Missoula water acquisition bid proving costly (October 19, 2015)

Reporter: Most residents support acquisition on moral grounds; less so fiscally

MISSOULA — Like Apple Valley, the city of Missoula, Montana is entrenched in an ongoing battle for local control of its water system with Mountain Water Company — whose parent company, the Carlyle Group, also owns Apple Valley Ranchos Water Company. Depending on how the situation is discussed, a slight majority of Missoulians are on board with the city’s acquisition attempts, according to Missoulian reporter Martin Kidston.

Kidston told the Daily Press his sense is there’s more support for acquisition than not, but that the issue is still controversial and a cause of much anxiety for Missoula taxpayers.

Support is larger if you talk about (acquisition as) as a moral issue, Kidston said. People think the city should own the rights to its drinking water.

He added, however, that support lessens when acquisition is discussed from a fiscal standpoint, and Ward 2 Council Member Adam Hertz said the reason for that drop in support stems from a drastic difference between estimated and real acquisition costs.

Described as a fiscal hawk by Kidston, Hertz is the lone Missoula Council member opposed to acquisition, but according to Hertz, he’s only opposed to acquisition through eminent domain.

I’m indifferent to acquisition in general, Hertz told the Daily Press. I’m against using the condemnation route to get to acquisition. Mayor John Engen estimated the cost of a condemnation lawsuit at $400,000 per side. Missoula is now over $3.6 million. Caryle and Mountain Water (have) exceeded $5 million.

A condemnation action is one acquisition route Apple Valley is considering and would allow the town, like Missoula, to pursue Ranchos’ water system through eminent domain in court.

Missoula is divided into six wards — each represented by two Council members — and while Mountain Water Company provides water to some residents in Hertz’ Ward 2, there are smaller water providers that also service the ward, including a neighborhood co-op system, according to Hertz, and there has been talk among residents who believe the city might attempt to acquire those providers if its acquisition of Mountain Water’s system proves successful.

The city hasn’t indicated that to be the case, he added.

To complicate matters, Missoula will soon seek punitive damages in a separate lawsuit against the Carlyle Group based on an alleged bad faith deal, according to Kidston.

The mayor put his full force behind Carlyle acquiring (the water system) in the first place, Hertz explained, on a promise that Carlyle would sell to the city in the future.

The city contends Carlyle reneged on that promise after the purchase, which led to Missoula’s decision to pursue acquisition through condemnation. Missoula then made an offer for the water system — not unlike Apple Valley’s offer for Ranchos’ system — that was rejected.

The negotiations — if you can call them that — started from a very adversarial position, Hertz said. That was the first mistake.

A Nov. 2 valuation hearing before an independent panel of three water commissioners will put a final selling price on Mountain Water’s system, according to Kidston.

That value will be the price the city will pay, Kidston said, (but) Carlyle already promised to appeal any number (the panel) gives.

Missoulians will know how much the water system will cost by January at the latest, according to Kidston.

Source: Matthew Cabe, Daily Press