By Alex Mitchell, Billings Gazette
It all started with a for sale sign, Laurel City Administrator Kurt Markegard said in a candid conversation in quiet council chambers Tuesday night.
The conversation followed a council meeting that had spilled over with questions and opposition to the actions Markegard had taken following the appearance of that sign last summer.
When elected officials and state agency representatives were touring five sites in Yellowstone County in late July, Markegard found the site they were touring near the Laurel Municipal Airport to be a poor fit for a forensic mental health facility. On sagebrush and open land, the state would have to create pipes crossing three creeks over a couple miles to connect to Laurel's water and sewer services.
Markegard asked why the state would be eyeing the property, given the likely pricey infrastructure costs. "We need free land," he recalled hearing as the reply.
The $26 million allocated by the Montana State Legislature for the facility wasn't expected to be enough to cover costs, even back then, Markegard said. The Montana Board of Investments and the Department of Public Health and Human Services have since confirmed that the project will exceed its appropriation.
Representatives with the state that day also injected urgency into the process, telling him that they need to get going on the project in the months to come.
Along with others on the tour, Markegard didn't know what they were looking for. After asking, he was told they needed 10 acres. He recalled a for sale sign he had just seen go up on Old Highway 10. Board of Investments Director Dan Villa pulled it up on X Maps near the end of the tour.
"So, they look it up and they go, 'It's 10 acres.'" Then they left to catch a plane, Markegard remembered.
The Montana Board of Investments declined to comment for this story, but has confirmed the accuracy of the details.
Markegard, who acts at the direction of Mayor Dave Waggoner and the city council in Laurel's government structure, reported back after the site tour.
"I came back to the mayor, and I said, 'Supposedly, it's a mental health hospital. Jobs are going to come with it, and everything else.'" Markegard said. "And the mayor's like, 'Jobs?' And I go, 'Well, yeah, any kind of facility like that would have jobs.'"
Markegard didn't know the state's plan beyond those jobs and the monetary allocation at the time. He ultimately wouldn't learn more until October, three months later.
After silence from the state for a few weeks after the tour, Director Villa emailed him on Aug. 11, asking, "Can you give a ring when you have a sec?"
Markegard had a stack of papers including those emails with him Tuesday night. The Gazette confirmed the documents independently with emails received as part of a records request to the Board of Investments in December.
While Laurel largely went under the radar, Markegard said whatever he said about that property for sale must have sparked the state's interest — or at least the state didn't see vocal hostility.
"Billings council members are coming out against it," Markegard said. "County commissioners are coming out against it. You have a big public outcry in Billings. Nothing in Laurel. They toured one site, but you heard nothing about Laurel."
Also around the time of the tour a number of businesses in the city and on Main Street had closed. Markegard said Tuesday that Laurel's "downtown is dying on the vine," leaving the city trying to find solutions.
Adding to the city's problems was the Montana Legislature's move to increase property taxes on commercial properties last spring. Working for the city for 22 years, Markegard fears a boarded-up Main Street.
"So we're sitting there looking at downtown Laurel and say, 'OK, the buildings are empty,'" he said. "They have no revenue coming into them, and they've got to pay those increased property tax because the state legislators decided that (taxes for) property owners with commercial real estate need to go up, homeowners need to go down. And those people with empty buildings ... they're going to walk away from the property because they don't have any revenue going in them. Downtown is dying. And so what do you do?"
With that backdrop, the mental health facility seemed viable for the city. Mayor Waggoner considered it about job creation and creating a place where people want to live and work in Laurel, though Markegard admitted they didn't have much in terms of direction at the time.
On Aug. 20, Gov. Greg Gianforte paused the search and committed to future transparency and additional information after pushback in Billings. Laurel learned of the pause through the news.
Markegard then called Director Villa asking what was exactly happening. Markegard said Villa responded, "We got to get guidance. We don't know what we're building, and we don't know what it's for."
They then discussed that site with the for sale sign.
