Administrative Rules of the State of Montana

BEFORE THE DEPARTMENT OF COMMERCE

OF THE STATE OF MONTANA

In the matter of the adoption of New Rules I and II pertaining to the administration of the Montana Historic Preservation Grant (MHPG) Program

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NOTICE OF ADOPTION

TO: All Concerned Persons

1. On November 8, 2019, the Department of Commerce published MAR Notice No. 8-94-175 pertaining to the public hearing on the proposed adoption of the above-stated rules at page 1926 of the 2019 Montana Administrative Register, Issue Number 21.

2. The department has adopted NEW RULE I (8.94.3101) and NEW RULE II (8.94.3102) as proposed.

3. The department has thoroughly considered the comments and testimony received. A summary of the comments received and the department's responses are as follows:

COMMENT NO. 1: A commenter seeks clarification on when funds would be made available to grant recipients.

RESPONSE NO. 1: The legislature must approve projects and funding. In addition, the legislature will determine when funding will be available. The department will present its recommendations for grants to the legislature's appropriation committee prior to January 15, 2021.

COMMENT NO. 2: Comment was received requesting an additional level of grant allowing for smaller grant amounts to be requested and modeled on Humanities Montana "Opportunity Grants" allowing requests up to $1,000. Such a design would allow the replacement of a window with an energy efficient pane and UV protection for exhibits.

RESPONSE NO. 2: There is no minimum amount required for grant requests or awards. The guidelines allow applications to include multiple needs. For example, a museum could upgrade one window or all windows, doorways, address accessibility, code improvements, add archival shelving, and acquire exhibit cases. The design of the program intends to provide flexibility to diverse project needs.

COMMENT NO. 3: Comment suggested looking at the Cultural and Aesthetic Grants Program application process as a model that addresses some of the disparity in capacity between larger and smaller organizations.

RESPONSE NO. 3: As instructed in SB 338, as the department drafted the program guidelines and application, it looked to other programs as examples, including the Montana Arts Council Cultural and Aesthetic Grants and the Treasure State Endowment Program (TSEP). Additionally, we looked at program examples from other states that offered comparable and successful models.

COMMENT NO. 4: Comments received that some of the requirements will make the program impossible for Montana's smaller museums, such as (1) requirement that organizations have documents like strategic plans, operating plans, and fully audited financials (2) reimbursement grant requires small museums to have the funds up front to get projects started (3) requirement that organizations go through full RFP process.

RESPONSE NO. 4: Organizations are not required to conduct strategic plans, operating plans, or fully audited financials to be eligible or competitive for grant funding in the program. As part of the application process, providing such materials when available helps to set the context of the institution and the project. The guidelines will be updated to clarify the language to accept financial audit or other similar financial information to determine financial need and capacity of the applicant. We recognize the great variance between Montana's museums and the resulting difference in planning needs of these diverse institutions. Applicants should feel comfortable submitting any plans created, whether that be a more succinct board-created annual strategy or a full-scale strategic plan. If a plan is not available, then an organization can articulate its goals in response to the application questions. We will consider adding clarification language in the program guidelines to encourage applicants to submit planning documents or provide information to identify how the project fits into the short- and long-term goals and plans of the organization.

Program reimbursement grants will not require funds up front. Project funds are dispersed by submitting draw requests and applicable invoices to the department for processing. Projects will have multiple draw requests, depending on the project size, timeline, and budget. While we do request time to process such draws, the department recognizes the need to expedite such requests as quickly as possible. The department will be in regular communication with each grant applicant and/or administrator throughout the startup process, draw requests, and close out process.

A full competitive request for proposal procurement process is not required or necessary for all projects. The required level of procurement depends on the value of services sought or products needed. For projects over $50,000, applicants are eligible to include 10% of the funds requested toward the administration of the project, meaning a smaller museum could obtain funds that address facility needs and obtain project administrative support.

