Asbestos Blamed As Reason Behind Failed Missoula Mercantile Deal | Local

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Asbestos blamed as reason behind failed Missoula Mercantile deal | Local | missoulian.com

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 Missoula Mercantile Asbestos blamed as reason behind failed Missoula

Mercantile deal

MARTIN KIDSTON [email protected] Apr 4, 2015  18

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The developers who placed the Missoula Mercantile under contract last year with plans to renovate the historic property backed out of the deal after learning that additional asbestos  +2 work would be required to complete their project. Missoula underground investigated in new book; author to sign at event Stephen Glenn and Dario Passalalpi of Reno, Nevada, This may or may not be what announced their intention to purchase the Mercantile in late Missoula was waiting to hear after the first archaeological surv… October. The announcement followed with several months of due diligence and the contract was expected to close this spring.

Glenn said they were moving toward the financing phase when he learned the building still contained asbestos. He said the discovery came as a surprise, and it prompted the developers to back out two weeks ago when efforts to renegotiate the purchase failed.

Market data needed before “There’s hundreds of thousands of dollars of abatement that has

http://missoulian.com/...tos-blamed-as-reason-behind-failed-missoula-mercantile-deal/article_57a75d20-9ac8-5354-81cd-8d7e084eb692.html[7/21/2016 9:33:06 AM] Asbestos blamed as reason behind failed Missoula Mercantile deal | Local | missoulian.com

Missoula Mercantile project to be done before anyone who’s going to do any true rehab work begins can start,” Glenn said. “The building really needs to be The new owners of the Missoula Mercantile came away from their resurveyed from the ground up by an impartial surveyor.” recent visit emboldened by th… The failed deal continues the saga for the challenged property, which has sat vacant in the heart of downtown Missoula since Macy’s closed in 2010.

Octagon Capital Partners of Virginia purchased the Mercantile for roughly $2.3 million in 2011. Abatement Contractors of Montana was hired to do the asbestos removal, which took place over  +7 2012. Sale of Mercantile expected to energize downtown Missoula During that time, Octagon received a low-interest Brownfields loan Over a 12-year span starting in 1998, the urban environment in from the city worth $638,000 to help abate the property. The downtown Missoula grew taller… company said the work was done in 2013 – completed at a cost of $1.2 million.

“Octagon initially gave us a scope of work of what they wanted in the remodel of the building,” said Tanya Chemodurow, president of ACM. “All of the asbestos impacted by their planned remodel was removed.”

 +5 *** Missoula Mercantile under contract, slated for redevelopment The U.S. Environmental Protection Agency contracted URS A team of Nevada-based developers Corp. in 2011 to conduct a Brownfields study on the property. will arrive in Missoula next week as The firm collected 407 samples representing nine material types the new owners of the… throughout the building.

“Octagon initially Asbestos was found in 89 of those samples.

gave us a scope of According to the ensuing report, the flooring material, the window work of what they calking, roofing tar, pipe insulation, decorative panels and joint wanted in the compound for drywall contained asbestos. Chemodurow said remodel of the ACM removed the items in accordance with Octagon’s renovation plans.

asbestos impacted “The report did say the roof of the building contains asbestos, and by their planned that was never remediated, and everyone knew that was there,” remodel was Chemodurow said. “Octagon had no plans with the roof, but the removed.” potential buyers’ plans would have impacted the roof. At that point, the (asbestos) in the roof would have needed to be – Tanya removed.” Chemodurow, president of ACM Chemodurow disputed Glenn’s claims that additional asbestos work would cost “hundreds of thousands of dollars” to abate,

though she said it wouldn’t be inexpensive.

