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One Big Sky District

An artist's rendering of proposed One Big Sky District high rises.

Much of the debate about the proposed development of the One Big Sky District centers on how it would use public funding. 

Ultimately, that question won't be answered until the legislative bill, which would map out and authorize the public funding, is finalized and brought to the floor for debate and a vote in the state legislature.

But the proponents of One Big Sky have sketched out what they hope the public finding will look like and what it will do. Most importantly, the plan — and the state bill that would authorize it — would require private investment of $300 million in project development before any public funds would kick in.

Opponents worry the public funding component will put businesses outside the One Big Sky District at a financial and competitive disadvantage, and that the project itself will end up being a boondoggle for the city. 

One Big Sky District

One Big Sky District

And so those invested in the outcome of the One Big Sky District have their eyes on a public foreclosure auction to be conducted next month in Allentown, Pennsylvania. 

Allentown is home to the PPL Center, a massive downtown redevelopment project that was spearheaded by Hammes Co., of Madison, Wisconsin, in 2009, and that transformed the economic fortunes of the old steel town. The project was aided by public funding that had been authorized by a Pennsylvania state law, created specifically to support the development of PPL Center.

One Big Sky, the brainchild of Hammes Co., was modeled on the PPL Center project. 

Adjacent to the PPL Center is a multistory office building called PPL Plaza, built by PPL Energy Supply in 2003, and currently in foreclosure. The building was bought by an investment group in 2006 for $90 million.

By 2016, the investment group had defaulted on the mortgage, which instigated the foreclosure proceedings. 

In its court filings, the investment group has placed blame on the neighboring PPL Center and the state law giving it tax incentives. Those incentives, they argue, allowed PPL Center to subsidize its rents, placing PPL Plaza and its full-rate rents at a competitive disadvantage, according to reporting by the Morning Call, the daily newspaper in Allentown. 

One Big Sky District Map — July 2018 revision

The most recent version of the proposed One Big Sky District map.

Opponents of One Big Sky worry the same could happen to businesses in downtown Billings. 

"This is exactly what happened in Allentown," Pam Ellis told the Billings City Council at its meeting last week. "The Allentown project was heavily subsidized."

Ellis, who lives in the Heights and is a previous member of the School District 2 school board, questions the findings of the One Big Sky project report, produced by Landmark Development, the company headed up by Hammes Co. President Bob Dunn to develop One Big Sky. 

She and Larry Seekins, a retired engineer and community member, have put together their own packet that calls into question the One Big Sky project report and highlights some of its flaws. 

"One Big Sky needs Billings much more than Billings needs One Big Sky," Seekins said. 

Dunn, addressing the council, pushed back on the notion that rents within One Big Sky District would be subsidized. 

"That is not what the project is intended to become," he said. "The bill is not a subsidy."

It's troubling to Joe Holden, owner of the Stillwater Building, who expressed his concerns about the project to Billings City Council on Monday. The Stillwater, which was once the James F. Battin Federal Courthouse, has been extensively remodeled into office space and currently houses the Yellowstone County administrative offices. 

He told the council he's worried the public funding that will be made available to One Big Sky projects will translate to subsidies that will give them a competitive advantage over the Stillwater. 

"This program subsidizes them," he said. 

Parking garage

Work continues on the six-level parking garage on North 26th Street to serve the Stillwater Building. The new structure is planned to have 430 parking spaces.

Steve Arveschoug, director of Big Sky Economic Development, is the local lead on the One Big Sky project. There are key differences between PPL Center and One Big Sky, and how they use the public funding option, he said.

Developers who want to build projects in One Big Sky will be required to invest their own money first before public funds kick in. And then, Arveschoug said, public funds kick in only if the project being developed has a public component. 

For example, the multi-use convention center proposed in the plan — currently called the Montana Station — would need to have public space and a public use component. 

Convention center concept

This artist's rendering shows the concept of a downtown Billings convention center that would be an early anchor for the One Big Sky District.

If developers wanted to build something like an apartment complex, they would be required to create space on the ground floor for a farmers' market or other community use to access the public funds, he said. 

"What makes the private piece work is the public amenities," Arveschoug said.

The public funding would come in the form of a reimbursement once the project is completed. 

Arveschoug added that developers are free to build projects without a public space in the district; they simply wouldn't be eligible for the public funds.

The public amenities portion of the projects will help increase rent rates rather than drive them down because it'll make the space more attractive to potential renters, he said.

One of the goals of the One Big Sky project is to develop projects and make them attractive enough to require higher rents to make the developments themselves financially viable. 

Mike Nelson wants the competition. He owns the Northern Hotel downtown and believes creating something like the One Big Sky District will act like a magnet, drawing to Billings industries from all over the country. 

Northern Hotel and downtown Billings

People walk across North Broadway downtown Tuesday, August 28, 2018.

The Northern was a redevelopment project that used tax dollars to get off the ground in the form of tax increment financing funds. Since the Northern opened in 2013, hotel space in the city has grown by 20 percent, Nelson said. 

Smart development spurs more development, he said. 

"One thing just leads to another," he said. "And another, and another, and another."

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Business Reporter

Business Reporter for the Billings Gazette.