Kalispell City Council is showing interest in a concept to add housing to a downtown parking structure, pushing the proposed building to roughly eight stories in height.

The developers behind The Charles Hotel and the related parking garage at the intersection of First Avenue and First Street West approached the city about shifting the plan for the parking structure to include an estimated 70 housing units.

City Council on Monday held a work session on the topic. Any modifications to the agreement regarding the hotel and parking garage would have to come back to the council for a vote. The project also has to go through the city planning board and get final approval from the council.

Along with 250 parking spaces, the four-story garage has been designed to include 7,000 square feet of retail lease space on the ground floor. However, the developer is interested in adding four additional stories to the building for multi-family housing.

Jarod Nygren, city development services director, told the council that in working on the project the developer has returned looking for modifications to the plan. In addition to housing, the developer is looking to retain ownership of the garage, rather than turn it over to the city.

“One thing we heard from the public was that the hotel is great, but why not housing,” he said. “So I think that factored into the developer's mind.”

“We could also see the public benefits of including the parking garage without having to own a building and having to pay for the long-term maintenance,” Nygren said while noting that city staff wanted the council’s input prior to working on details of amendments to the agreement.

City Council generally favored adding housing and the private ownership of the structure. Though some councilors did have questions regarding the logistics, particularly when it comes to providing the necessary parking for the housing units.

Councilor Sid Daoud said the city would benefit from the housing

“I think we’re all in favor of bringing in those units,” he said. “But we have to now figure out what we want to do about parking for those units.”

“I’d hate to get to the point where the size of the garage isn’t big enough for the parking we need,” Councilor Sam Nunnally said. “We’re looking at this as a long-term plan for the downtown to revitalize it and bring people downtown.”

REGARDING THE potential housing units, city staff also brought forward a suggestion of working with the developer to ensure that at least some of the units are set aside as workforce affordable units. Though this suggestion drew some support from some councilors, it also garnered several questions about how that might be structured.

City Manager Doug Russell said the council could look at designating tax increment finance funds — which are already planned to be used for the parking garage — toward lowering the cost for some of the housing units that are likely going to be developed at the market rate.

“Any type of housing that we add is good, but we have the opportunity to help make sure it’s affordable workforce housing,” he said. “What they will build is market-rate housing if we allow them to include housing as part of this. But there’s an opportunity here if council wants to participate to add workforce housing.”

Councilor Ryan Hunter said he would support housing, but wants to ensure that if the city is contributing funding that the housing is guaranteed as affordable.

“It’s meaningless to me unless it's deed-restricted as permanently affordable,” he said. “Otherwise, it could change a year later. We need to know it’s going to provide that workforce housing into the future.”

Daoud said if the city is subsidizing the housing with TIF funds, then he would want to know more about what income levels would be allowed for those living in the housing and how it would be managed in the future.

Mayor Mark Johnson pointed out that the agreement is already in place for the garage, but with the suggestion of adding housing, it could be an opportunity for the city.

“We can use tax increment finance to buy down that rent on a certain number of units because we’ve heard from the public multiple times and this Council that we need to do more to deal with the housing crisis,” he said. “It might not be the perfect option, but it’s an option we can look at. We can look at the numbers and how we can structure this.”

THE DEVELOPER is planning to construct a $47 million hotel at the corner of Third Street West and Main Street, which would also come with the parking garage. The garage is expected to address the parking needs of the hotel, replace the parking spaces being displaced within the two city-owned lots and construct additional spaces for future development.

The city is providing financial assistance to the parking garage project under the Downtown Kalispell TIF Assistance Program, which was developed to support redevelopment activity and advance the goals of the Downtown Kalispell Urban Renewal Plan. The Charles Hotel is expected to generate the TIF funds for the parking garage.

The hotel at 89,000 square feet is expected to include 79 rooms, a restaurant, a bar and lounge, retail spaces, conference space and a rooftop patio.

The Montana Hotel Dev Partners is the developer behind the hotel and parking garage.

The cost estimate for the parking garage is $9.2 million.

Features Editor Heidi Desch may be reached at 758-4421 or [email protected].