The following report was researched and composed in Hamilton, Montana by a group of approximately 10 people. It is somewhere around 30 pages, convincing, and real. It was submitted to the Montana Commerce people, submitted to the US Dept. of Justice, and to others listed wihin the report. It is eye opening, please read it all, it took time to compile it.
May 2008
Comprehensive Review
Misuse of Federal and State Grant Funds
By the City of Hamilton, Montana and HDR Engineering of Missoula,
Montana
Save the Bitterroot Conservation Coalition
GAO FraudNET U.S. Environmental Protection Agency
441 G Street NW Mail Stop 4T21 Office of Inspector General Hotline (2443)
Washington, D.C. 20548 1200 Pennsylvania Avenue, NW
fraudnet@gao.gov Washington, DC 20460
FAX 202-512-3086 FAX 202-566-2549
Ph: 1-800-424-5454 Ph: 1-888-546-8740
oig_hotline@epa.gov
HUD Office of Inspector General Hotline, GFI
451 7th Street, SW
Washington, DC 20410
1-800-347-3735
hotline@hudoig.gov
Dear GAO FraudNET, EPA Inspector General, HUD Inspector General, May 28, 2008
We represent a group of Ravalli County (Montana) individuals and organizations that have been working with our citizens to halt unwanted urban sprawl in western Montana, and to provide citizen oversight over the continuing misuse of public resources for private benefit.
We are contacting you to request an investigation into use of grant funds from the State of Montana and the United States, to the City of Hamilton, Montana. We sent a preliminary notice of this report to fraudnet@gao.gov on May 23, 2008.
Since February, 2008 we have been undertaking an extensive investigation into the channeling of state and federal grant and loan funds to benefit private land developers, and are contacting you so that you can carry out your fiduciary duties to stop this misuse of grant and loan funds, that are supposed to benefit the environment and/or the citizens of Hamilton.
We have compiled an extensive written record for your benefit and have done so at great personal sacrifice. We are average citizens with limited resources at our disposal and are in need of your assistance to stop what appears to be extensive violations of state and federal laws and regulations.
State and Federal Grant Monies Given to Unwanted Developments
The following table displays the grant and loan funds in question, and was taken from the City of Hamilton May, 2006 TSEP (Treasure State Endowment Program) Grant Application. The same table is in each of a number of grant applications sent to various state and federal agencies. We have determined that most of the monies in question originate at the Environmental Protection Agency and the U.S. Department of Housing and Urban Development. We understand that you have extensive experience investigating misuse of federal funds by the land development industry.
The total monies currently requested and approved by the various issuing agencies is $2,476,000.00 from the following funding sources:
TSEP (State) GRANT $750,000
CDBG (Federal) GRANT $450,000
STAG (Federal) GRANT $1,000,000
SRF (Federal & State) LOAN $176,000
RRGL (State) GRANT $100,000
$2,476,000
*TSEP = Treasure State Endowment Program (Montana Department of Commerce)
CDBG = Community Development Block Grant (United States Dept. of Housing and Urban Development)
STAG = State Tribal Authority Grant (United States EPA)
SRF = State Revolving Fund Loans; Matching Funds with United States EPA
RRGL = Renewable Resource Grant and Loan Program (Montana DNRC)
** $625,000 in Matching Funds Required by Issuing Agencies. Stated as “available immediately”, p.5 TSEP grant application. Add to $2,476,000 and we have the total grant and loan funds ($3.1 million) given to land developers through reduced impact fees.
An Urgent and Timely Response is Required
On June 11, the City of Hamilton Zoning Commission and Planning Board is holding hearings to consider annexation of the Flat Iron Ranch Housing Development (See Evidence Items #1 & #1(b)). Flat Iron Ranch is 2.5 miles east of Hamilton, is on state protected agricultural land, and is illegal to annex according to Montana law. It is also widely opposed by the citizens of Ravalli County. We have provided substantive evidence that Flat Iron Ranch, (as well as another large subdivision called Area III), is the primary target for taxpayer provided, impact fee reductions. The Mayor of Hamilton has put this project on a fast-track for annexation, as we have documented in our report. If successfully annexed, the citizens of Hamilton, as well as state and federal taxpayers, will be obligated to provide millions of dollars in tax subsidized infrastructure for years to come, to the wealthiest citizens in Ravalli County. THIS IS NOT THE INTENT OF STATE AND FEDERAL GRANT MONEY AND THE RESPONSIBLE AGENCIES NEED TO INTERVENE, IMMEDIATELY!
On May 30, 2008 we filed our original report package with the following agencies, but have received only one response, from the Montana Department of Commerce, causing us great concern that their exists few government entities that have the desire and ability to stop this blatant misuse of federal and state tax monies.
Dave Cole, Administrator Montana Board of Investments
Montana Department of Commerce 2401 Colonial Drive, 3rd Floor
C.D.B.G.P. and T.S.E.P. PO Box 200126
301 S. Park Avenue Helena, MT 59620-0126
PO Box 200523 (406) 444-0001
Helena, MT 59620-0523 [Evidence File Index Only]
(406) 841-2770
[With Complete Evidence File] Mary Sexton, Director, D.N.R.C.
1625 11th Avenue
Montana Department of Environmental Quality P.O. Box 201601
State Revolving Fund Loan Programs Helena, MT 59620-1601
1520 E 6th Avenue (406) 444-6668
PO Box 200901 [Evidence File Index Only]
Helena, MT 59620-0901
(406) 444-6697
U.S. Department of Agriculture
[Evidence File Index Only] Rural Development
900 Technology Blvd, Suite B
PO Box 850
Bozeman, MT 59771
(406) 585-2520
Steve.Trendle@mt.usda.gov
[With Complete Evidence File]
Dave Cole, Administrator for the Montana Department of Commerce, made the following statement in his agency's response to our allegations:
"The grants and loans that were obtained to finance these projects are an appropriate means of financing these projects. Loans, which are repaid by all of the customers of these systems through user fees, are the typical mechanism for funding these types of projects that benefit all of the residents in a community. The choice of using or not using impact fees to fund these projects is a local decision and is not relevant in the TSEP and CDBG ranking process. As long as an applicant’s water or wastewater system user fees, upon completion of the project, are at or above the target rate (a percent of the community’s median household income), and the applicant provides the minimum amount of matching funds, it is up to the local governing body to decide how to finance the project."
Mr. Cole is evidently not aware of Montana Code Annotated 7-6-1603, which states: "Collection and expenditure of impact fees – refunds or credits – mechanisms for appeal required. (4-d) “a means to establish credits against future impact fee revenue has been created as part of the adopting ordinance or resolution if the dedication of land or construction of public facilities is of worth in excess of the impact fee due from an individual development.”
No such gift of land or construction of public facilities from Flat Iron Ranch or Area III developers, or any other developer, has been made to the City of Hamilton or the State of Montana, making the total offsets of impact fees illegal, and unknown to the citizens of Hamilton, Montana or the United States.
Also, either Mr. Cole did not thoroughly review our evidence records, or has chosen to ignore the documented evidence in our three primary evidence documents, those being:
1- City of Hamilton Final Report Water and Wastewater Rate Study February, 2007; Prepared by HDR Engineering, Inc., and
2- City of Hamilton Draft Report, Impact Fees for the Water and Wastewater Systems; July, 2006; Prepared by HDR Engineering, Inc., and
3- City of Hamilton Revised Final Report, Impact Fees for the Water and Wastewater Systems; March, 2006; Prepared by HDR Engineering, Inc.
In these three documents, two of which we have supplied to you on a data CD (Evidence Item #42), you will find that HDR Engineering and the City of Hamilton, Montana reduced impact fees charged to developers building in Hamilton (current and future) by $630 per building lot, and they used state and federal grant monies, as well as increased water and sewer rates to Hamilton citizens, to do so. The Mayor of Hamilton and a small majority of City Councilors subsequently adapted these illegal, reduced impact fees into law, through Resolution 1005, on April 17, 2008.
The communities of the Bitterroot Valley of western Montana are reeling from the negative environmental and fiscal effects of uncontrolled development, and large corporate developers are unwilling to pay reasonable impact fees to these communities to mitigate these effects. Now, as outrageous as it may seem, HDR Engineering and certain elected officials from Hamilton, are reducing these inadequate impact fees even more, and they are using EPA and HUD monies to do so. We hope that you also find this outrageous and take action to stop it and to find and prosecute those responsible for what is tantamount to deliberate theft of state and federal tax money.
State and Federal Laws Violated
We have documented numerous violations of state and federal law, including the Clean Water Act, Clean Air Act and the National Environmental Policy Act, by HDR Engineering and the City of Hamilton in our report to GAO, EPA and the other five lower level agencies. It is quite cynical for developers to receive state and federal grant monies to subsidize their projects, when these rare funds are supposed to go towards environmental restoration, including water and wastewater infrastructure that should benefit the existing citizens of our community, especially those in low to moderate income brackets.
Hamilton Citizen Petition Ignored
The City of Hamilton and HDR Engineering supplied incorrect and misleading information in the grant applications to the State, and omitted crucial information, including written records of opposition to overdevelopment by the citizens of Hamilton, Montana as well as Ravalli County residents. In one particular instance, they deliberately omitted the fact that an active Citizen Petition is on file with the City of Hamilton and Ravalli County that provides the citizens of Hamilton the right to vote on annexation of large housing developments, including Flat Iron Ranch and Area III (Evidence Item #33). Hamilton Mayor Randazzo is deliberately ignoring the Petition, even though it contains more than enough valid signatures to force a ballot initiative. Not only did HDR Engineering and the City of Hamilton supply false information to the State of Montana, but they knowingly did so. It is apparent that this violates numerous parts of state and federal regulations.
