A committee of Missoula City Council members has approved actions that aim to spur two significant and expensive downtown redevelopment projects in currently vacant and blighted lots.
The Administration and Finance Committee gave the green light to a resolution of intent to approve a proposed new $20.6 million hotel called the AC by Marriott on the corner of Pattee and East Main streets as an Urban Renewal Project.
The approval of the resolution means that developer Andy Holloran can move forward with plans to seek nearly $1.9 million in Tax Increment Financing (TIF) to pay for public infrastructure upgrades such as new sidewalks, street trees, lighting, utility relocation and State Prevailing Wage for construction workers.
The committee also approved a $610,053 loan agreement to Riverfront Triangle Partners to be used for asbestos abatement and cleanup of other hazardous materials in the old medical buildings on the corner of Front Street and Orange, where developers want to build a $100 million conference center, hotel, condominium and parking project.
The money comes mainly from the U.S. Environmental Protection Agency, and committee members and Mayor John Engen said the abatement “is a commitment” that proves to potential investors the city is serious about getting the so-called Hotel Fox Project off the ground. The developers recently got a one-year deadline extension to find enough private equity financing to move ahead.
The Missoula Redevelopment Agency’s board had recently approved the TIF funding for the AC by Marriott, but because it requires a bond it will have to be approved by the full City Council in the near future.
MRA director Ellen Buchanan said TIF money “levels the playing field” for developers seeking to build projects in blighted areas downtown. She said the new AC by Marriott will generate $170,000 more in property taxes than the vacant Firestone building it would replace.
“Unlike greenfield development, downtowns are historically the most expensive place (to redevelop or develop),” she explained. “They don’t have staging areas, there are unknown conditions below grade."
Buildings nearby could be in danger of collapsing, as is the case of the Radio Central Building next to the proposed AC Marriott. It will have to be shored up to prevent that.
"You don’t have that when you do a suburban development," Buchanan said. "If we want the kind of investment downtown, you have to level that playing field or projects don’t happen.”
Tax Increment Financing is for the removal of blight, according to state law, she said.
“That Firestone building has been a blighted building for a long time,” she said.
Council President Bryan von Lossberg said TIF funds “are not a property tax break,” despite some popular myths.
“There are no property tax breaks,” he said. “There’s confusion around Tax Increment Financing and there’s tension in the community around what we do with MRA funds.”
He said he was recently approached in a restaurant by a constituent who told him the City Council needs to “stop bringing in hotels and giving them tax breaks.”
Von Lossberg said he explained to the person that the City Council is doing neither.
“This is a decision from an investor,” he said.
“If the World Institute of Bunny Rabbits and Panda Bears wanted to build their world headquarters at 175 Pattee St. as opposed to the AC Marriott Hotel,” he said, the City Council would still use TIF funds to improve the public right-of-way.
Buchanan said the extra property tax generated by the AC by Marriott hotel, along with the new Residence Inn by Marriott nearby at the site of the old Mercantile, could fund the conversion of Front and Main streets from one-way streets to two-way streets. It could also be used for a project at the site of the old Missoula Public Library, she noted, because that land was recently donated to the city.