City Council gives first nod to downtown project

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Ed Kemmick/Last Best News

Allison Corbyn, with Big Sky Economic Development, makes a presentation to the Billings City Council on the economic impact of One Big Sky Center.

The public and private partners working on a huge development in downtown Billings got their first nod of approval Monday night from the City Council.

By general assent—since no actual votes are taken at council work sessions like the one held Monday—developers of the One Big Sky Center got the green light to present the council with a predevelopment agreement at the council’s Sept. 12 meeting.

Details of the proposed development, which were unveiled Monday after several years of work and many months of rumor and speculation, are in an earlier story on Last Best News.

Greg Krueger, development director for the Downtown Billings Alliance, said the predevelopment agreement will not have hard numbers on how much public financing the project will need, but will give the council some estimates and several alternative approaches to completing the project.

If that agreement is approved, he said, a final development agreement with all the details will be completed by December at the earliest and next June at the latest.

George “Skip” Ahern, one of three developers in MontDevCo LLC, which is the private company pitching the project, told the council that if all goes well ground could be broken next summer and the project would take 24 to 28 months to complete, putting completion sometime in the summer or fall of 2019.

He said the partners have already purchased or have under contract all the land that makes up the 70,000-square-foot footprint of the project, which has a price tag of at least $120 million and includes hotel rooms and apartments, a parking garage, a conference center, a pedestrian mall and a 25-story building that would be the tallest in the state.

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Krueger told the council that while public money is essential for the project to work, the money from the city would not come from the general fund but from the downtown tax increment finance district. In other words, he said, existing downtown property owners would be putting up the money through their tax payments to the city.

Ahern told that the council that the benefits to the city of the project would be:

♦ The addition of a 45,000-square-foot conference center to the downtown.

♦ 500 jobs, including temporary construction jobs and permanent jobs in the businesses included in the project.

♦ A pedestrian mall or greenway, which would be built on North 29th Street, if the city allows closure of that street between First and Second avenues north.

♦ A large increase in spending by tourists and other visitors to Billings.

♦ Increased business for other downtown businesses, including hotels. He said the hotel planned for the One Big Sky Center could not handle all the conference attendees expected.

♦ The likelihood of other development in the downtown, and increased property values generally.

♦ A larger tax base.

♦ Extra downtown parking. Of the 650 or so spaces in the new garage, Ahern said, 100 to 125 spots would be surplus, for use by the general public.

♦ The addition of 300-plus residents to the downtown.

♦ The whole project is downtown infill, meaning it is served by existing infrastructure, including roads and water and sewer lines.

Ahern also told the council, though, that this will be a complicated, difficult project to put together. For one thing, he said, his and his partners need to know that they can lease out all 100,000 square feet of office space, for which they’ll be charging a premium rate of $30 to $35 a square foot, as opposed to an average rate downtown of $22 a square foot.

He said they already have letters of intent from two parties, and if a third letter comes in as expected, they’ll have letters of intent on 90,000 square feet of office space. Even so, he said, converting letters of intent to hard leases will be a challenge.

He said hard construction costs are estimated at $120 million. With soft costs like architectural, engineering, financing and legal fees added in, he said, the total is closer to $150 million.

“And that, gentlemen and ladies, is a big investment,” he said. At the end of the presentation, Ahern added, “This is a huge project for a fairly small city.”

Allison Corbyn, business recruitment and outreach program manager for Big Sky Economic Development, which is helping with the project, said the agency hired a private company to study the economic impacts of the proposed development.

That study determined that One Big Sky Center would have a total economic impact of $286 million during the construction phase and the first year of operation, Corbyn said. Taking out of consideration all the spending that would go to out-of-town suppliers and workers and such, she said, the impact on Yellowstone County would come to just over $150 million in the same period.

Of that, there would be $111.6 million in labor income, $30.6 million in capital spending and $7.9 million in indirect business taxes and fees.

Everybody on the council who expressed an opinion of the project had something favorable to say. Mayor Tom Hanel said the project looked “absolutely phenomenal,” and Ward 5 Councilman Shaun Brown said, “I think this is a great idea.”

The project also got support from Billings Chamber of Commerce President John Brewer, who said it would “grow our community and expand our talent pool.” Others who spoke in support of the project include hoteliers Mike Nelson, the Northern Hotel; Steve Wahrlich, Best Western Clocktower Inn; and Shelli Mann, Boothilll Inn and Suites.

Nelson acknowledged that he was “a little bit nervous about the competition, but I think this is a good thing for Billings.”

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