City Commissioners unanimously approved the sale of land to Pasta Montana during their Aug. 6 meeting.

Commissioners approved a 20-year lease for 5.222 acres within Veterans’ Memorial Park to Pasta Montana in July 1996, allowing the company to build a food manufacturing plant in Great Falls.

The lease included the option for Pasta Montana to purchase the property, if exercised before the lease ended.

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

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The Park and Recreation Advisory Board approved the lease and Pasta Montana was the only bid.

There was no appraisal done at that time since under the lease terms, the fair market value would only be established if Pasta Montana exercised its option to buy, according to the city.

Rather than extend the original lease agreement in 2016, city staff reviewed the lease and updated its terms with a five-year term with $27,000 annual lease payments and the option to purchase the property for its appraised value at the time the option was exercised, according to staff.

City Commissioners unanimously approved the new lease in 2016 with no discussion amongst commissioners. Three people spoke in favor of the lease renewal, including Doney and the Pasta Montana chief financial officer, as well as Ron Gessaman, a regular meeting goer until his death in 2018.

One person spoke in opposition to the lease, according to the minutes, and that was John Hubbard who often refers to himself in meetings as Johnny Angry.

According to the staff report in 2016, commissioners had approved the lease in 19977 “thereby allowing the company to build its food manufacturing plant in Great Falls.”

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

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Sara Sexe, then the city attorney, said there was a timing oversigt for notification by Pasta Montana of its intent to extend the lease and otherwise the 1996 agreement would have continued for an extension period of 10 years, with the potential for two additional 10 year extensions thereafter.

“Because of the timing issue, rather than simply extend the original agreement, city staff took the opportunity to undertake a more substantive review of the agreement, obtain expert opinion as to the reasonableness of the new lease amount, and update the agreement’s terms,” 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 indicated that amount was consistent with market rates for raw industrial land at the time.

The updated lease also included expanded environmental provisions and retained the option to purchase by Pasta Montana.

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The lease required a four-fifths affirmative commission vote to be executed under city code requirements for parkland.

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

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

For tax year 2023, according to county tax records, Pasta Montana paid $7,110.56 in property taxes for the land and $656,740.88 for the plant and improvements.

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

An appraisal was completed at that time with a fair market value of $375,000.

In preparing for the transfer of property, city staff found concerns with their ability to deliver a clean title to the leased area, plus surrounding city property.

Staff determined there was no legally recognized parcel corresponding to the leased parcel and was instead comprised of portions of three recorded parcels, none of which had been property subdivided, according to city staff.

In 2022, the city commissioned Babb Land Surveying, Inc. to retrace the boundaries of the three parcels of record underlying lease parcel and to relocate existing common boundaries to create a separate parcel to transfer to Pasta Montana, according to city staff.

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To resolve the title issues, the city filed a quiet title action in District Court in May 2023.

In April, NorthWestern Energy conveyed any interest in the leased property and surrounding parcels in a quit claim deed recorded with the county.

The city received an order in November 2023, declaring that the city is the owner of the subject parcels, according to the staff report.

Since it was clear that the sale would be delayed, the city and Pasta Montana agreed that 2022, 2023 and 2024 lease payments would be applied to the purchase price.

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Once the quiet title was complete, city staff worked with Babb to complete the survey, draft and locate easements.

In June, the commission approved the survey describing the Pasta Montana parcel and the dedication 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, according to city staff.

Commissioners could reject the final sale, but staff cautions that would likely subject the city to litigation since had previously approved the sale through its approval of the purchase options in two separate leases.

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

“This has been a quiet success,” he said.

Doney said it was a “very creative deal” in the beginning on leasing the city parkland so that Pasta Montana could pipe fresh flour from General Mills, which lead to job creation, the expansion of General Mills and several expansions at the pasta plant.

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The project also marked GFDA’s first economic gap loan through a partnership with the city, which sparked their ability to have been able to offer $68 million in gap and bridge financing since, leveraging $286 million in private investment.

Doney said that he often hears the city doesn’t do 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 missed the issue with the parcels in 1996 and again in 2016.

Staff said the land wasn’t surveyed until Pasta Montana exercised its option to purchase and if it had been surveyed earlier, would likely have had the same issues.

Tryon said he was getting comments that the city was getting “ripped off” and that he wasn’t sure he’d say that, but that “somebody screwed up” and now it was costing the city money to correct the parcel.

City Manager Greg Doyon said that people can speculate what should have been done, but it was a complicated arrangement done before any current city administrators were in their positions.

Doyon said it’s his guess that someone saw it as an opportunity to sponsor some economic development for the betterment of the community and that he’s not surprised the parcel and easement issues were missed in the original lease development.

Such searches are typically done when land is being sold or transferred.

Tryon said he wasn’t suggested that Pasta Montana hadn’t benefited the community but that it has been suggested to him that someone was benefiting from the sale.

He said that during discussions of the park maintenance district assessment that voters approved in 2018, there was discussion of selling parkland to cut costs.

Tryon said that there was an argument that it was “legally convoluted and almost impossible” for the city to sell parkland.

City Commissioners approved the sale of a portion of Lions Park in January 2018 to a neighboring property owner that was installing an elevator on their building for ADA compliance.

Commissioners swapped some parkland with Great Falls Public Schools for an initial proposed aquatic center site and there has been discussion of selling the Community Recreation Center downtown since the new aquatic center opened.

Doyon said that the Pasta Montana sale has been different since the option for purchase was in the lease agreement.

He said he believed Tryon was repeating things he’d heard from constituents but that if people were making accusations of wrongdoing or that someone was benefitting from the sale other than the city honoring its lease agreement, “I’d like to see that. People better have their facts straight.”

Tryon said he wasn’t suggesting wrongdoing at the city, but that if there’s a perception that there’s a good ole boys club or someone is on the take, it’s because they don’t discuss the details.

Tryon said that when they hear things about sweetheart deals, the city needs to respond.

Doyon said that city officials at the time made a decision that they thought was in the best interest of the city and perhaps it could have been done differently.

Tryon said that it’s a valid question to ask and said he was hearing that he shouldn’t be asking the question, to which Doyon responded, “that’s not what I said at all.”