Work beginning on Missoula Aside from the roof, the penthouse and a vintage cooler in the road projects; MDT looks at bridges basement, she said the building is otherwise free of asbestos. A number of city road projects are The penthouse and the cooler were deemed historic and left in slated to begin in the coming weeks, commencing a busy construction place, as Octagon didn’t plan to disturb them during renovation. season in Missoula that could run into … But Glenn said he and Passalalpi weren’t told about the asbestos. They entered the contract believing that abatement had been 100

percent completed. Two-way study of Front, Main streets finds benefits of conversion “Pretty much nothing we were told about that building was Converting streets in downtown factually correct,” Glenn said. “The building really had been Missoula to two-way traffic would represented as being abated. To us, abated means fully abated.” give local businesses an economic boost, create more parking and improve the … Nancy Harte, the senior grants administrator and Brownfields coordinator with the Missoula Department of Grants and Community Programs, said the project was cleaned to a standard Southgate Mall has plans for that met Octagon’s redevelopment goals. Sears property; H&M under construction Those plans were moving forward until the recession hit and Amenities found on North Reserve Street could make their way to scuttled the project. Missoula’s south side if the owners of Southgate Mall complete their long-term… “Abatement happens based on what they want to redevelop it into, and it may be completely different from what these new buyers wanted,” said Harte. “Within the scope of what Octagon asked

Ban asbestos to better ACM to do – and what Northern Industrial Hygiene confirmed – protect public they had done a good job and cleaned it up to the level they Montana’s two U.S. Sens., Jon Tester and Steven Daines, wanted them to.” highlighted “Asbestos Awareness Week.” Their article appeared March 31 in The Missouli… Harte and others noted that asbestos is only harmful if it’s disturbed. In old buildings, if the asbestos is left in place, it can remain on the property. They said Octagon removed asbestos from areas it planned to remodel, and the air tests came back Southgate Mall expansion rests on future of urban clean once the work was done. renewal district The Missoula Redevelopment But the new developers had a vision that took the renovations Agency and the owners of Southgate Mall are asking the city to further than what Octagon had intended. It was during their due consider extending the life of a redevelopment distr… diligence that they learned additional abatement work would be required.

“One of the big pieces that was not abated was the roofing Dibari looks to claim open seat material,” said Ellen Buchanan, executive director of the Missoula in Missoula City Council's Ward 4 Redevelopment Agency. “That would be driven by the decision to John Dibari filed Monday to run for put a new roof on the building, and Octagon did not make that the Missoula City Council’s open seat in Ward 4, tossing his hat into decision. That’s a renovation decision there.” the ring three months after narrowly… ***

News that the Mercantile had been placed under contract last Libby residents worried about October after sitting vacant for so long electrified Missoula’s EPA plan to leave some asbestos in homes downtown district. Word that the contract had fallen through hit LIBBY – The proposed final plan for just as hard. cleaning Libby’s asbestos- contaminated homes and buildings would leave some hazardous The building remains on the market, listed at $4.5 million by material in place, a… ZillaState Realty. Buchanan remains optimistic that another buyer will step forward.

Progress reported in master “There are other people who have shown interested in the plan for downtown Missoula building,” said Buchanan. “There were people who were showing A volunteer committee closely aligned with the Missoula Downtown interest in the building when (Glenn and Passalalpi) tied it up with Association offered its annual their contract. When the time is right, somebody will step forward update Wednesday on the city’s Downtown Master… and do something with the property.” http://missoulian.com/...tos-blamed-as-reason-behind-failed-missoula-mercantile-deal/article_57a75d20-9ac8-5354-81cd-8d7e084eb692.html[7/21/2016 9:33:06 AM] Asbestos blamed as reason behind failed Missoula Mercantile deal | Local | missoulian.com

The building remains eligible for various incentives. Buchanan

Consumer Direct to construct said it lies within an urban renewal district, making it a candidate 'national headquarters' building for tax increment financing. in Missoula Construction is set to begin on a new Historic tax credits remain intact as well, and depending on the $23 million office building off North Reserve Street next month, renovation plans, it may be eligible for other grants. launching what Consumer Direct is billi… “If a developer puts housing in it, there’s a lot of housing grants and things we run through this office that could help pay for that,” Harte said. “We work with so many different sources of funding, it Groups trying to market massive, empty 130-year-old kind of depends on what the project is going to look like.” Butte building BUTTE – Butte’s Urban Glenn and Passalalpi said they attempted to renegotiate the deal Revitalization Agency is charting new territory by teaming with an after they learned that asbestos remained on site, but they said owner and private developer to Octagon wasn’t interested. market a vacant buildi…

Octagon and Zillastate Realty couldn’t be reached for comment.

