At the stroke of midnight, it’s Missoula Water

A relieved Mayor John Engen mingles with attendees after the final condemnation order was issued Thursday in the city’s takeover of Mountain Water Co. (Katy Spence/Missoula Current)

At long last, Missoula owns its drinking water system.

Mayor John Engen on Thursday presented an $83.86 million check to Mountain Water Co. and a $6.3 million check to Missoula developers who put in water lines for the utility.

That, together with a final condemnation order issued by Missoula District Judge Karen Townsend, sealed the deal, which closed at midnight.

“I am excited, I am relieved, I am a little bit tired,” Engen said. “But the fact of the matter is we now get to operate this system for the benefit of the citizens of Missoula forever.”

The work begins Friday morning, when city officials walk through the doors of the newly named Missoula Water for a daylong transition.

The new Missoula Water utility logo.

New computer and telephone systems will be installed. Former Mountain Water employees will go through orientation as city employees. There will be lots of meeting and greeting, and a pizza lunch.

The office at 1345 W. Broadway will be closed for the day as these transitional tasks are completed. Customers will be able to pay their bills in most of the ways previously available during the one-day closure. Information on billing is available on the new Missoula Water section of the city of Missoula’s website.

Missoula Water will open for business Monday with a new phone number: 552-6700. The new email address for customer service will be watercs@ci.missoula.mt.us. The new mailing address is: P.O. Box 5388, Missoula, MT 59806.

Over the past four years of litigation, and in decades of unsuccessful attempts by previous mayors and city councils, the goal has been to place Missoula’s drinking water system in public ownership.

Increasingly, the local water system was owned by more distant and disaffected corporate owners, beginning with Mountain Water’s purchase by international investment fund The Carlyle Group, which then sold the utility to the Canadian firm Algonquin Liberty.

Thus Thursday’s enthusiastic response from the mayor and City Council members.

“Today, Missoula joins the rest of Montana’s cities in owning our own water system,” said Engen. “From this day forward, your hard-earned dollars will stay local and be reinvested in water system infrastructure rather than boosting profit sheets of a Canadian company. We are grateful for your support during this fight and applaud this monumental victory for our city.”

“This is all about us, and it’s all about our future,” he said.

“It’s a great day for the community,” said City Councilman Bryan von Lossberg. “It’s an investment. And I’ve struggled trying to find the right sort of duration to use. I’ve called it a lifetime asset, a 50-year, a 100 year. It’s a forever asset.”

Attorney Natasha Prinzing Jones of Boone Karlberg said the condemnation case has been “very long and complex,” and she was happy to bring it to a close in Townsend’s court.

Judge Karen Townsend issues a final order of condemnation that will turn ownership of Mountain Water Co. over to the city of Missoula. (Katy Spence/Missoula Current)

Other legal issues associated with the takeover have not been resolved, but Townsend ruled Thursday, the city can take ownership and begin managing the utility before those final questions are resolved.

Attorney Bill Mercer, representing The Carlyle Group, tried to stop Thursday’s ownership transfer until the issue of attorneys’ fees is settled. The Montana Supreme Court is considering that matter.

Townsend, however, said the city has placed sufficient funds in an escrow account to protect those fees.

The mayor executed short-term notes from Barclay’s for $140.4 million, enough to purchase the water system, pay the city’s and the water company’s legal fees, finance an initial list of water system improvements and provide a cash reserve for unforeseen expenses. That money was then placed with escrow with Townsend’s court.

The bonds will have no effect on local property taxes, the mayor said, and are no threat to the general credit rating of the city of Missoula.

In 18 to 36 months, once all legal issues are resolved, the city will move to long-term bonds to pay off the remainder of the debt.

Late in the day, the Montana Public Service Commission issued a news release commenting on the city’s purchase of Mountain Water, cautioning consumers of potential rate increases ahead.

“Mountain Water has been a good steward of the Missoula water system for over 100 years and I hope that trend continue under the city’s ownership,” said Commissioner Bob Lake, R-Hamilton. “The commission trusts the city to maintain a high quality of service delivery, while keeping rates affordable for customers.”

Missoula was the only city in Montana where the water utility was privately owned. All others are publicly owned and operated. During the condemnation trial, city officials and independent experts provided extensive testimony about the poor state of many Mountain Water lines, and the high leakage rate of the oldest infrastructure. Their contention was that the system has not been well maintained.

The PSC had authority over Mountain Water because it was a private entity, but has no authority over the city of Missoula.

“The city will own the utility in name, but is financing its large purchase entirely through private bond investors,” said PSC vice chairman Travis Kavulla, R-Great Falls. “It’s a little ironic that, at the end of the day, Missoula consumers will pay more to private investors under city ownership than it did when the utility was officially owned directly by private investors.”

In its news release, the commission suggested that water rates will increase under city ownership. But Engen has said there will be no rate increase until 2021. Any future increases will be subject to City Council debate and approval and full public comment. All financial records will now be public documents, whereas Mountain Water kept most of its financial information secret.

Engen chose not to comment on the PSC’s negative commentary Thursday.

For more information on the utility’s transition to city ownership, go online to www.ci.missoula.mt.us/water.

Katy Spence is a University of Montana graduate student in journalism, working this summer for Missoula Current. Sherry Devlin is a longtime Missoula journalist who writes occasional news stories for Missoula Current.