We believe it is prudent for the State of Montana and the EPA to place a hold on all grant funding for the proposed Hamilton wastewater project pending a review of this matter. If your investigation confirms that a gross misuse of public funds has occurred, or is being planned, we assume that you will not disperse any grant funds to the City of Hamilton, and will pursue the possibility of bringing charges against the guilty parties. We believe that these individuals conspired to defraud the United States government, the State of Montana, and the citizens of Hamilton, of millions of dollars of federal, state and local taxpayer monies, through previous (and on-going) applications for federal and state grant and loan moneys.
Recent Events Support our Findings
This process of channeling federal and state taxpayer money to developers is on-going. The City of Hamilton is preparing additional requests for grant money right now, which we believe will be diverted to new developments. The citizens of Hamilton and Ravalli County are unaware that their personal finances, as well as state and federal tax funds, are being used to subsidize developments that a majority of citizens opposed, as verified in several county wide elections.
This misappropriation of grant money is devastating communities in the Bitterroot Valley, who are under immense pressure to provide essential services to new developments (see Evidence Item # 76). New housing developments are being approved for construction at an astonishing rate, primarily due to changes in state law that give local decision-makers little choice in the matter.
On April 16, 2008 the Ravalli County Planning Board denied two subdivisions because of the devastating financial effects that these developments are having on the citizens of the Bitterroot Valley. In a statement to the press, Planning Board President Lee Kierig stated:
"For local services...that necessarily measure the community's ability to adequately provide the services required in support of public interest, it is glaringly evident that the capacities of fire districts, law enforcement, emergency ambulance systems, school districts, domestic water protection and transportation systems are now operating in severe deficit and without adequate community support."
Sincerely,
Treasurer, S.B.C.C. Chairman, Hamilton
(Save the Bitterroot Governmental Study
Conservation Coalition) Commission
***************************************************************************************
cc
Bitterrooters for Planning Democracy Watch
Hamilton City
Study Commission
Table of Contents
Chapter 1 – Cover Letter
Chapter 2 - Summary of Findings
I. Vicinity Map
II. Overview
A-Flowchart of Misappropriations of Federal and State Funds
B-Conflicts of Interest Violate State and Federal Law
C-Taxpayer Money Squandered
Chapter 3 – Our Findings of Impact Fee Reductions for Developments, Including Flat Iron Ranch and Area III
I.HDR Engineering Vastly Exaggerates Valley Growth Estimates to Obtain Grant Money
II. The Hard Evidence from the "City of Hamilton, Montana, Revised Final Report: Impact Fees for the Water and Wastewater Systems, March, 2007
III. Equivalent Dwelling Unit (EDU) Impact Fee Reductions – Our Calculations Derived from D. Harmon HDR Engineering Revisions to March, 2007 Final Impact Fee Report
A-Water System EDU Impact Fee Reductions
B-Wastewater System EDU Impact Fee Reductions
C-Total Illegal Reductions in Both Water and Wastewater Impact Fees
D. Montana Code Annotated 2005
IV. Flat Iron Ranch Illegal Subsidies
V. Area III Illegal Subsidies
Chapter 4 – Bitterroot Valley Water Sources Threatened
I. Hamilton Officials Refuse to Confront Water Pollution Problems that Have Languished for Decades
II. Calumet and Cooper Lane/Grantsdale Areas Continue to Threaten Water Quality
III. Flat Iron Ranch in the Aquifer Recharge Area
IV. The Hamilton Aquifer Needs Maximum Protection Now
V. Hamilton City Government Failing to Protect Public Health and the Environment
VI. "New-age" Chemicals, Including Pharmaceuticals, Threaten the Bitterroot River and the Hamilton Aquifer
Chapter 5 – May, 2006 Grant Application(s) Fail to Tell Truth About New Development
A. Cash Reserves and City capitalization fees of $625,000
I. Purpose for Request of Grant Money Fails to Identify Flat Iron Ranch, Area III and other New Developments targeted for Annexation
A. Decision-makers Continue to Violate State Laws
B. Hamilton’s 20 Year Planning Boundary
C. Time is of the Essence
D. Your Assistance is Needed
II. Statutory Priority #1 Evaluation Criteria Fails to Mention New Development
III. Uniform Environmental Checklist; May, 2006 TSEP Grant Application an Insult to the Citizens of Ravalli County and Montana
A. Your Grant Money Will Make Water and Air Pollution Problems in the Bitterroot Valley Worse
IV. Inalienable Rights to a Clean and Healthful Environment Desecrated V. Proof of Deliberate and Malicious Intent to Deceive
VI. More Grant Requests for Area III Development are Forthcoming; Fast- Tracked for Annexation into Hamilton
VII. Hamilton Citizens Victimized by Increases in Water and Wastewater Rates
VIII. Other Montana Laws Being Violated: Hamilton Elected Treasurer
IX. Federal Laws Violated
A. Comptroller General Testifies on Wasted Funds
B. Clean Water Act and National Environmental Policy Act Violated
C. Advanced, Alternative Septic Systems Approved by EPA and DEQ
D. Our Findings of Fact
Chapter 6 - Public Opposition to Wide Scale Development, Including Flat Iron Ranch and Area III
I. Citizen Petition to Allow Vote on Annexations of New Developments into Hamilton
II. Bitterroot Valley Citizens Speak Their Minds in a Series of Elections – Control Development!
III. Developers Sue Ravalli County to Force Approval of Unwanted Housing Projects
IV. Local Citizen Group Sues to Stop Unwanted Developments
V. Flat Iron Ranch Developers Interfere in Local City Council Elections
A. To Annex Flat Iron Ranch Violates Montana Law
VI. Ravalli County Citizens Embarked on Historic Zoning Effort
Chapter 7 – Conclusions and Expectations
Chapter 8 - Evidence Folder; Items #1 through #86 (modified for GAO Report)
**************
Chapter 1- Cover Letter (see top of report)
Chapter 2
Summary of Findings of Fraud and Deceit
We are providing you herein with substantive, written evidence that HDR Engineering, as a consulting firm on the payroll of developers promoting large housing projects, as well as elected officials and paid employees of the City of Hamilton, provided dishonest and deceitful data to you in the Renewable Resource Grant Application, dated May 15, 2006. The final result of these acts is the reallocation of $2.476 million of federal and state grant and loan funds (at a minimum), as well as $625,000 in matching funds, paid for with increases in Hamilton citizen water and wastewater use rates. These misued funds are being used to reduce the "cost basis" for major developments including, but not limited to, Flat Iron Ranch and Area III; two large developments in the Hamilton area that are opposed by the community. A Vicinity Map (Evidence Item #1) of Flat Iron Ranch and Area III developments, in relation to the Hamilton City Boundary, is shown on the next page.
HDR Engineering, with the knowledge of certain public officials, retroactively issued impact fee credits to the developers behind the Arbors and West Marcus Street subdivision projects; with the most recent 2006 grant funds, even though the City of Hamilton had already paid for the related improvements.
(report continued below)
II. Overview
Starting in 2005, or earlier; HDR Engineering, elected officials, and professional employees of Hamilton, decided to forego the necessary work that was stated as the primary objectives for grant/loan money (“to protect public health and the environment….to provide long-term protection of the City’s potable water source”), and instead decided to spend this money to support future developments, especially Flat Iron Ranch and Area III.
Serious water pollution issues affecting the Hamilton Aquifer and the Bitterroot River, both precious and valuable lifelines to the local economy, have languished for decades and will be unaffected by the expenditure of your limited grant and loan money.
Both water and air pollution are serious issues affecting the citizens of the Bitterroot Valley. Monitoring by the Department of Environmental Quality has found air and water pollution levels approaching federal and state, mandated, minimum standards. The annexation and construction of additional, wide scale development will exacerbate these health and safety issues, causing ever-increasing health effects on the citizens of Ravalli County, and creating the potential for endless litigation. The financial impacts on our community are devastating, as we will show you in this report.
A-Flowchart of Federal and State Funds
We have prepared this flowchart to help you to understand
the sequence of events that have resulted in massive fraud and theft
of federal and state funds by HDR Engineering, developers,
and elected officials and professional employees
of the City of Hamilton. This is the heart of our report
to you and we request that you review it in detail. All Statements are supported
with written evidence in document attachments, as referenced
#1
R.C.E.D.A.
