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Hillview Way

Hillview Way is slated for a $3.8 million reconstruction, but the city of Missoula and several large landowners can't agree on who should pay for the project.

Call it the cart before the horse – or in the case of rebuilding Hillview Way, a stalemate between the city of Missoula and several landowners over which should come first: their promissory signatures or a Special Improvement District.

Bruce Bender, the city’s chief administrative officer, has asked the City Council's Public Works Committee to approve a Special Improvement District that would fund the $3.8 million reconstruction of Hillview Way.

But after 90 minutes of discussion this week, the Public Works Committee failed to send the request on to the full council over concerns that public subsidies for the project were too high and that a group of large landowners wouldn’t join the SID, even if the city approved it.

“You can’t expect us to buy a pig in a poke,” said Jim Shockley, an attorney representing property owner Linda Frey. “If you want to negotiate, we’ll negotiate. But to sign this agreement under the circumstances, we won’t do that.”

Bender briefed the committee on the project’s history and proposed timeline. An earlier arrangement didn’t sit well with many property owners who live or own land within the proposed district.

But after further negotiations, Bender and the city’s bond representative reached a compromise with most of the district’s property owners. The results, he said, reduced the number of district protests from 47 percent to 20 percent.

“The most critical change we did was to reduce all the assessments on these large parcels to one assessment per parcel,” Bender said. “We initially started saying they would reimburse us at the SID rate of 40 years, but that was negotiated down to 25 years.”

As proposed, the reimbursement rate would increase roughly 3 percent each year for 25 years. For a single dwelling, the first-year rate would start at $1,747 and increase to $2,400 after 20 years.

The city believes it’s a small amount in relation to the value of the district’s properties. If the city approved the SID, the area’s largest landowners would have 60 days to sign the agreement and join the district.

If they failed to do so, Bender added, the city would be asked to create an ordinance adding a reimbursement fee when new homes are built on the lots held by the holdout landowners.

“If they don’t sign, it would come to you with an ordinance that would collect that fee under a building permit issuance,” Bender said. “The concept is, when you come to build, you pay your fair share for the improvements.”

Bender said the city has used a similar approach in other areas when creating sewer districts. But the arrangement concerned several committee members who expressed a reluctance to establish an SID without first winning the buy-in of landowners.

“We seem to be right back where we were in the beginning,” said Councilman Alex Taft. “I think we should have the agreement in hand before we pass the SID. If not, just forget the whole thing and let’s put our efforts toward other public improvements in town.”

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Bender summarized the standstill as a Catch-22. Committee members are reluctant to approve the SID without the landowners’ signature. But the landowners are reluctant to sign the agreement without the passage of the SID.

Allen McCormick, an attorney with Garlington, Lohn and Robinson who’s representing landowner Sun Developments LLC, said the council’s unpredictability has left his clients unwilling to sign the agreement out of fear the SID would change before it was passed.

“We still haven’t seen the (engineering) designs because the designs aren’t done,” said McCormick. “If you wonder why we’re not signing the agreement, it’s because you guys aren’t very predictable. We’re not signing the agreement because we don’t know what you’re going to do.”

Linda Frey, one of the area’s landowners, said she understands the city’s need to be equitable and fair when asking property owners to pay their share for the public improvement.

But she also said the city has calculated more developable lots on her property than is feasible. She also said the proposed arrangement taxes future builders for a service they aren’t currently using – that being the use of the road.

“I’m not sure it’s fair to give us interest on a lot when we haven’t used the road,” said Frey. “When you use the road, you should pay. But the owner who buys that (lot) should have the option to pay the initial amount, not the interest. You’re taxing them on the potential of what might happen.”

Several committee members also questioned the project’s funding sources. Initial improvement costs paid from special assessments have decreased under the new proposal from $2.5 million to $1.6 million, shifting the cost burden elsewhere.

As proposed, the remaining amount would take $1 million from the transportation management fee, $165,000 from the parks maintenance fee and $869,000 from the road district.

The last figure left some committee members anxious.

“That represents a large public subsidy,” said Councilwoman Marilyn Marler. “If it’s not paid back from building houses on those vacant lots and it's $869,000 and there’s 60,000 people living in Missoula, that’s $14 or $15 per person to pay for this section of road most people don’t drive on.”

Bender said taking funding from the road district has always been part of the formula. He said the funds would be repaid as landowners develop their properties over the next 50 years. But it’s also possible, he said, that the properties would never be fully developed, and the amount never fully repaid.

Committee members have asked Bender and city staff to work on building consensus before they move forward with a decision. The committee is expected to take up the issue again next week.

“For the good of the people, we need to get on with this,” Marler said. “It would be nice to hear some recognition that there’s a large amount of public cooperation going into this. But over and over again, we’re not getting any acknowledgement that that’s happening.”

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