While the vision of One Big Sky District (OBSD), a 2.5 billion plan for downtown Billings, has been widely promoted and explained by the organizations supporting it – often referred to as the Billings partnership -- there is opposition to it, who have had little opportunity to lay forth their concerns.
Far less organized and with almost no resources, two citizens who are part of the opposition, have spent considerable time and effort studying the master plan for OBSD and conducting their own research. From that effort they have been providing their findings to city council members and asking for answers to questions from the planners, for several weeks.
Pam Ellis, a former school board member for School District 2, has had experiencing analyzing the pros and cons of proposed public projects; and Larry Seekins, who calls himself a recovering (retired) engineer, is a stickler for details.
Most of Ellis’ and Seekins’ objections are drawn from crunching the same data that is provided in the OBSD master plan – something that Ellis said she does not believe many of the city council people have done. They are trusting to the conclusions presented by Landmark. She even doubts, by comments made by some city council members, that most have even read the master plan. [The council had but a few days to read 620 document pages.]
OBSD was brought to Billings as a vision for its future by Bob Dunn, formerly president of the sports branch of Hammes Co. of Wisconsin, and who now heads Landmark Development and other companies based in Wisconsin. Over the past year, Landmark, as part of an agreement with the City of Billings, developed a master plan for the future development of downtown Billings which is called One Big Sky District. The master plan – considered to be Phase One – has been completed and accepted by the Billings City Council.
But, concern about the future of OBSD reached heightened levels, a week or so ago, when the Billings City Council failed to pass an amendment to their current agreement with Landmark.
The amendment would have guaranteed Landmark’s investment in the next phase of OBSD – an estimated $1.34 million to $2.578 million. The amendment was but an increase in the amount already guaranteed to be reimbursed, in the original agreement. The reimbursement the amendment provided for would only be necessary if Landmark was not involved in building any of the projects.
For the next phase, Landmark had asked for a commitment from the Billings partnership of $355,000, to pay for preliminary design, promotional materials and lobbying of the state legislature to pass the bill that would make possible refunding to the project Landmark’s property taxes, once they invest $300 million in the building of one of four projects outlined in the master plan.
Originally, Bob Dunn asked the Billings partnership to commit $578,000 to the next phase, but that request was scaled back to $355,000.
The boards of Big Sky Economic Development (BSED) approved committing up to $300,000, and gathered additional funding of $55,000, none of which came from the city, assured City Manager Chris Kukulski.
In a statement to the City Council, Kukulski said, “Our Strategy Partners have raised $355,000 in additional dollars to pay the out of pocket cost for our local share of Phase 2. The city did not contribute additional cash towards this 2nd phase, however we continue providing substantial staff time to the project along with our strategy partners. The Revision describes the work to be completed in phase 2 and increases the potential reimbursement to Landmark from $1,340,000.00 to $2,305,000.00.”
Following the disappointing vote of the city council, Steve Arveschoug, Director of BSED, said that his organization remains committed to OBSD and will continue to push forward with trying to pass their bill (LC1182).
The Chamber of Commerce, too, proclaimed their continued commitment and called upon Chamber members to call the opposing city council members and ask them to change their votes and to ask the council to reconsider the issue.
Ellis and Seekins would, also, like other city council members to reconsider their views of the plan.
Neither the city nor anyone else has had a third party analyze the plan, as even Landmark suggests, said Ellis. The document reads, “Actual results may vary materially from the projected results included in this Development Plan. Parties reviewing this document should make their own investigations, projections and conclusions independent of the materials contained herein.”
Ellis and Seekins state further that the source of the data presented in the master plan is seldom provided. “Given the absence of any actual references that allow a reader to find the original source, it isn’t possible to evaluate the credibility of the projections,” said Ellis.
A primary part of the plan is to build a convention center in downtown Billings called “Montana Station.”