(Ravalli County Economic Development Authority)
Proposes Original
Sewer Lift Station
Area III/Fairgrounds Road
($150,000)
Prior to Yr 2005
Go to Evidence Item # 12 (page 3)
I
I
#2
Ravalli County and City of Hamilton
Hire Horowich Consultant to Develop plan for
Area III (840-1,858 houses)
January, 2006
Go to Evidence Items #8 & #12 & #14
I
I
#3
HDR Engineering & City of Hamilton
Prepare DRAFT
WASTEWATER FACILITIES PLAN
$6.2 MILLION FOR WATER/WASTEWATER NEEDS THRU 2012. $3.1 MILLION IMMEDIATE;
February, 2006
Go to Evidence Item # 9
I
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#4
Montana Dept. of Commerce
Gives Preliminary Approval to Spend
TSEP GRANT FUNDS
March 6, 2006
Go to Evidence Item #53 (p.2)
I
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#5
HDR Engineering & City of Hamilton
Apply for GRANTS/LOANS
May, 2006
Go to Evidence Item #10
I
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#6
HDR Engineering &
City of Hamilton
Prepare DRAFT IMPACT
FEE STUDY FOR
WATER AND WASTEWATER
Reduce Developer Impact Fees by $586,076
From 2006 Grant Money, Retroactively
July, 2006
Go to Evidence Item #11
I
I
#7
Ravalli County Completes
TISCHLERBISE IMPACT FEE ANALYSIS
Need $10,418/EDU for Schools Only
Go to Evidence Items#52 & #83
I
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#8
WGM, Inc, Ken Madden & HDR Engineering,
City of Hamilton
PROPOSE FLAT IRON RANCH
ANNEXATION
October, 2006
Go to Evidence Item #2
I
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#9
HDR Engineering &
City of Hamilton Announce
SEWER LIFT STATION UPGRADE
TO ACCOMMODATE
MAJOR SUBDIVISION – AREA III
($550,000) R.C.E.D.A. to apply for additional grant money
January, 2007
Go to Evidence Items # 12 & 13 & 15
I
I
#10
HDR Engineering &
City of Hamilton
REVISE AND RAISE WATER AND WASTEWATER
RATES TO HAMILTON BUSINESSES
BY 10% AND 38%, RESPECTIVELY
February – May, 2007
Go to Evidence Items #20, #21, #22, #23
I
I
#11
WGM, Inc, Ken Madden & HDR Engineering,
City of Hamilton
PROPOSE “FEASIBILITY” CONTRACTS FOR
FLAT IRON RANCH ANNEXATION
February, 2007
Go to Evidence Item #4 & #5
I
I
#12
MONTANA APPROVES $3.1 MILLION
IN GRANT/LOAN FUNDS
May 2007
Go to Evidence Items #17 & #24
I
I
#13
HDR Engineering &
City of Hamilton
REVISE IMPACT FEES FOR
WATER AND WASTEWATER SYSTEMS
Reduce Developer Impact Fees
By $3,108,590
March, 2007
Go to Evidence Item # 32
I
I
I
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#14
Citizens Organize to Oppose Major Developments
Circulate Citizen Petition to
Provide Vote on Major Annexations
January – September, 2007
Go to Evidence Items # 31, 33, #35 & #36
I
I
I
#15
Mayor Randazzo, Councilors Steele,
La Salle and Hendrickson
ADOPT ILLEGAL IMPACT FEES
RESOLUTION 1005
April 17, 2007
Go to Evidence Item #38
I
I
I
#16
Citizens Present Annexation Petition to
Mayor Randazzo and Council
September 4, 2007
Go to Evidence Items # 33 & #34
I
I
#17
Councilor Scott Proposes 11 Resolutions,
In the Absence of Mayor Randazzo
To Stop Apparent Corruption;
and Illegal Annexations of
Flat Iron Ranch and Area III Subdivisions
December 4, 2007
Mayor Randazzo Vetoes 2 Resolutions; Repeals 8
February 8, 2008
Go to Evidence Item #29
I
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#18
HDR Engineering &
City of Hamilton
Announce Approval of $550,000
Sewer Lift Station
To Service Area III
Future Housing Development
(as well as Council on Aging and Bio-center);
and intend to Request Additional
Grant/Loan Funds
from the Federal Government
and the State of Montana in 2008
February 8, 2008
Go to Evidence Items #39 & #40
I
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#19
HDR Engineering, Ken Madden (Flat Iron Developer) &
City of Hamilton
ANNOUNCE INTENT TO ANNEX
FLAT IRON RANCH AND
“ABSORB” ESTIMATED IMPACTS ON THE CITY
February 29, 2008
Go to Evidence Items #30, #43, #45, #54, #55
I
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#20
Mayor Randazzo, Councilors Steele,
La Salle and Hendrickson
RAISE WATER AND WASTEWATER
BASE + USAGE RATES TO HAMILTON CITIZENS
April, 2008
Go to Evidence Folder Items #25 thru #28, #44, #57
Section B Deleted May 20, 08
C-Taxpayer Money Squandered
Evidence of intent to defraud federal and state officials, by hiding the true intent to spend grant funds on new development, is spread through dozens of newspaper reports from the Ravalli Republic and Bitterroot Star, local valley newspapers; and in the minutes of dozens of Hamilton City Council meetings, but conspicuously missing from the May, 2006 TSEP (and other) Grant Application. We will refer you to specific evidence records as we proceed.
As examples of this evidence, we would provide the following quotes from some of these records:
1 – September 6, 2005 Memorandum; Hamilton City Attorney: “this developer (Ken Madden) is demanding that the City promise in writing to do…”The Developer Request: Development Agreement for service area – re-coop through rebate program the cost of development. HDR Engineering’s D. Harmon and (city representative) Colleen Miller e.g. Flat Iron: “The project I saw looked like a nice plan to me….With a small investment in another DRAFT and disinfection you can get that to about 780 units. I think given the timing of the project, the City should look at requesting a sizeable public works bond from the developer to do improvements that would get you quite a ways into the WWTP. This will certainly change the size of our small little community. I’d much rather see the City control the development versus leaving it to the County”. Evidence Item #46
2 - October 19, 2006 Ravalli Republic: “Jon Gass of WGM Group in Missoula represented the 622- lot Flat Iron Ranch slated for east Hamilton……The 495-acre subdivision is planned on agricultural land near Golf Course Road. Flat Iron Ranch officials spoke last year (2005) with city officials about annexation for the purpose of hooking on to the city’s water and sewer systems”. Evidence Item #2
3 – December 8, 2006 Ravalli Republic: “Dennis Stranger, Hamilton’s new land-use planner, sought direction from the City Council Tuesday night after developers from the proposed 622-unit Flat Iron Ranch subdivision recently petitioned the city for annexation. Stranger told city officials he would like to examine the potential advantages and disadvantages of the subdivision; including, how water and sewer services could be extended". Evidence Item #3
4 – February 8, 2007 Ravalli Republic: “The Hamilton City Council sent two proposals to committee that considers hiring consultants to study the impacts of annexing in the Flat Iron Ranch development east of Hamilton. Mayor Jessica Randazzo broke a 3-3 vote, sending the proposal to committee. At Tuesday’s regular city council meeting, Stranger recommended the city hire two consulting firms to do the research and let Flat Iron pick up the tab. HDR Engineering of Missoula, which does a lot of work for the city, proposed conducting a review of city infrastructure and impacts of Flat Iron on water and sewer systems for $16,093. Council President DeAnne Harbaugh said she did review the proposals and was startled at what she read. "I’m sorry. I am representing the citizens of Hamilton and not the developers,” Harbaugh said. “My concern is not whether these developers succeed or not”. (Councilor) Scott also worries the public would see approving the contracts “as a way to move the development forward” even though the council may decide against annexation in the end. Harbaugh said she doesn’t like the fact that Flat Iron has its “foot on both sides of the fence” (implying a conflict of interest). Evidence Item #4
5 – February 26, 2007 Ravalli Republic: “Hamilton city councilors disagree over whether to hire consultants to study the impacts of annexing in the Flat Iron Ranch development”. Legislative Committee Chairwoman DeAnee Harbaugh was angered when Steele and councilor Hendrickson tried to bypass her committee. Harbaugh accused Steele and Hendrickson of violating Robert’s Rules of Order, council procedures and possibly state law with their actions to skip her committee. She said they were trying to “usurp the power” of the other councilors. Harbaugh said she believes there is “something more” to Hendrickson’s and Steele’s actions and said she would examine the contract proposals even closer now. Evidence Item #5
6 – Yr 2007 Ravalli Republic Op-ed: “The mayor and council are threatening to increase your sewer rates up to as much as $15 per month, claiming the sewer plant needs humongous repairs; and at least two mega-developments (Flat Iron and Area III) are looming nearby with the expectations that they will hook on to our utility services and infrastructure, at your expense. Evidence Item #6
7 – Yr 2006 Ravalli Republic Op-ed: “The Ravalli Republic Newspaper (former Editor-Jenny Johnson; recently fired for plagiary) is wrong to use its newspaper to generate public support for the Area III Plan and to criticize and marginalize the three City Council members (Scott, Sutherland and Harbaugh) voting against the plan…. It is very clear that on November 7, voters crossed political and social barriers to send a “mandated” message to their elected officials that the status quo is not acceptable and that……the message is “protect the unique character and rural lifestyles connected to this valley and stop the heavy-handed, influence lobbying by large, land developers….By providing the majority, tie-breaking votes to move both Flat Iron and Area III corporate developments through the annexation process, the Mayor casts a dark cloud over her own connection to development interests. Evidence Item #7
Chapter 3
Our Findings of [Illegal] Impact Fee Reductions for Developers, Including Flat Iron Ranch and Area III
We would now refer you to three engineering reports authored by HDR Engineering and the City of Hamilton; reports paid with taxpayer funds. Also, please refer to your copy of the May, 2006 TSEP Grant Application from the City of Hamilton.
