MISSOULA — With the backing of the mayor and downtown advocates, the City Council on Wednesday gave its initial endorsement to the sale of city-owned property at the Riverfront Triangle to a team of Montana-based developers.
The hearing also included a development and land-use agreement with Averill Hospitality, which is set to redevelop the vacant block into a 180-room hotel with a 15,000 square-foot events center.
“After years, we finally have a project moving forward on the Riverfront Triangle. And after years, I mean decades,” said Mayor Andrea Davis. “This development aligns with the original vision and current public priorities for downtown vibrancy, riverfront access, infrastructure and the local economy.”
Under the agreement approved by the City Council's Housing, Redevelopment and Community Programs Committee, the city will reimburse the developers for the cost of making improvements to the public right-of-way as the project advances in three phases.
The first phase will fund the instillation of underground utilities to the property, with the potential of extending those utilities to several surrounding properties, which are also slated for redevelopment.
In the second phase, the city will reimburse the cost of improving surrounding streets, curbs and sidewalks. In the final phase, the city will reimburse the cost of building a public plaza connecting to the river, along with improvements to the Riverfront Trail.
The sale agreement passed 9-2 on Wednesday with council members Daniel Carlino and Kristen Jordan voting against it. The other two agreements also passed with the same results.
Downtown advocates spoke highly of the project and the community benefits it will provide.
“When you think about what a vibrant city center does for all of us as individuals and as a community, this particular property has been a significant drain on our downtown,” said Linda McCarthy, executive director of the Downtown Missoula Partnership. “We've had two downtown master plans that have called for the redevelopment of this site, both of them with a hotel and meeting space, and we're accomplishing those goals with this investment and this project.”
Terms of agreement
While the city invests in public infrastructure around the project, the agreements also call on Averill to achieve various goals. Among them, the developers will invest an estimated $100 million to build underground parking, the hotel and events center.
Averill has also volunteered to donate 1% of room, food and beverage sales to the city's Affordable Housing Trust Fund for 10 years or up to $3 million. The contribution could be extended past that point, the developers said.
The city will also direct most of the $4 million property sale to the trust fund. Under the terms, Averill will pay $1.7 million upon closing and the remaining $2.3 million when the building certificate is received.
“This is back to a more simple and traditional transaction,” said city CAO Dale Bickell. “It sets up a transaction that is simple, easier to understand and easier for us to execute.”
Project Partner Brian Averill said the project will create up to 200 new jobs. It's also estimated that area retailers will see a 22% boost in profits from hotel visitors, while restaurants see an estimated 20% boost.
The development will also extend downtown west of Orange Street, breaking what's been a decades-old barrier to the district's growth and redevelopment. It may also ripen the West Broadway corridor to redevelopment.
“When you develop in areas it makes the rest of the area more vibrant,” said downtown business owner Scott Stearns. “We're making Missoula, specifically downtown Missoula, a better place. Areas like this create vibrancy and connectivity to the river, and that development helps out with West Broadway, an area we all need to spend some time helping.”
Boosting the tax base
Based upon other downtown projects, the Riverfront development will help grow the city's tax base. The $37 million Mercantile Hotel, built in 2019, paid $23,600 in property taxes before construction, but now pays $527,000.
Other projects like the $26 million Roam project, built in 2019, paid $9,400 in property taxes before construction. It now pays $462,000. Likewise, the $23 million AC Hotel, built in 2021, was paying $18,000 in property taxes. That increased to $230,000 after construction, according to the city.
“We think this project will generate over $800,000 in new property taxes, and right now we're seeing none,” said Ellen Buchanan, executive director of the Missoula Redevelopment Agency.
On the city's cost of funding public infrastructure alongside the project, she added, “That's the wisest investment you can make in regard to return on investment. You don't make an investment of this magnitude generally without having a private partner also making that type of investment.”
While the project has won wide support, not all spoke in favor of the agreement and pending development. Local resident Mark Anderlik, co-chair of the Western Montana Democratic Socialists of America and president of the Missoula Area Central Labor Council, said the city could “do better.”
“I think having a project in essence pay people not a living wage and create more home-distressed folks who may work at this hotel, and the money that's being sent to the affordable housing fund, I think that's highly ironic,” he said. “I think you can do better.”
