One of the final issues surrounding the city of Missoula's takeover of Mountain Water Co. continues to play out in District Court, and the outcome could have implications for a number of local taxing jurisdictions, including Missoula County and local school districts.

Which way the chips fall is anyone's guess.

In a “head's-up” discussion with commissioners on Tuesday, Deputy County Attorney Matt Jennings said both Mountain Water and the Montana Department of Revenue have filed opposing briefs in District Court in Lewis and Clark County.

Mountain Water is seeking a refund of all taxes paid since April 2014 while DOR contends that the company is only entitled to taxes paid after June 2017, when Missoula officially took possession of the utility.

While the exact amount at stake wasn't immediately known, Jennings placed it at around $5 million.

“There's a suit in Lewis and Clark County to go back and look at whether Mountain Water is entitled to a refund of that money, whether the city might have to pay, or whether the obligation to pay disappears, in which case all taxing jurisdictions would have to issue a refund,” Jennings said.

The issue stems back several years when Mountain Water first filed suit in Lewis and Clark County seeking a refund from the Department of Revenue of all taxes paid after April 2014.

The court sided with Mountain Water, saying the city, not the company, was responsible for all taxes incurred during the years-long eminent domain trial. But the Montana Supreme Court later overturned that decision, putting the responsibility of taxes back into the hands of Mountain Water.

At least for the time being.

“We had a small victory last May and June getting Mountain Water to pay all the taxes that were due and put into escrow the taxes for the first half of 2017," said Jennings. “All the money is there from Mountain Water for all taxes that Missoula County and other taxing jurisdictions have been owed.”

But in its decision, the Supreme Court left the door open for Mountain Water to argue its case once the condemnation proceedings were finished, which they are.

The company filed suit in August, again in Lewis and Clark County, asking the court to order the Montana Department of Revenue to “carry out its statutory duty to reassess the property and issue the appropriate reassessment notices.”

“Mountain Water is entitled to a refund of all property taxes paid under protest after April 2, 2014, and the DOR must take all steps necessary (to) ensure that refund is issued,” the company argued in its brief.

The DOR contends that Mountain Water filed its brief with the wrong court in the wrong county, and it's asking the wrong government entity to assess past taxes. The agency claims that Mountain Water also failed to join the necessary parties to its brief, including the city of Missoula.

Jennings said Missoula County is watching the case for a number of potential outcomes. It's expected the city will argue that it is tax exempt, and if Mountain Water is owed a refund, then the responsibility could fall on other taxing jurisdictions.

“It's probably in excess of $5 million on the table in this litigation,” said Jennings. “That's not all money that went to the county. It went to the state, schools and the city as well. But it's still a lot of money from the county and it's something we'll need to be working on.”

To that, Commissioner Jean Curtiss said, “If they (Mountain Water) receive a refund, they should give all the ratepayers a refund because we were paying a percent of their taxes.”