We have provided copies of two HDR reports on a data CD, in order to reduce paper and to provide you with the flexibility to share these reports with others. It is provided as Evidence Item #42.
The two HDR Engineering/City of Hamilton Reports on CD are:
1- City of Hamilton Final Report Water and Wastewater Rate Study February, 2007
2- City of Hamilton Revised Final Report Impact Fees for the Water and Wastewater Systems March, 2007
We were unable to obtain an electronic copy of a third important HDR report, entitled "City of Hamilton Wastewater Facilities Plan". We do however have hardcopy excerpts from that study and have duplicated them for you in the Evidence Folder
I. HDR Engineering Vastly Exaggerates Valley Growth Estimates to Obtain Grant Money
This section is key to understanding how impact fee reductions were calculated by HDR, and how these calculations were used to establish revised, per EDU impact fees, for the benefit of developers. By using double the actual growth rates for Ravalli County, analysts were able to double the amount of total requested grant funds, and reduce the impact fee per building lot.
In the City of Hamilton Wastewater Facilities Plan and in the May, 2006 TSEP Grant Application, HDR makes the following population projections for the Hamilton sewer service area (Ravalli County) (see Evidence Item #80):
"Study area population and employment are projected to increase approximately 4 percent per year over 40 years. This equate to an increase of over 500 percent over the planning period".
In truth, growth rates in Ravalli County have been decreasing at a rapid rate since 2004, and overdevelopment is the reason. Housing starts have been declining since 2001. Potential buyers of new homes are finding the Bitterroot Valley less attractive due to over-construction, increasing water and air pollution, consistently increasing forest fire activity, and a cost of housing that has grown beyond their capacity to afford them.
In August, 2004 Ravalli County amended its Growth Policy and made the following change to growth projections:
"During the last three to four years, growth has slowed to about 2% per year"
Numerous news reports have been printed in local newspapers about declining growth rates, reduced demand for housing, declines in housing starts and extreme inflation in home prices in Ravalli County. We strongly suggest that you review the 6 documents in Evidence Item #81 so that you thoroughly understand how HDR Engineering provided deceptive and fraudulent data about population projections in order to maximize grant funds for new development.
In July, 2005, prior to the completion of the May, 2006 TSEP Grant Application, the U.S. Census Report showed Ravalli County's population at 39,940. It is now just over 40,000. HDR projects that it will be 45,000 in 2010 (2 years from now), a vast exaggeration that conflicts with all other sources of population projection.
HDR Engineering and the City of Hamilton had access to this data but failed to include it in the May, 2006 TSEP Grant Application. We believe that this was deliberate.
A reputable, local realtor, who wishes to remain anonymous, sent us data on housing cost, and stated (Evidence Item #80):
"On the market, as of today (March 31, 08), there are 884 Ravalli County residential listings for sale with the median price of $346,000. Average price is $548,737. Prices range from $15,000 to $16,800,000. There are 248 listings over $500,000! There are just 58 from $15,000 to $151,000."
All of this data should be shocking to you. Federal and State grant regulations require that grant funds go to benefit low and middle income Americans. Your agency's grant money is going to benefit wealthy home buyers and wealthy developers. This is outrageous and we implore you to act to stop this gross misuse of grant money.
*****
II. The Hard Evidence from the "City of Hamilton, Montana, Revised Final Report: Impact Fees for the Water and Wastewater Systems, March, 2007
The next 11 pages are data "pulled" from the March, 2007 Impact Fee Report. The complete report is 77 pages long and overly complex, making it difficult for average citizens to make a reasonable assessment of the changes to impact fees that resulted from the HDR Engineering analysis. You will see that, in the end, $3.1 million in grants, loans, and Hamilton citizen matching funds were used to reduce impact fees by $130 per EDU (Equivalent Dwelling Unit) for the "Water" component, and $500 per EDU for the "Wastewater" component, 2 primary variables in the complicated impact fee calculations.
This clearly illustrates how HDR and Mayor Randazzo used grant/loan money to reduce wastewater impact fees to developers [Capital Contributions Credits], instead of using the funds for their intended purposes, as stated in the May 2006 application(s).
The City of Hamilton has, and continues to, raise water and wastewater usage rates to the citizens of Hamilton to derive "matching funds" for grant approval, then immediately used those same matching funds to further reduce impact fees to developers. Following Exhibit C-2 is our analysis of the mechanism used to connect the impact fee reductions to reality, including impact fee reductions for Flat Iron Ranch and Area III developments.
One should also note that 2006 grant funds were used to (retroactively) reduce impact fees to the developers behind Arbors and Marcus Street projects. (A-4). The City of Hamilton paid for supporting infrastructure for these two developments, but the developers were subsequently given the impact fee credits for it, an illegal gift of grant money to developers and their projects.
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Also, please refer to Evidence Item #42 - Data CD; Impact Fees, starting on page 5-3 (Table 5-3) in order to evaluate the following Section III; A, B, C.
III. Equivalent Dwelling Unit (ED`U) Impact Fee Reductions – Our Calculations Derived from HDR Engineering Revisions to March, 2007 Final Impact Fee Report (Also Evidence Item #32). We derived the following (critical) calculations of impact fee reductions (per EDU) by analyzing HDR's revisions of the Hamilton Impact Fee Report in early 2007.
A-Water System EDU Impact Fee Reductions
Page 5-3, Table 5-3 states: Water System Equivalent Dwelling Units
“Equivalent Dwelling Units – 2006 3,172
“Equivalent Dwelling Units - 2020 5,713 (projected housing needs; exaggerated in grant applications)
Page A-4-3, shows pre-grant water impact fee charged to developers (prior to grant/loan funds = $646.12/EDU
Page A-4-2, shows water impact fee reductions, indicated as “Capital Contributions Credit = $3,047,662 divided by 5,713 EDU’s = $516.40/EDU = reduced amount of developer impact fees.
Our calculations of net water impact fee reductions = $646.12 minus $516.40=$130/Water EDU
Page 5-5, Table 5-4 shows the Total Allowable Water Impact Fee/EDU as $1,438.89. It should be $1,569/EDU, a loss of $130/Water EDU, to the citizens of Hamilton.
Total dollar reductions in developer water impact fees = $130/EDU times 5,713 EDU’s (projected to Yr. 2020) = $741,090
B-Wastewater System EDU Impact Fee Reductions
Page 6-3, Table 6-2 states: Wastewater Equivalent Dwelling Units
“Equivalent Residential Units – 2006- Treatment 2,248
“Equivalent Residential Units – 2025- Treatment 4,735 (projected housing needs, exaggerated in grant applications)
Page B-2-1, shows pre-grant wastewater impact fee charged to developers (prior to grant/loan funds) = $2,933.05/EDU
Page C-2-1, Exhibit C-2 shows wastewater impact fee reductions, indicated as “Capital Contributions Credit = $2,369,000 divided by 4,735 EDU’s = $2,432.76 = reduced amount of developer impact fee/EDU
Our calculations of net wastewater impact fee reductions = $2,933.05 minus $2,432.76 = $500/Wastewater EDU
Page 6-5, Table 6-3 shows the Total Allowable Wastewater Impact Fee/EDU as $3,205.83. It should be $3,705.83, a loss of $500/Wastewater EDU, to the citizens of Hamilton!
Total dollar reductions in developer wastewater impact fees = $500/EDU times 4,735 EDU’s (projected to Yr. 2020) = $2,367,500
C-Total Illegal Reductions in Both Water and Wastewater Impact Fees
$741,090 (water) + $2,367,500 (wastewater) = $3,108,590 (both water and wastewater); and coincidentally, the total amount of grant/loan moneys that have been approved.
This equates to $630/EDU that developers are now able to reduce from the cost of their developments; a fact unknown to the citizens of Hamilton; or to you, the trustees of federal and state tax money.
These acts represent a wanton and willful ploy by developers and their supporters in government to deceive the citizens of Hamilton, as well as citizens of Ravalli County, who are, at this moment, developing countywide zoning; in a difficult effort to reduce the negative effects of overdevelopment, which includes serious fiscal effects.
D. Montana Code Annotated 2005
Exhibit D – Montana Code for Impact Fees – Document Appendix
“7-6-1603. Collection and expenditure of impact fees – refunds or credits – mechanisms for appeal required. (4-d) “a means to establish credits against future impact fee revenue has been created as part of the adopting ordinance or resolution if the dedication of land or construction of public facilities is of worth in excess of the impact fee due from an individual development.”
No such gift of land or construction of public facilities from Flat Iron Ranch or Area III developer has been made, making the total offsets of impact fees illegal and unknown to the citizens of Hamilton, Montana or the United States.
IV. Flat Iron Ranch Illegal Subsidies
For Flat Iron Ranch, which proposes to build 622 housing units, and is being fast-tracked for annexation into Hamilton, the illegal water impact fee reductions amount to 622 EDU’S times $130 = $80,860. For Flat Iron Ranch, the illegal wastewater impact fee reductions amount to 622 EDU’S times $500 = $311,000. Developers of Flat Iron Ranch will be able to subtract a total of $391,860 from their assigned impact fees.
V. Area III Illegal Subsidies
For the Area III housing development, which proposes an average of 6.5 per acre on 288 acres; and is being fast-tracked for annexation into Hamilton, the illegal water impact fee reductions amount to 1,872 EDU’s times $130 = $243,360. For Area III, the illegal wastewater impact fee reductions amount to 1,872 EDU’s times $500 = $936,000. Developers of Area III will be able to subtract a total of $1,179,360 from their assigned impact fees.
