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  1. 1. Public-Private Partnerships The Missoula Experience
  2. 2. • Introductions • About Missoula • City Of Missoula • Missoula Parking Commission • Roam Project • Southgate Mall Project • Old Sawmill District Project • Fox Site Project Outline
  3. 3. About Missoula
  4. 4. • 2016: Montana Wage and Salary workers at 76% of US Level. • Non-wage income: Missoula County > 40% AGI is non-wage • Top 10% of all counties in the US Scenery Tax
  5. 5. • Zoning Capacity • Zoning Minimums • Cultural Expectations – parking; stuff; landscaping; relative space • Unzoned, Unplanned, Garage Units still being washed out • Coloradans. Californians. “I saw A River Runs Through It”. • Nearly 10% of all homes in Montana are second homes. Local Drag Factors Credit: UM Business and Economic Research
  6. 6. • Constrained Valley Floor • Rivers to cross with infrastructure • Zoning Capacity • Zoning Minimums • Cultural Expectations – parking; stuff; landscaping; relative space • Unzoned, Unplanned, Garage Units still being washed out • Scenery Tax • Those damn contractors Missoula Multi-Family Constraints
  7. 7. • “Those are downtown Seattle prices…!” • $135/ft for LIHTC level • $155/ft for “Missoula standard” • $135,000 per unit • $185/ft for Condo/nice-ish • Because: • Interior Rocky Mountain West • Still only 1mn people • Steel costs the same, no break in lumber, oil-based products the same • Who can, who would, who wants to work in construction. Construction Costs
  8. 8. • ROAM – Downtown Student Housing • Southgate Mall Redevelopment & Mary Avenue • Fox Site Redevelopment – Convention & Mixed Use • Old Sawmill District – Brownfield Redevelopment Projects
  9. 9. Projects
  10. 10. City of Missoula
  11. 11. Goal: Enter into agreements with development community to partner on projects that meets the City’s goals City Of Missoula
  12. 12. Current Situation – Missoula Growth Areas
  13. 13. • Urban renewal plans • Downtown master plan • Growth Policy • The Case for Downtown Housing • Planning Mixed Use • It’s all about Parking • Project Supportive Infrastructure Goals – Planning Efforts
  14. 14. Economic Health  industries, jobs, wages, fiscal sustainability, technology infrastructure and business support Housing  affordability, choice, student impact, fairness, and homelessness Community Design  connectivity, building form, infrastructure, transportation, City- County interface, and land use Livability  neighborhoods, historic preservation, education, local services and quality of life amenities Environmental Quality  air, water, climate, hazards, local food, urban forest, and open space Safety & Wellness  fire and police services, recreation, emergency preparedness, social services and health care facilities
  15. 15. Missoula Parking Commission
  16. 16. • “… to work with government, businesses, and citizens to provide and manage parking and parking alternatives. MPC identifies and responds to the ever changing parking needs in the area for which it is responsible.” • Annual Operating Budget of $2.1million • ~1200 metered spaces • 4 parking structures • Residential Parking Permit Program Missoula Parking Commission Role, Mission, Goals
  17. 17. Missoula Parking Commission Jurisdiction
  18. 18. Roam Project – Student Housing
  19. 19. Roam Project – Student Housing
  20. 20. • Two levels of structured parking  142 spaces “Public Parking Unit”  158 spaces on the lower level • Although not required by zoning, parking provided was a marketing need • Public Parking Unit divided into condominium unit • MPC owns the parking “at a purchase price of $3,200,000 or Developers actual costs” • Calculator Save: $22,535 each • $3.2mn of $37,800,000 construction costs (9%) MPC Role in ROAM Project
  21. 21. • How/Why that dollar amount?  Related to construction costs  Included some utility, ROW, site civil expenses  “Debt Service on the Bonds is intended to be paid from Tax Increment.”  Limitation: “The MPC acknowledges and agrees that residents of the Project shall be entitled to access the Public Parking Unit for parking on an equal basis as members of the general public, at the rates then charged by the MPC for such use.” MPC Role in ROAM Project
  22. 22. • Developers need to make this deal closer to setting a GMP with a Contractor • Parking Commission needs to review and approve parking design Lessons Learned
  23. 23. Southgate Mall Redevelopment
  24. 24. Southgate Mall/Mary Avenue • Description: Recognizing the need to adapt to the changing market, the City and Southgate Mall partnered to transition the mall to be outward-facing and create a streetscape that matches the city’s connectivity and complete streets goals • $7 million in tax increment funding for public infrastructure construction • $64 million in required private investment  Anchor tenants – Lucky’s grocery store, AMC Dine-in theater • Capital stack is viewed holistically. Typically developer is required to bring financial institution willing to buy bonds. Financial institution can look at the whole project – public and private
