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Demolition of the Capital Hill Mall begins Thursday morning.

Helena city officials are in early talks about an Urban Renewal District around the site of the Capital Hill Mall. A new URD would be Helena’s third created in the past five years.

Helena city officials are in early talks about an Urban Renewal District around the site of the Capital Hill Mall, according to community development director Sharon Haugen.

A Feb. 20 memo from Haugen and City Manager Ana Cortez first mentioned that Capital Hill Investment LLC, a partnership between mall site owners Dick Anderson and Dave Kimball, met with the city about creating a URD in the area. The memo briefly summarizes the city’s talks with Mark Esponda, who represented the owners and whose partnership with Anderson, D&M Development, will be redeveloping the site northeast of the state Capitol building.

“It’s just the start of the conversation, and that’s exactly where we’re at,” Haugen said.

A new URD would be Helena’s third created in the past half-decade, following one in the Railroad District in 2016 and another downtown last May. Tax increment financing in the Railroad URD has raised $69,600 since 2017, according to city administrative services director Glenn Jorgenson, while the downtown URD is not yet on the city tax system.

Under tax increment financing, the tax base within the mall’s Urban Renewal District would be frozen and tax revenue from appreciation and properties developed after the tax freeze — the increment — would be invested into a special fund for district infrastructure. Property taxes assessed to properties developed in the district before the freeze would be paid as normal.

A previous downtown URD, which Jorgenson said collected $17.2 million over four decades through 2005, helped fund the Great Northern Town Center and improvements to the Downtown Walking Mall.

The state Department of Revenue advised waiting until after the beginning of 2020, when a larger tax increment can be gained, if the city wants to start a URD around the mall site, Haugen added. She said city officials’ focus remains on a possible expansion of the downtown URD eastward to Rodney Street.

Esponda, also vice president of development for Dick Anderson Construction, told the city his company’s intent is to construct housing, office space and a hotel on the site of the former mall, according to the memo. Demolition of the mall, opened in 1965, began last month following asbestos treatment and the relocation of its sole tenant.

“I think that Urban Renewal Districts have certainly helped spur other developments like this throughout the country,” Esponda said. “I think it’s kind of a win-win situation for both developers and other businesses in the area, inside the renewal district and also for the city.”

Esponda said he has met with architects, but added that redevelopment plans for the site are not expected to be ready by the time cleanup finishes around May 1.

“This wouldn’t specifically and only benefit a development, our development,” Esponda said. “These Urban Renewal Districts are set up for the greater good of an area and not just specifically for our project, so we certainly don’t want the view of that to be skewed.”

The conceptual URD mapped in the Feb. 20 memo is bordered by Butte Avenue to the north, Montana Avenue to the west, 9th Avenue to the south and Fee Street to the east. Haugen said these borders are by no means final; the map represents only what the district boundaries could look like.

“It’s way too early for that,” Haugen said.

In addition to funding infrastructure on the redeveloped property, tax increment financing around the mall could help finance the city’s housing objectives, Cortez and Haugen wrote in the memo.

A recent assessment of housing needs in Lewis and Clark, Broadwater and Jefferson counties found construction “insufficient” to keep pace with Lewis and Clark’s population growth, forecast at more than 3,000 new households between 2016 and 2022.

Meanwhile, an increase of rental housing supply is included in Helena’s draft city housing strategy for 2019. The U.S. Census Bureau’s 2016 American Community Survey estimated a 45.3 percent share of housing units occupied by renters in Helena, compared to 32.8 percent in Montana and 30.9 percent in Lewis and Clark County at large.

The task force which undertook the assessment included county officials and representatives from the Helena Area Chamber of Commerce, Rocky Mountain Development Council and United Way of Lewis and Clark County.

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