A group of Helena residents filed a lawsuit against the city in district court, alleging that its street maintenance district and street assessments are illegal.
As a result of the lawsuit, the city is looking at alternative financing options for at least two major infrastructure projects, the Rodney Street overhaul and the Knight Street sidewalk projects, as loans of over $1 million of dollars needed to complete them are backed by street valuations.
In order to close street improvement bonds for projects in the district, the city is required to issue a “Certificate of No Litigation”, in which the city certifies that there is no threatened or imminent litigation that questions the validity of the district or the assessments taken from it, city spokesman Jacob Garcin said in an email.
“Until this matter is settled or finally resolved on its merits, the City will not be able to issue this certificate and therefore will not be able to enter into such street improvement obligations,” Garcin said. “The City is exploring other financing options as a short-term solution.”
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The request for declaratory judgment and reimbursement was filed in the 1st District Court of Montana on January 25 by RGB Investments LLC, which owns property at 2823 Airport Road; 80 Proof LLC, owner of the Loose Caboose parcel at 11 E. Lyndale Ave. and Parcel 4-Js at 1827 Prospect Ave.; CAS Holdings LLC, which owns property at 908 Euclid Ave. and at 1151 Partridge Place; and the Blatter Family Trust, represented by trustee Maureen Blatter, which owns property at 2500 N. Cook St.
The petition argues that the city’s tax rate increase that dates back to 2011 and amounts to approximately 190% for commercial properties provides them no benefit and has not been properly justified by the city government. city.
The petition further alleges that revenue generated from street assessments was spent on items unrelated to street maintenance, such as sidewalks, trailheads, and studies.
RGB Investments’ attorney argues in the motion that the company’s street valuations for its Airport Road parcel between 2014 and 2021 have increased by 164%.
They claimed the city charged RGB Investments more than $26,000 in street assessments in 2021 with an assessed value assessed by the Montana Department of Revenue of less than $23,000.
“When measured against assessed taxable value, the 2021 district tax assessment equates to a $1,173.49 million levy,” the petition states.
The owners are also asking the judge to order the city to reimburse “the petitioners and all ratepayers in a similar situation, all district taxes and statutory interest unlawfully collected.”
Acting city manager Thomas Jodoin, a former city attorney, told the city commission that the litigation and the city’s subsequent inability to secure loans for infrastructure projects could drag on for years.
“It could take several years,” Jodoin said. “Hopefully we can get some of the charges dismissed early in the process, but it could take several months.”
The city attorney’s office has contracted with Helena-based law firm Jackson Murdo & Grant, which Jodoin says is “preparing a vigorous defense.”
Montana Municipal Interlocal Authority, the entity that provides Helena with self-funded insurance coverage, denied coverage in this case, which Jodoin said was expected because MMIA does not help dispute tax payments.
Still, Jodoin said he hoped for a positive outcome for City.
“I think it’s quite a stretch to say there’s no benefit to their properties,” he said.