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Chapter 4
Bitterroot Valley Water Sources Threatened
The most reckless and egregious result of the continuing misuse of federal and state grant money has been the near total disregard for the water pollution problems that have languished for decades in the Hamilton vicinity, that threaten not only the drinking water supplies for Hamilton citizens, but also the Bitterroot River, the lifeblood of the Bitterroot Valley. As far back as 2005, Montana State agencies have warned Ravalli County/Hamilton officials about the increasing threats to the Bitterroot Valley’s water sources, but their warnings have largely fallen on deaf ears. Evidence Item # 50
Grant monies from the State of Montana award in Years 2001 through 2003 totaled $3.7 million and should have been partially used to correct deficiencies in wastewater facilities that are once again stated as the primary purpose for a new round of grant monies totaling $3.1 million. The State of Montana is paying money, repeatedly, to correct the many deficiencies that are causing serious water pollution problems around Hamilton and getting little for their money. The State is throwing good money after bad money because the true purpose of the funds is to subsidize new development through reduced impact fees.
Just recently, the Montana Department of Environmental Quality, at a public meeting in Victor, Montana announced TMDL monitoring results for the Bitterroot River, noting that current pollution levels in the River are approaching DEQ mandated standards. The employees of DEQ can verify this information to you.
Former Environmental Health Director Theresa Blazicevich attempted to form a Water Quality District for Ravalli County in 2006 in order to monitor the growing water pollution sources. Evidence Item #48. Backed by the development community, opponents of this proposal defeated it, not wanting officials to have empirical data that could be used to stop developments.
I. Hamilton Officials Refuse to Confront Water Pollution Problems that Have Languished for Decades
Within city and county government, it is well known that hundreds of residents just outside the city’s boundaries (within the City's Wastewater Service Area Boundary, as stated by HDR in TSEP Grant Application, STATUTORY PRIORITY #1 , PAGE 18) are using antiquated septic systems that fail to protect crucial water resources, including the valuable Bitterroot Valley Aquifer, from depletion and pollution. Evidence Item #51 These problem areas have never been corrected, even though the City has received millions of dollars in grants and loans over the years to do so.
II. Calumet and Cooper Lane/Grantsdale Areas Continue to Threaten Water Quality
Two of these areas are referred to as the “Calumet” and “Cooper Lane/Grantsdale” areas, respectively. According to a sitting Councilor, many of these residents may have nothing more that concrete, underground cylinders for septic tanks that do nothing more than concentrate raw sewage deep into the soil profile, by-passing the important biological processes that surface soils provide. According to his evaluation, 103 residential and commercial septic systems, a large percentage being inadequate, exist in the Cooper Lane/Grantsdale area, just outside the current Hamilton city boundary. These areas have been polluting ground water for decades, and are in the Aquifer recharge area. Evidence Item #51
For the Calumet area, northwest of Hamilton’s current city boundary: Morgan Farrell, an employee of the county’s Environmental Health Department recently stated “there is a definite need to evaluate these areas; many of these homes are on pre-1972 septic systems, that have been grandfathered in and we have no data on them, whatsoever”.
It is widely believed that many of these pre-1972 septic systems are grossly inadequate to protect water resources. Consequently, they should be targeted for grant money subsidies to bring them up to 2008 standards.
To correct these large number of deficient septic systems would require that Hamilton annex (forcibly, or otherwise) areas that we have identified as the Calumet, and the Cooper Lane/Grantsdale Road Areas. The facts state that this is not the intent of Mayor Randazzo and the Hamilton City Council; that these areas will remain as they have been for decades, that should have been corrected with previous $3.7 million in grant/loan monies from 2001/02, and that Flat Iron Ranch and Area III, new development projects are the real recipients of $3.1 million in grant/loan monies.
III. Flat Iron Ranch in the Aquifer Recharge Area
Flat Iron Ranch development, a recipient of federal and state grant money, is also in the Hamilton Aquifer recharge area and presents a serious threat to this Aquifer, because of the enormous size of the housing project, and the associated pollution sources that will result if the project is built (Evidence Item #30-Vicinity Map, #47). If approved for construction, it would be in violation of MCA 67-5-201 (2) (a) (b); and (3).
IV. The Hamilton Aquifer Needs Maximum Protection Now
“The Bitterroot Valley Aquifer is regarded as one of the purest natural sources of water in America. It is a huge underground and surface source of water that extends 2,000 feet below the ground surface. More than 18,352 Bitterroot Valley households and 1,793 businesses depend on it for water every day”. This represents the conclusions of the Montana DEQ, as well as former Environmental Health Director for Ravalli County, Theresa Blazicevich. Evidence Item #47
Water is now being traded as a commodity, just like oil and grain. The current price is near $1 per barrel, the price of oil 80 years ago. There are a number of water product corporations being traded on the New York Stock Exchange today, including one of particular interest called Aqua America; stock symbol TTEK, that is trading at $20 per share.
Instead of taking serious measures to protect the Hamilton Aquifer, by eliminating existing pollution sources in the aquifer recharge area (Calumet/Cooper Lane/Grantsdale areas), the City is proposing new developments in the recharge area that will simply create more sources of contamination that will degrade the aquifer in the future.
The Calumet and Cooper Lane/Grantsdale areas are the areas that Mayor Randazzo and the Hamilton City Council should be targeting for annexation and capital expenditures for infrastructure improvement. But instead, they choose to exacerbate the problem by annexing new housing projects that will simply create more and more cost outlays in the future, and will simply create new sources of water consumption and pollution.
V. Hamilton City Government Failing to Protect Public Health and the Environment
So, why was the FY 2001-2003 grant money not used to correct these high priority water pollution sources in and around Hamilton? What happened to the entirety of the $3.7 million dollar grant/loan monies provided by the state and federal agencies years ago to correct these serious problems? There needs to be a comprehensive audit of those monies, which we have shown have been diverted to private interests through impact fee offsets, and direct diversions of these funds through cost overruns and illegal change orders.
Given these existing deficiencies, Hamilton City government would be negligent in annexing massive housing developments such as Flat Iron Ranch and Area III, and in the process, providing these developments with taxpayer infrastructure subsidies.
VI. "New-age" Chemicals, Including Pharmaceuticals, Threaten the Bitterroot River and the Hamilton Aquifer
We are now aware that our personal use and disposable of "new-age" chemicals, including PPCPs Pharmaceuticals, Personal Care Products such as antibiotics, hormones and drugs are posing a threat to drinking water sources from ground water. We also know that traditional municipal wastewater treatment facilities are not capable of removing these contaminants from affluent; and that very expensive, high-technology systems are required to filter these pollutants. Minute levels of these chemicals, measured in parts-per-billion, may endanger the health of humans and animals.
Kate Miller and Joseph Meek, employees of the Montana DEQ completed the following research project in the Helena area that provides an alarming look at the potential for these chemicals to end up and persist in groundwater: (Evidence Items #71 & #79)
Helena Valley Ground Water: Pharmaceuticals, Personal Care Products, Endocrine Disruptors (PPCPs) and Microbial Indicators of Fecal Contamination
The completed report of the study can be found at the following website:
www.deq.mt.gov/wqinfo/Sub/Index.asp
Even though the study was carried out in the Helena area, the results can be logically applied to any high growth area, such as the Bitterroot Valley; according to Kate Miller.
This new class of pollutants presents a grave threat to the Bitterroot River and the Hamilton Aquifer. If this pollution is allowed to continue, permanent and irreversible damage to the Hamilton Aquifer will occur, eliminating the potential for the Aquifer to provide economic benefits for the citizens of Hamilton and the state of Montana, well into the future.
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Chapter 5
May, 2006 Grant Application(s) Fail to Tell Truth about New Development
We have provided evidence herein that HDR Engineering and the City of Hamilton intend to use 100% of federal and state grant money to reduce impact fees for new development. For Flat Iron Ranch and Area III developments, this amounts to $3.1 million dollars in subsidies to those projects that will not be spent to complete the critical work told to you in the May, 2006 grant application(s).
The total monies currently requested and approved by the various issuing agencies is $2,476,000, from the following funding sources:
TSEP GRANT $750,000
CDBG GRANT $450,000
STAG GRANT $1,000,000
SRF LOAN $176,000
RRGL GRANT $100,000
$2,476,000
* $625,000 in Matching Funds Required by Issuing Agencies. Stated as “available immediately”, p.5 TSEP grant application. Total grant, loan and matching funds = $3.1 million.
A. Cash Reserves and City capitalization fees of $625,000: These “matching funds did not exist at the time of this grant application; once again indicating intent to defraud federal and state agencies, as well as the citizens of Hamilton, who were unaware that they would be paying increases water and sewer rates to subsidize unwanted development.
I. Purpose for Request of Grant Money Fails to Identify Flat Iron Ranch, Area III and other New Developments targeted for Annexation
We have found no references to new development, especially Flat Iron Ranch and Area III, in the May, 2006 TSEP Grant Application. This, despite the voluminous evidence that Mayor Jessica Randazzo and the current City Council of Hamilton are clearly intent on fast-tracking these projects for annexation into Hamilton, for the financial benefit of the project developers. Evidence Items #4, #5, #30, #43, #45, #54 & #55
What we have found is that the application is a complete fabrication, from beginning to end. The only reference to future development is on page 1 of the application’s Uniform Application Form for Montana Public Facility Projects, which describes the work to include “Wastewater Treatment Plant Upgrade and Expansion”.
