The developers behind a planned hotel and conference center in downtown Missoula will ask the Missoula Redevelopment Agency next week for a one-year extension to complete the financing for the estimated $100 million project.
The City Council in 2017 approved the project and the agreements it contains, and Hotel Fox Partners have met the documentation deadlines at each stage along the way.
But two final deadlines are quickly approaching, including design for the conference center and parking garage on May 22. The deadline to submit equity and construction financing comes in November.
Hotel Fox, which didn’t return calls this week seeking comment, has asked for a one-year extension on the final two deadlines. MRA staff has recommended that the extension be granted, citing the project’s potential economic boom to the city.
A study conducted by the national planning firm Conventions Sports and Leisure estimated the Missoula conference center alone would bring $14 million in direct economic impact to the community each year.
“MRA staff believes that given the progress Hotel Fox Partners has made in addressing the delays and tremendous potential opportunity this project affords Missoula, that a one-year extension for each of the project deadlines … is realistic and reasonable,” MRA assistant director Chris Behan wrote in a memo to the board ahead of next week’s meeting.
According to MRA, the developers have already invested millions of dollars into the project but have encountered a number of challenges over the past year, including the death of Hotel Fox Partners project manager Barry Fisher.
An equity investor who committed capital to the project also experienced “personal and financial issues” unrelated to the project. That investment partner is no longer with the team and Hotel Fox Partners have successfully replaced Fisher’s role in the project.
Securing the financing for the $100 million project has also emerged as a challenge. According to MRA, two of the project partners have global relationships but have struggled to find investors. That’s due in part to hot markets in major metros, including Los Angeles, Seattle, Miami and New York – markets better understood by investors.
“For an investment of this size, Missoula is relatively unknown from an investor perspective and requires time to gain a level of comfort,” Behan wrote. “Additionally, the deal is complex, with numerous layers of public and private capital participation.”
The project has been years in the making and comes highly anticipated, along with a complex layer of agreements. Those agreements have taken time to negotiate but were resolved two years ago in a deal approved by the City Council.
Among them, Hotel Fox Partners will purchase the property from the city and build a seven-story, 195-room hotel with restaurants and other amenities. The developers will also build a 60,000-square-foot conference center and a parking garage with 405 spaces.
In exchange, the city will purchase much of the conference center and parking garage using tax increment financing. After construction, the city will lease the conference center to the hotel chain, which will be responsible for management, maintenance and repair.
The city will also enter into a management agreement with the Missoula Parking Commission to manage leased and general public parking. Other portions of the project include housing, office and retail, though those will come at a later phase.
MRA’s board of commissioners will consider the extension next week.