The Billings City Council heard a brief update Monday night from the president of the company that has taken the lead on a proposal to build a multimillion-dollar project in downtown Billings —which could be larger than originally planned.
Bob Dunn, president of the Hammes Co., didn’t have much new information to share Monday, but he did say the partners involved in the One Big Sky Center would have a “concept development plan” done in November. The council previously set a Dec. 11 deadline for completing a development agreement between the city and the developers.
The update was delivered at a special meeting that began at 5 p.m. Monday, preceding the regular council meeting that began at 6:30.
Dunn’s company, based in Madison, Wis., was brought into the mix over the summer, giving considerable heft to the trio of developers, organized under the name MontDevCo LLC, who publicly announced the project in August of 2016.
At the time, the project had an estimated price tag of $120 million and was to include a 25-story building, office space, a hotel and conference center, 160 high-end apartments, a 650-space parking garage, a pedestrian mall and 50,000 square feet of retail shopping.
Dunn said the developers are now looking at 90,000 square feet of retail space, 50,000 square feet of office space, 85,000 square feet of convention center space, 300 housing units, a 200-room hotel and an 1,100-car parking garage.
He said expanding on the original concept made economic sense, particularly in regard to the convention center, which has to be big enough to compete with other convention centers in the region.
He also said that he and his partners — and others involved in development locally — need to think beyond the confines of the One Big Sky Center because with such “a transformative anchor” in place, other large developments near it would be sure to follow.
Such has been the case, he said, in other cities where the Hammes Co. has been involved in billions of dollars worth of redevelopment.
Under the smaller project originally proposed, it was estimated that the city would need to kick in $30 million to $35 million in the form of funds from the downtown tax increment district to pay for the “public” parts of the project, including the parking garage and convention center.
Dunn did not give any indication Monday of how much the city might be asked to contribute under the larger plans now being considered. When he first met with the council in July, Dunn said Hammes would have “a major financial stake in the project,” as much as $110 million.
Dunn told the council Monday that he and his associates are still gathering information and analyzing data and have so far done only a “macro-level market analysis.” In time, he said, they would be drilling down much deeper, getting into specifics.
“It’s a little early for conclusions at this point,” he said. He told council members that now is the time to be having conversations with city leaders to shape the project, telling them, “we need to begin to understand what your vision is for your city.”
One thing that’s concerning, he said, is that rental demand for office space and the average price of rentals don’t appear to be high enough to support the construction of new buildings.
“We’re beginning to build up the analytics that we need to make a decision,” he said.
Councilman Brent Cromley asked Dunn, after his presentation, how they could afford to build the project based on rental rates of $30 a square foot when the average rent in downtown Billings is somewhere around $20. “How do you bridge that gap?” he asked.
Dunn said a market analysis would have to take into account current rates but also the potential benefits of renting office space in a brand-new, modern building.
During public testimony after Dunn’s presentation, Lee Humphrey, a financial adviser who runs the Edward Jones office a block and a half from the proposed One Big Sky Center site, said Billings needs new, modern office space to attract companies that offer high-paying jobs.
In answer to other council questions, Dunn said he couldn’t yet say what companies might be interested in leasing space in the building. For one thing, he said, there has to be a definite buy-in from the city before real negotiations can begin with prospective tenants.
“It’s too soon for us to turn on the marketing machine,” he said.