A. Decision-makers Continue to Violate State Laws
Flat Iron Ranch lays an average of 2.5 miles east of the nearest Hamilton City boundary, which makes it illegal to annex according to MCA 7-2-4503. It is also zoned as agricultural land and has not been rezoned, making it illegal to annex into Hamilton (MCA 7-2-4503). Additionally, the public is overwhelmingly opposed to Flat Iron Ranch.
B. Hamilton’s 20 Year Planning Boundary was arbitrarily drawn to include the area that encompasses Flat Iron Ranch. No records of public participation in this decision process can be found.
C. Time is of the Essence
Flat Iron Ranch and Area III, are being fast-tracked, by Hamilton Mayor Jessica Randazzo, for annexation into Hamilton. A City Council vote to annex Flat Iron Ranch is expected soon (May), making our effort to notify the appropriate, grant-issuing agencies urgent and timely).
On June 11, the City of Hamilton Zoning Commission and Planning Board is holding hearings to consider annexation of the Flat Iron Ranch Housing Development (See Evidence Items #1 & #1(b)). Flat Iron Ranch is 2.5 miles east of Hamilton, is on state protected agricultural land, and is illegal to annex according to Montana law. It is also widely opposed by the citizens of Ravalli County. We have provided substantive evidence that Flat Iron Ranch, (as well as another large subdivision called Area III), is the primary target for taxpayer provided, impact fee reductions. The Mayor of Hamilton has put this project on a fast-track for annexation, as we have documented in our report. If successfully annexed, the citizens of Hamilton, as well as state and federal taxpayers, will be obligated to provide millions of dollars in tax subsidized infrastructure for years to come, to the wealthiest citizens in Ravalli County. THIS IS NOT THE INTENT OF STATE AND FEDERAL GRANT MONEY AND THE RESPONSIBLE AGENCIES NEED TO INTERVENE, IMMEDIATELY!
Flat Iron Ranch is 1 of 16 corporate developments that are the subject of a controversial and oppressive lawsuit against the Ravalli County Commission and the citizens of the Bitterroot Valley. These lawsuits, permitted by MCA 76-3-604 (Senator Rick Laible, April 19, 2005), are unconstitutional, in our opinion, and are being challenged in the Montana Supreme Court by Bitterrootters for Planning and Phil Taylor, of Victor, Montana.
Area III is a massive housing development proposed directly north of Hamilton High School that will build approximately 1,872 houses, if annexed and approved by the City of Hamilton and the Ravalli County Commission. It is vehemently opposed by many citizens of Ravalli County, and is an unnecessary and unwelcome addition to existing housing in Ravalli County.
D. Your Assistance is Needed
We have expended great personal resources, including over 400 hours of time, in order to provide you with detailed evidence of fraud by Hamilton City Officials, HDR Engineering, We are committed to stopping this outrageous theft of federal and state funds, but need your help to continue.
II. Statutory Priority #1 Evaluation Criteria Fails to Mention New Development
Your primary criterion for evaluating the relative ranking of grant requests from various Montana communities requires a high level of deficiency in a municipality's wastewater facilities in order to rank high enough for grant fund approval.
STATUTORY PRIORITY #1 states: "Projects that solve urgent and serious public health or safety problems, or that enable local governments to meet state or federal health or safety issues"
a. Does a serious deficiency exist in a basic or necessary community public facility or service, such as the provision of a safe domestic water supply or does the community lack the facility or service entirely, and will the deficiencies be corrected by the proposed project?
The answer to both questions is an emphatic "No", because grant money is being diverted to new housing construction instead of to its intended and serious purpose(s).
HDR Engineering and the City of Hamilton recently announced to the community on February 29, 2008 that they were ready to "absorb estimated impacts to the City", which included the capability to connect Flat Iron Ranch to both the City's water and wastewater facilities (see Evidence Items #43 and #45). They are presenting conflicting information to both you and the citizens in order to obtain grant money for new developments.
III. Uniform Environmental Checklist; May, 2006 TSEP Grant Application an Insult to the Citizens of Ravalli County and Montana
We are sadly aware of the despicable changes that have been made to our Montana Environmental Policy Act, over the years; changes that we consider unconstitutional, and a result of successful lobbying by private industry, especially corporate land developers.
Now that MEPA is legally considered to have only ‘procedural” implications, as opposed to substantive, developers and their supporters in government fail to do even a minimally adequate job of assessing environmental impacts from their projects, and this is certainly reflected in the May, 2006 TSEP Grant Application, UNIFORM ENVIRONMENTAL CHECKLIST, prepared HDR Engineering, starting on page 18 (Evidence Item #62). It is a total fraud; not worth the paper it is printed on. As just a sample of this inadequate environmental analysis, we would direct you to the following sections:
UNIFORM ENVIRONMENTAL CHECKLIST, Physical Environment Criteria 3 & 8:
3. Effects of Project on Surrounding Air Quality or Any Kind of Effects of Existing Air Quality on Project. HDR and Hamilton Officials state: "the indirect effects of the proposed facilities will be related to the projected changes in residential and commercial growth. These changes may affect the distribution and values of total suspended particulate concentrations, due to changes in vehicle miles traveled over paved and unpaved roads, and changes in wood burning units during the winter". Reality: Flat Iron Ranch and Area III will more than double the current size of Hamilton and will have significant detrimental effects on existing air pollution problems that already exceed EPA standards. An Environmental Impact Statement is required by both federal and state law.
8. Agricultural Lands, Productions & Farmland Protection. HDR and Hamilton Officials state: "No overall Negative impacts on agricultural lands are anticipated". Reality: Flat Iron Ranch and Area III will consume a total of 1,059 acres of state protected, agricultural land, an irreversible commitment of agricultural resources.
A. Your Grant Money Will Make Water and Air Pollution Problems in the Bitterroot Valley Worse
Ravalli County is, and has been, suffering serious air and water pollution for years that is getting worse, as development increases. The grant-issuing agencies are already aware of the water pollution problems because you have approved $3.1 million in grant money to Hamilton to correct them.
Your sister agency, the Department of Environmental Quality, has notified Hamilton several times over the last two years that Hamilton is violating EPA air quality standards.
We have supplied you with copies of the official notifications from the EPA and DEQ; as well as public notices, about our serious air pollution problems for your benefit:
Evidence Item #62: DEQ Notifies Hamilton of EPA Air Quality Violations
Evidence Item #63: S.B.C.C. (Save the Bitterroot Conservation Coalition) Presents Health Effects Analysis to Ravalli County Commissioners; Citizens suffering and dying (likely)
Evidence Item #64: S.B.C.C. (Save the Bitterroot Conservation Coalition) Presents Health Effects Analysis to Mayor Randazzo and City Council; Citizens suffering and dying (likely)
Evidence Item #65: Photograph of Hamilton Air Pollution on High Pressure, Clear Day
Evidence Item #66: EPA Report: Provisional Assessment of Recent Studies on Health Effects of Particulate Matter Exposure - Citizens of Hamilton are suffering; some are dying (likely)
Since grant money is going to subsidize new development, it will create serious air and water pollution problems that already threaten the health and safety of Ravalli County citizens. You cannot allow this to happen!
Over the last two years, we have invested energy and resources to evaluate the health effects of our current air pollution on our citizens; an evaluation that Mayor Randazzo and the City Council should have done, but have not; and it is quite serious. More than 18% of our current population is suffering health effects of air pollution and some are dying. By allowing your grant money to go towards new development in and around Hamilton, a public health crisis is being created. Evidence Items #63-#65
IV. Inalienable Rights to a Clean and Healthful Environment Desecrated
Our Montana Constitution clearly dictates inalienable rights that cannot be diminished or circumvented for the financial benefit of private industry. The inalienable right to a clean and healthful environment is every bit as precious as the right to vote, or the right to bear arms. We intend to enforce our inalienable rights to a clean and healthful environment, in part, by stopping massive subdivisions from being constructed, which will add significantly higher levels of air and water pollution to our communities.
V. Proof of Deliberate and Malicious Intent to Deceive
Former City Councilman Bob Scott, attempted to stop the systemic, reckless decision-making process that we have described to you, just before leaving office in January, 2008. Councilor Scott successfully passed a series of important Resolutions while Mayor Randazzo was out of town, in January of 2007. Among these were Resolutions 1041 and 1042 that, if implemented, would have diverted your money to repairing the serious water pollution problems that we have described to you in Chapter 4.
On February 5, 2008 Mayor Randazzo, with knowledge and malicious intent, and with the full support of a newly elected City Council, repealed Resolutions 1041, 1042, 1043, 1044, 1046, 1047, 1048 and 1054, and instead diverted grant money to reduce impact fees to developers; then proceeded with raising water and wastewater rates to her own citizens in Hamilton.
This repeal of these important resolutions set the stage for Mayor Randazzo to fast-track Flat Iron Ranch and Area III for annexation. This provides overwhelming evidence that Mayor Randazzo, and her associates have, and continue to; commit fraud against the federal, state and local governments, as well as against their unwitting, taxpaying citizens. We compel you to review Evidence Item #29 in detail, so that you understand the flagrant and heinous acts of corruption against the citizens of the United States, Montana, Ravalli County and Hamilton.
