Two years ago, the Montana Legislature approved spending money for what was envisioned to be a new Montana Historical Society museum at the current site of Helena's aging Capital Hill Mall.

Lawmakers authorized the Historical Society to issue $7.5 million in bonds and raise $30 million from private donors. The proposal drew widespread support from current and former state elected officials, among others.

Although the two 2005 laws never specifically mention the mall site, committee minutes and press coverage make it clear that legislators then had a single site in mind -- the 13.4-acre mall property, four blocks north of the current museum.

Last month, however, the state has recommended against the mall location as a future museum site, with projected cost perhaps dooming that idea.

Instead, state architects and consultants proposed erecting a new museum in a state-owned parking lot across the street to the north of the society's current building. The new facility would be adjacent to the Montana Department of Fish, Wildlife and Parks headquarters.

Plans also calls for the Historical Society to remodel and retain its current facility for its staff offices, library, archives and some exhibits. The two buildings, connected by an underground tunnel, would be renamed the Montana Heritage Center.

At 6:30 p.m. Wednesday in Room 172 of the Capitol, the Capital Complex Advisory Council will vote on its recommendation to state Administration Director Janet Kelly, who has the final say.

It's uncertain whether Gov. Brian Schweitzer, who appointed Kelly and many trustees, will weigh in with his opinion on a site. So far, Schweitzer has supported a new museum but remained "site-neutral."

No one disputes that the Montana Historical Society needs more space. Its current museum at the corner of Sixth Avenue and Roberts Street, kitty-corner from the northeast grounds of the Capitol, is overcrowded. It can display only a fraction of the society's valuable art and artifact collections. As a result, its Jackson Pollock paintings and Bob Scriver sculptures are locked in a warehouse out of public view.

The society's trustees now unanimously back the architects' plan. They have noted the Capitol Complex facility can be built for nearly $30 million less than a museum on the mall site. Trustees also are wary about delaying a decision until after the 2009 Legislature adjourns and want to start raising money.

Where to build the museum has proved highly contentious, particularly among Helena residents. Many, including business owners, envision a destination museum at the site of the mall. They are confident the private money can be raised

The debate also has stirred up lawmakers. Last week, Sen. John Brueggeman, R-Polson, who sat on the Long Range Planning Subcommittee that approved the funding in 2005, said legislators ought to revoke the $7.5 million bonding authority if the museum isn't built at the mall site because that was legislators' intent.

Some other legislators from the committee agree with Brueggeman, while others said they still want to see the money go for a new museum, even if another site is picked.

Selecting a location for a new museum has dragged on for six years through several committees, numerous studies, two Historical Society directors and dozens of rounds of meetings.

The latest study, by CTA Architects Engineers of Billings and SRG of Portland and Seattle, recommended last month the Capitol Complex site over the Capital Hill Mall location.

It left the mall owners scratching their heads.

On Feb. 23, the Historical Society trustees voted to ask the state Department of Administration to offer up to $7 million to the mall's owners for the 13.4 acre site. Historical Society Director Richard Sims at that time called it "a momentous occasion" and added: "We feel it's time to make a decision that would generate the related activity that would lead to a real estate transaction."

Despite the vote, the Department of Administration never made an offer. Instead, it later undertook an assessment over the summer to determine the society's future space needs as part of a Capitol Complex master plan.

Richard L.K. Mendenhall, president of Westfield Properties Inc., the Salt Lake City partnership that owns the Helena mall, said he hasn't officially heard from the state since writing Sims Feb. 8.

Mendenhall's letter said: "Please advise me as to how the state of Montana and Montana Historical Society would like to proceed from this point forward with the negotiations of the purchase of the property."

Eight months later, Mendenhall is frustrated. The mall proposal had momentum until Sims took over as the society's director in July 2006 but announced he wanted to examine all options for a site, not just the mall, the businessman said.

"I think we had a good-faith agreement at the beginning," Mendenhall said in an interview. "Things seem to have gone awry."

Mendenhall still wants an answer from the state. He's confident his company could work out a deal with Intermountain Children's Home, which owns 9.7 acres of the land on which the mall is built, and offer the state "unencumbered, fee-simple property" for sale.

"We're still willing and interested in having the state tell us what the terms and conditions are in which they're prepared to negotiate." Mendenhall said.

If the state makes an offer, Mendenhall pledged to respond in four to six weeks.

"We've never had an answer whether it is or is not feasible and at what price," he said. "We're still available here and waiting."

If the state turns it down, Westfield can pursue other options, Mendenhall said. He believes the property's "highest and best use" is for the government to own it.

In response, state architect Tom O'Connell defended the state's recommendation for a museum site on the Capitol Complex instead of at the mall property.

"Basically, we're saying we can't afford it," O'Connell said of the mall site. "There's been no movement from anyone to get extra money."