  25. 25. Old Sawmill District
  26. 26. Old Saw Mill District
  27. 27. Old Saw Mill District
  28. 28. Perspective Aerial View
  29. 29. Roadway Connections
  30. 30. Roadway Connections
  31. 31. 2015 Market Study Total Traffic 15,000 1,750 1,975 1,150 26,200 28,200 25,000 25,700 Buildout Full Height Total Traffic 9,000
  32. 32. Don MacArt
  33. 33. Don MacArt •140,000 s.f. Commercial •Up to 950 Single Family and Rental Residential Units
  34. 34. Polleys Square
  35. 35. • Parking • Zoning • Infrastructure Challenges
  36. 36. • Original plan contemplated a shared parking area with surface parking and one major structure Parking Challenges
  37. 37. • Current buildout is more dense with parking underground and more outdoor space Parking Challenges
  38. 38. “Restricted Use Area” requires ground floor retail, restaurant, or café. Zoning Challenges
  39. 39. • Utilities • Wyoming Street • Roads • Common Areas • Phasing Conditions • Moose Creek- Clearwater Lane • Orange/Cregg Traffic Signal Infrastructure Challenges
  40. 40. • Lease Purchase - TIF Bonds • EPA Brownfield Revolving Loan Fund - Cleanup • Project TIF Bonds – Demolition & Infrastructure • Special Improvement District (SID) - Infrastructure Don MacArt Financial Structure Project Not Feasible without Complex Public/Private Partnership
  41. 41. Riverfront Triangle Project http://www.riverfronttriangle.com
  42. 42. Cleanup – Old City Dump
  43. 43. FutureCurrentPast Master Development Agreement Land Use Agreement Conference Center & Parking Development Agreement Conference Center Lease/ Management Agreement Land Disposition Agreement Public Facility Agreement Agreement Regarding Condominium Documents Condominium Documents Lease between City and Developer (Lessee) Buy/Sell Mechanism & terms by which parties will construct Conf. Center and Parking Structure Time extension Agreements
  44. 44. Hotel Fox:  Hotel Fox will purchase the Fox Site from the City and construct an estimated seven-floor, 195- room hotel with associated restaurants, bars, and other facilities.  Attached to the hotel, the Hotel Fox will construct a conference center with approximately 60,000 square feet of usable space including:  A large hall that is able to be divided into somewhat smaller event or meeting rooms  “Back of house” areas for storage, food preparation, administration, utilities, etc.  At least 10,000 square feet of breakout rooms (retained by Hotel Fox).  A two-level, approximately 405-space parking facility under the hotel and conference center.  Three floors of residential condominiums on top of the hotel.  Construction of the conference center, parking facility (and any other facilities to be owned by the City) would be conducted pursuant to Montana Prevailing Wage Rates and State procurement standards for municipalities, i.e. subcontract work will be bid. The Basic Deal
  45. 45. The City • City will purchase the conference center (exclusive of the meeting rooms). • City will purchase the public parking. • City will lease the conference center to the Hotel:  Hotel (or its approved manager) will manage all facets of the conference center.  Hotel as lessee will assume all maintenance, repair and replacement responsibilities of the conference center furniture, fixtures and equipment as well as the structural systems such as the roof, HVAC system, etc. • Enter into a parking management agreement with the Missoula Parking Commission to administer and manage public leased and general parking.
  46. 46. City Financing • Purchase of the conference center would be financed with Tax Increment Financing Revenue Bonds. • Public lease and short term portions of the parking facility will be financed with Parking Revenue Ponds (perhaps augmented with Tax Increment Financing funds). • Revenue Bonds are not a general obligation of the City. General taxes in the community will not be impacted.
  47. 47. • The City (After Construction) A credit will be extended to Hotel Fox toward the Fox Site land purchase price for value of the land assigned to the City-owned conference center. When the block north of the Fox Site is developed, the developer may request another purchase price offset or credit toward the cost of Fox Site land to buy a parcel for public parking facility on that block. The per-square-foot value of that land is within the Master Development Agreement and Conference Center and Parking Facility Development Agreement.
  48. 48. Other Policy Considerations
  49. 49. Source: Smart Growth America, The Urban Land Institute Presentation
  50. 50. Buy-Sell Rates by Age Source: Dowell Myers & SungHo Ryu, “Aging Baby Boomers and the Generational Housing Bubble: Foresight and Mitigation of an Epic Transition”, Journal of the American Planning Association 74(1): 1‐17 (2007).