VI. More Grant Requests for Area III Development are Forthcoming; Fast-Tracked for Annexation into Hamilton
Mayor Randazzo is in the process of applying for even more grant/loan funds to pay for the $550,000 sewer lift station through the Ravalli County Economic Development Authority (R.C.E.D.A), a local organization led by Julie Foster. Evidence Items #39 and #40
We are informing you that we have contacted Ms. Foster, of the R.C.E.D.A, to compel her to reconsider that agency’s application, on behalf of the City of Hamilton and Ravalli County (in progress), for the $550,000 sewer lift station. This expanded, sewer lift station is intended to provide taxpayer subsidized infrastructure to the Area III development, which is proposed directly north of Hamilton High School, and will ultimately result in the construction of 1,872 houses.
HDR Engineering, and city employee Dennis Stranger, (for the benefit of the Area III developers), expanded the designs for this sewer lift station to its current larger, $550,000 design. Evidence Item #13. It is located in close proximity to the Area III project area, on Fairgrounds Road. Area III is on county land that includes “Prime Agricultural Farmland”, protected by Montana statute. Hamilton is moving forward with plans to annex this area into Hamilton, again, at taxpayer expense.
VII. Hamilton Citizens Victimized by Increases in Water and Wastewater Rates
On April 17, 2007 Mayor Randazzo signed Resolution No. 1004, which authorized rate increases for commercial customers in Hamilton. Evidence Item #22.
At this moment, Resolutions 1075, 1076 and Ordinance No. 308 are in the final stages of approval, (Evidence Items #26, #27, #28, #44) and will again raise water and wastewater rates to the citizens of Hamilton, despite opposition from one Councilor and vocal opposition from citizens.
Mayor Randazzo, on April 1, 2008, mailed a notice to the citizens of Hamilton, to alert them of the impending increases in usage rates for water and wastewater facilities, adding insult to injury. Evidence Item #67
The Mayor is being dishonest with her own constituents. She is failing to tell them that she is spending federal and state tax dollars, and her own citizen's water and sewer charges, to subsidize new development, development that is overwhelmingly opposed by the residents of Ravalli County. By doing this, she is forcing her own constituents to cover the funding short-falls that she has created in the Hamilton city budget.
VIII. Other Montana Laws Being Violated: Hamilton Elected Treasurer
Mayor Randazzo, by Montana statute (MCA 7-3-201), must provide the citizens of Hamilton with the right to vote for an elected City Treasurer, to comply with Hamilton's Plan of Government (MCA 7-3-201 - 224). This form of government was chosen by the citizens of Hamilton under MCA 7-3-217. Mayor Randazzo has repeatedly refused to hold an election for Treasurer, even after she spent taxpayer funds on a straw poll for her constituents to vote on. A majority told her in this straw poll election, that they did, indeed want to elect a Treasurer. We believe that her continual refusal to carry out her legal mandate is because of the great amount of evidence of misuse of taxpayer money that is embedded in the City’s budget and finance records. We are recommending that you access and audit those records as part of your investigation.
IX. Federal Laws Violated
In 2003, the General Accounting Office provided testimony to the United States Congress that "problems persist in effectively managing grants for municipal wastewater treatment plants". Evidence Item #70.
Billions of dollars of federal funds have been wasted over many years, and continue to be wasted at an alarming rate. This is exactly the problem that we find with the City Of Hamilton's municipal wastewater plant, despite the expenditure of millions of dollars in grant money by Hamilton over the years. We now know that part of the reason for this waste is that some communities (including Hamilton) are using these funds to subsidize new development, in direct violation of federal law, including the Clean Water Act, Clean Air Act and the National Environmental Policy Act.
In 2006, the Hamilton wastewater plant reported two accidental discharges of raw sewage into the Bitterroot River. As we stated in detail, in Chapter 4; Hamilton has failed to resolve long-standing water pollution problems in neighborhoods outside the city boundary, and will continue to neglect these critical areas with the current expenditure of grant money from federal and state agency(s).
In addition to reducing developer impact fees, HDR Engineering and the City of Hamilton have failed to meet minimum analysis and documentation requirements set forth by the federal law, in the May, 2006 Grant Application.
A. Comptroller General Testifies on Wasted Funds
The GAO also found that:
1 - "Many sewer plants have seldom or never met the performance standards they were designed to achieve. Failure of treatment plants to meet performance expectations may not only have an adverse impact on the Nation's ability to meet its clean water goals, but may also represent the potential waste of tens of millions of dollars in Federal, State and local moneys".
2 - "Millions of dollars are being spent to construct sewers and central wastewater treatment facilities to replace septic systems. Because of the inadequate controls over design, installation, and operation, septic systems have become unreliable and temporary. Septic systems are, however, environmentally sound, technologically feasible, and cost effective. The EPA and other federal agencies should increase the acceptance of septic systems by requiring established public management entities to control their design, installation, and operation".
3 - "The EPA must encourage waste treatment management that combines open space and recreational uses with waste treatment goals".
4 - "The EPA must encourage techniques that will reduce total energy requirements"; and most importantly,
5 - The EPA cannot approve grants that do not provide for evaluation of alternative techniques of waste treatment to determine the "best practicable waste treatment technology".
B. Clean Water Act and National Environmental Policy Act Violated
The following federal laws require analysis of advanced, alternative, on-site septic systems:
1 - Clean Water Act, Title 33, USC, Section 1254Q, Parts 1-4, and Section 1342
2 - Title 40, National Environmental Policy Act, Parts 1502 (Alternatives); 1503 (Commenting); 1508.18 (Compliance); and Part 35 State and Local Assistance; Subpart E - Grants for Construction of Treatment Works
These laws also require a high level of public participation when analyzing alternative systems, which is missing in Hamilton's Grant Application.
What we have found:
-no such analysis of advanced, alternative on-site systems is presented in the May, 2006 TSEP Grant Application; making this Grant Application illegal;
-no documentation of public participation for the analysis of alternative systems can be found in the Grant Application, making it illegal.
C. Advanced, Alternative Septic Systems Approved by EPA and DEQ
The EPA and State of Montana, DEQ have approved an advanced, alternative on-site sewer system for use by individuals and communities. (Evidence Item #72) The website link to review it is:
www.orenco.com
The Orenco Community Collection System is in use in the Florence, Montana community and is functioning properly. The DEQ is responsible for inspecting this system and has found no reason to not approve it for wide scale use in the Bitterroot Valley.
The City of Hamilton should be required to evaluate this approved collection system for use by existing homeowners in the Hamilton area. Evidence Item #74
Hamilton must also require that new developments, including Flat Iron Ranch and Area III evaluate this approved system for their massive housing projects, as an alternative to connecting to Hamilton's fragile and overly costly wastewater collection system.
It is estimated that it will cost in excess of $11 million just to construct a wastewater line to Flat Iron Ranch (Evidence Item #31, #32 & #78).
If Flat Iron Ranch is annexed into Hamilton, the citizens of Hamilton (and Montana) will be obligated to fund infrastructure to the project area, potentially adding up to tens of millions of dollars.
By not evaluating the State approved, Orenco Community Collection System as an alternative to this boondoggle, HDR Engineering and the City of Hamilton are creating a potential, future fiscal crisis of enormous proportions. Based on these facts alone, the May, 2006 TSEP Grant Application must be rejected and issuance of further grant funds terminated.
This analysis is required by federal law, and Hamilton's Grant Application is in violation of these laws (as we have referenced in Chapter 5, Section IX B), without this analysis.
D. Our Findings of Fact
The State of Montana and the United States government should re-evaluate the approval of the 2006 TSEP Grant Application and put a "hold" on future grant funds to the City of Hamilton.
We have told Mayor Randazzo and the City Council about the need to evaluate alternative systems at City Council meetings and they have ignored us, in usual fashion. (Evidence item #74).
They are moving forward with annexing and approving new developments, including Flat Iron Ranch and Area in full ignorance of the value of the Orenco collection system to the citizens of Hamilton. The potential financial savings by using this system may be enormous and Hamilton is continuing to misuse taxpayer monies. As grant issuers, you are unaware of the future expenditures that will be required to adequately "sewer" the Flat Iron Ranch development, after it is annexed into the City of Hamilton.
You are being deliberately deceived by HDR Engineering, the City of Hamilton and the owners of Flat Iron Ranch subdivision. Their primary objective in annexing Flat Iron Ranch is to pass the cost of development to taxpayers.
Chapter 6
Public Opposition to Wide Scale Development, Including Flat Iron Ranch and Area III
Our evidence also shows that HDR Engineering and the City of Hamilton, deliberately failed to include obvious and voluminous, written records of opposition to these new developments, by the citizens of Hamilton and Ravalli County. (Evidence Item #31 - City Council Meeting; Flat Iron Ranch Contracts/Impact Fees). TSEP regulations require overwhelming public support for projects that are being considered for funding by the federal and state governments. This support is lacking and this fact provides a major concern for your approval of grant funds (Evidence Items #33, #34, #84 & #85)
I. Citizen Petition to Allow Vote on Annexations of New Developments into Hamilton
A Citizen Petition, to allow the citizens of Hamilton the right to vote on annexation of these massive subdivisions, was circulated during 2007 and is included as evidence of opposition to these large housing developments, that your grant and loan money is being used to pay for. A copy of a portion of the petition, and the signature and filing results are included as Evidence Item #33.