COMMENT NO. 5: Comment received that as part of the Museums Act, the Montana Historical Society will receive operating funds as they move forward with their new building. Why not give the same assistance to the rest of Montana's museums?

RESPONSE NO. 5: SB 338 established specific criteria for the Montana Historic Preservation Grant program, which were used as the basis for these guidelines. Operating expenses do not appear to be related to the specific criteria established in the bill and are therefore not eligible.

COMMENT NO. 6: Comment received that the Department of Commerce offer some assistance in helping small museums prepare for and apply for these grants. Assistance with professional planning, financial audits, etc. would be greatly appreciated.

RESPONSE NO. 6: Similar to other technical assistance and grant programs in Commerce, the Montana Historic Preservation Grant program will provide technical support on the project and application process. While professional plans and financial audits are encouraged, they are not required; our technical assistance will help applicants identify other financial and technical resources available to strengthen the application and the overall project. Project related planning and administrative costs are eligible expenses for projects that are awarded $50,000 or more.

COMMENT NO. 7: Comment received that the guidelines lean perhaps unduly toward infrastructure assistance, which is available through other state and federal programs, and especially private investors have access to such plus the ability to tap private capital markets. Museums require equipment and materials.

RESPONSE NO. 7: The aim of the guidelines and application is to meet the requirements of the legislation, including infrastructure, and opening eligibility to public and private applicants. Historic preservation projects typically are not eligible for most state and federal infrastructure programs. The draft guidelines consider eligible museum infrastructure to include materials, equipment, and upgrades that directly contribute to the preservation or directly impact the maintenance, display, or care of collections. The department will consider clarifying eligible activities in

the guidelines to include more detail to better assist potential applicants.

COMMENT NO. 8: Comment received stating that overall we are pleased with what we see, and we are grateful that your department sought our input in creating the program framework and incorporated this input. Certainly, Commerce staff who worked hard on this have good instincts on the priority issues of historic preservation. Thank you.

RESPONSE NO. 8: Thank you for your comment.

COMMENT NO. 9: Comment received that funding should be capped at $50,000 with a one-year waiting period. Funding should be targeted, as narrowly as statute will allow, to nonprofit and local government-subsidized museums and historic sites.

RESPONSE NO. 9: The guidelines aim to meet the requirements of the legislation in making both public and private entities eligible for grant funding. Non-profits are not required to have a match for the grant, while for-profits must demonstrate a match. The guidelines further aim to provide flexibility to a wide array of project types in diverse areas of Montana. Providing a higher capped amount allows for institutions to effectively address and resolve significant issues and reallocate funds to other operational needs. The department will consider clarifying the guidelines to request applicants provide a prioritized list of activities within an application, as applicable, to reflect an applicant's need.

COMMENT NO. 10: Comment received that funds should not be used for institutional operating funds.

RESPONSE NO. 10: SB 338 established suggested criteria for the Montana Historic Preservation Grant program, which were used as the basis for these guidelines. Operational funds and personnel services are not eligible activities.

COMMENT NO. 11: Comment received that capital improvements should be allowed up to the $50,000 amount but needs beyond that should be met with local capital campaigns or other state and federal programs. The program will be overwhelmed if it tries to meet six-figure needs.

RESPONSE NO. 11: The guidelines aim to provide flexibility to a wide array of public and private project types that are solving the most critical of needs in diverse areas of Montana. The guidelines aim to enable grants to work in coordination with other private and public funding, including grants, tax credits, and loan financing. Collectively, this regional array of financing opportunities better positions Montana applicants for national opportunities with match dollars and leveraging potential. As our guidelines point out on page 3: "The program coordinates with wider historic preservation technical assistance available and utilizes the diversity of funds to address both the financial and preservation gaps of projects. The program funding invests in the critical point to help projects move forward, catalyzing local revitalization and economic growth."

COMMENT NO. 12: Comment received that funds should be eligible for museum exhibits, interpretive programs, promotions and marketing, events, advertising, paid internships, professional development, and travel.

