Surplus property: City Council to explore housing options over highest bidder

A vote to discard surplus city property to the highest bidder led to a wider discussion among members of the Missoula City Council this week on whether such property should be held as an asset for housing.

While the strategy has wide support among members of the council, the two parcels in question are owned by Missoula Water. As such, they’re considered part of an enterprise fund, which requires the city to fetch the highest value for the lots.

“This is part of an asset of the enterprise fund, and we have certain legal requirements we have to do,” said Dennis Bowman, deputy director of Public Works. “We can’t sell this stuff for less than its value.”

The parcels include a small lot at Arthur and Beckwith avenues, which will be sold to John Dunkum for $169,800. The second parcel, located at 701 E. Beckwith, fetched as many as six offers, with Edgell Building submitting the highest bid at $302,000.

Proceeds from the sale will go back into the enterprise fund, which Missoula Water will use to add additional wells on the western fringe of the city.

“The funding will be used for future well sites,” Bowman said. “We’re lacking well sites and redundancy going out west. That’s where a lot of the growth is going. That’s what we’re looking at, using this fund to purchase more well sites as the community grows out west.”

The city has other surplus and unrestricted properties it will look to discard in the coming year, and council members are lining up to ensure they go to affordable housing and not necessarily to the highest bidder.

It’s something the city should consider when such opportunities arise, said council member Heather Harp.

“We do have these various surplus lots throughout the community,” said Harp. “We have talked extensively about trying to make our best efforts to make a dent in affordable housing with the land that we own. It’s pertinent that we’re cognizant and we do the best we can to make sure we follow through on that.”

The lot purchased by Edgell sold for roughly $52,000 over the asking price. Selling surplus property at fair market value could make it difficult to build affordable housing, several council members said.

“At first glance, this seems like an easy thing – selling it for more than we’re asking for,” said council member Stacie Anderson. “It’s great to sell it and get the money, but the impact it would have if it was developed into affordable housing would be greater than the sum of the dollars we’re receiving for it.”

Selling the properties on Beckwith frees Missoula Water from conducting costly maintenance. The properties were purchased years ago by Montana Power for the intended use as a well site. But DEQ regulations have changed and the wells are no longer permitted at those locations, making them useless for Missoula Water.

Council member Bryan von Lossberg supported the sale to support future water wells, given the limitations of the enterprise fund.

“There are laws around what the utility can do related to those funds, and I think it’s responsible to be using those relative to the mission of the enterprise relative to water supply,” he said. “If this were an asset owned by the city outside of an enterprise fund – a utility fund – we’d be having a different conversation.”