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paul roos

Paul Roos, owner of the nearly 9.5 acres along the Blackfoot River that will be purchased by Lewis and Clark County Commission for a new community park in Lincoln, is pictured on the property with his dog.

The Lewis and Clark County commission agreed to use the county’s Open Lands Program funds to buy nearly 9.5 acres on the edge of Lincoln and along the Blackfoot River for a community park.

However, a county attorney’s office opinion is advising the commission it can’t can use the program’s funds to pay related fees.

Land trust representatives at Thursday's commission meeting where the Lincoln project and another near Augusta were discussed disagreed with Deputy County Attorney Katie Jerstad’s Nov. 6 legal opinion.

Responses to the county attorney office’s opinion were to be prepared for the Nov. 29 commission meeting when the question of using the bond fund for transaction costs would be discussed.

The Montana Association of Land Trusts was among those supporting the use of bond funds for these associated costs.

A Nov. 9 letter from its director, Glenn Marx, urged the commission to include transaction costs in county funding of the Lincoln project.

Both the cost of property and those for the transaction are essential to the open lands program conserving open land, he stated in the letter.

However, commission Chairman Mike Murray noted that “lawyers argue with each other and judges decide.”

The county commission is not a decider of differing opinions on what is an allowable use of the Open Lands Program bond, Murray said and added “once we receive an opinion from the county attorney, we’re bound to uphold it.”

Action by the commission to approve paying the full appraised value for the land in Lincoln came after Vickie Edwards, conservation program manager for Five Valleys Land Trust, asked the commission to separate payment for the land from transaction fees because of the December closing date for the property.

Five Valleys Land Trust is sponsoring the project in Lincoln that began as a community effort in conjunction with Prickly Pear Land Trust of Helena.

Unlike other uses of the bond where a landowner sells the right to subdivide the land, the Lincoln project purchases the land that will be owned and managed by Five Valleys Land Trust.

Five Valleys Land Trust’s vision for the land, Edwards said, is to provide a place where the community can walk in and fish and picnic, as well as a place for an outdoor classroom for Lincoln’s school.

“We anticipate owning this for the long term,” she said.

Expenses associated with the Lincoln Community River Park that are being requested from the county amount to $17,887 and are less than the $20,487 to prepare the project for the Open Lands Program bond, she said.

The total funding request from county Open Lands Program funding is up to $102,887, she noted and explained that the actual amount could be less based on the last of the transaction fees such as recording the property’s title.

If the commission doesn’t agree to include transaction costs in its funding of the project, Five Valleys Land Trust will continue fundraising to pay for those costs, Edwards said on Friday.

“We’re definitely not walking away from it,” she added of her organization’s commitment to seeing the land purchased on behalf of the community.

Lewis and Clark County voters in 2008 approved issuing $10 million of bonds to fund projects that protected open space, water quality, working ranches, wildlife and recreation. The bond came in reaction to the rapid pace of development locally.

Because of the recession, development slowed and there was less financial interest in selling subdivision rights to land. The first Open Lands Program project came in 2010. A second project occurred in 2011 and another occurred in 2012.

Five other projects tapped bond funds beginning in 2014, and the Lincoln project marked the ninth one to win county approval.

Of the $10 million authorized by voters, $3 million was converted into cash in 2010 to fund projects. Prior to the Lincoln project, about $1,975,000 had been spent, according to a tally from the county’s finance office.

Commissioner Susan Good Geise said she was impressed that Lincoln residents helped fund the project.

“They kind of passed the hat,” she said and noted that those contributions produced $2,600.

Adding to her support, she explained, was that the entire community benefits.

“This is like the sweetheart of projects,” Geise said, and she saw it going beyond the program’s criteria.

The commissioners’ willingness to use the bond for the $85,000 appraised price for the land in Lincoln was supported by a county attorney’s office opinion that said the county can pay up to the appraised value.

While Jerstad’s opinion supported paying up to an appraised value, it didn’t support using Open Lands Program funds for related costs in a transaction, such as for appraisals and environmental reports, among other of paperwork.

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A court, she explained, would look at state law for guidance and then focus on the Open Lands Program bond language.

“It is the opinion of this office that the language ‘to pay costs associated with the sale and issuance of bonds’ does not include the costs incurred by the project sponsors or applicants,” Jerstad wrote, noting that the language does allow for payment to the professionals needed for the process to issue bonds.

And, she added, “If the County were to follow the well-established contract interpretation principle -- ‘one cannot omit what has been inserted or insert what has been omitted’ -- it is clear that transaction costs were specifically omitted from the County’s open space ballot proposition.”

While open space bond language in Ravalli and Missoula counties allows payment of transaction costs, the bond language that was approved by voters in Lewis and Clark County after those of the other two counties does not include the transaction costs of the sponsor or landowner/applicant, Jerstad noted.

She also disputed suggestions that sponsoring organizations would not incur some of the transaction costs were these steps not required by the county.

Open Lands Program requirements for due diligence -- steps to satisfy legal requirements in property transactions -- that she helped draft are modeled after best practices for land trusts that seek national accreditation.

Many of the county’s requirements, she explained, are also contained in those accreditation standards for internal operating procedures of land trusts.

Because there are several accredited land trusts in the county that work on projects for the Open Lands Program, her legal opinion continued, that accreditation means those organizations are already doing “many if not all” of the steps the county requires to satisfy legal requirements in property transactions.

“In other words, asking the County for ‘transaction costs,’ some of which are incurred by the landowner, some by the project sponsor, and often not itemized in the request, is akin to asking the County to make a donation to the land trust to assist with their internal operating expenses that they would incur regardless of whether they sought funding from the County,” Jerstad wrote. “Such donations are also unauthorized by the bond and by Montana Law.”

Jerstad’s opinion was delivered to the commission later on Wednesday, the same day of a letter from Five Valleys Land Trust to comment on funding transaction costs.

That letter, Edwards said, was not in directed toward Jerstad’s opinion but was instead in response to discussion by the commission when it was discussing the Lincoln project on Oct. 25.

The letter was signed by Five Valleys Land Trust director Grant Kier and stated that his organization believed the commission has the discretion to use the bond to pay transaction costs despite no authorization in the ballot language for the bond.

Transaction costs, Kier continued, can pose a “significant financial barrier” to completing an application for Open Lands Program funds.

“We believe that, because of the implicit and unavoidable nature of these costs, the Commission’s ability to expend bond funds to cover such costs should accordingly be implied and permitted as requisite part of the process of acquiring real property interests for open-space purposes,” his letter noted.

He also advised the commission that based on conversations with an expert in bond law, who was not named in the letter, that using the bond for transaction costs is appropriate because such costs are a necessary and proper expense of any real estate transaction.

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Al Knauber can be reached at al.knauber@helenair.com

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I am a staff writer at the Independent Record covering primarily city and county governments.

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