City-owned properties ripe for redevelopment; interest high but market tough

Martin Kidston

(Missoula Current) Development interest in a number of properties owned by the City of Missoula is high, and officials believe activity could begin within the coming year on some of them.

In recent years, the City of Missoula has purchased or been given a number of properties, a process it describes as land-banking. Holding the properties enables the city to have say in a project's final outcome, with income-restricted housing being one of the goals.

Among those holdings, the city purchased the old Sleepy Inn property on West Broadway in 2020 for $1.1 million. The facility was used as a quarantine shelter for two years before the building was razed and placed on the market for $890,000.

Ellen Buchanan, director of the Missoula Redevelopment Agency, said interest in the parcel is strong.

“It appears there is some interest in it. There's been some inquiries we believe could be serious inquiries,” she said. “But as we all know, it's a difficult time to be developing property right now.”

The sale of all city property will be invested back into the Affordable Housing Trust Fund, helping fuel the construction or preservation of affordable or workforce housing. Officials believe they may close on a number of potential sales in the coming year – a move that could infuse the fund with around $5 million.

The largest of those properties includes 19 acres off Scott Street, which the city purchased for roughly $6.6 million in 2020. The city entered into a development agreement with Ravara LLC several years ago to develop 9 acres, three of which will be converted to a land trust.

That portion of the project is expected to include a blend of workforce and market-rate housing. It's also been years in the making, but Buchanan believes the end is near.

“We're trying very hard to finalize the agreements that are still outstanding with that project this fall, and have that to a place by the end of this calendar year where we're looking at construction next spring,” said Buchanan. “We've been meeting weekly in an effort to work through the financing required to make both the workforce housing and the mixed-use, market-rate projects pencil.”

The city also purchased 12 acres in the Midtown area from Montana Rail Link in 2016 for $2 million. It has already converted 4 acres into a neighborhood park and plans to redevelop the remaining 8 acres into a mixed-use housing project.

But when the pandemic hit, the city put its redevelopment plans on pause and converted one of the property's empty buildings into a winter shelter. Now, the shelter will operate year-round, a move that left residents worried that it has become a permanent fixture.

To address that concern, council members Mike Nugent, Sandra Vasecka and Kristen Jordan brought forward a measure this month that requires the city to begin master planing the property's redevelopment within one year, with a goal of removing the shelter building within three years.

“There is a higher and better use for this site. We'll go through a planning process that will involve the neighbors, the Midtown Association, the Missoula Redevelopment Agency and community partners,” Mayor Jordan Hess said. “We'll go through a process to identify the long-term use of this site.”

Not all property held by the city was purchased. A local philanthropist in 2017 donated a block of land in downtown Missoula to the city with no strings attached. It now includes the old library, and the Missoula Economic Partnership has led efforts to solicit and vet partners interested in redeveloping the block.

Last month, MEP introduced Edlen & Co/deChase Miksis as the site's developer. The team has built dozens of other properties in the Northwest with energy efficiency, affordable and workforce housing being key themes in nearly all of them.

The project however is expected to take time to plan, finance and develop.

“We've got a lot of big projects that we're trying to get to milestones on by the end of the year,” said Buchanan. “And the end of the year seems close.”

The city also owns the Riverfront Triangle in downtown Missoula, but that project has stalled for a number of reasons. The city has not provided an update on where things stand with that property in months.