City sees affordable housing opportunities in purchase, redevelopment of Sleepy Inn

The proposed purchase of a West Broadway motel marks the latest effort by the city to explore new ways to provide affordable and low-income housing in Missoula, and while the deal must be approved by the City Council, local housing experts are backing the plan.

Missoula Mayor John Engen on Monday joined others in announcing the city’s intention to purchase the Sleepy Inn at West Broadway and Russell Street for $1.1 million. The old motel would be used as a shelter during the coronavirus pandemic and redeveloped later as housing.

Eran Pehan, director of the city’s Office of Housing and Community Development, said the opportunity could help the city advance its goals of providing a mix of housing to low and middle incomes in Missoula.

“It can help us fill a need for a really diverse housing type outside the standalone low-income properties and stand-alone market rate housing, and maybe look at mixing the two,” Pehan said. “There’s an incredible amount of opportunity, and we’re excited after the current crises to see how we can capitalize on that opportunity.”

The city holds a number of other properties now being eyed for redevelopment, including roughly 12 acres of land formerly owned by Montana Rail Link in the Midtown district.

The city purchased the 12-acre property in 2016 for roughly $2 million, calling it a generous price for a parcel of its size and location. Four acres have been since been developed into a park, and the remaining 7 acres are being eyed as a mixed-use development with housing.

When the new Missoula Public Library opens in downtown Missoula this summer, the city will also own the old library block. It was gifted to the city by the owner last April.

The Missoula Redevelopment Agency in February funded a study to complete a preferred development scenario for the parcel. The study will receive public input this year, with proposals including housing, office space, retail and parking. The end result should enable the city to partner with a private developer to move the recommendations to construction and occupancy.

Engen said Monday he envisions a similar process playing out at the Sleepy Inn if the City Council approves the purchase using tax increment financing from the district. Public input would help craft the end result.

“The best analogy would be what we’re doing with the Payne (library) Block,” Engen said. “We’d do a public scoping process to understand city and neighborhood desire, and follow that up with a request for proposals.”

The city followed a similar process on the Riverfront Triangle after it acquired the parcel decades ago. It issued a request for proposals, looking to put the property to its highest and best use given its downtown location and the city’s plans for inward development and job growth.

While that project will include an element of market rate housing, the city is looking to develop more affordable housing opportunities. In Missoula, land costs often stand in the way of such developments, though with the city owning the land, it could remove such barriers.

That was the case two years ago when the city and Missoula County partnered with area nonprofits to develop two parcels of land that will provide 202 units of affordable housing. The two projects, dubbed Trinity and Bellagio, received a $3 million grant from the Montana Department of Commerce in January.

Pehan said that effort will help put a dent in the city’s affordable housing needs, though it alone won’t be enough. But opportunities presented by the Sleepy Inn parcel, along with others around Missoula, could help move the dial.

“We’re making tremendous strides in the next 18 to 24 months in projects we’ve identified in Trinity and Bellagio, but we know we’re only hitting a small percentage of the total need,” said Pehan.

The Sleepy Inn parcel sits on a transit line, near trails, services and the Clark Fork River. Engen said the city has been eyeing the property for some time. The purchase could be finalized this month if it wins approval from the City Council.

“We have been looking at opportunities for redevelopment, particularly for hosing projects, and we had identified this property because it was for sale,” Engen said. “There is some excess right-of-way the state holds as a result of the Russell Street bridge project. We knew if were able to aggregate these two properties, we’d have a good piece of land for redevelopment for truly affordable housing, most likely low-income housing.”

The Missoula Redevelopment Agency’s board of commissioners will consider the proposal on Thursday, followed next Monday by the City Council.