City prepared to take “immediate and orderly” possession of Mountain Water Co.

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Missoula Mayor John Engen, right, along with attorney Natasha Prinzing Jones and Dale Bickell, the city’s CAO, discuss the transition of Mountain Water Co. into public ownership with members of the Missoula media on Wednesday. (Photo by Martin Kidston)

By Martin Kidston

The city of Missoula will petition the Fourth Judicial District Court in the coming days to take “orderly possession” of Mountain Water Co., placing the once-private utility under public management, Mayor John Engen said Wednesday.

This week in an anticipated 5-2 decision, the Montana Supreme Court upheld a Missoula County District Court ruling that found that public ownership of the water system was more necessary than private ownership.

Engen said that with the high court’s decision now made, the city will move forward “as quickly as possible” to take possession of the drinking water system, one of the last in Montana to remain under private ownership.

“We have been actively engaged in making sure our financing was in place, that we have a transition team working, and that we understand where we were with management issues and software issues,” Engen said. “We need to have some conversations internally about the technicalities of the final order of condemnation and our motion to take possession. Our intention is to do that as quickly as possible.”

Mountain Water didn’t return calls for comment.

Last year, amid a series of court hearings and legal maneuvers, an independent valuation commission placed Mountain Water’s value at $88.6 million. Engen said the city has the financing place to buy the utility at that court-determined price.

“We’ll be able to be in business almost immediately,” Engen said. “Our bank was waiting for the decision by the state Supreme Court, and with that decision they’re ready to write a check. All our models suggest that we’re in a position to purchase, service debt, and operate the system at the current rates.”

The city’s legal costs to date stand at more than $6 million. Over the past few weeks, Judge Townsend has heard arguments regarding fees the city may be responsible for paying. The court is expected to render a decision in the coming weeks.

Whatever fees are determined, Engen said, the city will fold them into the cost of acquiring the utility.

Dale Bickell Web Size
Dale Bickell

“Our models have accounted for that,” Engen said. “Even with those costs, which are still a little up in the air – with all that, we still maintain rates, pay debt service without breaking business, and invest in capital improvements.”

Dale Bickell, the city’s chief administrative office, said the city will finance the acquisition through a long-term revenue bond. He said interest rates on municipal bonds remain at historic lows. Barklays will underwrite the bond, he said.

As the financing falls in place, Bickell added, the city will focus on making an orderly transition in ownership. It will also continue to work with current Mountain Water employees in an effort to keep them in place.

“We’ll be ready to write a motion to take possession in the next several days,” Bickell said. “We have to have an orderly transition. On the top of our minds and on the top of Mountain Water’s mind is the continued delivery of safe water to the citizens of Missoula. We want to work together to make that happen.”

Engen also remains hopeful that Mountain Water employees will make the transition to city employment. The employees are currently represented by members of the Missoula City Council.

Jones
Natasha Prinzing Jones

“Our conversations with employees and council have been productive and cooperative,” Engen said. “I hope this decision helps those folks make some more decisions about what they’d like to do. We need those folks to run the system.”

Natasha Prinzing Jones, one of the lead attorneys representing the city in the case, said that while waiting for the Montana Supreme Court to render its decision was difficult, she felt confident the city had a solid case.

“We’ve always felt comfortable with the evidence,” said Jones. “As we proceeded through the process, we had very strong arguments and very strong evidence, from the point of filing a complaint through every proceeding in court. What made it difficult was the tactics and arguments thrown at us from the other side.”

The state Supreme Court’s ruling wasn’t unanimous, with justices Jim Rice and Laurie McKinnon dissenting. According to the ruling, Rice believed the city violated Mountain Water’s constitutional rights by engaging in “abusive litigation tactics that were not corrected by the District Court.”

Jones disagreed.

“We disagree with justice Rice and his dissent, as did the majority of the Supreme Court judges who also evaluated those same arguments, and as did Judge Townsend, who also evaluated and disagreed with those same arguments,” said Jones.

Engen denied charges by some members of the community who believe the city’s efforts to take ownership of Mountain Water represented governmental overreach. Water is essential to survival, he said, and it belongs in the hands of the public, not a private, for-profit company.

“We believe and have long held that public ownership of monopoly utilities that provide essential services like water are best left in the hands of the public – the folks who live locally rely on those services and have a stake in it,” he said.

Contact reporter Martin Kidston at info@missoulacurrent.com