Encouraging decision in Missoula (December 16, 2015)
A Montana case with similarities to Apple Valley’s desire to acquire Apple Valley Ranchos has ended in a move that Apple Valley town officials find encouraging.
The Carlyle Group owns Western Water Holding (WWH) which includes Mountain Water Co. serving Missoula, Montana, as well as Apple Valley Ranchos serving our community. The Missoula City Council tried to purchase the water company from Carlyle but the offer was rejected, so the Council began a process of eminent domain. Montana courts agreed to the eminent domain procedure last June and then started the procedure to establish the price that the city would pay for Mountain Water. A three-member panel has decided that Mountain Water is worth $88.6 million. The City of Missoula is extremely happy with this price as it falls within the amount they had expected to pay for the water system. The price is also more than $50 million less than what the Carlyle Group had claimed it was worth. The Missoula case remains subject to an appeal.
Just like Missoula, Apple Valley had tried to purchase the water system from Carlyle and was rejected. So the Town Council in Apple Valley has begun its eminent domain procedure. This case will likely take a few years to resolve.
While no one can say the California courts will rule exactly the same as the Montana courts, there are many parallels in the case. The first is that both water systems are similar in size, with each serving about 22,000 customers. Second, Carlyle is claiming the water systems are worth far more than what the panel says it is worth. In Montana’s case, Carlyle rejected a $65 million purchase offer from the city and later claimed the system was worth $146 million. In Apple Valley’s case, the town offered $51 million for AVR and was told by Carlyle that it was not for sale, and they valued it at $400 million.
Marc Puckett, Apple Valley’s Assistant Town Manager of Finance, says the town can afford to purchase AVR without raising taxes and would stabilize water rates. In fact, in recent days, Puckett has said that if the price is reasonable, the town might be able to lower water rates. AVR has been fighting back hard in its campaign by saying the town would raise taxes and water rates. This is nonsense. Puckett has demonstrated publicly several times how the town would use the savings from AVR’s guaranteed 9 percent profit and other unnecessary expenses to pay off debt incurred in the purchase.