Bozeman company unveils Glenn said he remains interested in the Missoula market and will proposal to demolish Missoula Mercantile building consider other local projects in the future. He also praised the A Bozeman real estate development city’s development arm for its work, saying it was among the best company has unveiled plans to demolish the Missoula Mercantile offices he’d worked with. building in downtown Missoula and replace it … “We’re not going to point any fingers,” he said. “Based on the information we were provided with, maybe some assumptions were made, and our assumptions were wrong. None of this is Mayor backs developer's plans onerous in and of itself, unless you’re not aware of it.” to demolish Missoula Mercantile for new hotel The fate of the Missoula Mercantile The money out of pocket is painful, Glenn added, but money building, one of the city’s most wasn’t the issue. important historical icons, is a powerfully divisive issue. “We basically lost six to eight weeks of our due diligence time messing with something we thought had been taken care of,” he said. “We like the building and we love the market, but in the end, the seller wasn’t willing to come back to the table.”

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Tags Asbestos Stephen Glenn Octagon Capital Partners Dario Passalalpi Mercantile Tanya Chemodurow Nancy Harte Acm Ellen Buchanan Urs Corporation U.s. Environmental Protection Agency

Missoula Department Of Grants And Community Programs Missoula Redevelopment Agency Historic Properties

Missoula Mercantile Development Growth Martin Kidston

Martin Kidston  

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 (18) comments

Butchy Apr 8, 2015 10:24am  Asbestos problem, MY A--! The problem is that the project that these people want to do is too expensive for the return on the dollar. All these smart guys from out of town don't realize that this is Missoula , Montana not downtown San Francisco. You just can't rent property for the prices that they would require. They come to our town with grand ideas, our city buys into it, then they bleed off any historical money and any sort of grants, then they leave. This building can work, but not for the asking price of Four Million Dollars. Hopefully, the building isn't in total disrepair when the city obtains it for back taxes, at which time maybe it can be brought back to life. Unfornunately, it will probably become a parking lot.

Greg Strandberg Apr 5, 2015 11:28am Over 5 years, that would have cost us $460,000 a year to clean up. What kind of rent could have been had during that time? What are the opportunity costs here? Again, the water lawsuit. Our roads are suffering http://missoulian.com/...tos-blamed-as-reason-behind-failed-missoula-mercantile-deal/article_57a75d20-9ac8-5354-81cd-8d7e084eb692.html[7/21/2016 9:33:06 AM] Asbestos blamed as reason behind failed Missoula Mercantile deal | Local | missoulian.com

because of it, and here's a case with the Merc where someone is losing money, big time.

This is incompetence, and you can recall Mayor Engen for this. 11,000 signatures are needed to get that on the ballot. Remember, with the right legal advice, that petition could be rock solid. If it's rock solid it can get past the city's attorney, allowing us to collect those signatures.

Summer is coming up, and people are downtown. We could get 11,000 signatures in a few weeks. If you wait until after the City Council elections you'll have new people. Remember, you need to appoint someone from the City Council to replace the mayor when he's recalled.

What are we waiting for? This is the leadership we need - a recall election. John Engen is ruining his hometown, and he doesn't even care.

NativeMissoulian Apr 5, 2015 12:02pm  Mr Strandberg, I thought you promised to recall the mayor months ago- how's that coming? What does the mayor have to do with the Merc? It is not owned by the city. By the way, the downtown is as vibrant and as energetic as its been in over 30 years, and probably much longer. John Engen doesn't care about Missoula? Are you kidding me? That guy has done more for Missoula and Missoulians in a day than most have done in a career. He loves his hometown and he cares deeply for it and it shows, every day. Which Aldermen are you after? Please reply, I do enjoy your comments.

BJackson Apr 5, 2015 5:12pm  Greg, you been spouting for months now about recalling the mayor, give it up.

If the city does not own the building, then the city has no obligation to abate anything, they have no obligation to mitigate anything, the responsibility is the owner of the buildings obligation, if the owner don't want to take care of the problem or they can't convince the buyer to do it, then let it sit empty, this is an issue between the owner and any prospective buyers of the property.

