After months of discussion, Missoula City Council members on Wednesday unanimously approved an agreement that will use tax increment financing bonds, or TIF, to reimburse developers of the new AC Hotel.
The reimbursement agreement will be on the consent agenda at Monday night’s City Council meeting.
“As stated in May, we will not bring a bond resolution until the project is complete,” Ellen Buchanan with the Missoula Redevelopment Agency told council members Wednesday. “You might have noticed the private investment number has increased. It went up a couple million dollars from what the developers thought it was when they applied for the reimbursement, so the ratio is just that much better. It’s $12.50 for every public dollar invested.”
The $1.8 million in tax increment bonds will reimburse the developers, Missoula Investors LLC, for public improvements associated with the $22 million downtown hotel.
The hotel will be built on the long-abandoned Firestone property on the corner of Main and Pattee streets as AC by Marriott Missoula, a six-story hotel with 105 rooms, a basement restaurant and rooftop bar.
The TIF bonds will reimburse the costs of remediation of the property and deconstruction of the building, public right-of-way improvements and placement of all utilities underground. Reimbursement will not occur until the project is complete. Without TIF funds, some aspects of the project could not be built.
The Firestone building currently pays just over $15,000 in property taxes every year, while the new AC Hotel will pay more than $186,000 in property taxes.
More than 90 percent of the materials that will be deconstructed are recyclable and can be reused for the new hotel, and about 33 full-time employees will be needed when it opens for business.
The hotel is expected to be completed in the fall of 2020, neighboring the Mercantile Hotel.
Having hotels close to one another is a growing model, Buchanan said.
“You can get a lot of efficiency in your management,” she said. “For instance, the two hotels will share valet service for parking, the two hotels may share other things.”
When the Riverfront Triangle development is built, a conference center with the capacity to seat 1,000 people will also accompany that structure. But downtown Missoula needs more than one hotel to accommodate the influx of people for conferences, Buchanan said.
“If you’ve got a conference that’s being attended by 700 people, think about it. You need rooms,” she said. “All of the properties profit from that.”