The cost comparison "certainly was a driving factor" in the state architects and consultants' preference for the Capitol Complex site over the mall, O'Connell said.

"I'm charged with trying to get something built within the appropriation," the state architect said.

Building the new facility on the Capitol Complex and renovating the current building would cost an estimated $35.6 million, O'Connell said. With the state covering $7.5 million in bonding, backers would have to raise $28.1 million from private donors.

In contrast, the state projects it would cost $64.5 million to build a new museum on the mall site. Excluding the bonding money, the backers would have to raise $57 million in private donations.

The most private money the state has ever raised for a building has been $10 million to $12 million for university buildings, O'Connell said. Seeking $30 million in private funds is a daunting enough task, he said, to say nothing of nearly $60 million.

O'Connell said Sims was forthright with the 2007 Legislature, telling lawmakers the mall was an option, but no extra money was forthcoming.

No agreement was ever reached with Westfield to buy the mall property, he said, but the two sides agreed to conduct separate appraisals and undertake "due-diligence" studies in 2006 to assess the mall's heating and cooling, electrical, plumbing systems as well as determine whether there was asbestos to be removed. Westfield paid $100,000 for these studies. Afterward, talk of renovating the mall was dropped in favor of razing it and building a new facility.

"I can understand his frustration," O'Connell said. "It's a complicated project in lots of ways. I don't think when we entered into this, no one ever dreamed it would take this long to materialize into something. That was probably a disappointment to us as well as him."

Timeline for MHS plans for new museum

1952

New Montana Historical Society building is dedicated at corner of Sixth Avenue and Roberts Street.

January 2002

Montana Historical Society trustees, with Gov. Judy Martz's backing, vote to seek bids from private consultants to evaluate potential sites for a new historical museum in Helena estimated to cost up to $45 million.

August 2002

Consultants and committee considers a number of sites and seeks public comment on five locations for a future historical museum: southern edge of Centennial Park near former National Guard Armory, Capitol Complex, Great Northern Town Center downtown, Caird Engineering on Montana Avenue and on Forest Service land near Cedar Street interchange of Interstate 15.

October 2002

Site selection committee recommends two top sites to Montana Historical Society board: Centennial/Bausch Park and the Great Northern Center downtown. As an alternate site, it recommended the Capitol Complex.

Fall 2004

Owners of Capital Hill Mall approach Montana Historical Society with an offer to sell the mall property on 11th and Prospect avenues, about four blocks to the north of the current museum.

April 2005

The Legislature approves $7.5 million of bonding authority and the right to raise $30 million privately for a new Montana Historical Society facility. Although not spelled out in the two bills, committee discussions focused on one site: the Capital Hill Mall.

November 2005

Arnold Olsen, a leading advocate of building a new Montana History Center at the Capital Hill Mall, resigns as Historical Society director.

May 2006

Two appraisals -- one done for the state and one done for the Capital Hill Mall owners -- peg the value of the mall and its 13.4-acre site at about $10 million. Those figures include the cost of buying the 9.7 acres owned by the Intermountain Deaconess Home for Children and leased to the mall owners, Westfield Properties of Salt Lake City. Separate ''due diligence'' studies found that 75 percent of the mall's roof would need replacement if the current facility would be converted to a museum. Another study found some but not an inordinate amount of asbestos that would have to be removed.

July 2006

Richard Sims, director of Sharlot Hall Museum in Prescott, Ariz., begins work as new director of Montana Historical Society. Sims said, ''I want to work to build a society to match the scenery.'' Gov. Brian Schweitzer said earlier in the summer that any museum siting decision should be postponed until Sims has a chance to get his feet on the ground here and make an assessment.

January 2007

Historical Society board of trustees passes resolution directing Sims to vigorously proceed with trying to put together a deal for Capital Hill Mall.

February 2007

Historical Society's board of trustees ask state Department of Administration to offer up to $7 million to the owners of Capitol Hill Mall for a future museum. State architect Tom O'Connell said the department never made that offer because it didn't know yet what the society's future space needs were.

April 2007

The Legislature provides money for state Architecture and Engineering Division to hire consultants, conduct ''a needs assessment'' for a proposed museum and to update the Capitol Complex master plan.

June 2007

State architect's office hires a Billings architectural firm and a Seattle and Portland architectural firm to determine how much space is needed for a new Montana Historical Society facility. Consultants are told to evaluate at least five sites, including the mall land.

September 2007

Consultants and state architect recommend the new museum be built across the street from its current location and not at the mall. The plan envisions retaining and remodeling the current Historical Society building at the corner of Sixth Avenue and Roberts Street and building a new museum in a current parking lot, across the street to the north. The proposed cost for the proposal is $35.6 million vs. $64.5 million to buy the mall property, raze the mall and build a new museum.

September 2007

At a public meeting, the proposal to build a new museum across the street from current museum draws little support. More speakers favor building it at the mall.