Martin Kidston

(Missoula Current) As deconstruction and removal of Sleepy Inn begins, the city on Monday night said it plans to list the property in March for roughly $890,000.

Mayor Jordan Hess detailed the past few years from when the city opted to purchase the property for roughly $1.1 million to serve as a quarantine shelter during the pandemic and then sell the property for eventual redevelopment.

The city has made money while owning the facility, Hess said, and proceeds from the property's sale will help feed the city's Affordable Housing Trust Fund.

“It unequivocally saved lives and saved the city money, and anything contrary to that is false information,” Hess said on Monday. “We paid $1.1 million for the building. During that we were reimbursed $1.9 million from FEMA for our expenses. In additional to that, we received $718,046 in rent.”

While some suggest the city paid too much for the property, it's use as a FEMA-authorized shelter brought the city nearly $2 million in operational reimbursements.

What's more, Hess said, the city received more than $700,000 in rent from those who lodged at the facility during the pandemic. The sale price will further pad the city's investment, Hess said.

“We are in the next week or two listing that property for sale for $890,000. The $1.9 million in reimbursements was reimbursing operational costs, but the $718,000 in rent, plus the $890,000 in listing price, is over $500,000 in excess of the original purchase price. We will make money on that property. And that's the plain truth of it.”

The city purchases the property in early 2020 to serve as a quarantine shelter. Over the next two years, it housed nearly 400 people. Hess said that included the homeless diagnosed with Covid, along with business travelers who were stranded in Missoula after a Covid diagnosis.

“There were also people moving out of their homes to avoid affecting family, maybe to avoid infecting elderly or immune-compromised family. They were also people discharged from the hospital who had Covid and had nowhere else to go.”

The City Council earlier this month approved a $238,000 contract to remove asbestos and lead-based paint from the Sleepy Inn. Once the work is finished, the building will be deconstructed, and the site cleared and leveled for redevelopment.

That work began on Monday and is expected to be finished in the coming weeks.

“Deconstruction of that property has begun, and that's an effort to salvage building materials and divert construction waste from the landfill,” Hess said. “That's something we do quite regularly now and that's in service of our zero waste goals.”

Purchase and resale for redevelopment at a profit

The city purchased the property as part of its land banking strategy – a goal detailed in Missoula's housing policy.

As the theory goes, sale of the property to a private developer will enable the city to recover its expenses from the initial purchase and abatement work, and place any equity into the Affordable Housing Trust Fund.

Hess on Monday said the site will be sold and redeveloped in accordance to the city's new West Broadway Master Plan. The plan calls for a five or six story “gateway” building to anchor the site with ground-floor retail and roughly 36 residential units.

It's expected to be the first property to redevelop within the West Broadway planning area.

“It could be housing, it could be mixed use, it could be commercial, but whatever it is will be in service of the West Broadway community master plan,” Hess said. “It calls for creating a new neighborhood center in the area – the services the Westside Neighborhood has asked for for a long time.”

Hess said the sale and redevelopment will also increase the property's taxes. Hess said the old Sleepy Inn during its last year of private ownership paid little more than $13,000 in property taxes.

“We anticipate that will increase many fold and be a good investment in our community's tax base,” Hess said.

Most members of City Council have supported the deconstruction and resale of the property.

“There was a significant amount of neighborhood participation throughout the West Broadway planning process,” said Council member Mirtha Becerra. “This is a key component of making some of that vision a reality.”