Kalispell moves forward on parking garage and multi-family housing project

Despite criticism regarding the process seeking proposals to redevelop a downtown parking lot, Kalispell City Council on Monday approved taking the next step with developers to turn the property into a parking garage and multi-family housing.

Council authorized allowing city staff to negotiate a developer’s agreement and lease agreement with the Montana Hotel Dev Partners based on their proposal to turn the lot into a parking garage coupled with retail space and housing. The agreement for the parking lot at First Street West and First Avenue West will return to Council for final approval.

Councilor Ryan Hunter, who was the only vote against, questioned the proposal and agreed with public comments arguing that the deadline for request for proposals should have been longer. While the prospect of getting housing is exciting, he said he wanted assurances that the housing would be deed-restricted for a certain period of time along with other requirements.

“I have significant concerns about the whole project,” he said. “There are details that would answer my questions, but we won’t see that until a development agreement comes back.”

Councilor Sid Daoud said he didn’t want to delay discussions on the project because that would mean delaying answers to the questions raised about the project.

“We’re not approving or rejecting anything tonight, just allowing staff to begin negotiations,” he said “I want to work with the developer and see what the plan would be on this. Support moving forward to get a more detailed plan.

The developer last year gained city approval for its plan to construct The Charles Hotel on Main Street on what is now a parking lot and, as a related project, construct the nearby garage to provide public and hotel parking.

City Council in June decided to take submissions for the redevelopment of the lot after the developer returned seeking the city’s approval in changing the parking garage to include housing. The city then advertised for proposal submissions.

DURING PUBLIC comment on Monday, a few speakers questioned whether the proposal made sense for the lot. Most questioned the timeframe for the submission of proposals.

Cassidy Agan-Kipp, with Community Action Partnership of Northwest Montana, said two weeks was not enough time for an effective proposal. She said that by allowing more time those who are experienced with affordable housing projects could have brought forth plans, which could have also created competition to get the best project.

“I don’t think this was done in a way that invited multiple submissions,” she said. “To see that the City of Kalispell gave two weeks to come up with a plan for a project of this scope is really sad. This process really favored one applicant and you see that with this one applicant.”

City Manager Doug Russell pointed out that the current developer’s agreement for The Charles Hotel incorporates the parking lot at First Street and First Avenue to be used as a parking garage to serve the hotel.

“There is a vested property right in that lot right now with that agreement,” he said. “There is no new full breadth of what can be on that lot.”

Russell said the only thing that is changing is the ownership of the parking garage from the city to privately owned by the developer, thus the city under state law had to advertise a new request for proposals.

“That ends up being beneficial for both parties by making it a public-private partnership,” he said. “They can get private financing and it’s beneficial for the city for not having to do maintenance and the property moves onto the tax rolls.”

Mayor Mark Johnson said the city can’t wipe out that prior agreement for The Charles Hotel. He also addressed criticism that the city is turning over ownership of its property to a private developer.

“We could put that property up for sale and we’d get that,” he said. “But we chose to move forward with proposals so we could have more control over the projects and what’s developed there. This is a much better proposal than just putting a piece of property up for sale with no control over what happens.”

Johnson pushed back at those pointing to a need for affordable housing projects while questioning the proposal for the lot. He said the city has to work through the process of seeing if the agreement makes sense.

“What I heard was people opposed to the hotel because it didn’t have housing, but then when a proposal comes back with housing it’s not good enough,” he said. “I can support moving forward to get the details of this proposal to see if it makes sense.”

THE ONLY firm to submit a new plan for the lot was Montana Hotel Dev Partners. Their proposal calls for constructing an eight-story building that would include a parking garage with about 240 parking spaces.

The proposal calls for 6,200 square feet of retail and office space on the ground floor. Constructed above the parking garage, of the 78 apartment units, 20 are proposed to be designated for workforce housing.

Compass Construction, BOND Partners and Alchemy Development are working together on the project as Montana Hotel Dev Partners, LLC.

Bill Goldberg, of Compass Construction, reiterated that the proposal is in the conceptual phase.

“We hear a lot of input, but we’re trying to not get too far down the tracks,” he said. “We need to go through the process and ask the right questions.”

Lincoln Murphy, with A&E Design the architecture firm on the project, said the goal of the design is to fit in with the historic downtown and fit with surrounding buildings.

“We’ve focused a lot on keeping that urban feel on the site,” he said. “We’re focused on getting that pedestrian experience by keeping retail and shops on the first floor to activate those spaces.”

IN EXPLAINING the proposal, Jarod Nygren, city development services director, said the redevelopment of the parking lot is a culmination of years of effort called for in city plans including the Downtown Plan.

“Those highlighted turning city parking lots into more beneficial uses,” he said. “The change from public to private ownership also increases the tax base which adds to the [tax increment finance] district, which is part of the goals of redeveloping downtown. Housing is also certainly a component of that.”

Nygren estimates that the parking garage project, along with The Charles Hotel, would add $80 million worth of development to the downtown thus increasing the TIF district funds and that would assist.

City TIF funds would be used to pay for the parking garage component of the project. The developer would lease and manage the parking garage.

The previous cost for the garage was estimated at $9.2 million, which would be financed with TIF funds. However, because the project has changed that amount would likely need to be increased, Nygren noted, and the developer would return with that request.

In addition, the developer is expected to come before Council to request TIF funds to assist with developing the proposed 20 workforce housing units that are called for in the project. Currently, TIF funds can’t be allocated to workforce housing, but Council later this month is considering updating its urban renewal plans to make that permissible.

The location for The Charles Hotel is currently a parking lot. The two parking lots have a combined 115 parking spaces, so the parking garage is planned to increase the number of downtown parking spaces.

Since the building, at eight stories, is over 60 feet in height the developers will need to obtain a conditional use permit for the project. That request would go before the planning board and City Council.

Features Editor Heidi Desch may be reached at 758-4421 or hdesch@dailyinterlake.com.