  51. 51. Reshaping Metropolitan America - The Case for Downtown Housing Arthur C. Nelson, Ph.D., FAICP Presidential Professor and Director Metropolitan Research Center University of Utah Development Trends & Opportunities to 2030
  52. 52. Changing Households Household 1960 2000 2025 With Children 48 % 33 % 28 % Without Children 52 % 67 % 72 % Single 13 % 26 % 28 % Source: Census for 1960 and 2000, 2025 adapted from Martha Farnsworth Riche, How Changes in the Nation’s Age and Household Structure Will Reshape Housing Demand in the 21st Century, HUD (2003).
  53. 53. Relocation Choices of Seniors Housing Type Before Move After Move Attached 24 % 54 % Renter 20 % 59 % Multifamily Share 2010 30% Multifamily Share 2020 36 % MF Share of New Unit Demand 2010-2020 50 % Arthur C. Nelson, Ph.D., Presidential Professor and Director, Metropolitan Research Center, University of Utah 75 % of all Seniors will Change Housing type between ages 65 and 80.
  54. 54. Features & Location Market Demand AA Features & Location, 25% Features & Location, 8% AA Entry Level, 15% Entry Level, 12% AA Elite, 12% Elite, 18% Simple Life, 4% Family Life, 7% Projected For-Sale Housing Demand 33 %
  55. 55. Active Adult (+55) Market Demand AA Features & Location, 25% AA Entry Level, 15%AA Elite, 12% Features & Location, 8% Entry Level, 12% Elite, 18% Simple Life, 4% Family Life, 7% Projected For-Sale Housing Demand 52 %
  56. 56. Demand for Housing Type Source: Smart Growth America, The Urban Land Institute Presentation -10000 0 10000 20000 30000 40000 50000 60000 70000 2003 Supply 2025 Demand Net New Units Needed Attached Small Lot Large Lot
  57. 57. Demand for Housing Type -40000 -20000 0 20000 40000 60000 80000 2010 Supply 2020 Demand Net New Units Needed Attached Small Lot Large Lot Arthur C. Nelson, Ph.D., Presidential Professor and Director, Metropolitan Research Center, University of Utah
  58. 58. Planning Tools • Downtown Master Plans Economic & Market Studies Parking Studies Traffic Studies Capital Improvement Plans • Special Zoning Districts Residential Overlay • Historic Districts & Overlays • Design Guidelines Downtown Housing Implementation
  59. 59. • High Land Costs – Rental Income Replacement • Construction Costs of New Housing • Hazardous Materials & Cleanup • Existing Infrastructure - Aging • Existing Regulatory Process (Zoning) • Neighborhood Issues • Historic Preservation Impediments
  60. 60. • Residential Overlays In Specific Areas • Townhome, Condominium, Apartments • Form Based Code • Build Public Parking • Form Public Private Partnerships • Increase Residential Density (1/1000 sf CBD?) • Evaluate Infrastructure Readiness • TIF Funding Critical – Levels Playing Field Recommendations
  61. 61. • Construction efficiencies • Pre-fab • Clash detection software • In-the-field redesign • Job site efficiencies • Incremental construction material innovation (micro-piles, CLTs) • Financing • Low-Income Housing Tax Credits allocation system hurt our two states • Tied to population, not affordability and wages • Montana Coal Tax Trust Fund mandated investment • Easier loan guarantees at all levels OPINION – The Realm of Solutions - OPINION
  62. 62. • Municipalities • Intentionality – align existing municipal programs to support housing and development issues, especially related to infrastructure programs • Zoning Bonus Densities (for multifamily only) • Bonus for LEED or Green Globe • Eliminate all parking minimums everywhere always and forever • Traded and sold like tax credits • Priority Permitting and inspections for <120% AMI • Special Improvement Districts for housing infrastructure OPINION – The Realm of Solutions
  63. 63. • Extractions on development can be excessively burdensome and in disproportionate to benefit of the project. • Public participation provides funding for portions of the project with a regional benefit. • Public Process and findings of public benefit are important. OPINION – The Realm of Solutions
  64. 64. Downtown Residential • Will be in Demand • The Current Supply is Relatively Low • For-Sale and Rental Product are in Demand • Product Type Will Change – Active Adult Market • Large Lot Suburban Housing in some markets will be in trouble. • Parking is Key!
  65. 65. Public-Private Partnerships The Missoula Experience

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