City Council approves $1.8M bond sale to fund public improvements with hotel
Members of the Missoula City Council this week approved the sale of $1.8 million in bonds to fund public improvements completed with the recent construction of the AC Hotel downtown.
The bulk of the tax increment, or around $1.2 million, reimburses the developer for deconstructing and salvaging materials from the old Firestone building that once occupied the dilapidated property.
“They were able to give us a deconstruction plan that reused or recycled everything in that old Firestone building, or around 95% of it,” said Ellen Buchanan, director of the Missoula Redevelopment Agency. “It was probably the most complete and thorough deconstruction project MRA and the city have been involved in.”
The $25 million downtown hotel marks the latest project to land in the district. It brings around 50 new jobs downtown and boosts the property’s taxable value from $15,000 before the project to $208,000 annually now that the project is complete.
The City Council in the past approved a resolution of intent to reimburse certain elements of the project using tax increment from the Front Street Urban Renewal District. That was followed months later with a development agreement between the city and HomeBase Montana.
The funding wasn’t used to build the hotel but to make public improvements while the project was under development.
“We set a policy on this back in July 2019 when we passed the original documentation stating that we were making a commitment to use TIF funds for these public improvements,” said council member Gwen Jones. “If we’ve made a commitment to pay something and vote no, it impacts our integrity, our credibility. If we do it often enough, it can impact our credit rating and our ability as a city to get quality low bids for work.”
Along with deconstruction, around $600,000 covers the relocation of utilities. As little as five years ago, the downtown district’s tangle of overhead power lines and its antiquated power grid stood as a barrier to redevelopment in the area.
Investing public funding to bury power lines as new projects come along clears the way for future redevelopment and private investment in the city’s core. That in turn promotes urban infill and new creates jobs, advocates believe.
“It’s something we face downtown whenever we have a multi-story building going up. All our alleys have a lot of overhead electrical lines,” Buchanan said. “As downtown redevelops in a more dense and urban fashion, we’re slowly seeing all those lines be put underground. It allows us to build up.”
A portion of the funding also pays for sidewalks, street lighting and other improvements in the right of way. Stockman Bank has agreed to purchase the bonds.
The sale of the bonds passed the City Council’s Administration and Finance Committee on an 8-3 vote. Those who voted against the sale are relatively new members of City Council and said they were under no obligation to carry out the wishes of an earlier council.
“I don’t support the bond agreement and am under no obligation to vote for this right now,” said council member Jesse Ramos.
Others however described the sale as a win for the public and the downtown district.
“Investing in our local businesses does pay off,” said council member Heather Harp. “These are the projects that bring increment to these districts so we can do those public benefit projects.”