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MRA wants City Council assurance over $780K air exchange, $4M infrastructure bond

Scott Street Missoula
Posted at 9:43 AM, Jan 20, 2023

MISSOULA - Lacking a guarantee from City Council, the Missoula Redevelopment Agency (MRA) this week tabled a decision on funding a costly ventilation project at a city shop with toxic air without first knowing whether elected officials will approve plans for a larger revenue bond that's needed to fund vital infrastructure work in the Scott Street district.

The ventilation project, part of a larger energy contract the city signed last year in its quest for carbon neutrality, would fund a modern air exchange unit at City Shops off Scott Street.

But the project's $1.3 million cost would draw more than $750,000 from the Scott Street Urban Renewal District, leaving the MRA little capacity to fund other needs in the district.

“I'm personally opposed to this at this time,” said MRA board member Tasha Jones. “There's too many variables, and I'm uncomfortable with bringing our contingency fund down to that level with so much uncertainty around what we can count on for approvals when deciding bond measures for the great needs in this district.”

If MRA funded the air exchange for the city, it would draw its contingency fund in the Scott Street Urban Renewal District down to around $300,000. Infrastructure in the area also is needed as development picks up pace and other projects may emerge, but MRA wouldn't have the capacity to address them.

As a result, MRA Director Ellen Buchanan said the agency plans to roll the cost of the air exchange into a $4 million bond it looks to issue to pay for the infrastructure work. MRA could also add its $1.3 million contribution to the Vallagio — another affordable housing project on Scott Street – to the bond.

Doing so would free up revenue for MRA to address other needs in the district.

However, there's no guarantee that City Council will approve MRA's request to issue the bond. Buchanan said City Council already has approved a reimbursement agreement for the infrastructure work, though no amount was set during discussions.

“It put them on notice that we'll be coming to them asking to issue bonds for the instillation of this infrastructure and other appropriate costs in this (Scott Street) neighborhood,” Buchanan said. “But we have not used that ($4 million) number with them. We don't have firm numbers for the instillation of the infrastructure yet.”

Scott Street Infrastructure Needs

The city purchased 19 acres off Scott Street several years ago and partnered with Ravara LLC to develop nine acres into housing. Of those nine acres, around three will include 70 units of deed-restricted housing while six acres will include 224 market rate units.

The entire project has been years in the making and adheres to a publicly-crafted master plan for the area. The development also will include a small neighborhood grocery, three different food vendors, a tap house and potentially a gym and co-working space, developers have said.

But before the project can break ground, the city must provide the infrastructure needed to support the new neighborhood including roads, utilities, sidewalks, lighting and other needs. While firm numbers are expected by the end of the month, MRA has placed the estimated cost at around $4 million.

However, Buchanan said MRA only has $1 million in discretionary funding available in the district. That makes funding the air exchange a risky endeavor if the cost can't be added to the larger infrastructure bond.

“It doesn't make sense to me to take $760,000 of that (discretionary funding) and use it as cash to pay for this (air exchange) because of the opportunities that may come along,” she said. “We'll need to utilize that revenue to incentivize private investment.”

Board members said they were in a difficult spot. While city employees need safety improvements regarding air quality at the Scott Street shops, there's no guarantee City Council will approve a larger bond for the air exchange and infrastructure work, along with other needs in the area.

Without that guarantee, the board voted to table the decision, saying the district had too many needs and they weren't willing to jeopardize them with the purchase of an air exchange and the city's uncertain stance on the matter.

“Right now, if we're voting on this, I'm voting no,” said MRA board member Melanie Brock. “We'd like more assurances that there's a plan that's not going to have more of an impact on the assets in this urban renewal district.”

City Shops Air Exchange

Looking to make progress on its quest to achieve carbon neutrality, the Missoula City Council in December approved an energy contract to begin implementing several projects intended to shave energy use and improve efficiency.

The city contracted McKinstry Essention LLC to begin the work, most of which comes with guaranteed savings that will refund the initial costs over time. But for now, it's asking MRA to fund some of the work.

The air exchange will improve efficiency at the Scott Street shops given its modern design. However, it will also improve air quality for city workers who currently face the threat of high carbon monoxide levels and other airborne toxins.

In its own memo, MRA noted that “the exhaust and air handling system at the City Shops building is deficient and could pose a health risk to employees working at the building.”

MRA board members cited a desire to complete the project, citing concerns with worker health, but some also suggested it was also outside the agency's traditional role and questioned why the city had passed the task to them.

The agency plans to approach the city in the coming weeks seeking authority to issue the larger bond to fund both the air exchange and infrastructure work. But any delay could leave city employees working another year under poor conditions, one city official said.

The city hasn't said why it hasn't already addressed the air exchange given its alleged threat to worker health.

“McKinstry is trying to ink the work order and individual contract orders with departments that have projects in the next month or so,” said city COO Eric Hallstrom. “It's hard to predict contractor availability and timing, but every month that goes by makes it a little less likely it gets into this year.”