Developer Requests Five-Year Extension for Charles Hotel and Parking Garage Project

Compass Construction owner and project partner Bill Goldberg said he can’t begin construction on the five-story hotel and eight-story parking garage in downtown Kalispell until he can secure capital for the $80 million development

By Maggie Dresser
The Charles Hotel. Rendering courtesy of A&E Design

The developer who plans to build an eight-story parking garage and an 86,000-square-foot boutique hotel as part of a partnership with the city in downtown Kalispell asked the council at its March 25 work session for a five-year extension on the project, which is now estimated to cost more than $80 million.

In 2022, the city council passed a developer agreement and a transfer of two city-owned properties on Third Street West and Main Street and the southeast corner of First Avenue West and First Street West with Montana Hotel Development Partners LLC.

The public-private partnership between the city and developers would bring a 242-stall public parking garage with 78 multi-family housing units on the city-leased Eagles Lot while the five-story Charles Hotel project would include 79 hotel units with a full-service restaurant. The development would generate significant tax revenue for the city using tax increment financing (TIF).

According to the agreement, several targeted dates like financing contingency and project timelines were established, including a March 31, 2024 construction start date.

However, Bill Goldberg, owner of Compass Construction and a development partner in the project, says he doesn’t have the capital available to start construction and he asked the council to extend the start date until 2029.

Citing challenges like interest rates, construction costs and labor, Goldberg said the investment group, JMA Ventures, that he had been working with backed out of the deal due to the current economic climate.

Rendering courtesy of A&E Design

“Things continued to slide on the timeline because of the lack of the ability to take the next steps with the funding to commit to signing a buy-sell with the city,” Goldberg said at the work session. “It wasn’t a stall tactic on my part, it was the reality that I didn’t want to take the next step without having the capital fully procured.”

Goldberg said he is now working with another investor who is committed to the project but is also hesitant to provide funding until the economy improves for developers.

“It’s a big shift,” Goldberg said. “It wasn’t for lack of trying and it wasn’t for lack of motivation for the project – it’s just the economic climate.”

If the council approves a five-year extension, Goldberg said the development would be put on hold until he finds a capital partner, which would be followed by a year of design work.

“We’ve got to get this capital dispersed to take this project to the next step,” Goldberg said. “It starts with the extension and, if I don’t get the extension, there’s nowhere to sugarcoat it you guys – we’re obviously out of time on the 31st. I don’t really have any other options.”

The Charles Hotel and Eagles Lot development projects were officially introduced to the Kalispell City Council in 2021 as part of the Downtown Urban Renewal Plan. In December 2020, city staff advertised a request for proposal (RFP) to develop the city parking lot as an avenue to incentivize downtown development while adding more parking to the city. Following the deadline in July 2021, Montana Hotel Development Partners submitted the only proposal.

If the council voted against the extension, City Manager Doug Russell said the proposal would be tossed and the city would start the process over, which would open it to new project ideas.

“We could do that – put it back out for another RFP,” Russell said. “But with the market as it is, you’re not going to get a project of that magnitude. We only got that one to begin with.”

While councilors were concerned about the financing, those in attendance remained supportive of the project and said they would likely approve the official resolution that will head to council in the coming weeks. Councilors Sandy Carlson, Sam Nunnally and Ryan Hunter were absent from the meeting.

“I’d hate to see this go away,” Councilor Jed Fisher said. “I do think it’s an anchor and I think it’s an important project and I just don’t see how we can go wrong with this offer.”

“I’m in favor of the extension because I don’t think we will get anything this ambitious if we went back out to an RFP, if we get a response at all,” Councilor Sid Daoud added.

Despite previous opposition to the development from public members when it was approved in 2022, only two Kalispell residents attended the meeting to voice their opinion during public comment, both who supported the project.

“I am also in support of the Charles Hotel with the parking garage and the multifamily dwellings above,” Gracelyn Abel said. “I’m always proud of my city … and I would like to keep seeing Kalispell grow.”

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