Council committee expresses support for $37M hotel at old Fox Theater site

By KEILA SZPALLER of the Missoulian | Posted: Thursday, December 1, 2011 6:00 am

The Fox Hotel group is homegrown, and the people who want to build a $37.65 million hotel and conference center in Missoula aren't strangers to the Big Sky State.

"We're a Montana-based group that cares about Montana," said Sean Averill, one of the partners. "We're here to stay."

On Wednesday, Averill and other partners introduced their team to the Missoula City Council Administration and Finance Committee and presented their plans for putting up a "landmark" hotel on the old Fox Theater site on the corner of Orange Street and the Clark Fork River.

To pull off the project, the group wants the city to donate the property, which appraised at $2.7 million in better economic times. Councilors weren't eager to give away the land, some 1.87 acres, but Wednesday, they expressed support for the project.

In a unanimous voice vote, the committee recommended giving the Fox Hotel group the "exclusive right" for one year to negotiate a development agreement for the site. The full council will take up the decision Monday at its regular meeting.

"We're excited about this project," said Councilman Bob Jaffe. "The benefits to the downtown and community are obvious. If this comes to fruition, I'm sure it's going to be a really great thing for everyone."


The team that pulled together to build the Hotel Fox is generally made up of three partners, and combined has roots in Montana and the hospitality industry. (The name hasn't been settled yet and could be the Hotel Fox or Fox Hotel, but the group wants to incorporate the historical Fox site into its name.)

The Averill family, with Sean and Brian Averill, own and operate The Lodge at Whitefish Lake as well as Flathead Lake Lodge. The Averills also developed Marina Cay in Bigfork.

The proposal to the Missoula Redevelopment Agency notes the family knows both hotel operations and the Montana hospitality market and will take "the lead development role" on the Fox site: "They have developed hotels with an eye toward quality, integrating into and enhancing their property's beautiful surroundings with an emphasis on being sensitive toward the environment."

The Farran Group of Missoula is the second partner, including owners Pat Corrick and Jim McLeod. The Farran Group is a development company that built the Copper Run Apartments and, according to their proposal, "successfully entitled or constructed in excess of 4,000 apartments, subdivision lots and condominium units."

The third partner is a friend of the family with 40 years in the hotel industry. Dieter Huckestein, former president of hotel operations for Hilton Hotels Corp., will spearhead the hotel and convention center, similar to his work in "marquee destinations" such as Houston, Austin and San Diego: "Dieter's extensive experience with Hilton and his broad industry connections will enable us to evaluate and secure the most optimum design, branding and operating agreements for the Fox site."

Said Sean Averill: "His international hotel experience is basically unparalleled."

Other members of the group include a 30-year veteran of Marriott, Scott Ringer; Devin Khoury, a broker with Windermere Real Estate; and John Paoli, a principal of Inkstone Architecture.

While the group got an initial green light from the council committee, it's at least another 18 months before breaking ground - and that's if a feasibility study confirms the financing pencils out.

If the full council agrees to reserve the property for the group for 12 months, the partners will embark on a feasibility study. Another step will be to negotiate a development agreement with the city of Missoula "that fully addresses land costs."

"We're standing at the bottom of the ladder and looking up," said McLeod, with the Farran Group. "There's a lot we have to do before this project becomes a reality."


A couple of the hurdles were clear Wednesday. The group wants the land donated with the quid pro quo - possibly including a long-term lease - to be worked out in a development agreement with the Missoula Redevelopment Agency.

Councilman Jon Wilkins said he's excited about the boon for the downtown, but he also wants his constituents on board. And at first blush, he couldn't see his constituents wanting the city to give the land away.

"(If) you're running a public relations campaign, you'd better sell it to my bosses. And you know who my bosses are," Wilkins said.

Pat Corrick, though, said the transfer of the land will be worked out in the development agreement. In fact, he said the land has been for sale for a number of years, and if someone could have figured out how to pay cash for it, the person would have done so by now. He also said the group wanted to be up-front about needing the land free and clear instead of coming back and asking for it later.

"I think that's one of the key hurdles of making this project a reality," Corrick said.

He said the downtown will reap benefits, and a market study will show details. The hotel is slated to employ some 200 to 250 people in full- and part-time jobs with a payroll of $3.5 million.

Data from the University of Montana Institute for Tourism and Recreation Research shows the average traveler in Missoula spends $73 a day in the community on other expenses such as restaurants and groceries, according to the group. It estimated that'd bring another $2.7 million to the local economy in the hotel's second year.

In short, Huckestein said the land is a critical component to pull off the project: "The reality is today, you can buy hotels around the country for 50 cents on the dollar, and not many hotels are being developed."

Councilman Ed Childers said the group might have noticed a certain skepticism on the council, possibly because its seen a few projects fall apart. But he said he's hopeful given the partners' history of successes, and currently, the Fox site isn't generating tax dollars.

"(The) carrot is $300,000 worth of property tax revenue every year as outlined in your proposal," Childers said.

The other hurdle will be ensuring the project is a "community benefit." A group called the "Community Benefit Coalition" recently formed to ensure the Fox Hotel is in the best interest of as many people in Missoula as possible.

Members include labor unions, the Montana chapter of the Sierra Club, and BWAM, the Bike-Walk Alliance for Missoula. Some representatives asked the committee to hold off on its decision until its group had a chance to meet with the developers.

"This is a good, viable proposal. Please give the Community Benefits Coalition the time to help make this a great proposal," said John Wolverton, speaking for BWAM.

The committee disagreed, although Councilman Bob Jaffe said labor matters are a priority for many on the council. He'd like the development group to take some of those matters into consideration up front, but he didn't want to hold up the vote Wednesday.

Councilwoman Stacy Rye, too, said she would be watching for benefits to the city. Unlike Whitefish, Missoula doesn't have a local sales tax, and she said hotel taxes are low and go to the state.

"So the benefits that eventually do make their way to the city are very indirect and hard for us to grapple with on a municipal level sometimes," Rye said.

Reporter Keila Szpaller can be reached at @KeilaSzpaller, 523-5262, or on