by Alison Berry
We had a great webinar yesterday with Ed & Leslie Wetherbee, discussing their exciting revitalization project in Missoula’s Old Sawmill District. Questions from the audience prompted additional information from the Wetherbees. Here is a re-cap:
Q: Did you use a form-based code to implement your vision?
A: No. The city has building codes that we will have to meet. Our concept is for higher-density urban living, so that is driving where we are going. The city was actually very interested in our plan, in fact, they even wanted more density that what we have proposed. In addition, from an economic standpoint, the costs of getting to where we are now creates a scenario where we need to have higher-density to cover our costs.
Q: Do you have any plans for affordable housing for the residential units?
A: We don’t have plans for this. There is a great deal of affordable housing available nearby, across the river. We don’t have plans to incorporate that.
Q: What is the University of Montana’s role in the development? Do you have a programmatic realationship with the university? Are they a partner or a stakeholder?
A: There is no formal relationship. The extended learning program is acting as an advisor to us, and there is a lot of interest from the alumni office. We are working closely, we meet often, and as the project unfolds, we will see where that relationship can go. We would like to see a very close relationship, but there are boundaries that will need to be observed. The university has a program called the “MOLLI” program that is for people aged 50 and older, and is incredibly popular here. The university is excited because we could offer them an opportunity to have an off-campus site. We are very excited and learning about how this type of relationship has worked in other college towns. This is an exciting way to offer a new, not-done-before-in-Missoula type of product.
Q: What were your sources for financing? What were some of the challenges you faced in getting this financed? What did you have to offer to lenders?
A: What has been done so far has been financed by a combination of our private investor equity—the developer entity group, the landowner, is Millsite Revitalization Project. That company is comprised of two partners, one is Kevin Mitty and the Shelter West family, and our company is Boulder Partners. We have come together with our own private resources. Kevin and I are basically the two managers of the effort. So there is a substantial amount of private equity involved.
We also were the beneficiaries of grants from the Environmental Protection Agency (EPA). It is an awkward process. Here’s how it worked: first, Millsite Revitalization Project created an application. Then the city or an economic development organization–we orgininally worked with the Missoula Area Economic Development Corporation—they packaged it up and applied for a grant from the revolving loan fund from the EPA.
We did that three times. Those funds would come to the city, because they had to be granted to a municipality. We then had to apply to the city for the funds. The money comes to the city, and becomes owned by the city in a revolving loan fund. As these funds are repaid through incremental property tax over time, that creates a pot of money. I think it is on the order of $1.5 million, that would be able to be re-lent to other projects down the road.
We also had a grant from the American Recovery and Reinvestment Act that helped in a big way. And, the city financed construction of the park and of Wyoming Street. That is the basic combination of things.
Q: Did you use New Market Tax Credits?
A: we are working with the New Market Tax Credit Program, in efforts to finance one of the first buildings for the site. We are in the process of doing that now. If it all comes together, the financing should close later this year, on our first project. It is about $20 million.
Q: Don’t New Market Tax Credits require some low-income benefit?
A: There are a few different angles to New Market Tax Credits. What helps our project qualify, is that it would be the first project to stimulate the area. There is a common story that is told about how the first building, or the first several buildings, will really help create the momentum for an area. There is some negotiation going on right now about just what we have to do to qualify. There may be some small component of reduced-rent, affordable apartments, but we haven’t figured that out yet.
Q: When will the project be completed?
A: We have quite a bit of information from market studies about market absorption, prices, and competition, and other things. Given the fact that we have many different product types, at many different price points, we expect that absorption for the project will be somewhere in the seven-year time frame. We could get surprised in a strong market, if financing comes together, it could be five to seven years. But I believe for the project to be completely built out and finished, we are looking at a seven to ten year time frame.
Q: When will you be looking for reservations for along Wyoming Street, and in the residential areas?
A: We are taking reservations on our first condo building right now. The other building, that we are using New Market Tax Credits for, that is an apartment building that will have executive-style apartments for rent, and a commercial area as well. That’s one we’re hoping to be able to begin construction on at the end of this year. We are talking to people, about retail businesses, restaurants, and office space. We are very anxious to be able to bring all of those people to the site.
Q: Looking forward, do you have plans for a Business Improvement District for the commercial areas, and/or homeowners associations for the residential areas?
A: We are spending a fair amount of time with lawyers right now drafting those documents. Each building, or each block, depending on how it’s defined, is likely to have its own homeowners association, and then there will be a master homeowners association for the entire site. We are very much looking to have a well-managed and well-cared for neighborhood.
We have not worked on creating a Business Improvement District yet, but I can see over time how that would be a good step. Much like the one that focuses on businesses in downtown Missoula, I can see something like that here as well.
Q: Do you have plans for bike lanes?
A: We do already have bike lanes on Wyoming Street now. We like to call this a pedestrian village. The trails are all heavily used by bicycles as well. The hub of the city trails has the trails emanating from our neighborhood, with additional trails in the park, all of which are available for bikes and pedestrians.
Q: Knowing what you know now, would you have done anything differently, and were there any downsides to the project that you would have changed?
A: We didn’t expect it to take twelve years! We are very happy to be where we are. In the larger context, we survived one of the largest economic downturns this country has seen, at least in recent decades. That certainly caused us some concern.
We found that over several years, we were working with various different city councils, because they turn over. And everybody’s got an opinion about how things should go. But all in all, we’ve had very strong support from the public sector, and we’re very happy about that. We learned a lot along the way, we thought it would be a five-year plan. It turned into twelve—so far.
The environmental remediation part, while it’s not really that much that we had to do, was very time consuming, and not quite what we expected. But at the end of the day, we got a lot of cooperation from people who extended themselves to help make things work. So we are where we are. Would we have started if we knew what we knew now? Yes, we might have structured it a little bit differently. But we are very proud of what’s been achieved and what the city’s done, with the park and the street.
At times, certainly things are frustrating, but we are very excited about where we are now, and we are very excited about embarking on the next phase. The responses that we get from people—just from what it looked like before, and what it looks like now—people are so excited about it. People are actually thanking us for doing it, and we have a great sense of pride. It is really starting to take shape now and people are seeing the vision of what it can be.
Our last little bit of success is in the last 60 days or so, we had the last final sign-off from state environmental regulators, and that allows us to move forward on some of this vertical development. Some we will do ourselves, some we’ll partner with others, and it will be an exciting next few years.
Keep an eye on the Old Sawmill District to keep up with new developments. And, if you missed the webinar, you can view it HERE. Thanks to Ed & Leslie for a great presentation!
(Cross posted from Community Builders)