BROWNING — The defunct town of Browning will turn over and sell essentially all of its assets to settle debts with the Blackfeet Tribe and put some cash in the bank, though not nearly enough to settle possible liabilities stemming from a lawsuit and other unsecured creditors.

Browning is an incorporated municipality that serves as the hub of the sovereign Blackfeet Reservation, home to the Blackfeet Tribe. Two winters ago, without enough money to pay employees, the town’s aldermen and mayor failed even to get consensus to vote to disincorporate the town. Instead, they just stopped meeting.

The town went broke and blamed its financial troubles on the Blackfeet Tribe and the tribe’s Two Medicine Water Co., two entities the town has clashed with for years over management of the water utility that serves residents.

The tribe has long said the town must accept responsibility for its own poor fiscal management, dismissing the suggestion that the utility dispute caused Browning’s problems. The tribe says the town owes it money, a share of water bill collections that Browning agreed to pay so the tribe could pay debts it incurred to build the system that brings water into town.

Everything is made more complicated by the town failing to perform annual audits, required under the state Constitution, for the past several years. That means it’s nearly impossible to track what has happened with money the town collected from utility bills, taxes and fees. A court document indicates the last available audit is from 2010.

A state-appointed receiver, who has collected the town’s mail, managed its bills and handled other issues since Browning stopped functioning, wrote in one of his reports:

“To be blunt, the (town’s) records available probably cannot be relied upon.”

Browning will sell and transfer its assets to the tribe under an order from Lewis and Clark County District Judge James Reynolds, issued Aug. 26. That settlement will resolve all ongoing disputes between the tribe and the town. The transfer of property and assets to the tribe will settle three cases in tribal court that could have led to the town owing more than $2 million.

The sale of other assets to the tribe’s Siyeh Corp. will be held in a court-managed escrow account until the resolution of a lawsuit filed by Sandra Reevis, Aurice Show, Sandra Racine Gilham and others against the town of Browning and the state of Montana.

In 2015, that group sued on behalf of other Browning residents and people who have made tax and utility payments to the town, saying they deserve governmental stability and have been financially abused and deprived of government services for decades.

Their initial lawsuit says the town charged for water, sewer and trash services that were provided by the tribe, that drinking water was not treated and garbage was allowed to pile up, roads were not maintained, there were no emergency management services, dogs roamed the streets without animal control operations and fees were double-charged.

The group says it is owed $3.2 million, which is far beyond the assets of the town, even after selling off things like City Hall to the Siyeh Corp. to bring in a total of an estimated $650,000.

An oral argument hearing in the lawsuit is set for Sept. 20 in Helena and expected to last several hours.

Plaintiff claims

Under state law, if a town fails to have a meeting of its council members for two years, it dissolves. After months of failed efforts to figure out where the town stood financially and employees going unpaid, signs went up on the doors of Browning’s City Hall two winters ago saying “Closed as of Feb. 1, 2016.” That’s considered the start of a two-year period for automatic disincorporation, putting an expiration date on Browning of February 2018, or a little over five months from now.

A sign on the door of Browning’s City Hall in February 2016 read closed “until further notice.” Holly Michels/Lee Newspapers

The group of Browning residents who sued say the town for years transferred money from its water fund to help patch negative balances in its general fund, and $161,300 moved was never repaid. The transferred money went to cover payroll, cleaning fees and other expenses the plaintiffs call “extraneous.”

Based on audits from 2003, 2006 and 2010, the plaintiffs also say they overpaid $816,825 for water, $37,707 for sewer services and $32,510 for solid waste disposal.

The town also charged each customer a $5 monthly fee for “capital improvements” from February 2012 to September 2013, but the plaintiffs say this fee was already included in the base water rate paid by customers. Based on town records showing 1,667 customers in the service area, the overcharge was $175,035 over 21 months.

Because of the lack of audits, the plaintiffs say it’s impossible to tell exactly how much the town overcharged for metered water payments. But customer bills show “gross misuse,” court documents say. In one month, an elderly woman was charged $1,400 for utility services.

Plaintiffs also say they were overcharged about $26.23 a month per customer for groundwater and $27.77 for surface water once the town switched to getting its drinking water from Two Medicine Lake. That makes a total of $1.8 million in over-payments for water over 40 months.

The tribe took over water, sewer and garbage services starting in October of 2013, but the plaintiffs say the town still collected $238,000 in customer payments.

All that adds up to the $3.2 million the plaintiffs say they and other residents who lived in Browning and paid city taxes and fees are owed.

