One Big Sky Center’s Concept Development Plan provides not only a concept for the project and the next 15 years of downtown economic development, but ideas for paying for it all, too.
The 77-page plan was delivered to the Billings City Council recently by the Hammes Company of Madison, Wisconsin.
The plan builds on the important role of health care in Billings, as well as the significance of the city’s 500-mile retail draw and the two million tourists who visit annually.
The concept calls for two potential development districts: A civic lifestyle district, anchored by an entertainment and conference center, and a health and wellness district, using the downtown hospitals as “anchoring elements” to attract urban residential construction, year-round public spaces, and biotech and academic collaboration space, which could include research, incubator and accelerator programs.
The districts’ area of influence spreads beyond downtown, from Rimrock Road to Montana Avenue, and, along its southern base, from North 24th Street to North 31st Street. A series of successive maps show how the entire project’s possible $2 billion build-out might take place.
Billings is poised for further development due in part to demographic and economic factors, the plan asserts. The population is expected to continue to grow by about 6 percent over the next five years, and about 37 percent of Billings' workforce is expected to retire in the next 15 years or so. Billings’ per-capita income is higher than those of both the state and the nation.
Health care and social assistance, a sector that already employs more than 13,500 Yellowstone County workers, is expected to grow locally by almost 2 percent each year.
By building Montana’s largest convention center, Billings will attract visitors who otherwise wouldn’t come to town and would likely entice a large hotel development, according to the plan. The venue, the plan says, “must be positioned to compete outside of Montana for conventions, trade shows, exhibitions and other events that Billings and Montana cannot host today.”
Financing the development
A price tag of about $1.6 billion — spent in phases over about 15 years — will require multiple funding sources, and the plan lays out some of those.
Equity — multiple private development interests — will pay for a number of plan components, including medical/wellness facilities, retail, commercial office space, housing, hospitality, parking and unspecified civic amenities and social infrastructure.
Debt financing is another potential funding source, as is naming rights and sponsorships. Operator contributions — money paid out in exchange for long-term management contracts for civic facilities — are another possibility.
Public investment is essential, and the plan calls for two phases with a total cost to the public of about $198 million. That will cover a $69.7 million convention center, $44.5 million in civic infrastructure and $83.9 million in structured parking.
A number of public and quasi-public funding programs can be utilized, the plan suggests, including federal, state and local programs designed to reduce blight; mitigate extraordinary real estate development costs; subsidize specific public purposes, such as historic preservation, affordable housing or transit; and catalyze broader economic development strategies. It’s likely, the plan states, that “some specialized funding tools will need to be created to accommodate the level of private growth and investment that will occur” as One Big Sky Center develops.
Billings’ market conditions must also grow stronger to close the funding gap between current rent levels and the costs associated with new construction and development in key categories, including office and residential.
Hotel rooms currently available for about $150 per night would have to be priced at $190 to help bridge that gap. The office that can now be rented for nearly $17 per square foot would have to be priced at about $23 per square foot. And the $1,500-per-month rent on an apartment would be more like $1,800 per month in order to help spur the level of development the plan envisions.
If One Big Sky Center takes the form outlined in the document, upon full build-out the plan foresees at minimum nearly 4 million square feet of construction, $1.4 billion in private investment, 3.6 million additional annual visitors, the addition of about 12,000 jobs and a $48 million annual impact, or $1.3 billion over 30 years.
The Concept Development Plan is designed in part to advance Hammes Co., to the creation of a detailed development strategy and development plan, which must receive Billings City Council approval.
“In this stage, we will create a strong case and detailed supporting information for the financing of the project, including potential public support,” the plan states.
The company proposes developing the preliminary development plan during the first two quarters of 2018. That process will include public outreach, engineering and transportation assessment, a land use analysis and market research analysis.
July through December 2018 will be taken up with final plan development. Included in that stage are architectural design and engineering documents, land-use approvals, a finance plan, a marketing program and an operations plan.
According to that proposed timetable, the implementation phase will begin after Jan. 1, 2019.