City slows process for fund giving to hotel, old high school

Libby City Council members voted at Monday night’s meeting to pump the brakes on giving money to two local entrepreneurs who are trying to renovate properties that have seen better days.

The Friends of Historic Hotel Libby’s Gail Burger, who is renovating the Hotel Libby on California Avenue, and the partnership of Libby Lofts, including Zach and Tracy McNew, who hope to renovate the old high school, were seeking money for their respective projects.

Both structures received historic designations. The school got theirs in 2008 while the hotel got its in 2012.

Burger sought $9,000 from the city’s Community Development Fund to pay the balance on cost overruns that developed while work crews put a new roof on the hotel last fall.

Libby Lofts’ request was more sizable - $138,000 in fact - to begin work on the old high school. Tracy McNew said the money would be partly matched by the partners, which include Brick Briar’s Bruce Weatherby and Joan Oakland, and original Lofts partner Scott Curry.

The Community Development Fund balance currently sits at $1.5 million. The money originated in 2001 when the city received $11.5 million from a federal earmark led by former U.S. Sen. Conrad Burns. The money was intended to assist in economic stimulation after the collapse of the timber industry and the discovery of asbestos in the community

While $3.5 million went to the hospital, the other $8 million went to the Libby Area Economic Development Company. It has helped pay for, among other things, the expansion of the Cabinet View Golf Course and the building of the club house. It also helped pay for new playground equipment in Fireman’s Park and the refurbishing of an old gymnasium now known as the Memorial Center.

Prior reporting in the Daily Inter Lake indicated that of the original $8 million award, only $750,000 was left at the end of 2004. There were criticisms of how some of the money was spent and that was the backdrop of Monday’s meeting where council decided to hold off on approving spending $147,000, about 10% of the $1.5 million balance.

Council president Brian Zimmerman said it would be a good idea to hold off on the requests until there is more clarity on the policy for distributing the money.

Gary Beach and Hugh Taylor had plenty to say about the fund and the city’s history of where the money has been spent.

“I asked last year for the fund to be looked at and nothing happened,” Beach said. “The city looks like it did something, but many times the business wins and the city doesn’t win. The city’s track record of picking winners is relatively low. I think we should only be offering the interest from the money to businesses.”

Taylor said he’s received more calls and emails about the Libby Lofts project than any he could remember.

“People I’ve talked to aren’t behind it. I think it’s an outstanding idea, but we need to be careful,” Taylor said.

More concern about the involvement of original developer Scott Curry was talked about.

Jennifer Nelson, who sits on the city’s Planning Board, said she was excited for the possibility to have the school renovated.

“It’s tragic what happened to Mr. Berry, but Scott Curry had that building for nine years before the roof collapsed and now it’s seven years after that happened and nothing has been done,” Nelson said. “We don’t know the business structure, there’s no engineering report, no alternatives if they don’t get the money. The city has to be fiscally responsible and know what the money is going to be used for.”

Beach asked the McNews if they don’t get the money from the city what would happen.

“We’d seek other sources, go to Glacier Bank,” Zach McNew said. “We’re gonna do it one way or another. We could do it by ourselves, but we want the community to buy in.”

McNew did make several assertions in arguing for the money.

“That property generates $1,500 for the city in taxes, but after it’s developed, it would generate $15,000. Our architect and engineer are Jackola and they’ve done projects all over northwest Montana.

“The units will rent for $1,500 each, but three of them we are setting aside for teacher-subsidized housing at $750 each. That money comes out of our pocket.”

McNew acknowledged that Curry didn’t have insurance on the building when the roof collapsed in 2017.

“But we won’t come back to the city for more money if there are cost overruns,” McNew said.

For the $2.3 million hotel project, Burger said the roof replacement work that was done last fall already had an economic benefit to Libby.

“Just under $60,000 was added to our community in 11 weeks in the form of lumber and supplies purchased, gas, seven AirBnBs ($13,860), groceries, restaurants, equipment purchases (generator and air compressors), clothing and other items to take home to their families,” Burger wrote in a letter she presented at Monday’s meeting.

She explained there were, “additional fixes that could not have been foreseen and additional repairs required that cost $18,000.”

Burger said there is $9,000 left to cover and was seeking money from the Community Development Fund to pay it.

Council members did OK a letter of support for Friends of Historic Hotel Libby to seek a $500,000 Montana Historic Preservation Grant to help with rehabilitating the outside of the building. 

Burger said the project would cost about $750,361.

“We want to get the pink siding off and get the building back to its 1930 appearance,” Burger said. “We’re excited to be rapidly moving forward toward full restoration and closer to opening the hotel as a Historic Hotel with 22 guest rooms and a Living Museum component.”

Council will hold a special meeting about Community Development Fund spending at 7 p.m. Tuesday, Feb. 13 at city hall.