By Martin Kidston
The City Council’s Administration and Finance Committee signed off on construction of a new student housing project in downtown Missoula on Wednesday, and authorized the sale of tax increment bonds to help fund a new parking garage associated with the development.
The project, which includes a six-story student housing facility with two levels of parking, is currently under construction on the 300 block of East Front Street. The $38 million development also includes 488 beds and 6,5000 square feet of retail space.
Chris Behan, assistant director of the Missoula Redevelopment Agency, said the public-private partnership will enable the city to acquire more parking at a time when it cannot afford to fund such projects on its own.
In conjunction with several other projects planned in the district, the new development and its influx of residents could boost downtown retailers and serve as a welcome economic trigger.
“Retail has had a marginal existence downtown since the late 1970s,” Behan said. “For downtown to grow, it needs to move toward more of a 24-hour downtown, where there are more residences, and those residences need to be in a variety (of types).”
Over the past few months, MRA’s Board of Directors has explored the public-private partnership with the project’s director, Lambros Farran Apartments, LLC. In doing so, the board also considered a number of funding options before settling on a series of tax increment bonds.
Because tax increments from past projects is currently obligated to several other downtown projects, the city must issue revenue bonds to help construct parking at the student housing facility.
The bonds approved on Wednesday include a $1.16 million taxable series, a $277,000 tax exempt series, and a third bond valued at up to $3.2 million. The third bond is capped at that level, ensuring new tax revenues generated by the student housing project – estimated at $320,000 annually – cover the debt.
Behan said that third note will be used to refinance a 2010 bond associated with the First Interstate Plaza project, and to acquire roughly 150 parking spaces in the new student housing project.
“It refinances existing debt and repackages it with new debt,” Behan said. “It lowers the interest rate and extends the term, and it frees up money for additional projects downtown.”
The timing of the project is key to downtown growth and its economic health. Several projects along East Front Street are set to begin next year, including a proposed new Marriott hotel and a new Missoula Public Library, which Behan said will lack enough on-site parking to accommodate the larger facility.
The need for parking is also mentioned in several downtown plans, which all call for expanded public parking in the Front Street corridor. One plan calls for a minimum of 533 parking spaces at Front, Main and Pattee streets, while more recent needs place the number closer to 700.
The new Park Place garage, which opened in 2013 at a cost of $10 million, included just 300 spaces. Behan said there wasn’t enough revenue to make it any larger, prompting the city to explore new public-private partnerships, such as the one agreed to Wednesday.
“In terms of parking in the area, to develop the whole Front Street District, this is an appropriate use of those funds,” Behan said. “Lack of available parking and the high cost of developing private structures are ranked by interested developers, property owners and business owners as the greatest impediment to investment consideration in the district.”
Rod Austin, head of the city’s parking commission, said the level of parking purchased by the city will include roughly 142 spaces, depending on how the new garage is striped. Of those, as many as 50 will be dedicated to short-term parking for customers of the new library, as well as area retail.
“We’ll be getting a revenue stream that will help us do other projects that desperately need to be done,” Austin said.
Contact reporter Martin Kidston at firstname.lastname@example.org