In communications with the council members, Ellis asked why a study done by HVS less than a year ago, regarding the feasibility of a downtown convention center concluded it would need a subsidy but the OBSD does not. Using the figures projected in the OBSD master plan, Ellis calculated that the proposed convention center – Montana Station – would have to generate on average $9100 a day, 365 days a year, in rental fees to sustain itself. She said she does not think that is feasible.
The reason for the appearance of a discrepancy is that Landmark did its own study, explained John Brewer, Chamber of Commerce President, “The two studies were seeking information for two completely different facility models.”
In a letter to council members, Brewer explained, that Montana Station is an “un-conventional convention center vision.” “This model will be a 356-day a year facility that will be self-sufficient by year three (no operational subsidy needed).”
“As the vision evolved for the great success of the OBSD plan, the facility footprint changed, as did the potential impact to Metra. Those impacts, however, will also be positive as we would be able to recruit co-located events that currently cannot be held at Metra,” said Brewer.
But if the analysis done for the OBSD master plan regarding the feasibility of a convention center as compared to other facilities in the region is a complete one, why does it leave out the two top facilities in the region, quizzes Seekins.
OBSD master plan presents the results of a market analysis of convention centers extending from Washington State through the Dakotas. The analysis is not complete, stated Seekins, because it left out the Yellowstone Conference Center at Big Sky, and the only other facility that even begins to vie with it, Metra Park.
No one is going to be able to compete with the Big Sky convention center, contends Seekins, calling it a destination site, with phenomenal amenities from skiing and fishing, golf courses, and most of all, Yellowstone National Park.
Using the studies, own criteria, Seekins said Metra Park comes in second, but it is not even mentioned in the evaluation. If Billings needs more, or to improve upon what is available, why not build upon what is already available at Metra Park, where there is ample room and plenty of parking, something which downtown Billings does not have?
The plan shows Montana Station would have parking for 700 – which more correctly should be 508, says Ellis. Metra Park has 3,897 parking spaces, and even at that they do not have enough parking for some events.
It is essentially, the possible competitive impact of Montana Station on Metra Park that has prompted Yellowstone County Commissioners to object to building a convention center downtown. Why build another facility to compete with an existing facility that is already being subsidized by taxpayers by almost $3 million annually? they question.
Manager of Metra Park, Bill Dutcher provided information to commissioners that a competing facility could pull as much as $700,000 of business away from Metra Park, annually, not including possible increased revenues from potential future events.
Seekins said that he is convinced by the data presented in the plan that Montana Station would be in competition with Metra Park.
One of the weaknesses of the OBSD plan, according to both Ellis and Seekins is what the master plan calls the “market gap.” The market gap is essentially the difference between the current rental rates paid by all entities -- residential, retail and office space – and what those rents would have to be for “premium space” as proposed by Landmark and OBSD.
OBSD proposes increasing rental rates in downtown Billings for every kind of space offered. It offers no low-income or affordable work force housing, pointed out Ellis. In fact, data in the master plan shows the necessity of increasing rentals from 20 percent up to 100 percent depending on the kind of space.
Seekins compiled data that show the increase in rents that will be required to support the proposed $29 million “Lifestyle” development of OBSD. Residential rental rates currently in the downtown area average $1,326 monthly. The rents required for the new development would be $1,824 – an increase of 38 percent; for senior housing the current rate is $3,716, for the new development it would jump to $4,545, and increase of 22 percent; student housing costs monthly are currently about $1,222, which would climb to $4,545, another 22 percent increase.
Seekins points out that in Yellowstone County the low-income housing coalition says that the average renter make $14.01 an hour, or $2,380 a month. A typical $935-a-month two bedroom apartment would require 39 percent of the average renter’s income. “That’s well above the 30 percent of income threshold housing experts generally consider ‘affordable.’”
Proponents of OBSD contend that there will be no need for subsidies for the rental properties because the facilities will make downtown space more attractive, drawing residents, shoppers, retailers and company headquarters wanting to be part of the new modern scene, and that demand will drive up the prices they are willing to pay.