RESPONSE NO. 12: SB 338 established suggested criteria for the Montana Historic Preservation Grant program, which were used as the basis for these guidelines. Exhibits, interpretive programs, promotions and marketing, events, advertising, paid internships, professional development, and travel do not appear to be related to the specific criteria established in the bill and are therefore not eligible. We recognize the importance of these needs of Montana's museums. As part of our program technical assistance, we will guide prospective applicants toward other private and public funding. The design of the MHPG program allows for organizations to submit multiple and distinct needs in one application, allowing the organization to target other state, regional, and national funds in coordination. For example, a museum may apply for exhibit lighting and displays in combination with equipment directly connected to preservation of collections from the MHPG program while submitting for interpretive funding from a state and national grant opportunity.

COMMENT NO. 13: Comment received that the current rules are supported. They very much like and compliment the development of the grant program, especially the details that are noted for qualifying applications, clarifying the eligible projects, explaining the application submission process and the requirements that go along with it. Because these will ultimately seek and need legislative approval, we feel the guidelines need to be in this current form with some qualifications and a great deal of detail. This will allow a system that will be helpful in getting applications from across Montana, spark and assist our local rural museums, and hopefully keep tourists in our rural areas longer, where they will spend more dollars in our local economies.

RESPONSE NO. 13: Thank you for your comment.

COMMENT NO. 14: Comment received stating thanks to everyone involved with crafting the guidelines and the application information for this wonderful bill. The Department of Commerce and the Community Development Division has done a really good job of being very clear and straightforward with translating the goals of the legislation into a pretty understandable packet of information.

RESPONSE NO. 14: Thank you for your comment.

COMMENT NO. 15: Comment received stating a belief that this program has a tremendous capacity to assist local museums, heritage properties in large and small communities. Montana should be proud to have passed such forward-looking legislation.

RESPONSE NO. 15: Thank you for your comment.

COMMENT NO. 16: Comment received about concerns about some of these projects needing planning up front in order to have good applications to be considered though the process. Having planning funds available ahead of time, projects could identity underlying issues, and better prepare applications.

RESPONSE NO. 16: Planning is not a requirement for applicants and will not necessarily make a project application more competitive, although it does help to provide detail and context to an application. Planning is an eligible activity for projects over $50,000 and up to 10% of the total grant requested. For project applicants determining that planning work should commence before MHPG funds are either applied for or dispersed, other state, federal, or private grant programs provide planning funds for feasibility studies or architectural reports. Other state, federal, and private grant opportunities can assist with planning for historic buildings and can work in combination and coordination with MHPG funds.

COMMENT NO. 17: Comment received that some eligible projects have intangible values and may not rank as competitively with projects that more directly are income producing or have a substantial financial benefit and economic impact. Examples would be the Fire Tower in Helena or grain elevators in Hobson. Can there be an adjustment in the ranking so that economic development would take second place to the heritage value?

RESPONSE NO. 17: The guidelines were designed to balance both economic impact and heritage value, but not to position one in conflict with the other. The department recognizes the value of long-term economic impact as it relates to the impact of a historic preservation project and also understands that smaller historic preservation projects may not have a large number of jobs created to be competitive. While job creation is a critical factor, the department will consider updating the guidelines to better balance the ranking criteria to consider immediate job creation as well as long-term widespread economic impact.

COMMENT NO. 18: Comment received about the match requirements complimenting the fact that the match is optional and that it will probably result in more small projects coming forward with the hope that they can be awarded and more encouragement to the small museums and historical sites and rural places where that kind of match is harder to come by. For profit having cash match requirements makes all the sense in the world.

RESPONSE NO. 18: Thank you for your comment.

COMMENT NO. 19: Comment received that the program is going to have a tremendous impact. I really applaud the Department of Commerce for being broad in their inclusion of many kinds of properties that would all be eligible for these grants under the rubric of museums and historic properties.