This Citizen Petition provides compelling evidence that support for annexation of large subdivisions (i.e. Flat Iron Ranch and Area III) is lacking; that the citizens of Hamilton demand a "say" in whether or not projects are annexed into their town.
We obtained signatures of 17.6% of the registered voters of Hamilton, exceeding the 15% threshold required to force an election. We originally attempted to complete a ballot initiative but our efforts were thwarted by Ken Bell, Hamilton City Attorney, and a proponent of large scale developments, like Flat Iron Ranch. Evidence Item #33
Our Citizen Petition has been recorded with the Ravalli County Clerk and Recorders Office (Regina Plettenberg).
We presented the completed, and filed, Citizen Petition to Mayor Randazzo and the Hamilton City Council on
September 4, 2007; the results were presented to the community in local newspaper reports (See Evidence Items #33 through #37).
Our Citizen Petition was only accomplished because of the dedication and hard work of dozens of citizens in Ravalli County who are watching their way of life disappear, in a losing effort to stop large, corporate developments from transforming our rural lifestyle to an urban morass, which we find frightening and threatening.
Mayor Randazzo has made it painfully clear that she intends to ignore the Petition, despite the support of her own Hamilton constituents and those of numerous Ravalli County citizens. In an e-mail to one of our associates she made the following statement about why she is choosing to ignore the Citizen Petition, a petition that was accomplished at great expense by dozens of dedicated citizens: “the document was not considered because it wanted a vote on the annexation of anything as small as an acre”, a total fabrication by the Mayor. Evidence Item #40.
In the Citizen Petition, Text of the Measure, the following statement was included, specifically to exempt small annexations: “Individual single-family dwellings, or individual commercial small businesses, that are contiguous to city boundaries, or which are wholly-surrounded within the city limits, are exempt from this measure”.
Again, this is evidence that Mayor Randazzo is being less than honest in her efforts to promote private developments, that are widely opposed by the community.
Just as in the case of an elected Treasurer for Hamilton, Mayor Randazzo is picking and choosing laws, and is extremely biased when considering citizen comments and demands that she chooses to acknowledge (or not), in order to prevail in her quest to promote large, corporate developments.
II. Bitterroot Valley Citizens Speak Their Minds in a Series of Elections – Control Development!
On November 7, 2006 the citizens of the Ravalli County voted to control development by approving an Interim Zoning Initiative that limits house construction to 1 residence per 2 acres; along with a $10 million Open Lands Bond to start preserving open and wild lands remaining in the Bitterroot Valley. Evidence Items #7 and #58. Since that historic moment, citizens have moved to conserve more open lands by changing the County Commission from pro-development to pro-planning/pro-conservations members.
The Interim Zoning Initiative had lead to a full-fledged zoning effort that we are working on today, that will be completed by November, 2008. The citizens of Ravalli County are fighting their hearts out to prevent corporate developers from building thousands of houses that they market to potential buyers around the world. We implore you to consider these efforts by the citizens of Ravalli County when deciding the fate of your extremely valuable grant and loan money.
III. Developers Sue Ravalli County to Force Approval of Unwanted Housing Projects
In an act of total arrogance and defiance of the will of the citizens of Ravalli County, large corporate developers have sued Ravalli County for millions of dollars, for failing to analyze and approve their massive housing projects in an impossible 60 day review period. (MCA 76-3-604). This regulation, along with others that are believed to be unconstitutional, have placed Ravalli County in a position where we must either approve these housing projects, therefore accepting defeat, or sue the State of Montana to overturn these illegal regulations.
On the very day that the citizens of Ravalli County elected new County Commissioners, our previous (pro-development) Commission “settled” with 16 developers, in order to lock-in approval of their building proposals.
A local conservation organization, (of which we are members), Bitterrooters for Planning [BFP] has sued to overturn the settlement agreement, made illegally by our previous Commission. The case is currently in front of the Montana Supreme Court. Evidence Item #59
V. Flat Iron Ranch Developers Interfere in Local City Council Elections
It should be of importance to you that the individuals behind the Flat Iron Ranch development purposely and maliciously, concocted a (successful) political campaign called "Stop the Fighting", to eject three Hamilton City Councilors from office in November, 2007; three Councilors who had worked diligently to stop this corruption during their terms of office (Councilors Scott, Sutherland and Harbaugh).
Attached are P.A.C. reports from the Commissioner of Political Practices that provide evidence that wealthy, Flat Iron Ranch developers spent thousands of dollars to create a political campaign committee called "Citizens for Effective Government", that flooded local media with negative attack adds to remove the three City Councilors from office during elections held on November 6, 2007. By doing so, they succeeded in removing the only obstacles to their plans to complete their taxpayer subsidized, development projects. Evidence Items #60 and #61
Councilors Scott, Sutherland and Harbaugh should be requested to testify about this egregious manipulation of public opinion, that occurred for the benefit of the development community in Ravalli County.
Dennis Unsworth, Commissioner of Political Practices for the State of Montana should be called on to investigate this election tampering by the development community. His phone number is (406) 444-2942.
The financial backers of many of these developments (Ken Madden and Jim Schueler) have hired HDR Engineering to promote their projects at the same time that the City of Hamilton is also paying HDR and relying on HDR to provide “objective” analysis concerning water and wastewater infrastructure “needs” for the City of Hamilton and Ravalli County government.
Jim Schueler is also one of the owners of the already constructed, Arrow Hill Ranch Subdivision, which is immediately adjacent to the proposed Flat Iron Ranch Subdivision. (See Vicinity Map, Evidence Item #1 & #30)
We have, on many occasions, publicly admonished Hamilton officials for creating and maintaining these obvious conflicts of interest, but to no avail. In a February 8, 2007 Ravalli Republic Article, Councilor DeAnne Harbaugh made the following statement in this regard: “I don’t like the fact that Flat Iron has its foot on both sides of the fence”, a clear indication of the obvious conflict of interest known by the general public, but not known (apparently) by your office and other state agencies.
As one would expect, these continuing conflicts of interest have now blossomed into a series of reckless activities and decisions that we have proven to you with concrete, written evidence.
A. To Annex Flat Iron Ranch Violates Montana Law
Flat Iron Ranch is east of Hamilton and should not be annexed into the City of Hamilton. To do so would violate MCA's 7-2-4301, 7-2-4311, 7-2-4734, 7-2-4503, 7-2-4608(2), 7-2-4610 and 7-2-4734. Evidence Items #73 & #84.
At the nearest point, the development is 1.84 miles from the Hamilton city boundary; at its furthest point, 3.05 miles. Evidence Item #30 Beyond and around Flat Iron Ranch are hundreds of acres of prime agricultural land that are owned by the developers behind Flat Iron Ranch, and it is their intent to develop this land in the future, after Flat Iron Ranch is completed.
In an official letter to the City of Hamilton, S.B.C.C. notified Hamilton City Attorney Ken Bell about the potential violations of Montana law; if Flat Iron Ranch is successfully annexed into the city. It is found in Evidence Item #73.
VI. Ravalli County Citizens Embarked on Historic Zoning Effort
As a result of the successful election of November, 2006, that created the Interim Zoning Regulation (1 house per 2 acres), the citizens of Ravalli County have embarked on a contentious and difficult process to apply classical zoning techniques to the land in order to preserve open lands, including agricultural lands and wildlife habitat. (Evidence Items # 68 & #69) Zoning will be in place by November, 2008. The Flat Iron Ranch area is being evaluated for open land preservation by local CPC planning groups.
By continuing to issue grant money to subsidize development, including Flat Iron Ranch and Area III, the State of Montana is neglecting its own citizens, who are attempting to determine their own futures, rather than having development corporations do it for them.
Chapter 7
Conclusions and Expectations
We are hereby asking for an investigation into racketeering activities conducted against the citizens of Montana and the United States; there is a long history of such activities in Ravalli County. Because of our networks throughout the state, we know that the fraud is not unique to Hamilton alone. It appears that the Montana development lobby may have been engaged in suspect operations involving large state and federal grants for many years, and it is our hope that our discovery will be the catalyst for a statewide review of grant processing procedures.
It is the responsibility of grant issuing agencies to monitor funds dispersed from the precious financial resources of Hamilton, Ravalli County, Montana and the United States, at a time when average citizens are struggling just to stay in their homes and feed their children. Montana agencies are the guardians of the Montana Coal Trust. Yet these “trust” funds appear to have found their way into the hands of developers and their associated engineering firms where it is being used by the untrustworthy.
Impact fees are supposed to place the costs of new development with the developers, and away from citizens living in targeted communities. HDR Engineering and the City of Hamilton have cynically touted the beauty of impact fees in the City of Hamilton, March, 2007 Impact Fee Report, while simultaneously shifting the cost of new development upon the community, the State of Montana, and the United States government; to the tune of millions of dollars.
Until now, the citizens of Hamilton and Ravalli County have been largely unaware that their taxes and water/sewer fees are actually being used to reduce impacts fees to developers, and as the general public begins to find out about the public money that has been illegally obtained, they will be outraged. We are making sure that they are fully informed of this systemic corruption, by sharing our report to anonymous news organizations in western Montana.
Chapter 8
Chapter 8 - Evidence Folder; Items #1 through #86
(Modified for GAO/EPA)
[End of Report]