With the legal battles surrounding the acquisition of Mountain Water Co. winding down, the city of Missoula plans to amend a portion of its financing package – a move that will reduce the interest rate.
The City Council’s Administration and Finance Committee approved the amendment on Wednesday, saving the city roughly $12,000 a month over the life of the $25.3 million revenue bond.
“The principal of that balance doesn’t change yet, but this reduces our interest costs by about $12,000,” said Dale Bickell, the city’s chief administrative officer. “As things wind down and everything becomes final, we’ll be able to release all or part of this, so we’re getting close.”
After years of legal wrangling, the city took possession of the water utility last year. To do so, it issued two revenue bonds totaling $138.2 million. The first bond was issued for $112.9 million to pay for the acquisition of the utility, cover attorney fees and make capital improvements over the first three years.
The second issue for $25.3 million was included to pay for unexpected costs related to pending appeals.
But most of those legal battles have been resolved in the city’s favor, and with only one decision pending before the Montana Supreme Court, the city will refinance the second bond to cut interest rates.
“As we move toward totally wrapping up and litigation winds down, we approached the bank saying the risk is substantially reduced,” Bickell said. “They offered to lower the interest rate for the time being as we work toward getting those bonds released.”
While interest rates have been volatile this past year, Bickell said, the city remains within its acquisition budget. The final legal ruling before the Montana Supreme Court will answer an appeal on attorney fees by the water company’s former owner, The Carlyle Group.
“It’s great news,” said council member Jesse Ramos. “I’m very excited about this.”