RESPONSE NO. 19: Thank you for your comment.

COMMENT NO. 20: Comment received to encourage Commerce to provide pre-application workshops or webinars that educate applicants on best practices in preservation, grantees' legal responsibilities, and how best to communicate a scope of work in a grant application. Applicants' participation in these workshops should be a prerequisite for their applying. We also encourage ongoing job creation studies to safeguard the grant's future and be an asset to this and other programs such as Montana Main Street, that promote preservation as an economic development tool.

RESPONSE NO. 20: The department is planning an outreach strategy to engage the wide variety of potential eligible projects across the state and will announce technical assistance opportunities in the future. Job creation studies and other planning work are encouraged as part of these guidelines. The department has received tremendous support from historic preservation and museum colleagues in spreading the word and receiving helpful input on the program.

COMMENT NO. 21: Comment received on the application, noting that drawings or annotated photos should be used to supplement written communication. It is also important to stress the need for unambiguous language that avoids either-or scenarios resulting in potentially open-ended use of state funds. The inevitable unanticipated situations should be handled with amendments.

Because review and scoring committee members will likely not visit all applicant properties, numbered and labeled photos that correspond to photo number/location/direction plotted on site plan and floorplan photo keys will be important aids in understanding a property and project. A photographic basis for a scope of work is helpful in those inevitable offsite discussions between grantor and grantee.

RESPONSE NO. 21: The guidelines mention the requirement of photos on page 9, but a restatement of this requirement along with additional detail may be helpful to applicants and guide applicants to provide clear project descriptions. The department will consider editing the guidelines and application to better clarify this requirement and improve guidance to prospective applicants.

COMMENT NO. 22: Comment received suggesting that the Interiors' Standards for the Treatment of Historic Properties can be challenging to communicate and determine when a particular one would apply to a property. Suggestions to do the following:

Providing applicants links to the Department of Interior website on the Standards.
Preliminary consultation between the applicant and Commerce should precede an application and set expectations for which treatment would apply. SHPO suggested as a resource in this consultation.
Providing brief examples of these Standards, using familiar Montana places would help. For example:
1. Preservation is applied in places like Virginia City and Bannack, so that the passage of time and layers of history remain evident. The intent is to arrest decay, not to make buildings look new. The Preservation Standards are commonly used when a property's primary function is to interpret history.
2. Restoration is applied at the Original Governor's Mansion, which is depicted at a certain period of significance in the mansion's history. Certain features that were added to the mansion outside of that period of significance were removed, and historic or replica features were reintroduced. Restoration Standards are commonly used when a property's primary function is to interpret history.
3. Rehabilitation is applied to many of the historic properties we encounter daily, such as local businesses and government buildings. Although rehabilitation sometimes involves the preservation of serviceable historic character-defining features and the restoration of missing features, the Rehabilitation Standards are more flexible than those for Preservation and Restoration. The Rehabilitation Standards accommodate a change in use, continuation of a historic use, and meeting current codes in a way that maintains the property's historic fabric and character.
4. Each of the Standards asks planners to meet the historic property on the property's terms. None of them allows for damaging treatments or adaptations arbitrary to the property's historic integrity.

RESPONSE NO. 22: The department will consider incorporating links to the Department of Interior website and providing the above examples of the standards in the guidelines to support applicants. Department staff will provide support and technical assistance to assist applicants with submitting the most successful and competitive application related to their specific project. The department encourages all applicants to use other state or federal resources and technical assistance to enhance the proposed project.

COMMENT NO. 23: Comment received recommending switching the term nominations to National Register nominations.

RESPONSE NO. 23: The department will consider modifying the guidelines with this language.

/s/ Amy Barnes /s/ Tara Rice

Amy Barnes Tara Rice

Rule Reviewer Director

Department of Commerce

Certified to the Secretary of State December 17, 2019.