The end at last: City, Liberty Utilities agree to water settlement

By Martin Kidston/Missoula Current

After years of litigation and mounting attorney fees, the city of Missoula and Liberty Utilities Co. found common ground this week, entering into an agreement that will end the legal battles and clear the way for the city to acquire Mountain Water Co.

The terms of the agreement were announced Friday afternoon in a special meeting called by Mayor John Engen and the City Council's Committee of the Whole. Once signed, the agreement and subsequent purchase will end Missoula's century-long struggle to own its drinking water system.

“We've been in negotiations with Liberty for some time, and the agreement that we've reached, we believe, is a good deal for the citizens,” Engen said. “It allows us to reach closure on this long process without further litigation, and it allows us to operate a water system.”

Natasha Jones, one of the city's lead attorneys with Boone Karlberg, said the agreement is still being drafted, though the general terms will see the city pay Mountain Water $83.7 million.

In addition, she said, the city will pay any developers named in the case, as well as attorney fees for Carlyle – the utility's prior owner. It will also pay Liberty Utilities and Park Water for transitional services.

The total amount comes to $96.4 million and settles nearly all lingering disputes, less a single liability claim for interest, Jones said.

“Liberty has agreed to cooperate completely in the transition to city ownership,” said Jones. “They'll immediately provide access to the city and its vendor, Advanced Technologies, for customer data and configurations and other proprietary business information the city needs for a very smooth transition to city ownership.”

The city is also talking with other parties that joined a Missoula District Court case regarding developer fees, including Missoula County. That issue was brought before District Judge Karen Townsend, though Jones is confident the issue will be resolved as part of the agreement.

Jones said the city will ensure local developers are protected as the agreement is finalized.

“As part of our agreement with Liberty, the city is going to accept assignment of the unnamed developer contracts,” Jones said. “They will roll into the new water utility under city ownership. Those contracts will be paid over the lifetime of those contracts.”

Under the general terms of the agreement, Jones said Mountain Water will also grant the city access to its facilities, essentially aiding the city in transition and planning to launch Missoula Water.

The timeline to settle the final agreement and push it through the appropriate channels is tight, as the city looks to take ownership by May 31, according to Jones.

“Liberty and Mountain Water Co. has pledged the full cooperation of its employees to assist in the transition,” Jones said. “The city is continuing its discussions with Mountain Water employees and it intends to follow through on making good-faith offers of employment to those employees.”

After years of courtroom arguments, mudslinging and escalating legal costs incurred by both parties, news of the resolution was well received by members of the City Council. Most of the council members praised the mayor for his foresight and political courage.

“There were times when we were in the weeds and there was litigation fatigue, but we stuck it out and it was worth it,” said Ward 3 council member Emily Bentley. “We stuck it out because we had a great team and the mayor's vision, and our understanding that this process was never about us, it was about our children's children.”

Ward 6 council member Marilyn Marler said the protracted litigation, which dates back more than four years and cost the city upwards of $6 million to fight, could have dampened public support, though it never did.

“At one point I felt the legal strategy from the water company was just to keep running up the bill until community support went away, but it never did,” Marler said. “There have been some naysayers, but I hope we can move forward and work together on all of this.”

Under the terms reached between the parties, Liberty will take the initial draft of the settlement and present it to the city next week. The city will have five additional days to comment.

The city's legal team plans to present the agreement to the City Council prior to May 20, with the goal of closing on the purchase set for May 31.

“It's been a journey, and at the end of this journey, we'll have done something that will matter to this community long after we're forgotten,” Engen said. “That's about the best you can do in this line of work.”

Contact reporter Martin Kidston at info@missoulacurrent.com