Missoula Experiences with Public Private Partnerships (P3) in project delivery. Given to P3 Conference in Anchorage, Alaska.

1. Public-Private Partnerships
The Missoula Experience

2. • Introductions
• About Missoula
• City Of Missoula
• Missoula Parking Commission
• Roam Project
• Southgate Mall Project
• Old Sawmill District Project
• Fox Site Project
Outline

3. About Missoula

6. • 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

7. • 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

8. • 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

9. • “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

10. • ROAM – Downtown Student Housing
• Southgate Mall Redevelopment & Mary Avenue
• Fox Site Redevelopment – Convention & Mixed Use
• Old Sawmill District – Brownfield Redevelopment
Projects

11. Projects

12. City of Missoula

13. Goal: Enter into agreements with
development community to partner on
projects that meets the City’s goals
City Of Missoula

14. Current Situation – Missoula Growth Areas

15. • 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

16. 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

17. Missoula Parking Commission

18. • “… 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

19. Missoula Parking Commission
Jurisdiction

20. Roam Project – Student Housing

22. Roam Project – Student Housing

24. • 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

25. • 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

26. • 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

27. Southgate Mall Redevelopment

31. 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

35. Old Sawmill District

36. Old Saw Mill District

37. Old Saw Mill District

38. Perspective Aerial View

39. Roadway Connections

40. Roadway Connections

41. 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

42. Don MacArt

43. Don MacArt
•140,000 s.f. Commercial
•Up to 950 Single Family and
Rental Residential Units

44. Polleys Square

45. • Parking
• Zoning
• Infrastructure
Challenges

46. • Original plan
contemplated a
shared parking
area with surface
parking and one
major structure
Parking Challenges

47. • Current buildout
is more dense
with parking
underground
and more
outdoor space
Parking Challenges

48. “Restricted Use
Area” requires
ground floor
retail,
restaurant, or
café.
Zoning Challenges

49. • Utilities
• Wyoming Street
• Roads
• Common Areas
• Phasing Conditions
• Moose Creek-
Clearwater Lane
• Orange/Cregg
Traffic Signal
Infrastructure Challenges

50. • 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

51. Riverfront Triangle Project
http://www.riverfronttriangle.com

60. Cleanup – Old City Dump

61. 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

62. 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

63. 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.

64. 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.

65. •
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.

66. Other Policy Considerations

67. Source: Smart Growth America, The Urban Land Institute Presentation

68. 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).

69. 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

70. 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).

71. 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.

72. 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 %

73. 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 %

74. 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

75. 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

76. 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

77. • 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

78. • 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

79. • 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

80. • 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

81. • 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

82. 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!

83. Public-Private Partnerships
The Missoula Experience