Tracker Apr 6, 2015 6:25pm  Good grief, as others pointed out, the city doesn't own the property. How can the mayor be incompetent because a private property owner's sale fell through? Your comments have become tedious and childish.

Hi Apr 5, 2015 11:01am  Missoula expects so little from its local government. The Merc has been empty five years and counting, the Fox property has been empty for 20 years and counting. We have exploding taxation, crumbling streets, and a shrinking University. This is the Engen / Progressives record. Missoula Voters are the slowest learners on the planet.

Roger Apr 5, 2015 9:28am The word "abate" means to reduce in amount, degree, intensity etc..

It does not mean to eliminate all of the asbestos.

NativeMissoulian Apr 5, 2015 12:03pm  Roger, I I have to admit, I agree with you!

gato Apr 5, 2015 4:46pm  "Fully abated" would imply that all of the asbestos would have been eliminated.

PJarvis Apr 5, 2015 9:15am  That particular real estate is full of great promise - Engen, January 2010; even then knowing about asbestos problems, Why? Because every old building in Missoula has the same problem to some degree. "World Class” empty rhetoric.

Octagon Capital Partners purchased the building the following year and cleared the structure of asbestos and lead-based paint. - Martin Kidston, October, 2014. No ambiguity at all in that sentence. One follow up question by the Missoulian could have learned otherwise, however. But why do the extra work. Why determine and tell the truth and rock the boat? "World Class” journalism.

This is why the City deliberately left out all mention of asbestos problems concerning the Macy’s building in its 'Front Street Urban Renewal District Study of Blight’ report. Bait and switch; get some fool to buy the property quickly, then force them to do all the improvements before they can get URD funds (which are supplemented by your taxes, btw). Sounds like Missoula doing business as normal. "World Class” business practices. Now we’re left with a blighted building - for five years - that most cities would have razed by now.

Citizen1 Apr 5, 2015 7:48am  The developer's concerns are perfectly understandable. You can't get on the wrong side of government regulations which could turn your project into a money pit. How can you leave asbestos in a roof, which sooner or later will have to be replaced? If the city cared 1% as much about getting the biggest and best located commercial space downtown developed as it does about resorts for vagarants we'd be in better shape.

Miss Perfect Apr 5, 2015 12:56am  The price is the problem. Octagon wants their purchase price + the EPA loan + $1 million to boot = $4.5mm

Sorry girls...... fact is there is no value added for the $1.2mm EPA loan...... and the boot ($700k-$80k?) is too much on this sorry property.

Consider the fact that there are limited uses for this property....and even fewer with the asbestos issues. Would you want to get STUCK with it like Octagon is?

Best option would have been to level the mess...... but that may cause a domino effect and then the entire "Higgins Express" would be empty lots.

Maybe we can talk Lord Engen into condemning the property and purchasing via eminent domain? Then Octagon gets bailed out and Engen gets to spend your money...... the "Ecstasy" for Progressives.

Hail Hail...... all raise a cheeseburger and toast the mayor!

ReturnoftheNative Apr 5, 2015 1:49pm  Mercifully, the Missoula Mercantile building is on the National Register of Historic Places, as are many other downtown buildings.

DVanVorous Apr 6, 2015 9:23am  Little difficult to level buildings on the National Historical register...the owner is limited in what they can do to *approved* modifications and cleanup. Eminent domain would just mean that the city would own the mess with the attendant registration, just like Bozeman and their little ex-frat house debacle...

Crutcher Apr 8, 2015 9:00am  Even if you level it, you still have to abate it.

Objective observer Apr 11, 2015 10:02am  Can you read? The loan to cleanup the building wasn't for $1.2 million. Level a building on the National Historic register? All hail a cheeseburger and toast the commenter who is ALWAYS wrong.

Run - A- Mook Apr 4, 2015 8:59pm  Another, pig in a poke that didn't or won't sell.

Re-Made in Montana Apr 4, 2015 7:52pm  Sloppy, sloppy, sloppy.

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