The money trail – Libby’s $8 million economic development grant nearly spent

Money poured into Libby during the scramble to determine who had been exposed to asbestos, who was sick, what needed to be cleaned up and how to get it all done.

Beginning in late 1999, the federal government dipped into its coffers to lead the charge, with the Environmental Protection Agency heading the cleanup and the Agency for Toxic Substances and Disease Registry handling an unprecedented health screening program.

By LYNNETTE HINTZE
The Daily Inter Lake

http://www.dailyinterlake.com/articles/2004/11/16/news/news02.txt

As word spread about the extent of the contamination in Libby from asbestos linked to the W.R. Grace vermiculite mine, tourists began canceling vacations to Libby, home sales slumped and town promoters began to panic.

Enter Sen. Conrad Burns, R-Mont.

Responding to Libby’s plea for help, Burns asked the Senate Appropriations Committee in early 2000 to consider special funding needs for Libby.

Specifically, he asked for and got $3.5 million for St. John’s Lutheran Hospital and $8 million for the city to use on economic development.

When the $8 million arrived in Libby, city leaders had to decide how the money would be managed.

"It was a difficult thing to decide where the money was going to be deposited, whether it would be the state, county or city," recalled Paul Rumelhart, executive director of the Kootenai River Development Council.

Once the decision was made to have the Libby City Council ultimately control the purse strings, the Libby Area Development Co. was formed to review project proposals and make recommendations to the council.

In turn, the Lincoln County Economic Development Council contracted with the newly created development company to help with the review process, particularly projects that involved job creation.

The Lincoln County Economic Development Council changed its name about 18 months ago to Kootenai River Development Council.

Four years later, roughly $750,000 is all that’s left of the original $8 million. The money generated about $750,000 in interest.

The pot was split somewhat evenly between grants and loans, with several programs aimed at low-income residents receiving grants. These included the Community Health Center, Families in Partnership and the Rocky Mountain Ecosystem.

Many projects were clearly targeted for economic development — expansion of Turner Mountain ski resort, the addition of nine holes to the golf course, improvements to Flathead Valley Community College’s Lincoln County Campus, and loans to businesses such as Montana Float Co., Libby Woodworks and Kootenai Paving.

In retrospect, Libby Mayor Tony Berget said he believed the process of divvying up the money worked well.

"There are projects I wouldn’t have been for, but I really think it did go well," Berget said. "You’ll always have controversy with something like this."

One element of controversy came to a head earlier this month when the Libby City Council voted to disband the Libby Area Development Co. and take charge of remaining disbursements. At issue was a $250,000 grant for a research center to study the health effects of tremolite asbestos fibers found in Libby vermiculite.

The development company maintained the Center for Asbestos Related Disease, to which the research center would be attached, should be loaned the money.

Rumelhart said he’s disappointed the council is disbanding the development company.

A $1.2 million grant to the Kootenai Heritage Council to refurbish a community gymnasium and equip it with a performing arts center also has been criticized by some Libby residents, though Rumelhart said he hasn’t heard any direct complaints.

"Fifty thousand people went through this facility this year," he pointed out. "It’s been used by many of those people who didn’t want it done. And every organization that has used this facility for a fund-raiser has done better than ever before."

Rumelhart has a long history with the gymnasium project.

As president of the Kootenai Heritage Council, which oversaw the completion of the facility, he was involved from the get-go, when the idea grew out of the 1996 Montana Heritage Project. The charge was to transform the deteriorating 1948 gymnasium into a performing arts and community center.

It cost $2.1 million to complete the project. In addition to the $1.2 million allocation from the $8 million federal money, private donations and another federal grant helped pay for it.

Asbestos victim advocates Les Skramstad and Gayla Benefield are among the vocal critics of the way the $8 million has been distributed.

Benefield called the development company a "good ol’ boys club that evolved into a small self-appointed group." She pointed to the $609,000 the development company and the Kootenai River Development Council have received over the past four years for operating expenses.

Rumelhart said those reimbursements covered not only operating expenses but also consultant fees, reports and some advertising.

"It didn’t go into someone’s pocket," he replied.

Skramstad faulted the group for failing to have an adequate system of checks and balances to keep tabs on the money. He also criticized the group’s rejection of a proposal to help the local VFW club pay off a loan.

"The VFW needs a grant and they’ve been turned down every time because they serve liquor," Skramstad said, noting that other recipients of grants or loans, such as the golf course and ski resort, also serve liquor. "I think it stinks. If anyone deserves a boost it’s the veterans."

The development company maintained paying off a loan for the VFW didn’t constitute economic development.

But other appropriations have been given to pay off loans. The FVCC Lincoln County Campus was granted $87,299 to use for loan payments, and just over $1 million of the federal windfall was loaned to the city of Libby to pay off water and sewer bonds.

The city has yet to pay back any of its loan, Rumelhart said.

The remainder of the $8 million grant will be used at the City Council’s discretion, with economic development foremost in mind, Berget said.

"The council is looking at how can we create jobs," he said.

Features editor Lynnette Hintze may be reached at 758-4421 or by e-mail at [email protected]