Two days after the pause, Markegard sent an email outlining the 10-acre parcel for sale near the under-construction Love's truck stop. His letter noted the existing connections being built with new water that would likely help make the property affordable. It would be referenced again in a November letter announcing the selection of Laurel.
Villa thanked the administrator and replied at the time, "We will be in touch once we have more guidance."
Markegard didn't hear much in terms of guidance until early October, several weeks later, when the state released a document outlining the bottleneck around forensic facilities. The state then began seeking out communities interested in hosting the site, receiving proposals from Big Horn and Custer counties.
Laurel City Council discussed the possibility of the site's location on Oct. 21. It was the only item in the hour-long meeting where Markegard made his case for the facility to the council. Part of the agenda packet included a letter from state Sen. John Esp and Sen. Tom McGilvray that explained why Billings and Yellowstone County, at large, ranked far above other large cities in Montana.
In attendance at the meeting were three legislators and only one member of the public. The legislators and Markegard expressed support for the site and took questions from council members.
It followed a community meeting at RiverStone Health in Billings with local officials and health professionals in attendance. Markegard described himself mostly sitting in the corner as the unexpected meeting proceeded; he would help explain the zoning process to those gathered at RiverStone.
"We heard in that meeting that Mr. Markegard is talking about in Billings, that they were also frustrated," Laurel Rep. Lee Deming told Laurel City Council that October. "They felt like this was being shoved down their throats. And in some ways it is."
Gianforte noted in a Sept. 10 letter to the Board of Investments that the project is of "great importance" to the state and that he shared the goals of the Legislature to complete the project "quickly while also ensuring transparency, fairness and public involvement."
Deming told Laurel council members on that October night that the $26 million set aside for this project is money well spent.
"I don't think anybody really says there's not a need for this kind of facility here in Eastern Montana, and they're bound to determine building someplace," he said. "So, in my personal opinion, it needs to be built in Yellowstone County. Because I'm from Laurel, I want it to be in Laurel."
Deming said it made "zero sense" to put the facility in Custer County as they just didn't have the workforce to maintain it. Maintaining a stable workforce has been a frequent problem for the state in recent years. Legislators noted at the meeting that the number of beds might eventually double at the facility. Deming, in a statement to Montana Free Press in December stated that the 10-acre parcel might not be big enough.
The October guiding document released by DPHHS stated the facility will be designed with scalability and adaptability.
"A modular layout and medium- to low-security infrastructure will allow the facility to be scaled up or down based on changing demand, whether that means expanding forensic capacity, converting pods/units for civil use, or adjusting gender-specific housing," the document stated.
Still, Laurel's government determined it couldn't put in for the property as both parcels examined were in Yellowstone County rather than within city limits. It was assessed to exceed its authority and to lack meaningful public input in accordance with existing laws.
Markegard tried calling Villa to explain how they couldn't put in for it. Villa was in the fast pass lane at Disneyland with his son when he answered, so the city administrator decided he'd try to explain at a later date.
The deadline for submissions came and went.
Markegard then received a call from Villa asking, "How did we screw up?"
He explained to Villa that submitting a proposal would have been impossible without a public comment period and initiating an annexation.
Villa checked with lawyers after the call. Markegard was right. State law excluded local cities from participating, even though it was encouraged with the solicitation process. Villa pressed him to put his explanation in an email and send it his way. It was sent Nov. 17.
"I had a premonition to the reason they wanted a letter, and I was specific about having the public speak," Markegard said to county residents in the council chambers Tuesday night. "That was my intent, so that people like yourselves had a right to come in and question the state on what they were doing."
After on-site reviews across Eastern Montana, the final proposal of Laurel to the state's budget director was submitted for approval on Nov. 26. It followed an outlined timeline for the project, with the state hoping to get the ball rolling on the public process in January.
But on Nov. 28, the day after Thanksgiving, DPHHS announced to the media the selection of Laurel. Villa tried calling Markegard and Mayor Waggoner to let them know in advance but neither answered their phone. And so the press learned about the selection before the city did.
"I'm upstairs working," Markegard said. "I go over and I see I have a missed call from Dan Villa. I call him."
