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The owners of the historic Penwell Building on the Hip Strip in Missoula are looking into plans for restoring and redeveloping the structure into a ground-floor upscale food hall with communal seating, and four to eight restaurants.

The project would also include a rooftop bar, deck and event center. A speakeasy-style restaurant would occupy the basement and Airbnb-style apartment rentals would replace the current apartments on the second and third floors. However, the idea is only a rough concept right now and much of the feasibility hinges on city-mandated parking requirements.

Ken Duce, a retired historical architect who represents the ownership of the building, went before the Historic Preservation Commission earlier this month to seek approval for a parking variance request to lower the number of parking spaces the city requires for the project.

He said he would like to have fewer parking requirements in exchange for restoring parts of the facade and completely overhauling the interior's safety and plumbing systems.

“If we can rehabilitate the building, we need to pay for it, and we now think we have a project that we think will pay for it,” Duce explained.

Duce called the plan for the building “adaptive re-use” and wants to preserve many of the façade features of the structure, which was built in 1910 as a hotel because of the nearby Milwaukee railroad depot. It lies within the city’s Southside Historic District, which is on the National Register of Historic Places. It was designed by famed architect A.J. Gibson.

Duce said he would like the project to begin in fiscal year 2020 while the new Higgins Bridge deck is being put in place. The building is located at 101 S. 3rd St. W., on the corner of Higgins and South Third just south of Higgins Bridge.

Duce said one of his business partners got married in Montana this summer and told him there aren’t good options for event spaces for weddings. That's why they’d like to construct a new building on the roof of the Penwell that would include seating for about 80 people, with “gorgeous views” of downtown and the mountains. The ground floor, currently a mix of retail stores, would be transformed into a style of eatery called a food hall.

“A food hall, they’re all over the country in major cities,” Duce explained. “If you think of a food court in a mall, it’s a very upscale food court. Instead of a McDonalds and the (Panda Express noodles), the guy that came and is proposing to do this, he calls them an incubator for chefs to try new ideas."

He said the plan would call for somewhere between four and eight different vendors serving food, with shared tables throughout, and a shared scullery (a kitchen and back-of-house dishwashing area) "so that the chefs can focus on making good food and not on all the running of the business part of it."

Duce also said there are plans for a “grotto restaurant” in the basement.

“Sort of like the old speakeasy,” he said.

The building currently holds 36 apartments and has long been an affordable option for artists and others who want to live near downtown without paying sky-high rent. Some rooms have a shared hallway bathroom.

The ground-floor retail stores include Bathing Beauties Beads, Shakespeare & Co. independent bookstore, Carlo’s One Night Stand vintage clothing and costumes, The Sports Exchange outdoor gear consignment shop, Joseph’s Coat yarn and fiber shop, and Logan’s Boot and Shoe Repair.

“The building is not a safe place to live anymore,” Duce explained. “The plumbing is constantly leaking. My partner that manages the building complains constantly about how much we spend on a constant basis with Fred the plumber. All those nice stores that are really fun to have in Missoula, they’re there because we pay their rent. They pay us almost nothing.”

Duce said the fire escapes are dangerous, and plans for remodeling the building include updating the structural systems, tearing out the interior and putting in new floor decks, redoing the fire and plumbing systems and installing a stairway, elevator and a hallway connector over the public alleyway to a portion of the nearby Flipper’s property.

“When people have offered to come in, it just scares me to death,” he said. “I wouldn’t rent it to someone who wants to put in tenant improvements for a restaurant. Even if they could, if they did that then they would have leaking toilets on a regular basis or the possibility of them. The building needs the repairs, and it can’t be done piecemeal as far as I’m concerned.”

The building currently offers several Airbnb rentals, and Duce told the board that converting all of them to rentals would help pay for a “complete restoration on the outside” of the building.

“Depending on how things progress, to generate money we would have 34 new hotel apartment rooms replacing 36 apartments that we have right now,” he said. “The rooms, one of my partners experimented and renting on Airbnb, the income — even at very low rates — the income is surprisingly high enough that we think with that money, along with the restaurant use in the building, will generate enough money to rehabilitate the building.”

Duce said, from his perspective, the street view of the building after the remodel project would “probably be pretty close” to the street view now. But, the interior needs a complete overhaul, and he said structural engineers have told him it would be cheaper to replace the second and third floors rather than try to repair the flooring that is so warped it’s wavy and causes people to trip.

“I don’t want to stay in a 1910 hotel,” he explained. “We have to make enough money to pay for all of this.”

The restoration would involve an “all-new modern interior” including repairs to HVAC systems. Duce also wants to replace the missing leaded glass on the outside, replace the storefront windows, and replace the aging awning with a glass awning that would allow street-level pedestrians to look up and view the building.

Duce said the city’s planning department told him he would need 190 parking spaces because city zoning laws require a parking spot for every four chairs in a restaurant. The building is served by public transit and has some parking spot reductions “grandfathered in,” so Duce estimates that he needs to find 89 more spots to meet requirements. He told the Historic Preservation Commission that he would like them to grant a request in the future to reduce that number.

He also said he may try to get a zoning change, although he’s aware that neighbors in the area might be concerned about overflow parking spilling into residential streets. He said he’s also worked with Mayor John Engen and the Boone and Crockett Club, which owns the railroad depot building nearby and a parking lot, to see if they’d be interested in leasing parking spots. It will be a complicated process, and members of the Historic Preservation Commission said they couldn’t make a decision at this time.

Emy Sherrer, the city’s historic preservation officer, said that smaller restaurants like Clyde Coffee and Ciao Mambo on the Hip Strip were granted waivers by the previous officer in the past because they wanted a reduction of a small number of spaces. City code states that city zoning officer Mike Haynes, in consultation with Sherrer, are authorized to approve exceptions and waivers to minimum off-street parking ratios.

“Since this is such a large request, nothing has been determined/resolved as of yet,” Sherrer told the Missoulian in an email.

Linda McCarthy, the executive director of the Downtown Missoula Partnership, said the downtown area, called the Central Business District, has no parking requirements for businesses. However, the Hip Strip has parking requirements but no parking management because it’s not in a parking district, which would fall under the authority of the Missoula Parking Commission. She said there have been projects in the Hip Strip area that have not been able to move forward because the development either didn’t have the necessary land or financing to do the parking component.

The HPC didn’t make any decisions at its Oct. 4 meeting, so the future of the project is still up in the air. Duce sounded cautiously optimistic.

“We have to make this thing pencil,” he said.

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