City strategy to bank land for redevelopment, future housing showing results

A cyclist rides down the Bitterroot Branch Trail in MRL Park in this file photo. A portion of the property will cleaned of environmental contaminants and redeveloped with a mix of retail and housing. (Martin Kidston/Missoula Current)

A strategy in the city’s housing policy is beginning to show results with the acquisition of property in key locations around Missoula, and it could help remove land costs as a barrier to building affordable housing down the road.

The U.S. Environmental Protection Agency this month awarded the city $1.2 million in grants from its Brownfields program, including $326,000 earmarked for the cleanup of a Midtown property.

The city acquired the property in 2016 in a $2 million deal notched with Montana Rail Link. It built a new neighborhood park on one corner of the parcel and has reserved the other half for a mixed-use project that will include an element of housing.

“The EPA has awarded the city a little over $300,000 to cover the cost of cleaning up that 11-acre parcel, which does clear the way for redevelopment,” said Eran Pehan. “We do envision building homes that Missoulians can afford as a central part of that redevelopment plan.”

Pehan, director of the Office of Housing and Community Development, said the EPA funding has helped the city partner with a number of local organizations on cleanup, followed by redevelopment.

Past examples include the village of small homes developed in collaboration with Homeword and the Missoula Food Bank on Montana Street. The Lee Gordon townhomes, developed on Front Street by the North Missoula Community Development Corporation, also benefited from the program.

“While lots of things are uncertain these days, we know the city of Missoula will bounce back, in no small part by doing the things we’ve always done well,” said Missoula Mayor John Engen. “Among those things we do well is work with federal and community partners to create lasting value by cleaning up old environmental damage and redeveloping sites that would otherwise sit idle.”

While the city works with the EPA and the Montana Department of Environmental quality on preparing the Midtown property for redevelopment, it’s also banking land – a key component of its housing strategy.

Land costs in Missoula continue to rise and when coupled with other factors, they’ve served as a barrier to building workforce housing. By removing the cost of land, the reasoning goes, housing can be offered at a lower price point.

“Land banking is really a key strategy in our housing policy, and we are starting to see some benefits of that,” Pehan said.

The city currently owns several properties around Missoula, including the former MRL parcel in the Midtown district. A philanthropist also gifted the city the old library block in downtown Missoula last April, and the parcel will undergo a master plan for redevelopment, which will likely include a housing component.

More recently, the city purchased the Sleepy Inn motel for $1.1 million on West Broadway. While its initial use will be to quarantine and isolate the vulnerable during the pandemic, the long-term goal looks toward redevelopment, again with an element of housing.

Pehan points to the recent Trinity project made possible by Missoula County, which donated 4 acres of property off Mullan Road for housing. Combined with low-income housing tax credits and tax-exempt bonds, the land donation will save the developer an estimated $670,000.

Under the arrangement, that savings will be passed on to future tenants.

“The city of Missoula hopes we can serve in that same capacity and serve as a catalyst as well through the acquisition of properties like the Sleepy Inn and the MRL triangle, so that when opportunity presents itself we are poised to use that land to help meet our housing needs,” Pehan said.

While redevelopment of the city’s three key parcels – the Sleepy Inn, MRL triangle and the library block – may be years away, the parcels have been secured, preserving them for future redevelopment. When that time comes, Pehan said, the city will complete a master plan in partnership with the public and area stakeholders.

“We want to work closely on the master planning for these sites to make sure that whatever redevelopment occurs is in alignment with the larger community and the neighborhoods around those parcels,” Pehan said.

“We’re also really interested in partnering with the private sector. We know it’s more difficult than ever to develop housing in today’s climate, and especially to develop homes Missoulians can afford. A public-private partnership is key to making that happen.”