Montana State Parks got some welcome good news this week as the agency struggles to address a potentially costly problem stemming from how part of West Shore State Park was acquired 50 years ago.

Last year, Montana Fish, Wildlife and Parks discovered that a majority of the park on Flathead Lake has for decades been obligated to federal management requirements that are inconsistent with its current use as a popular boat access and recreational area.

The state wildlife agency’s initial cost estimates to correct the problem ranged as high as $14 million.

Agency Director Jeff Hagener told the Montana State Parks and Recreation Board during its regular meeting Wednesday that a preliminary appraisal put the property’s cost closer to $6 million.

“Apparently, right now if people are interested in property, the values are depressed around Flathead Lake, so they’re actually lower than anticipated,” Hagener said, but emphasized that a formal appraisal still needs to be completed.

In 1966, the state resolved a land dispute by acquiring a 76-acre parcel adjacent to the park, after the agency learned it had unknowingly encroached on the neighboring private property by adding improvements including picnic tables and an outhouse.

The state arranged a land swap with the owner, trading a portion of a wildlife management area that had been purchased with federal money through the Robertson-Pittman Act. The federal program provides states with money collected from excise taxes on firearms and ammunition.

“When we do that, there’s a lot of strings that get attached to that property,” explained Adam Brooks, who heads up Fish, Wildlife and Parks’ Federal Aid and Compliance Bureau. “Language in the deed acknowledges the federal funding source, and the state also has to comply with federal funding requirements. The property must continue to be used in perpetuity for the original purposes of the grant.”

When the land changed hands, the requirement that it be managed for wildlife conservation — known as an “encumbrance” — transferred to the new addition to West Shore State Park.

That encumbrance went undiscovered for nearly 50 years, until Fish, Wildlife and Parks staff discovered it last year.

Hagener’s chief of staff, Paul Sihler, told the commission in April that there are two options to regain compliance with the federal law: repay the U.S. Fish and Wildlife Service for the park property, or transfer West Shore State Park’s encumbrance to other state lands that can match both its present-day dollar value and wildlife conservation value.

Failure to bring the encumbrance into compliance would mean the loss of federal funding under the Pittman-Robertson and Dingell-Johnson acts, which provided over $27 million to the agency in the current fiscal year — more than a quarter of the state agency’s budget.

During Wednesday’s meeting, parks board member Diane Conradi of Whitefish questioned whether the encumbrance was an immediate concern.

“I’m not convinced of that, and I’m hoping we can kind of back off that proposed solution to what might be a nonexistent problem,” Conradi said. “I think the solution appears a little knee-jerk to me, in terms of those numbers.”

Hagener responded that the federal agency had advised that the park land encumbrance was a problem, adding, “They do watch us pretty closely, and they’re pretty heavy-handed.”

A working group consisting of park board members, wildlife commissioners and agency staffers will begin meeting next month to discuss potential solutions, Hagener said.

Brooks, a member of the working group, said Thursday that refunding the money is an unlikely option, given the limited funds available to pay back to the agency. Federal funding can’t be used, and he said it’s “a little gray” as to whether state revenues from hunting and fishing licenses would be eligible.

During Wednesday’s meeting, park board member Jeff Welch said he prefers transferring the encumbrance, and Hagener agreed.

Sue Daly, Hagener’s chief of administration, said Thursday that the agency is still eying three wildlife management areas that were purchased with money from the state’s general fund under former Gov. Brian Schweitzer.

These parcels are on the North Shore of Flathead Lake and on the Marias and Yellowstone rivers.

An earlier estimate of the properties’ combined value came out to only about $4 million, however, leaving a significant shortfall — even under the latest estimate of West Shore State Park’s value.

“Those ones we did identify are the low-hanging fruit. Those are the easy ones, but if the price comes in higher we’re going to have to look harder,” Daly said, noting that their appraisals could also come in lower than expected.

She said an appropriation from the state to purchase eligible land would also be a challenge. The state provides virtually no funding to Fish, Wildlife and Parks, which gets its budget almost entirely from federal dollars and fishing and hunting license sales.

“That is an option, but it’s not a preferred one,” Daly said.

The U.S. Fish and Wildlife Service had not yet imposed any deadlines on the state to resolve the issue, but Hagener said he aims to present possible solutions to the board by mid-September.

Reporter Sam Wilson can be reached at 758-4407 or by email at [email protected].