Welshing on a Legacy

By Beacon Staff

I’ve been writing about the ongoing beating being inflicted on Montana’s education trusts by the so-called Whitefish Trail/Whitefish School Trust Lands Neighborhood Plan. But the harshest blow to the beneficiary trusts was struck by Montana’s Land Board when it approved the Plan in November 2004.

The Plan covers 13,000 acres of state trust lands, which according to the Plan, had a 2003 development value of roughly $8,743 per acre, or $113.6 million. The Land Board approved a “course over a 20-year period” where about 1,300 acres of sacrifice lands might be sold outright at full value, for about $11 or so million. On the other 90 percent (11,700 acres), the “development rights” would theoretically be sold to “conservation” buyers at an arbitrary price of $4,372 per acre, or about $51 million.

Put simply, the Land Board unanimously approved “selling” these trust lands to the Whitefish Trail/Legacy at a $60 million discount with the remaining $62 million supposedly to be paid off with a 20-year, interest-free “mortgage” – roughly $3 million per year.

Chancellor Frank Gilmore of Montana Tech, one of the beneficiary institutions, opposed the Plan in testimony before the Land Board. He was joined by Tech booster Daniel Berube (former Montana Power CEO). Also expressing concerns over the Plan’s treatment of beneficiaries was MONTRUST leader Roger Bergmeier. MONTRUST, of course, is the watchdog group that sued over cabin-site leasing below full value.

Last year, after re-reading their objections to the Plan, I contacted both Gilmore, who now directs the Goldwater Scholarship Fund, and Berube. I asked if they’d considered suing the Land Board. Yes, they had discussed litigation, but as the Plan had not run its course, the issue was not legally “ripe.” Furthermore, they expected the Plan to crash and burn on its own through lack of funding.

Dr. Gilmore also related an incident that stunned me: After the Plan was approved, Gilmore and a Commission of Higher Education attorney attended a Whitefish Neighborhood Plan “steering committee” meeting in Whitefish, asking for representation as an affected trust stakeholder. Request denied.

With Plan approval, the nonprofit Flathead Gateway Partners (renamed Whitefish Legacy Partners in 2011) was tasked to work with the City of Whitefish in implementing the Plan and its trail system. FGP raised a grand total of $47,247 its first five years, including $500 in 2007, and a whopping $0 in 2008.

However, in 2006, philanthropist Michael Goguen donated $100,000 to the City, kick-starting the trail-planning process. In 2008, the so-called Goguen Land Exchange was arranged under the Plan, with Goguen trading 570 acres near Lupfer (purchased in January 2006), plus a retail building in town and 30 acres at Livermore Flats for 434 acres of Public Buildings ground adjacent to his Beaver Bay estate.

The 1,030-acre Exchange met the Plan’s agreed-upon 1,000-acres-by-2009 “implementation” goal. What about progress toward the $62 million discounted “mortgage?”

Well, Goguen further donated a total of $3 million to be placed in trust with the City of Whitefish. A million was set aside for conserving land; $2 million for trails design, construction and maintenance. Goguen’s gift to the City was certainly generous, but none went to any of the state beneficiary trusts.

In fact, until the Land Board approved the Beaver/Skyles easement and the sale of the Dollar Lake section to Goguen, the only “mortgage payments” attributable to Plan “implementation” are trail right-of-way lease payments to Montana DNRC.

In the five years prior to the Land Board’s approval of the land sale and easement deed, the grand total of lease payments was – and I got this straight from DNRC – $46,972.57.

At that rate, the trust obligation of $62 million would be paid off in 10,500 years – if you tried that on your already-half-price home mortgage, what would your banker do?

Even adding the proceeds from 2012’s Plan transactions brings the paid-in figure to only $10.25 million after eight years. Again, try skipping your mortgage payments for eight years, then make only 3 1/2 years of payments, and see what your banker does.

What should the Land Board do?

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