To whatever degree that happens, or to whatever degree visitors are drawn to the community to spend money here, OBSD would be a contributor to the economic base of the community. But, to whatever degree the shops, offices and apartments simply serve the needs of the already established economic base, OBSD projects will be a secondary industry, replacing or competing with the services and businesses that already serve basic industries. Secondary businesses do not succeed unless they have strong primary industries to serve.
Just having the conversation about building OBSD is causing businesses to leave downtown, said Ellis. In part because they anticipate the disruption and congestion from construction impacting access to their businesses, and in part because they too worry about the disadvantage they will be at in competing with a high-end, subsidized competitor.
Proposed development of convention facilities by the Billings Hotel and the Red Lion have stopped, just because of the uncertainty of what will happen with a partially funded convention center in downtown Billings.
Also largely lacking in the OBSD master plan is a realistic analysis of what the proposed new rental properties will do to the values of existing properties downtown, say Ellis and Seekins --one of those properties being the Stillwater Building which is owned by Joe Holden, who has invested considerably into restoring and remodeling the former Federal Building. He told the City Council that he sees the tax refunds and incentive programs being granted to Landmark, as subsidies against which he and others will have an unfair disadvantage in competing.
His point is not unlike that which has initiated a lawsuit against the City of Allentown, PA, which is the location of a Hammas project, which Billings civic leaders visited as a prototype, some months ago, of what is possible for Billings.
Because of losses suffered in having to compete against the subsidized Hammas project, another company that owns the adjacent PPL Plaza, is suing the City of Allentown.
According to Jon Harris a reporter for The Morning Call, Allentown business media. “The plaza’s owner, meanwhile, has repeatedly fought against the city’s Neighborhood Improvement Zone, arguing that the buildings rising with the benefit of tax subsidies have rendered its already-constructed office property essentially valueless.”
The Neighborhood Improvement Zone created by the City of Allentown created an advantage for the Hammes property in competing with other properties. The company owning PPL Plaza said that the property operating under the Neighborhood Improvement Zone owned by Hammes is able to rent property for 30 percent less than that of PPL Plaza, which was built prior to the creation of such a program. PPL Plaza is claiming that the situation is in essence a “takings” of their property, which has pushed them into bankruptcy and they want compensation.
Part of the reason that OBSD proponents say that the project is necessary is to attract young people to Montana to fill a very short labor supply.
Ellis and Seekins question the assertion that such projects are necessary to attract young people – “millennials” – to Billings. Ellis said that none of the assertions are connected to any supporting data.
When comparing the actual size of age groups, Montana is comparable to most other states. “Actually, 26.5% of Montana’s population is millennials.” The average of all the 50 states is 27.3%. The highest is Utah with 30% and the lowest is Maine with 23.8%. Montana’s millennial percentage is within +1% of over half of the United States.
Seekins and Ellis also take exception to the characterization of Billings as being in desperate need of some kind of massive help to survive in the future. They list some other conclusions by other analysts about the viability of Billings:
-- Billings No. 1 city in state, Money Magazine: Billings stands out as the "business capitol of the state.” Compared to other cities, when executives in Billings make decisions, "their decisions are more likely to have ramifications outside Billings."
--...Still, Billings has the corner on the state's business landscape and sees consistent economic growth year after year, Barkey said. ..." [Pat Barkey, Director of the bureau of Business and Economic Research, UM]
-- Best-Performing Cities 2018: Where America’s Jobs Are Created and Sustained, Jan. 24, 2019. Billings ranked 118 out of 201 Best Performing Small Cities
-- Outside Magazine, 2016 - announced Billings as “America’s Best Town of 2016!” over Boise, ID and Bend, OR.
--Livability, 2016, - ranked Billings 39th out of 100 as one of the top “100 Best Places to Live!”