City Withdraws Appeal, Prepares To Take Ownership of Mountain Water

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Missoula Mayor John Engen, right, faces the media and several citizens during a press conference on Friday. The city withdrew its appeal over the value of Mountain Water Co. and is prepared to take ownership of the utility. (photo by Martin Kidston)

By Martin Kidston/MISSOULA CURRENT

A looming jury trial set to decide the value of Mountain Water Co. won’t be taking place next week, as the city of Missoula has withdrawn its appeal over the price set by a water commission in Missoula County District Court.

The decision, announced late Thursday evening, brings the city closer to taking ownership of its drinking water system. The water commission placed the system’s value at roughly $88.6 million in November.

“We originally appealed that valuation number based on our concerns that local folks – the developers and individuals who may have extended money for infrastructure and are owed that money – would be left in the cold,” Mayor John Engen said Friday. “We wanted to clarify that.”

The city had asked District Court to allow it to assume the estimated $22 million obligation Mountain Water owes to local developers to ensure those developers receive their payments.

But Judge Karen Townsend determined this week that Mountain Water must retain the obligation.

“With that question resolved, there’s no need to pursue the trial next week,” Engen said. “Our motion was to assume those developer agreements, but Judge Townsend has said those remain the responsibility of (Mountain Water).”

While the question of who will pay the developer agreements has been answered by the court, several other issues must be resolved before the city presents the bond payments and takes ownership.

Last year, Mountain Water’s parent company, The Carlyle Group, appealed Townsend’s ruling on necessity, which found that public ownership of the water system was more necessary that private ownership.

That case is now pending with the Montana Supreme Court, which is charged by statute to make an “expeditious” determination. The city’s legal team believes Townsend’s findings on necessity are solid.

“We believe we’re ready to move forward based on the (water commission’s) value and let Judge Townsend do the work she’s been doing to help us move through this process,” Engen said. “We’re ready to own and operate a water company on behalf of the citizens of Missoula.”

Friday’s press conference, held in the mayor’s office at City Hall, was attended by a long list of local media affiliates, along with a handful of citizens who questioned the mayor on the city’s actions. Mountain Water attorney Joe Conner was also present. He recorded the conference on his iPhone but offered no statement.

Natasha Jones, a member of the city’s legal team, said Mountain Water will likely file a motion with the court regarding the city’s move to withdraw its appeal. The defendants in the case, including Mountain Water and Carlyle, never appealed the water commission’s valuation.

“We’ll see what the defendants do,” said Jones. “We received an email that they intend to file a final motion with the court. We have not seen that yet.”

What the city will actually pay for the system remains a moving target. The water commission’s $88.6 million valuation figure remains standing, though the estimated $22 million obligation Mountain Water owes to local developers will likely come into play.

“Our hope is that the defendants will be interested in consummating this deal as quickly as possible,” Engen said. “They did not appeal the (water) commission’s ruling. My sense of things is that Carlyle has wanted to sell the utility, and we want to buy it. We’ve accepted the terms of the valuation commission.”