The City of Missoula is moving steadily toward closing a deal with a group of private developers to undertake a massive redevelopment of the downtown Riverfront Triangle area – a project that would include a 39,000-square-foot conference center, a 200-room hotel, two floors of below-grade parking, retail stores, restaurants, entertainment space, offices, housing, a public plaza and a park.
The Missoula Redevelopment Agency has finalized a draft of a development agreement that the MRA’s Board of Commissioners will discuss at its Thursday meeting. The plans for the site, also known as the Fox Site, call for a public/private partnership in which the city would sell land to the developers and then buy a portion of the conference center and the entire parking garage once the developers build it.
“After three decades of unsuccessful attempts using traditional transactions, a true private/public partnership for this project was the basis for the original (plans) as the best way to redevelop the Fox Site with an appropriately designed project with uses that impact the entire community,” wrote MRA assistant director Chris Behan in a memo to staff.
“After several years of working with Hotel Fox, it is even more apparent that to achieve a proposed redevelopment vision in a form that will dramatically change the downtown and urban core as well as improve the overall Missoula economy, a close partnership relationship is crucial.”
Behan also wrote that the proposed development will become a “new central location for community activities and commerce.”
A group called Hotel Fox Partners, which includes local developers Pat Corrick and Jim McLeod of Farran Realty Partners, unveiled their plans for the estimated $150 million project last year.
“To date, Hotel Fox has conducted extensive market feasibility studies, preliminary planning, infrastructure engineering studies, and conceptual design efforts to create a viable vision for the Riverfront Triangle,” Behan wrote. “Other than the Fox Site, they have purchased all land necessary for the larger Riverfront Triangle vision south of West Broadway and west of Orange Street.”
According to terms of the draft agreement, Hotel Fox Partners would pay a purchase price of $2.3 million to the city based on an appraisal value as a traditional promissory note. The developers would build and own a full-service, 200-room hotel with at least 10,000 square feet of meeting space on that land.
They would build an additional 29,000 square feet of conference space that would be sold to the city upon completion of the building. The city would then contract with Hotel Fox Partners to manage the conference center, meaning the space would be taxable for Hotel Fox Partners even though it would be city-owned, and the developers would be liable for any operating deficits.
"A center large enough to attract the sort of conferences now going to other cities is bigger than a private developer would build because such centers "don't cash flow," Behan wrote. “Most conference centers of this size are publicly owned and subsidized. This proposal makes it possible to build a large enough conference center to expand the Missoula market and use the tax revenues generated by the project to pay for the enlarged center with no impact on the City General Fund.”
The developers would also build a parking structure with about 400 spaces beneath the hotel/conference center, and the city would purchase the structure using parking revenue and additional Tax Increment Financing revenue bonds. The developers would also be expected to donate a portion of land north of West Front Street to the city to be developed as an additional parking structure, as the dense development on the site would require lots of parking. The developers have said they intend to build high-end condominiums, affordable housing and medical offices. However, plans have not been finalized.
The city would purchase 29,000 square feet of the conference center for a purchase price equal to the lesser of $6.25 million or the actual cost of constructing the City Conference Center. The city would purchase the parking structure for a purchase price equal to the lesser of $8.8 million ($22,000 per space) or the actual cost of construction.
The structures would be paid for by Tax Increment Financing bonds, since the project lies within the special Riverfront Triangle Urban Renewal District. The tax revenue from the development there would go to directly finance projects in that site.
Many aspects of the draft agreement would be subject to certain agreements, and the draft can be found online at https://mt-missoula3.civicplus.com/DocumentCenter/View/38013.