The city councilors unanimously approved the sale of the property to Pasta Montana during their meeting on August 6.

In July 1996, commissioners approved a 20-year lease for 5,222 acres in Veterans’ Memorial Park to Pasta Montana, allowing the company to build a food manufacturing plant in Great Falls.

The lease included an option for Pasta Montana to purchase the property, provided that this option was exercised before the end of the lease term.

Annual lease payments were $18,000 for the initial 20-year lease term.

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The Parks and Recreation Board approved the lease and Pasta Montana was the only offer.

No appraisal was made at the time because, under the lease terms, the fair market value would only be determined if Pasta Montana exercised its purchase option, the city said.

Instead of renewing the original lease in 2016, city staff reviewed the lease and updated its terms to five years with annual lease payments of $27,000 and an option to purchase the property at the appraised value at the time the option is exercised, according to staff.

City councilors unanimously approved the new lease in 2016, with no discussion among council members. Three people spoke in favor of renewing the lease, including Doney and Pasta Montana’s chief financial officer, Ron Gessaman, who regularly attended meetings until his death in 2018.

According to the minutes, one person spoke out against the lease: John Hubbard, who often refers to himself as Johnny Angry at the meetings.

According to the 2016 staff report, commissioners approved the lease in 1997, “enabling the company to build its food processing plant in Great Falls.”

The original lease called for annual payments of $18,000 for the 20-year term and $27,000 for each year of the renewal term.

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Sara Sexe, then-city attorney, said there was a failure to notify Pasta Montana of its intention to renew the lease, otherwise the 1996 agreement would have been for a 10-year renewal term with the possibility of two additional 10-year renewals.

“Due to the timing issue, city staff took the opportunity not to simply extend the original agreement, but rather they took the opportunity to subject it to a more thorough review, obtain expert opinions on the appropriateness of the new lease amount, and update the terms of the agreement,” Sexe wrote in her October 2016 staff report.

The updated five-year lease increased annual payments to $27,000, and staff sought an opinion from Mark Macek, a local commercial real estate agent, who stated that this amount was in line with market prices for undeveloped industrial land at the time.

The updated lease also included enhanced environmental provisions and retained the purchase option for Pasta Montana.

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The execution of the lease required approval by four-fifths of the commission in accordance with the requirements of the city’s parkland ordinance.

Pasta Montana pays property taxes on the leased property and paid $5,842.85 for the land and $380,420.65 for improvements in 2015, according to the 2016 staff report.

Proceeds from the lease, $135,000 over the five-year term, would go to the Park and Recreation Special Revenue Fund and be used for park purposes, the staff report said.

For the 2023 tax year, Pasta Montana paid 7,110.56 USD property tax for the property and $656,740.88 for the facility and improvements.

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In 2021, Pasta Montana notified the city that it was exercising its option to purchase the leased property.

An estimate conducted at the time gave a market value of $375,000.

In preparing for the transfer of ownership, City staff determined that they would not be able to provide clear title to the leased area and surrounding city-owned properties.

According to city staff, staff determined that the leased property was not a legally recognized parcel of land, but instead was part of three registered parcels of land, none of which had been subdivided.

In 2022, the city hired Babb Land Surveying, Inc. to trace the boundaries of the three parcels underlying the leasehold property and relocate the existing shared boundaries to create a separate parcel that can be transferred to Pasta Montana, city staff said.

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To resolve the ownership issues, the city filed a lawsuit in district court to determine ownership in May 2023.

In April, NorthWestern Energy transferred all claims to the leased property and surrounding parcels in a waiver filed with the county.

In November 2023, the city received an order declaring it the owner of the parcels in question, the staff report states.

Since a delay in the sale was foreseeable, the city and Pasta Montana agreed that the lease payments for 2022, 2023 and 2024 would be credited towards the purchase price.

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After the deed was completed, city staff worked with Babb to complete the survey and design and locate easements.

In June, the commission approved the survey of the Pasta Montana property and the assignment of public rights of way. The survey was sent to the county for recording, and now both parties are ready to complete the property sale, city staff said.

Commissioners could reject the final sale, but staff warn that doing so would likely result in litigation with the city because the city had previously approved the sale by approving purchase options in two separate leases.

During the August 6 commission meeting, Brett Doney of the Great Falls Development Alliance thanked the city for the Pasta Montana deal.

“It was a quiet success,” he said.

Doney said it was initially a “very creative deal” to lease the city park land so Pasta Montana could supply fresh flour from General Mills, which led to job creation, the expansion of General Mills and several expansions of the pasta factory.

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The project was also GFDA’s first economic bridge loan in partnership with the City, enabling the company to since then offer $68 million in bridge financing while leveraging $286 million in private investment.

Doney said he often hears that the city is not doing anything to support economic development, but “this was a great success and just one of many.”

Commissioner Rick Tryon asked how it was possible that the city overlooked the parcel problem in 1996 and again in 2016.

Employees said the land was not surveyed until Pasta Montana exercised its purchase option and that an earlier survey would likely have encountered the same problems.

Tryon said he’s received comments that the city is being “ripped off.” He’s not sure he would say that, but “someone screwed up” and now it’s costing the city money to fix the property.

City Manager Greg Doyon said one can only speculate as to what should have been done, but it was a complicated agreement made before the current city managers took office.

Doyon said he suspects someone saw this as an opportunity to encourage economic development for the benefit of the community, and that he is not surprised that the issues surrounding parcels and easements were not addressed in the original lease development.

Such searches are typically conducted when a property is sold or transferred.

Tryon said he was not told that Pasta Montana did not benefit the community, but was led to believe that someone was profiting from the sale.

He said that during discussions about the park maintenance district assessment approved by voters in 2018, discussion was ongoing about selling park lands to cut costs.

Tryon said there is an argument that it is “legally complicated and almost impossible” for the city to sell park land.

In January 2018, city council approved the sale of a portion of Lions Park to a neighboring property owner who had an elevator installed in his building for ADA reasons.

Commissioners traded a portion of parkland with Great Falls Public Schools for the site of an originally proposed aquatic center, and since the new aquatic center opened, discussions have been underway about selling the downtown Community Recreation Center.

Doyon said the sale of Pasta Montana was different because the purchase option was included in the lease.

He believes Tryon is repeating things he’s heard from constituents. However, if people are making allegations of wrongdoing or claiming that someone other than the city is benefiting from the sale by honoring its lease, “I’d like to see that. People better know their facts.”

Tryon said he doesn’t want to accuse the city of wrongdoing, but if it seems like there’s a good old boys’ club here or someone is taking bribes, it’s because they’re not discussing the details.

Tryon said if the city hears of favors, it must respond.

Doyon said city officials at the time made a decision they thought was in the city’s best interest and perhaps a different approach could have been taken.

Tryon said that it was a fair question and that he had heard that he should not ask the question, to which Doyon replied, “I didn’t say that at all.”