Carnegie Lot

The Carnegie parking lot in downtown Bozeman on Oct. 20, 2011.

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The parking lot the city of Bozeman is considering selling to a hotel builder is worth $1.5 million, an appraisal has concluded.

That’s about $40 for every man, woman and child in town.

“This is a large, open, developable piece of ground in the city center, which probably makes it more valuable,” said Chris Pope, a commercial real estate agent and member of the city’s Parking Commission.

The public, 71-space, Carnegie parking lot is located at 106 E. Mendenhall St., across North Black Avenue from the downtown parking garage.

On Monday, the Bozeman City Commission will consider calling for offers from anyone willing to buy the parking lot and build a full-service hotel with meeting facilities there. One of the city’s goals is to attract a small, luxury hotel downtown.

“In some ways, it is surprising that a community of Bozeman’s stature does not already have a small, 50-80 room, ‘four-star’ hotel,” the city’s Downtown Improvement Plan states. “(Montana State University), (Bozeman Deaconess Hospital) and other corporate entities report that such a hotel is needed for many types of visitors.”

Although city officials say a hotel could help downtown grow, several businesses near the parking lot have objected to its sale. They say their livelihoods depend on their customers having easy access to those parking spots.

The Carnegie lot is located across the street from the city’s parking garage.

Last month, commissioners delayed calling for offers on the parking lot. And now, at least one commissioner expects the issue will get pushed back again.

“I think that would be wise,” Commissioner Chris Mehl said Wednesday.

The process to possibly sell the lot began earlier this year when Catellus Group, based in Charlotte, N.C., sent the city a letter saying it wanted to buy the property and build a hotel and convention center there.

The commission subsequently determined that the parking lot is "no longer needed for the conduct of city business,” a step necessary to sell any public property.

Three months later, commissioners were poised to publish a request for proposals, officially calling for all offers to buy and develop the parking lot, when Mayor Jeff Krauss asked the rest of the commission to wait.

He said he heard rumblings that the city could wind up interfering with private negotiations.

Krauss said another property owner downtown was trying to sell their land to a hotel developer. The city could undercut that deal by making another company a better offer, he said.

The rest of the commission agreed to wait one month so details of any private party negotiations could be fleshed out.

But now that the time has passed, it’s still unclear who the private party is or where they’re trying to develop a hotel. City officials won’t say, and downtown representatives say they don’t know.

“It’s proprietary and people have told me things with the understanding that it would be such,” Mehl said. “There are a couple of balls in the air. The parties I talked to thought they were very serious.”

Commissioners are “on the horns of a dilemma,” he said.

“We’ve got a plan that the downtown businesses — and downtown plan — have said would be quite helpful for them … but at the same time I want to respect if there’s something private going on,” Mehl said.

Krauss couldn’t be immediately reached for comment.

Pope said he hasn’t been privy to any information about the private negotiations, but he’s hopeful that more information will be made public soon.

“I’m hoping that whatever is being discussed will come to light, so everybody knows what the possibilities are so they can be fairly assessed,” Pope said.

Mehl said he respects that the information is proprietary for now, but “at some point, since we have engaged in some public funding … we have to go public with this.”

At 26,500 square feet, the parking lot is worth about $57 a square foot, according to the Oct. 5 appraisal.

That’s the same value per square foot as the empty lot at 219 E. Main St., where the old Montana Trails Gallery stood prior to the 2009 natural-gas explosion, according to the comparables included in the report.

The parking lot is also worth $200,000 more than the city paid for Story Mansion in 2003.

Pope said the parking lot is a valuable piece of property. But at the same time, having a hotel with meeting facilities that could improve the economy downtown is worth a lot, too, he said.

“Therein is the debate,” Pope said.

The commission will consider calling for offers on the city parking lot during its regular meeting Monday.

Amanda Ricker can be reached at aricker@dailychronicle.com or 582-2628.

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