The tension was palpable Wednesday as negotiations reached an impasse over the management contract for the $20 million trust fund created by the sale of cabin sites at Canyon Ferry Reservoir.

At issue is whether the nonprofit Montana Fish, Wildlife and Parks Foundation should retain its current trust management contract with fewer duties and a lower fee, or assume additional duties for the existing fee. Either option would include an ending date for the contract, which is something the current arrangement does not have because of an apparent oversight.

Negotiations ended shortly before noon, with the FWP Foundation representatives saying they weren’t able to drop their annual management fee below 1 percent of what recently has been a $20 million Montana Fish and Wildlife Conservation Trust fund, which would be about $200,000 annually. Currently the trust gets 1.25 percent, which is $250,000 with a $20 million trust fund.

The income from the trust is one of the biggest annual cash payments to the FWP Foundation.

However, trust fund managers are refusing to pay more than 0.7 percent, which would be $140,000 of the $20 million fund.

“We feel like there’s an imbalance between the amount paid and the work being done,” said Mike Ryan, the regional director for the federal Bureau of Reclamation, who is negotiating on behalf of the trust. “Right now you receive about $250,000. We felt that we didn’t receive much, that we could receive more effort on the part of the foundation.”

Foundation members countered that they’re doing exactly what was called for in the contract negotiated in 2001.

“We come here in the spirit of compromise … but we have done everything required by the contract, the RFP (request for proposals) and the law,” Earl Sherron, foundation chairman, said. “We agree there may be some inaccuracies in the current agreement, but it should be pointed out those shortfalls were put in by the government with your approval.

“We have acted in good faith and done everything accordingly with what you have asked us to do.”

He added that the foundation has retained legal counsel for this matter.

Of the current 1.25 percent of the trust that the FWP Foundation receives, 0.4 percent goes to D.A. Davidson for actually investing the trust’s monies. Profits from those investments are used for projects to enhance wildlife and fish habitat, as well as improving public access.

That arrangement has left anywhere from $100,000 to $173,000 each year for the past five years — a total of about $700,000 — to go into the coffers of the FWP Foundation.

Meanwhile, the trust has had to contract with an outside organization for even simple administrative tasks like taking notes at meetings or putting out press releases, duties some believe should be the responsibility of the trust manager.

The situation has raised the ire of the trust fund’s Citizen’s Advisory Board and the local Joint State-Federal Board, which were created by federal legislation to oversee expenditures from the trust. It’s also irked the federal Directors Working Group, created by the Department of Interior to try to negotiate a new contract, and Sen. Max Baucus, whose legislation allowed for the sale of the 265 cabin sites that funded the trust.

Those groups argue that while the investments have done well, the foundation has few duties relating to the trust management. They’d rather have that money go toward hiring an executive director, who would do fundraising for the trust among other administrative duties; and into on-the-ground projects.

Some members of those groups also are advocating termination of the contract with the foundation, citing inherent conflicts of interests.

Ryan said he contacted other managers of other trusts and investment firms in Montana, the Dakotas and Nebraska, who told him 0.7 percent was the going rate for management fees.

“I don’t believe it,” Sherron said bluntly. “You have to put it in writing.”

“I hear you and respect you, but I don’t think we have to provide that in writing,” Ryan countered. “We have done our due diligence, and I’m not asking you to prove that it can’t be done.”

That led to Sherron telling Ryan he wasn’t negotiating; that he had set a base and wasn’t budging.

Ryan noted that they had gone up to 0.7 percent from an initial rate of 0.6 percent, while the foundation had dropped at that point from 1.25 percent to 1.1 percent before settling at 1 percent.

After a second break in the negotiations to discuss options, the foundation board members said they weren’t authorized to go below 1 percent. They plan on meeting with the rest of their board, and the negotiations will reconvene in Helena at 9 a.m. Oct. 16 at a location to be decided upon.

“I think all of us are working hard on this,” Ryan said. “We all need to double check where we are at and get back together on the sixteenth.”

Reporter Eve Byron: 447-4076 or eve.byron@helenair.com