The City of Missoula has hit a speed bump in its effort to take ownership of the city’s water system.
The current owner, the Carlyle Group, is trying to sell Mountain Water Company of Missoula, and several other local water systems, to Liberty Utilities, a company that operates an assortment of water, electric and gas utilities around the country.
Tuesday, attorneys from the City of Missoula pleaded with the state Public Service Commission to stop, or at least slow down the sale to Liberty, while the city pursues its own attempt to take over the water utility through condemnation. Attorney Scott Stearns, representing Missoula, says the city wants to start making repairs to the aging and leaky system.
“The city needs to get control of this water system as quickly as possible, which is happening before the district court on a rapid pace consistent with Montana law, which protects everyone in this process," Stearns said. "The condemnation statutes protect them, as well as us, and so this matter before the PSC should be stayed to let that matter run its course.”
The city won a condemnation case in June giving it the right to buy the water utility, all that remains is for the city and the utility’s current owners to agree on a price. Missoula claims that gives it a kind of “constructive ownership” of the water system, which means it can stop or delay the sale to a different buyer, even though no money has changed hands. Attorney Thor Nelson, representing Mountain Water, called that theory flat-out wrong.
“They claim that they have the authority, that they have taken the property right, one of the most fundamental rights of property there is, the right to sell your property, that they have taken that away from Carlyle and paid not one red cent to do it. That cannot be the law. And frankly it isn’t the law,” said Nelson.
The five commissioners sided with Mountain Water, voting unanimously to continue reviewing the proposed sale of Mountain Water to Liberty. Commissioner Travis Kavulla says despite winning its condemnation case in court, the city doesn’t have a guarantee that it will eventually get the water system, and if it does happen, it won’t happen quickly.
“If I thought that the city would take ownership over this property within sixty days, I would favor a stay," Kavulla said. "I don’t think that’s going to be the case, candidly. The deal is not a sure thing.”
Commissioner Roger Koopman agreed, saying Missoula’s attempt to take over the system by condemnation, and Liberty’s attempt to buy it from Carlyle, should just proceed on separate tracks.
“Carlyle is still the owner of Mountain Water," Koopman said. "A process needs to continue on the condemnation side. We have a parallel process. It really is quite separate and we need to I think follow past practice and to simply go steady as she goes on our way.”
In a separate action, the Commission also turned down Missoula’s request to force Liberty’s parent company, Canada-based Algonquin Power, to participate in the case directly, a move that would have further slowed down the sale to Liberty while Missoula tried to negotiate a price under condemnation.
Public Service Commissioners expect to decide on Liberty’s purchase of Mountain Water in October, while the city’s condemnation process could take until the end of the year to complete. When the dust settles, Mountain Water could change hands twice before 2015 draws to a close: first from Carlyle to Liberty, and then from Liberty to the City of Missoula.
