Denied: Commission scuttles $30M project, massages outcome to deny Merc permit

Merc crop


The Missoula Historic Preservation Commission stumbled through another marathon meeting on Thursday night, amending several findings of fact regarding a demolition permit for the Mercantile, arguing over law, and casting doubt on the developers’ effort to find alternative uses for the vacant building before voting to deny the application.

After chastising the HomeBase developers, the commission voted 6-0 to deny the demolition permit for the Mercantile. Four members abstained from voting over accusations of bias while others called the process a “debacle,” suggesting HomeBase had failed to meet several criteria.

“We come here in March, our mayor tells us we need to comply and we find out there’s a bunch of debauchery going on,” said commission member Scott Loken, who missed nearly two months of discussion but voted to deny the permit. “The conclusion is we weren’t informed – we didn’t get the information prior to our meeting.”

Barring an appeal by the developers to the City Council, six volunteer commission members effectively scuttled a $30 million community project that would have given use to a vacant downtown property, employed up to 200 local residents and served as a boon to downtown businesses.

Several business owners have argued the importance of revitalizing the downtown corner with a proposed 150-room hotel, but to no avail. Six members of the commission, spearheaded by Delia Hagen, massaged the findings of fact to achieve a desired outcome, despite caution by the city attorney.

“You cannot insert language into any law in order to achieve a desired result,” said City Attorney Jim Nugent. “You have to be focused on plain meaning. You have to look at the plain meaning and make your best interpretation, and that’s what the courts will look at as well.”

Commission members argued over various nuances, from the time frame in which the building has sat vacant to suggesting advertising requirements had not met statute. They also suggested that developers had failed to consult with the appropriate agencies in the appropriate time frame, and didn’t make a good-faith effort to find a buyer, despite documents suggesting otherwise.

They waited nearly 90 full days before rendering a decision.

“There’s been demonstrated in public process and public comment, which we were told we could use in evaluating the application, that there are alternatives and they’ve been pretty readily available,” Hagen said. “If they (developers) haven’t seen them, then they must not have made a good-faith effort to find them, since they’re not that hidden.”

The developers argued otherwise, saying the structure has sat on the market for several years at $4.5 million and has appeared in numerous national real-estate listings. As many as 20 credit-worthy buyers have toured the building but walked away after determining that repurposing the structure was financially unfeasible.

After Hagen suggested another buyer was lurking, developers urged her to provide details. She failed to do so and members of the commission didn’t press for answers.

“We have a member of the commission who has a user for this building, and it would be great for her to share that with everyone,” said HomeBase developer Andy Holloran. “Many people have looked to repurpose this building over the past six years, from the library to the hospital to Whole Foods – twice. I don’t know what you define good faith as, but Octagon has been living this for six years to try to find an alternative to rehabilitate this building, without success.”

The building’s owner, Octagon Capital Partners, is a national leader in historic renovation and has been unable to find a tenant, which is required to receive financing. Without a tenant, Holloran said, the basic elements of financing cannot occur.

“That’s the heart of the matter,” he said. “The bottom line is, there has not, and there is not, a tenant or group of tenants who will lease a majority of that building so the very basic aspects of financing for that building can occur. There’s no project, and that’s the root of the issue.”

The commission wasn’t swayed and spearheaded a negative outcome from the start, casting unanimous votes all but once. It accepted as fact some evidence but excused other details. It proposed alternative conclusions and revised nearly a dozen findings of fact while striking other details from the record, including the staff report suggesting developers had me the criteria.

After more than four hours of discussion, the commission ultimately voted to deny the permit on a 6-0 vote, with four members abstaining. The meeting concluded at 11:30 p.m.

“The burden of proof is upon the applicant to prove the criteria,” commission member Steve Adler said. “We’ve basically just stricken all the findings of fact to support the conclusion.”