'Doughnut' lawsuit has first day in court

Columbia Falls could be dragged into Whitefish's case against the county

By RICHARD HANNERS / Whitefish Pilot

The opening round in Whitefish's lawsuit against Flathead County lasted about an hour April 23. District Court Judge Katherine Curtis heard oral arguments in the city's request for a preliminary injunction that would bar the county from rescinding the interlocal agreement that authorizes Whitefish's two-mile planning and zoning jurisdiction — the so-called "doughnut" area.

Whitefish city attorney John Phelps said Curtis might rule on the preliminary injunction in a few weeks, but it's likely the ruling will be appealed by whichever side loses, and the appeal could drag on for several years.

That makes a preliminary injunction important, Phelps said, because it could maintain the status quo until the matter is fully resolved by a higher court.

The county's Missoula attorney, Alan McCormick, had a different take on the need for a preliminary injunction, saying the city's jurisdiction in the "doughnut" area will continue until the county amends its new growth policy to cover the two-mile area surrounding Whitefish.

Phelps, however, told the Pilot that if the city is unsuccessful in securing a preliminary injunction, he expects the county commissioners will instruct county planners to begin work on amending their growth policy.

Whitefish's sister city

In the meantime, having read McCormick's April 16 brief and learned that the county planned to argue that the interlocal agreement "was void from the get go," Phelps alerted Columbia Falls officials about the lawsuit's potential effects to their extraterritorial jurisdiction.

McCormick had noted that the city and county's agreement was based on the Montana Interlocal Cooperation Act. But according to the act, he argued, "interlocal agreements are limited to administrative services, activities and undertakings. Enacting a growth policy, subdivision regulations and zoning regulations are legislative acts." The act "never contemplated the transfer of legislative authority from one entity to another," he said.

Phelps responded to McCormick's argument the next day. He also e-mailed Columbia Falls city manager Bill Shaw and city attorney Eric Kaplan, warning them that "if the county is successful in convincing Judge Curtis that interlocal agreements cannot deal with planning and zoning issues, then Columbia Falls' agreement with the county could be in jeopardy."

Phelps told Shaw and Kaplan he had reviewed Columbia Falls' interlocal agreement and found it "virtually identical" to Whitefish's agreement. He noted there was less "tension" between Columbia Falls and the county, but the outcome of the lawsuit "could come back to hurt Columbia Falls."

"I wanted to make you aware of this," Phelps said. "Columbia Falls could sit back and wait for the outcome. Or it could intervene in the current lawsuit between the county and Whitefish."

Shaw and Kaplan addressed the issue at the Columbia Falls city council's April 21 meeting. Shaw advised the councilors that their planning and zoning actions in the Columbia Falls "doughnut" area could be deemed illegal.

"Columbia Falls is looking at both sides of the issue," Kaplan told the Pilot. "If the decision by Judge Curtis will have a negative effect on Columbia Falls, I believe the council will seek to intervene."

The "doughnut" history

In his memorandum in support of the preliminary injunction, Phelps described the history of the city's interlocal agreement with the county. Beginning in 1967, the city and county had agreed to give Whitefish planning authority up to 4 1/2 miles outside its city limits.

They also agreed Whitefish could apply zoning and impose subdivision regulations within a one-mile "doughnut" area. And, in accordance with state law, a joint city-county planning board was established to advise the city council.

A new interlocal agreement went into effect on Feb. 5, 2005, which shrank the city's planning jurisdiction to two miles and extended zoning and subdivision regulations to two miles.

Noting that "past commissioners had threatened that the county might unilaterally change the arrangement that the parties had established in 1967," Phelps insisted the new agreement could only be terminated if both sides agreed.

With the new agreement in effect, Whitefish annexed Whitefish Lake, zoned or re-zoned more than 7,500 acres, supervised the creation of about 1,079 lots on more than 769 acres, extended lakeshore protection regulations to Blanchard Lake, processed 93 lakeshore permits and completed a new growth policy for Whitefish and the "doughnut" area.

New regulations imposed on city and "doughnut" residents precipitated the lawsuit. The city's new critical areas ordinance went into effect on April 8, creating setbacks and buffers for lakes, rivers, streams and wetlands and restrictions for building on steep slopes. Strong opposition to the ordinance led to the county commissioners' decision to rescind the interlocal agreement.

The city's case

Citing the county commissioners' resolution, Phelps responded to six reasons for rescinding the interlocal agreement, noting that the commissioners' reasons "are somewhat vague, and so are difficult for the plaintiff to respond to."

? The commissioners claimed they were protecting the interests of the "doughnut" property owners from the regulatory burdens and loss of property values caused by the critical areas ordinance. They also claimed the city failed to act in good faith after "doughnut" people had expressed their concerns.

Phelps countered that the city council had "conducted an extremely democratic process, consisting of multiple public hearings" and several revisions to the draft ordinance. He said the procedural due process "exceeded all requirements of law."

"In any event, the interlocal agreement gave the Whitefish City Council the 'sole power' to adopt and amend zoning regulations," Phelps said.

"A party is presumed to know the contents of a contract and to assent to those terms," he added, citing precedent.

? To the commissioners' claim that the critical areas ordinance violates property rights, Phelps claimed it doesn't.

"It goes to extreme lengths to protect property rights," he said.

? As to the commissioners' claim that "doughnut" area residents do not have representation and are disenfranchised, Phelps pointed out that state law authorizes cities to extend zoning outside the city limits, but "state law does not provide a method for the residents of such 'doughnut' areas to vote to elect city council members."

"Parties to a contract are presumed to be aware of existing laws which affect the contract at the time of execution," Phelps said, citing precedent.

? The commissioners' resolution also claimed that because the critical areas ordinance could lead to lawsuits against the city, the county might be held liable "for the city of Whitefish's errant acts."

"That possibility existed at the time that the interlocal agreement was signed," long before the critical areas ordinance was created, Phelps pointed out.

In conclusion, Phelps claimed "the county has advanced no legal ground that would support rescission of the interlocal agreement," and he emphasized the importance of a preliminary injunction to the city.

"No amount of money can rectify the harm that will be done to the city of Whitefish, and its lawful planning, zoning and subdivision operations, by the county's attempted withdrawal from the interlocal agreement," he said. "The county's withdrawal would leave a complete vacuum."