency, the project may not have happened.
"This land sat for sale for two or three years before that urban renewal district was approved, then it made sense,” said company president Dave Edgell. “So many people like to say that (giving out TIF assistance) is giving the developers money. It’s not. It’s creating this, which wouldn’t have happened otherwise. The same goes with the (Southgate) mall and South Crossing (at the intersection of Brooks and Reserve). A lot of the improvements wouldn’t have happened without it. It’s a good boost and (the city) gets payback for it. It’s not like they don’t get paid back. It’s a really good deal.”
The first phase of the project, which is located at the old Clawson Manufacturing site, will consist of 23 single family homes and five townhomes. The second phase will consist of 18 townhomes and six single-family homes, and the third phase will be approximately 65 apartments. Construction of the first phase will be complete by the end of 2017, at which point the second phase will start immediately.
Last summer, the Missoula Redevelopment Agency approved Edgell’s request for $518,230 in tax increment financing to help complete the necessary infrastructure upgrades for the $4.5 million first phase. The property sat vacant for nearly four years and was not generating much in property tax for the city. However, once the first phase is complete, it could generate as much as $65,000 per year for the city in additional property tax revenue. The other phases could generate approximately $50,000 per year each.
The site was not contaminated by dangerous chemicals like the adjacent property, the former White Pine Sash site, but still remained unattractive to buyers and developers until the city stepped in and offered to help subsidize improvements.
“It’s very useful,” Edgell said of the TIF financing. “The South Crossing development only happened because of the Missoula Redevelopment Agency. It’s a huge thing to really emphasize. It’s going to help this whole area. Eventually, this is all going to get improved, and it wouldn’t happen without (TIF assistance).”
The overall price range for housing in the project will be from $162,500 to $257,000. Edgell said the whole goal of the project was to provide housing at prices affordable enough for people buying their first homes.
“Everything’s basically below the median price in Missoula,” he said. "We’ve sold a lot of these type of houses. A lot of people are really grateful to be able to get into these types of houses at the lower end of the spectrum, whereas if they buy a used house they have to spend a ton of money to bring it up to date.”
So far, 11 homes have been sold, even though none of them are move-in ready yet. A lack of inventory has led to a pretty tight housing shortage in Missoula in the past few years, which has driven up prices. From January to October this year, the median sales price in the Missoula area was $255,000, but that is surely increasing because in just the month of October the median sale price was $275,000.
Mark Edgell, Dave’s son and the vice president of the company, said the lowest-priced unit sold within an hour of being listed. He said he’s been surprised at the wide variety of backgrounds of the buyers so far.
“We’ve got a lot of people moving down from bigger houses to here,” Mark Edgell said. “There’s people from all over. There’s people buying starter homes, second homes, third homes or just downsizing.”
All of the homes will have unfinished basements, which means the buyers have room to expand their homes in the future.
“We’ve built a lot of houses like this before, by the freeway, and they sold well,” Dave Edgell said. “So you’re paying a little more to begin with to have a basement. But everyone has the opportunity to pretty much double the size of their house, and it costs $35 to $40 a square foot to finish that. So it’s real cheap space compared to selling, then trying to find another house. That’s what happened in the Pleasant View (subdivision). Lots of those houses turn over in Pleasant View because none of them have a basement and they all run out of room, so they have to come and find more space.”
As a developer, Dave Edgell has a unique perspective on what’s behind Missoula’s lack of affordable housing inventory. The city’s regulatory process that developers must wade through is “cumbersome,” he says.
He added that there’s also not a lot of large, vacant pieces of land in good locations that are for sale for the right price.
To make such a huge investment in Missoula means the Edgells are confident in the future of Missoula’s economy and the fact that housing will continue to be in demand, although they are still making a bit of a gamble.
“We’ll see in a couple years,” Dave Edgell says, chuckling. “But interest (in buying) has been very strong so far.”