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The City of Billings is looking for private investors interested in developing retail or residential space in the Historic District of Billings on Montana Avenue between North 27th and 28th Streets.

The project will supplement a plan to build a parking garage which will fill the current shortage of parking spaces in that area.

Working through the Downtown Billings Partnership, Inc. (DBA) the city issued an inquiry last week seeking investors who would be interested in owning a portion of the proposed "mixed use, multi-level, parking structure/development" on a condominium basis, explained Greg Krueger, DBA Director.

Called the Empire Parking Garage Project, the City of Billings has already purchased property in the half block area to facilitate a plan to build a structure with 522 parking stalls. The property includes that of the Northern Hotel's parking garage, the lot of the former Empire Bar and the Windsor Court Building.

The city used tax increment funds to purchase the property, at a cost of over $2 million. The process has eliminated that much property value from the tax rolls, and since that isn't, at all, the purpose of tax increment districts, said Krueger, the plan is to replace at least that much value, and more, through the investment of private developers. The goal is to have a "stable and growing tax base, and to stimulate other investment." They hope that 20-30 percent of the final project will be privately owned (about 20,000 square feet of residential or retail space).

Also in acquiring the property, 220 parking spaces were eliminated. The previous owners of those spaces already have commitments to purchase as many again, when the parking garage is completed. Those lots will then be back on the tax rolls and will be maintained and managed by private sector investors, said Krueger. The rest of the parking garage will join the four other parking facilities which are managed by the City of Billings, Parking Division.

It is necessary, said Krueger, for tax increment funds to subsidize the cost of developing parking in downtown Billings because the actual cost of developing parking is otherwise prohibitive. "That's the reason tax increment districts were created," he said.

The parking project is vital to the redevelopment of almost 200,000 sq. ft. of vacant hotel and office building space as well as tenant parking for about 60,000 sq. ft. of fully redeveloped office space, he said.

The major source of funding for the Empire Parking Garage Project (about 68%) will be a planned bonding of the Expanded North 27th Street Tax Increment District. The additional construction /design funding will come from Fund 203 (N. 27th TIFD account), about $800,000 in FY 2012. as well as the agreed upon sale of about 212 of the structure's parking spaces and about 17,200 sq. ft. of the street level retail to Zootist, Inc. and Alley Cat Investments, LLC.

If they fail to get the private interest they want at the outset of the project, they will probably proceed with the project with the idea of eventually selling the space, said Krueger.

Krueger is optimistic that there will be interested parties, however, since the area is already a vibrant one. He said that he believes there is a demand for more retail space in the area – especially, small unique space that accommodates "mom and pop" types of establishments. There may also be a need for additional residential space, said Krueger, since all residential space in the downtown area is occupied.

Krueger is more than anxious to see the project launched. It's one that has been in the planning for five years, and is currently awaiting the City Council to issue a request for proposal. Krueger said demolition of the existing structures on the half block will begin early in the spring and he hopes construction will begin shortly thereafter. Construction should take from 12 to 18 months, he said.

The DBA functions on a contract basis with the City of Billings, managing the tax increment districts and making recommendations as to how to invest the tax increment revenues.