Shaping Market Square 

Ongoing scrutiny overshadows MHA’s major project

At the center of a controversy roiling over the Missoula Housing Authority (MHA) sits a redevelopment project in the works for Russell Street’s old Intermountain Lumber site, which has the potential to provide much-needed low-income housing and establish a new mode of local urban design.

This month, plans for the Market Square project are at a critical juncture, a matter that’s been largely lost amid the many questions and issues MHA’s board of commissioners and city officials have recently raised about MHA doings under Executive Director Peter Hance.

Despite the storm that’s now escalating into a flurry of letters from lawyers representing a range of parties involved, the Market Square project won an important victory on Wednesday, April 4, when staff of the state Board of Housing recommended the low-income portion of the Market Square project—called the Garden District—receive the tax credits necessary for it to move forward. Also tapped for approval was a Lewistown housing project that has been the cause for much of the concern expressed by Mayor John Engen, MHA Board Commissioner James Hoffmann and others. Their disquiet is due to the fact that Hance, through an MHA-supported corporation called Garden City Neighbors, assisted the Lewistown project in his private time on its application despite the fact it was competing for the limited number of tax credits Market Square also was seeking. City officials’ involvement in the issue, which has been criticized by some attorneys now in the mix, originates from the basis that MHA is a public body that receives public funding. It is not controlled by the city, although Missoula’s mayor does appoint and remove its board of commissioners and receives an annual report about MHA doings.

Photo by Sarah Daisy Lindmark

On April 3, movers haul away the last building remaining on the Intermountain Lumber site in anticipation of the Market Square redevelopment project.
Independent went to press before the Board of Housing’s commissioners had considered their staff’s recommendations to grant both the Market Square and Lewistown projects their requested tax credits at an April 4 public hearing. Under the staff’s plan, Market Square would receive $545,000 in tax credits, although the credits would ultimately total $5.4 million since they are renewed for a period of 10 years. Staff also recommended denying funding that homeWORD sought for its housing project at the Liberty Lanes site because it scored lower on their rubric than the Market Square project and “we’re just not comfortable recommending that half of the [$2.3 million available tax credits] go to one city,” says Mathew Rude, with the Board of Housing staff. This year’s recommendations have “caused quite a stir,” Rude says, and although commissioners typically follow staff advice he’s certain there will be arguments made against the staff recommendations. Ultimately, he says, “the board can do anything.”

Winning the public funding is an important piece for the Market Square planners, and the next critical step for the project is expected to come later in April. While one-third of the Market Square project is dedicated to the low-income Garden District, the remaining portion of the project will be developed privately. Geoff Badenoch, Market Square project manager, says he hopes to have signed a development agreement hammering out the rest of the project by April’s end. Since late 2003, when the Intermountain Development Company (an MHA subcorporation controlled by MHA commissioners) bought the Intermountain site, the pieces of the Market Square project have been up in the air while expensive interest payments for the property continued to accrue at a rate of $12,000 each month. But Badenoch hopes that efforts this month will finally lock the plans in place.

“If we get this pulled together, I know we’ll deliver something to Missoula that people will really be excited about,” Badenoch says.

The vision for Market Square is a mixed-income, mixed-use development that will include housing, commercial retail and office spaces and a community center. The property, which sits on 12 acres sandwiched between Russell and Catlin streets south of the Clark Fork River, would tie into the existing riverfront trail system that now ends at Russell Street. It would feature a 1.5-acre park near the community center that would be built on top of underground parking so that parking spaces don’t override green spaces, Badenoch says.

The Garden District, which sits on the western side of Market Square, would include 72 units managed by the MHA and be built in two phases. The tax credits the Board of Housing appears poised to grant to Market Square would fund construction of the first phase, 36 units, which could begin as early as this summer. The remaining eight acres of the site would likely include about 40,000 feet of commercial space plus about 200 housing units, although Badenoch says the specific details of that portion of the project are precisely what the ongoing negotiations with the Cornerstone Group, a Minneapolis developer, aim to settle. The buildings are envisioned to be classic “brownstone” style buildings that create a downtown-type atmosphere, with four- or five-story commercial buildings fronting Russell Street.

