A Flathead District Court ruling has returned planning control of Whitefish’s embattled two-mile “doughnut” area to Flathead County, declaring a referendum passed by Whitefish voters is invalid.

In an order issued Monday, District Court Judge David Ortley lifted an injunction and said the county may apply county zoning regulations to the doughnut area. He also denied motions for summary judgment by the city of Whitefish and a group of intervenors.

The Whitefish City Council will decide whether to appeal Ortley’s ruling to the Montana Supreme Court, but attorneys said earlier this year it’s likely the case will go to the high court. The council will meet in a closed session on Monday with its legal counsel.

The tug-of-war over planning jurisdiction in the doughnut goes back 12 years, but the latest court battle started about a year and a half ago when four Whitefish-area residents sued over the validity of a referendum passed by voters in November 2011. That referendum repealed a 2010 planning agreement for the two-mile area around Whitefish.

In January 2011, Whitefish sued the county, alleging the referendum was legal.

Kalispell attorney Duncan Scott, who represents plaintiffs Lyle Phillips, Anne Dee Reno, Turner Askew and Ben Whitten, said Ortley’s ruling “is a welcome victory for the 5,000 doughnut property owners who have suffered for more than five years under Whitefish’s ‘regulation without representation’ form of government.

“In addition to the referendum being illegal, as Judge Ortley has ruled, it was an insult to doughnut residents, who were the affected parties but could not vote on it,” Scott said, noting a county survey that showed more than 70 percent of the affected property owners want the county to govern them.

Scott said he hopes a majority of the Whitefish City Council will vote against an appeal of Ortley’s ruling.

“Whitefish cannot win this fight,” he said. “If the Montana Supreme Court reverses Judge Ortley, which we think is highly unlikely, and somehow the old 2005 interlocal agreement springs back to life, then the county itself can put a referendum on the ballot to repeal the 2005 interlocal agreement.

“In a countywide election, where doughnut residents can actually vote, does anyone seriously think Whitefish would prevail?” Scott said.

The original 2005 interlocal agreement gave Whitefish zoning and planning control of the doughnut, but in 2008 the county unilaterally rescinded the agreement based on the premise that doughnut residents have no representation since they can’t vote in city elections.

A city critical areas ordinance that imposed drainage-related regulations in the doughnut area was the proverbial straw that broke the camel’s back for the county.

Both government entities then worked together to forge a revised interlocal agreement that was adopted in 2010 as a compromise.

The compromise agreement allowed either party to withdraw at any time with a one-year notification of termination. Flathead County followed through with that notice of termination once the referendum process was underway.

“The fact that the court finds the referendum invalid does little to negate the city’s clear intent to not be bound by the 2010 interlocal agreement,” Ortley stated.

He supported the county’s rationale that it “matters little whether the parties were required to honor the one-year termination,” or whether the breach by the city or the county excuses further performance of the interlocal agreement.

“This is the most pragmatic approach to this conundrum the court has heard yet,” Ortley said.

A key issue in the legal challenge was whether the Whitefish City Council, which passed a resolution directing the city manager to sign a lawsuit settlement that adopts an interlocal agreement, can be overturned by referendum.

“The answer depends upon whether the act of the city ... is a legislative or an administrative act,” Ortley said. “It is indisputable that administrative acts of a municipality are not subject to referendum.

The plaintiffs maintained a legal settlement is an administrative act, not a legislative act.

After researching other Montana court cases, Ortley said he determined the city’s resolution was an administrative action. “As such, it was not subject to the people’s power of referendum,” he said, denying the motions for summary judgment by the city and the intervenors.

Ortley further ruled there is no valid interlocal agreement between the two parties. Until the county adopts its own zoning for the doughnut — which it had begun to do when the court imposed an injunction stopping the interim zoning from moving forward — the city of Whitefish has the authority to enforce zoning in the two-mile area.

Features editor Lynnette Hintze may be reached at 758-4421 or by email at lhintze@dailyinterlake.com.