Tribe’s claims

The Blackfeet Tribe has stepped in to provide services, but said it is “hamstrung” from improving services without the property and assets of the town.

“For over a decade, the town abused public funds and charged the public more money than what was needed to operate the utility system and provide governmental services in Browning,” tribe attorney Derek Kline wrote in July.

The group from Browning that filed the lawsuit also said the tribe — which it says has provided a partial solution to their problems in getting essential services — needed the settlement to improve those services.

As part of the settlement, three cases in Blackfeet tribal court will be stayed, including a lawsuit from the tribe against the town, mayor and four aldermen; a lawsuit from the tribe’s environmental office against the town and the receiver in his official and personal capacity, and a lawsuit from the tribe’s water company against the town and receiver in his official and personal capacity.

A sign outside the offices for the Blackfeet Tribe in Browning. HOLLY MICHELS/Lee Newspapers

The tribe says it is owed $2.6 million from the town in the three lawsuits it’s filed, but will forgo that in exchange for taking ownership of the town’s water and sewer infrastructure, roads and sidewalks, water rights and land the town owns, such as a city shop, park, sewer lagoon, dump, rights of ways and areas set aside for development.

The purchase prices the tribe proposes seem low in some cases — $50 for the 3.7 acres east of the city shop, for example. But prices for buildings associated with the sites are closer to what market rate might be, such as $211,204 for a building to use for garbage services and $31,419 for the animal control building.

The tribe also will assume water storage tanks and equipment, town vehicles like dump trucks, pickups, the dog catcher van and fire engines, as well as street sweepers, loaders, tractors, a bailer and plows, lawnmowers, a boat trailer and more.

To generate cash for the town, the tribe’s Siyeh Corp. plans to buy the City Hall complex, where the Glacier County commissioners hold meetings, Lions Park and the license to broadcast the local Thunder Radio, plus other property including the fire hall. That will result in $650,000 that will go into the town’s receivership estate.

The town owes $26,000 to Kansas State Bank and $23,400 to First Interstate Bank. There’s also a retirement obligation to the fire department of $41,700 and $200,000 owed to unsecured creditors. That’s in addition to possible liability from the lawsuits, both in Lewis and Clark County District Court and tribal court.

A notice needs to be published in all major newspapers giving potential creditors 45 days to make any claims. A receiver report from May shows the town had $132,514 in cash and $41,211 for the firemen’s pension. There were bills totaling $215,065.

The school district also has asked to have an emergency generator and a structure and land that was part of the town’s recycling and transfer facility that is next to the school district property.

State involvement

The tribe and plaintiffs blame the state for not acting earlier and making sure the town performed annual audits, as required by the state constitution.

“The deep and longstanding financial abuse of the residents of Browning by the town since at least 2003 would not have been so severe but for the inaction of the state and its failure to insure strict accountability of public funds under the Montana Constitution,” Kline wrote.

The lawsuit in Lewis and Clark County District Court names the state of Montana as well as the town of Browning as a defendant, but the state is fighting to have Glacier County, where the town and a large part of the Blackfeet Reservation sit, as part of the lawsuit. It also says it should have no role in figuring out the messy financial situation since state never collected, received, or retained any of the taxes or fees the plaintiffs are complaining about.

The state has said Glacier County should be named as a party in the case, citing a state law that says any money left in the town’s account after it dissolves would revert to the county. The state was not opposed to the town and tribe reaching a deal. Unlike the other parties, it believes the town will have money left after paying some creditors.

But neither the town nor group of residents that filed the lawsuit think the county, which has its own financial problems, should be involved.

Documents filed by the plaintiffs say audits of Glacier County have shown flawed auditing, accounting, budgeting and internal control difficulties, and that the county is behind on 2015 and 2016 audits. A county cash report from June 2017 showed 26 county funds with negative balances totaling $6.7 million.

They also say because the town’s receiver, Robert Denning, has done work for the county, it’s a conflict of interest.

Kline wrote in court documents that the county joining the suit “only serves to minimize the state’s liability exposure from its failure to ensure strict accountability of public funds in Browning.”

Because the town is incorporated but sits on the reservation, it’s a complicated situation. Legal documents from the tribe’s attorney perhaps sums up the situation best:

“This is a very unique situation before the court, as it involves a federally recognized Indian tribe and a town that is situated within the exterior boundaries of the Blackfeet Reservation, with a population that is 93 percent Native American.”