City to pursue purchase of Southgate Crossing, eyes mixed-use project
Martin Kidston
(Missoula Current) A vacant patch of ground near Southgate Mall could become the city's next investment in affordable housing if the property's public acquisition clears the necessary hurdles over the coming weeks.
The parcel, which has sat vacant for decades and lacks any form of infrastructure, represents a tangled array of lots covering 13 acres in the Midtown district. The Missoula Economic Partnership has negotiated a $5.8 million purchase price – a deal that's below the current market value.
“They (the owners) are coming to the table to sell the property to the city for below the appraised value,” said Grant Kier, president and CEO of the Missoula Economic Partnership. “They understand what it means to this community to have houses that people can afford. We got here because those families understand the urgency of this problem. This property is a huge opportunity to address that.”
The property's infill potential and its prime location in the Midtown district has been of interest to the city for the past two decades. The lack of infrastructure has hindered redevelopment and the parcel remains vacant.
But the city, along with its partners at the Missoula Redevelopment Agency (MRA) and the Missoula Economic Partnership (MEP), are now poised to acquire the land using tax increment financing from Urban Renewal District III.
The Missoula Redevelopment Agency's board will decide this week whether to purchase the property and recommend that the city accept ownership of the lot. If the proposal clears the City Council in November, the mayor will close on the purchase in December.
Missoula Mayor Andrea Davis said the city would then master plan a future mixed-use neighborhood and partner with the private sector to develop it. She said interest in the property is high, and a number of entities have already expressed interest in working with the city on the project.
“This is a significant keystone property. It will give us the opportunity for residential and business development, but also those vital connections,” Davis said. “With our investment, we can bring infrastructure to this part of the community to help catalyze housing, business and public spaces.”
The potential for redevelopment
Dubbed Southgate Crossing, the parcel was first identified as a prime location for redevelopment in an urban renewal plan conducted in 2000. More recently, the Midtown Master Plan highlighted the property's potential and the need for strategic redevelopment.
With the city now poised to acquire the parcel, the vision for a sweeping master plan has emerged to include housing, parks, and commercial and retail uses.
With the parcel's proximity to Brooks Street and its future bus rapid transit line, a potential transit station could also be in play. A needed connection between South Avenue and Brooks Street would round out the opportunities.
“When the city is strategic and looks at saving land like this for intentional, community-driven use, it allows developers like us to concentrate on what our community members say they need,” said Karissa Trujillo, executive director of Homeword. “We hear resoundingly that folks need more housing. They want ownership opportunities and rentals they can afford.”
The Missoula Redevelopment Agency has already conducted due diligence on the parcel, which didn't reveal any setbacks other than some wood fill stemming from past lumber operations.
One recent appraisal for the property named an “as is” market value of $6.5 million. A second appraisal “with entitlements” held a value of $8.3 million. But the property's two owners, SMA and Beach, have agreed to a purchase price of $5.8 million, or $15 per square foot.
“We can use the tools of MRA to partner with private partners to invest in our urban core,” said Davis. “That's what we're working to create here as a community, and that's what this property exemplifies in so many ways.”
The necessity of tax increment
Urban Renewal District III has been among the city's most successful districts, and tax increment generated by private development has placed Midtown on a path toward revival.
City Council member Mike Nugent said the city now has an opportunity to reinvest that tax increment back into Midtown's future. Doing so not only helps businesses grow but will provide new housing opportunities and meet other community needs, he said.
“Unlocking a parcel like this really shows why it's so important to have an organization like MRA that's trying to put the pieces together to make this happen,” said Nugent. “If the city and MRA weren't willing to step up and be part of this project, it would absolutely not be developed to its full potential.”
Davis and Nugent said that MRA is one of the city's strongest tools to help spearhead housing and business growth. Most recently, the agency helped fund the infrastructure needed to develop city-owned land on Scott Street, including 45 affordable, for-purchase homes and several hundred market-rate housing units.
While MRA's investment in certain private projects has drawn criticism from some, the tax increment those projects generate down the road enables the city to reinvest the funding back into infrastructure and affordable housing.
“It's the biggest reason why MRA exists,” said Nugent. “When you're talking about laying infrastructure on 13 acres, those are real costs and real impediments for a lot of people to really master plan something like this at the full level. By investing here, we're unlocking that key piece. But we don't get to do the infrastructure to create the spaces for affordable housing and those other things if we don't have private investment in these urban renewal districts.”
Mayor Davis added, “The increment that's created will help us invest in other infrastructure opportunities in this area that wouldn't otherwise be available. It's critical for future opportunities.”