Missoula County to sell bonds to cover bankrupt subdivision lawsuit

Missoula County commissioners on Wednesday agreed to the parameters of a general obligation bond to help cover its $2.2 million settlement agreement with a group of landowners over a failed Grant Creek subdivision.

Andrew Czorny, the county’s chief financial officer, said the terms of the Gleneagle Subdivision agreement will see the county pay $1.2 million by Jan. 12 and the remaining $1 million within the next two years.

The county will issue roughly $1.09 million in General Obligation Bonds to help cover the settlement.

“I negotiated with First Security Bank to borrow the money and we ended up negotiating a 2.4 percent interest rate for a five-year period,” Czorny said. “Right now the risk fund is at a loss, so we don’t have any money there to pay for this.”

Trouble in the Gleneagle Subdivision, located in lower Grant Creek, began in the late 1970s and spiraled downhill from there. The county received the lots through a tax deed in 1989 and proceeded to plan a new project.

In doing so, the county reduced the 67 lots to roughly 25 and re-deeded them in an agreement reached with two developers in 1999. But the subdivision never broke ground and no infrastructure was ever laid, leaving the buyers empty handed.

In Missoula County District Court, the buyers alleged that the county violated the Montana Subdivision and Platting Act by failing to require a plat and infrastructure bond when it reconfigured the lots back in 1999.

Retired District Judge Ed McLean issued an order in 2016 ordering a partial summary judgment to the plaintiffs. Terms of that judgment were announced in August, in which the county agreed to pay $2.2 million to settle the case.

“It concludes this portion of the lawsuit, though we still have an outstanding matter with (developer) Mark Denton, who owns parts of the lots up there,” Czorny said. “The entire development went bankrupt and was never able to follow through with filing the subdivision.”

While Denton’s portion of the case remains in flux, the county will receive roughly 20 subdivision lots in its settlement of the initial case. Czorny said cash for the deeds will be exchanged by the end of December.

“We’re going to try and get some value from them,” Czorny said. “We’ll try to retrieve some of that lost value.”