Permit delays could jeopardize downtown hotel project

By Martin Kidston/MISSOULA CURRENT

A team of developers looking to build a branded hotel in downtown Missoula are hoping to receive a demolition permit to launch the project this April, with the goal of opening in the spring of 2018.

Volunteer members of the Missoula Historic Preservation Commission will consider the permit next month. If the commission delays, it could place the downtown project in jeopardy, potentially costing the city hundreds of new jobs and millions of dollars in new revenue.

“The longer this goes, the less confidence we have to pull it off,” said HomeBase founder Andy Holloran. “The markets change, interest-rates change, the economy changes and costs change. More time brings more uncertainty.”

Members of the HomeBase development team joined architects from JNS Design out of Denver in detailing the $30 million project before a joint meeting with the Missoula Redevelopment Agency and the Downtown Business Improvement District this week.

Developers are proposing a 154-room custom hotel with 24,000 square feet of retail space on the ground floor. The project, which has gained the support of downtown business groups, would create an estimated $6 million in new annual wages and generate $13 million in annual revenue.

Proponents say it would also rejuvenate a property that has sat vacant in the city's downtown core for more than six years.

“This project truly translates into 300, 400 or 500 people a night who are eating, drinking, shopping and using our downtown businesses,” Holloran said. “It's a catalyst for the neighborhood.”

It's also part of the city's Downtown Master Plan, which calls for new lodging amenities within the district. While the vacant Mercantile generates $22,000 in annul taxes, the new hotel would generate $800,000 a year, Holloran said.

But while the proposal fulfills one vision of the Downtown Master Plan, BID board member Dan Cederberg said it conflicts with the plan's goal of preserving historic downtown properties. Despite the project's many benefits, he said, losing the Mercantile could be a tough sell for some members of the community.

Holloran said HomeBase and JNS architects have studied a number of scenarios, including a full and partial renovation of the crumbling building. The costs of doing so proved prohibitive, he said.

More than 20 potential buyers have reached the same conclusion over the past three years.

“The economics proved unworkable for us,” Holloran said. “The second challenge was the design of the existing building – the functional obsolescence. It became unleasable to many tenants, and that's been a recurring theme throughout the years.”

Developers are looking to deconstruct the Mercantile over a 90-day period this summer. Architects from JNS, which have designed several award-winning projects in Denver, are looking to use the building's historic elements in the new structure.

“It would be a lot easier, quicker and less expensive if we can just bulldoze that building and move on,” said Holloran. “But we're committed to the deconstruction process so we can salvage as much of the existing usable material as we can.”

The project has won the support of the Montana Community Development Corporation, including president Dave Blaser and vice president Heidi DeArment. The organization announced its support on Monday.

“We have been working for seven years now with groups who have looked at the Mercantile and at possible redevelopment of the building, and we've yet to see an organization capable of cash flowing redevelopment of the building,” said Blaser. “As people who live here in the community and are neighbors of that building, we see HomeBase as a potential solution.”

Given changing market conditions and interest rates, Holloran said HomeBase hopes to receive a permit in April. The timeline would see environmental abatement work take place for 60 days over May and June, and allow 90 days for deconstruction from July through September.

The Historic Preservation Commission will consider the permit on April 14. By statute, it could impose a 90-day delay and postpone a decision until June 17. If the commission doesn't act, the permit will be automatically issued. If it denies the permit, the decision could be appealed to the City Council.

Holloran said such a delay could potentially prove costly.

“We don't know if we have a project yet,” he said. “The longer things go, there's more uncertainty.”