"Hey, what's going on," Markegard asked him.
"Well, you're a hard guy to get hold of," Villa said.
"What's going on," Markegard asked again.
"I wanted to let you know that we're coming to Laurel," Villa responded.
"What?"
"Yeah, we're coming to Laurel. Put it out there 20 minutes ago."
Markegard's letter was posted on the website hb5.mt.gov alongside other documents as part of the state's announcement.
Five days after the state's announcement, that property with the for sale sign shot up in price from $980,100 to $1,500,000, according to Zillow. Realtor for the property Hazel Klein told the Gazette the price increase was unrelated to the state's announcement. She referenced the development of infrastructure crossing the property with the construction of the nearby Love's truck stop leading to the price increase.
With its tight budget, the state wanted free or donated land and so officials started looking elsewhere when the price jumped. No representative of the state or Yellowstone County ever reached out to her, Klein said.
One of the state's limited options were two parcels of farmland totaling 114 acres owned by Miller Trois LLC. The LLC is registered to Billings resident Norman Miller. Like the other parcel on the western edge of Laurel and outside of city limits, it's connected to Old Highway 10 making it accessible for law enforcement fulfilling court orders for forensic beds. The facility will likely face Old Highway 10.
The state would have preferred purchasing portions of the property for their proposed 0.74-acre building. The west side has been assessed as wetlands, impractical for development. Nonetheless, the property owner said they would have to purchase the whole 114 acres.
It had become one of the few viable options and so the state last week entered a buy/sell agreement with the property owner.
Last week, Villa announced the agreement to Markegard over the phone during public comment. It isn't currently clear what the state might pay for it.
The price of the original property that started the whole conversation went down to $1,250,000 after that buy-sell agreement was announced. Klein again denied the price reduction being related to the state's actions saying it was adjusted to hopefully garner interest from the public.
After the announcement of the buy-sell agreement identifying the location, individuals in the community quickly rallied against it.
The Laurel school board Monday took a straw poll on their opposition to it with unanimous support. An official action would likely be illegal as it was a discussion item on the agenda, and not an action item. Nonetheless, the district has since posted a statement on official channels with their opposition. District officials spoke at the council meeting Tuesday explicitly opposing the development.
Markegard's was the first public comment at that council meeting. Unlike the mostly empty October meeting, people were sitting on the floor outside the council chambers waiting for their turn to express opposition and ask dozens of remaining questions. He offered to the packed chamber to review how the city got to this point, with his emails in hand to prove it.
County resident Jacob Schreiner didn't believe the administrator as he explained himself that night.
"I'm reading between the lines because they asked you to bring everything and ask, 'How do we get this done?'" Schreiner said. "Like you can say it however you want, but a week later they announced it was coming. So in the middle of November, you have this meeting with them. And then right after Thanksgiving they announced it."
Markegard shook his head at this characterization. Schreiner pressed on.
"But for some reason, they had the assumption that Laurel would be open to this," he said. "Laurel is clearly frustrated with that."
Markegard responded that back in October he figured the facility wouldn't ever come to Laurel. He couldn't help what the state government would do next.
"I truly believed that it wasn't coming to Laurel at that point," he said. "I really did, because we didn't put in for it."
The state is currently working on property surveys and associated site plans. They will go before the city-county planning board for zoning and annexation in the coming weeks, likely receiving an onslaught of public comments in the process.
Currently the full 114-acre area with the buy-sell agreement pays $333.85 per year to the school district. Total property taxes for the state, local school and university assessments add to $803.10 per year.
During the council meeting, commenters expressed disdain with the lack of transparency and explanations and a feeling that the public hasn't had much of a chance to comment until this point. One commenter apologized for online comments that have gone after Markegard's and Mayor Waggoner's children. No one expressed support for the facility.
"That's what I really loved about tonight, because it gives the ability for this council to hear the public comment," Markegard said. "And I wanted this to happen. I did. I wanted to hear from the community, because we weren't hearing anything — because we weren't getting anything."
Source: Billings Gazette