With the upcoming redesign of Russell Street and the expansion of the bridge crossing the Clark Fork River, plus other changes in the neighborhood like the in-progress Champion Millsite development, the area in which Market Square sits is prime for redevelopment, says Badenoch, and his project aims to be a major part of that.

“We want to set the pattern for how that part of Missoula gets developed,” he says, explaining how Market Square’s dense, urban style could transform the Russell Street corridor. “We have set the bar pretty high—we didn’t pick a big-box solution. We picked a very difficult and challenging thing to do because we know in the long run that’s what will be best for Missoula.”

Other leaders in Missoula also see the importance of the Market Square project, and affordable housing more generally, which is precisely why they’ve reacted harshly to Hance’s involvement with a competing project. The waiting list for people trying to utilize MHA’s housing resources stands at 1,375, says MHA’s Andrea Davis, far more than the 2002 list of 550 people, despite the fact MHA has added 450 new units to Missoula since 2002.

“I hate to be parochial, but I’m the elected mayor of Missoula and Missoula is where my responsibility lies,” Engen says. “I would hope that the Missoula Housing Authority would at least make projects in our community a priority and when we assist in an application somewhere else I don’t understand how it doesn’t compete.”
Hance argues that “Missoula alone cannot solve Montana’s affordable housing crisis,” and says the MHA is hard at work building new housing here, but unless other Montana communities succeed at it too, their residents may end up on Missoula’s waiting list. He says the 450 units MHA has added over the last five years constitute “more than any housing authority in the state, and more than every housing authority in the state combined.”

While the competition question in many ways is moot if the Board of Housing indeed approves funding for both Market Square and Lewistown, the questions raised about Hance’s direction of the MHA, as well as the way affiliated private corporations like Garden City Neighbors are controlled and monitored remain. MHA Commissioner Hoffmann says, “Whether the authority gets tax credits [for Market Square] or not, it still doesn’t obviate the need to examine Peter’s participation in a competing application. I’m going to continue to discuss that and other issues with the board.”

The discussion thus far has not been cordial. Both Hoffmann and City Attorney Jim Nugent have posed written questions about a number of MHA issues, some of which were addressed at a marathon March 21 meeting. Since then, Hance’s personal attorney wrote the city demanding an apology for having “participated in a scheme to defame Peter Hance and to interfere with his employment” along with a proposal for how to make up the damage done. A different attorney hired by the MHA Commission has written Nugent contending the city’s involvement is misplaced and is “escalating what should have been handled as an internal Board inquiry.” Some say Engen is going after Hance for personal or political reasons—tension between MHA and the city dates back to 2002, when employee grievances led to the revelation that Hance had been disbarred in New Hampshire in 1992 for mishandling trust funds—but Engen insists otherwise. "What I want is the housing authority to work well," says Engen, " and if Peter Hance is the guy who can make it work well, terrific.”

Nugent says there will be no apology from the city, and that the demand is merely a “strategy to distract from the real issues rather than be open and explain about public business going on at a public entity with a public employee.”

Hance prefers to let his attorney’s letter speak for itself.

Meanwhile, Badenoch is staying focused on Market Square as the details of the project draw closer to realization. At this critical stage of the planning, he wants locals to know that Market Square is “one of the most exciting things to ever emerge and confront Missoula in terms of how it can help knit the urban fabric in a good way.”

He doesn’t think the broader scrutiny of the MHA is impacting its potential for success, but he does say it’s a complicated issue that’s difficult to convey in newsprint.

“When these very complex issues get hashed out in the newspaper with allegations about things that were not done properly, that does cast a shadow…,” he says. “In time we’ll know whether it’s a fair thing to do.”
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