Committee weighs using resort tax for fire equipment amid ownership, leasing and legal questions

Chair opened the meeting by introducing an agenda item on annexation and “an amendment to the rural fire department contract to incorporate resort tax for emergency capital expenditures,” seeking guidance on whether resort-tax dollars could pay for equipment the city would not own (S1). The question matters because several assets the city funds, such as sidewalks, are not owned by the city, and committee members worried that a requirement for city ownership could bar resort tax from paying for otherwise eligible capital needs.

Why it matters: resort tax is a restricted revenue stream and the committee said a legal determination on ownership would change how the FY2027 budget is built. Committee members said staff will assume an additional 7 mills for planning purposes but must be able to roll that assumption back if legal advice prevents using resort tax for certain purchases.

Committee members pressed staff on specific ownership and financing scenarios. One line of discussion explored whether the city could own equipment and lease it to the rural fire district to preserve eligibility and reduce liability: “we own it, but it’s leased then to the fire department essentially,” a committee member said, framing leasing as a way to preserve use while dealing with insurance and liability questions (S4). Members also discussed taking a loan to finance equipment if ownership is required, noting that lenders typically require an insurable or financial interest in the asset: “you can’t get a loan of something you don’t own,” a committee member said (S1).

Questions about mutual-aid use and liability surfaced when one committee member asked whether city-purchased fire equipment would be available when the rural district assists other areas, including out-of-state operations: “If the city purchases fire equipment… Is that fire equipment then available to the bridal fire district to ... assist other districts even as far as California for firefighting,” the member asked, raising response-time and equipment-type concerns (S5).

Legal route and timing: members asked whether to seek a second legal opinion and whether an opinion from the Montana Attorney General would be required. Staff warned an AG opinion could take months, so the group discussed short-term contract or loan approaches while awaiting definitive guidance: “unless and until we get an opinion from the attorney general,” staff said, the committee will continue working on contract language and contingency budget scenarios (S3).

Budget implications and next steps: staff and members said they would build the FY2027 budget with the extra 7 mills in mind but prepare to remove that assumption if a legal opinion forbids the proposed use of resort tax. Staff will continue negotiating contract language that clarifies ownership, leasing and accounting for a separate resort-tax account; the resort tax board is scheduled to present its recommendations to the council the next day, and related expenditures are posted on the city website for review.

The committee did not take a formal vote on the contract amendment; members asked staff to pursue clearer contract language and legal guidance as the next step.