Merc/Marriott developer asks for and receives a helping tax hand 

Mercantile developer Andy Holloran began his visit with Missoula Redevelopment Agency board members June 30 by expressing relief. The pharmacy portion of the now-deconstructed Missoula Mercantile building had been spared from collapse after mishaps had put its survival at risk. Had the pharmacy toppled, it would have jeopardized the $3.6 million in tax assistance Holloran had come to the MRA board to seek.

Phew! Catastrophe apparently averted, the Bozeman-based developer was able to focus his presentation on showing off the latest design of the custom Marriott Residence Inn, for which he plans to break ground July 10.

City officials had fully expected Holloran to seek tax-increment financing help for his controversial $38 million project. The site is in the middle of one of the city's six urban renewal districts, where new property tax revenues are pooled and reinvested to address blight. The former Merc building, as MRA director Ellen Buchanan said at the meeting, had been "the epitome of blight."

The new building, on the other hand, will feature all the amenities of a modern extended-stay hotel and more. Holloran detailed plans for 22,000 square feet of retail and restaurant space, showed renderings of the hotel's rustic lobby, which will include wood salvaged from the former Merc, and explained the interior alleyway, dubbed the "Mews," that celebrates the razed structure's contributions to Missoula.

The show-and-tell presentation was crucial to Holloran's $3.6 million ask. The Merc project is unusual in that it arrived at the MRA with conditions already attached by City Council. In approving a demolition permit last year, council made Holloran commit to building the Marriott according to design concepts he had already presented, including preservation of the pharmacy. MRA board members and the city's new historic preservation officer, Emy Scherrer, pressed Holloran on exterior design choices, including a large amount of stucco-like siding, but didn't demand any changes.

Holloran had also committed to deconstructing the Merc, rather than demolishing it outright, so that historic materials could be salvaged. Just over half of the tax-increment financing awarded to the project is intended to defray deconstruction and preservation costs.

Most of the nearly $300,000 in annual taxes the project is estimated to generate will be used to pay off the TIF bond over the next 25 years. As MRA board members prepared to vote, one Missoula resident in the audience asked Holloran what would happen if the tax assistance was denied.

That would "stress" the project, he replied. The MRA board approved the funding unanimously.

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