One of the most ambitious development projects in Missoula history is moving forward slowly but surely.
The developers with the Riverfront Triangle/Hotel Fox project gave an update to the Missoula Redevelopment Agency’s board and staff on Thursday to discuss their timeline, finances and confidence level. The plan calls for a 10-story hotel that would include three floors of condominiums, a 60,000-square-foot conference center designed to attract regional groups, new restaurants, office space, a new park, housing, new parking structures and redesigned traffic infrastructure.
It would all be located in the seven-acre, triangle-shaped area between West Broadway and the Orange Street bridge, which currently consists of a parking lot and decaying structures.
Jim McLeod and Pat Corrick of Farran Realty Partners in Missoula are leading a team that includes Averill Hospitality of Whitefish and other partners.
“We have completed the schematic design on the project,” Corrick told the MRA board. “We have the conference center planned, the parking planned and other amenities like restaurant space, etcetera, and we’re in the process now of kicking off construction drawings.”
McLeod said the developers are on track to submit building permit applications by June 1. He and McLeod have said they envision the area to be about $150 million worth of high-density, mixed-use housing and retail that will act as a “western gateway to downtown Missoula” with a public plaza.
City leaders such as Mayor John Engen have endorsed the project as a way to attract out-of-town visitors and their spending. McLeod told the board last year that a market study the developers paid for showed the conference center could attract the equivalent of the Missoula Marathon crowds every month.
“The parking structure is the first structure, and then the hotel and condos and conference center will go up simultaneously,” Corrick told the board.
Under an agreement with the city approved by the Missoula City Council last year, a maximum of $8.3 million worth of Tax Increment Financing will be used by the city to purchase most of a new 405-space underground parking garage. The city will also use TIF dollars to purchase the conference center, which will be the largest of its kind between Spokane and Billings, for approximately $16.5 million.
The site lies within the Riverfront Triangle Urban Renewal District. Therefore, the additional property taxes generated by the project compared to what is there now will be administered by the MRA, instead of going to the city's general fund and schools, and will be used on projects within that district that ostensibly benefit the public.
Corrick told the board they’ve hired an expert to put together a financial model that demonstrates “the project is reasonable in terms of expectations for equity.”
“We’re certainly not in the range where we’re doing backflips but we’re not in the range where we’re pulling back from the deal,” he said. “The financial modeling is very robust. The model is now one where we’re comfortable that if TIF amounts or pricing changes, we’re able to understand that along with interest rate exposure and expectations for equity and how it impacts the bottom line.”
Corrick said that interest rate hikes and the ever-rising cost of construction materials, in part due to ongoing trade wars, are a cause of concern.
“But fortunately we’ve hired Dick Anderson Construction, and if anyone can figure it out they can,” he said.
Dieter Huckestein, a development partner, said the team is “bullish” that they can accomplish starting construction next year.
“We’re still excited about the project,” he said.
Ellen Buchanan, the executive director of the MRA, wanted to know when the team will begin the cleanup of the site, which was formerly Missoula’s landfill. McLeod responded that there’s no set timeline, but they hope to start work within a few months. However, winter weather could complicate that process.
After the city purchases the conference center, Hotel Fox Partners have signed an agreement to lease the city-owned portion for 25 years, with two automatic 10-year renewals at the developer’s option. The city will buy the furniture, fixtures and equipment, but the developers will be responsible for all major, non-routine repair and maintenance.
The council also voted last year to unanimously approve a land disposition agreement. The land is currently owned by the city, but it will be sold to the developers for $2.3 million, its appraised value.
The developers will receive a credit of no more than 40 percent of the total purchase price for the land that will be occupied by the publicly owned conference center and parking. The developers will pay interest only on the purchase for the first five years, and then begin making interest and principal payments, with the final payment due within 15 years of the original sale date. The developers also may, in the future, receive an additional credit of up to $1.25 million in exchange for giving the city a portion of land it owns in the so-called “chicken block” north of West Front Street for a future additional parking structure.