The Montana Department of Environmental Quality has issued final approval for the first phase of the Territory 1889 luxury development in Lakeside, allowing multinational developer Discovery Land Company to begin work on its resort.

The department conducted an environmental assessment to consider the impacts of the development’s proposed water, wastewater and stormwater facilities for the first phase of development, which is limited to 79 residential lots, as well as roads and utility infrastructure. The entire project encompasses a proposed 359 homes, private golf courses and a marina.  

“The Phase 1 facilities represent a small increment to existing resource demands in the Lakeside area, and cumulative impacts across the resource areas analyzed in this EA are expected to be minor when considered alongside past and present actions in the corridor,” officials wrote in the department’s environmental assessment report. 

Future phases of the development will require additional, independent approval, and approval of the first phase does not commit the department to approval of future phases, according to the review. 

The Department of Environmental Quality’s certificate of subdivision approval only addresses the adequacy of water supply, sewage disposal and storm drainage systems. Subdivision design, land use, home construction, internal roads, grading and other associated improvements were not considered by the department. Rather, the Flathead County Board of Commissioners considered these aspects of the project and granted approval through the preliminary plat process in August 2025.  

Discovery Land Company plans to utilize two existing wells and construct a new well to serve the 79 lots in phase 1. Once completed, the third well would be transferred to the Lakeside County Water and Sewer District, which would then be responsible for ongoing operation and maintenance. This transfer is a condition for approval.  

The developer also plans to connect the wastewater collection system to the current Lakeside County Water and Sewer District wastewater treatment facility. A previous analysis by the department of the district’s system capacity concluded that the district has sufficient excess capacity to serve the 79 lots in the first phase of development.  

“Long-term operational impacts are expected to be minor and, in the case of water quality, the centralized wastewater and DEQ-8 compliant stormwater infrastructure would reduce risks compared to the alternative of individual on-site systems,” officials wrote.  

Meanwhile, at its Sept. 15 meeting, the Lakeside County Water and Sewer District Board of Directors voted 3-1 to annex Territory 1889 into the district for the second time since May, following pushback from local advocacy groups regarding voting procedures.  

Ordinance 26-1 was first passed unanimously by the board at its May 19 meeting. The ordinance incorporates Territory 1889 into the Lakeside County Water and Sewer District, allowing the development to hook up to the district’s water and sewer services.  

Discovery Land Company relied on this annexation in its applications for development approval, making it a crucial step in the development’s progress. Without annexation, the development would have to construct its own water system and wastewater treatment facility. 

Following the passage of Ordinance 26-1, though, several community advocacy groups opposed to the development, including Citizens for a Better Flathead and the North Shore Water Alliance, took issue with what they viewed as violation of procedural rules. 

Under Montana code, as applied to local governments, “an ordinance must be read and adopted by a majority vote of members present at two meetings of the governing body.”  

Since the board had only read Ordinance 26-1 once, advocacy groups argued the board was in violation of procedure and the ordinance was not valid.  

What’s less clear is whether the two-reading requirement applies to the boards of local utility districts, Board President Tim Kluesner said at the meeting.  

“We’ve done some research on this. We do believe that we had followed Montana law and have been following Montana law as per MCA code back in May when this was passed... There are some districts in the state that do second readings, and there’s districts in the state that do not do second readings. So, we had a conversation with an attorney, and they recommended that we do a second reading on this just to cover some bases,” Kluesner said.  

During public comment, members of the advocacy groups thanked the board for holding a second reading of the ordinance but still expressed frustration over the annexation itself and concerns that the district does not have the excess capacity it claims to have. Under Montana law, water and sewer districts can only annex a subdivision without an election by district residents if there is excess capacity. 

“The district has consulted with the Department of Environmental Quality,” Director Marc Liechti said. “They have to go through it with us. We have to prove to them that we have capacity.”  

Newly elected Director Darcy Lard acknowledged the frustration of residents during public comment before ultimately voting against the ordinance.  

“As a board, it’s our fiduciary duty to make decisions in the best interest of the district, but I also feel it’s our responsibility to listen and represent the concerns of the ratepayers and the public,” Lard said. “There’s been some concern about our public image and public trust. I feel it’s been a bit eroded. I am concerned, regardless of the merits of this ordinance, that the ratepayers are feeling unheard.” 

“I know there's a lot of issue about discovery and Territory 1889, and there's lots of people that don't like them. I understand that,” Kluesner said at the conclusion of the lengthy and often tense discussion about Ordinance 26-1. “But we have a responsibility to take care of effluent from really anybody the best way we can... Talk to the people who are involved in it, and we can help you understand. And by you asking questions, it will help us understand, too. We’re all in this together.” 

Reporter Elsa Ericksen can be reached at 406-758-4459 or [email protected]. If you value local journalism, pledge your support at dailyinterlake.com/support.