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Engen: Missoula's Ready To Take Ownership Of Mountain Water

Mountain Water Company.
Cherie Trusler
Mountain Water Company.

Missoula Mayor John Engen received an important email a little after 5 o’clock  Tuesday afternoon. It was from Harry Schneider.

"When we win, Harry always says the same thing in all caps: ‘BINGO’. So I open the thing up and it was a ‘BINGO’."

Schneider’s one of the attorneys representing the city in its bid to force the sale of the local water utility from Mountain Water, and parent company the Carlyle Group:

That ‘BINGO’ meant the State Supreme Court had just affirmed the city’s right to buy Mountain Water, the private company that serves as Missoula’s water utility.

It’s the result of a high stakes bet placed by Engen and his staff back in 2014. They argued such an important utility should be controlled locally, not by profit-motivated out-of-state interests.

Earlier this year District Judge Karen Townsend agreed.

Townsend ruled the city had the right to use the power of eminent domain to buy Mountain Water. The utility and Carlyle appealed to the state Supreme Court. A little over three months later, on Tuesday, the court upheld Townsend’s decision.

Mayor Engen says the city used that time to prepare for a ruling in its favor:

"We have been actively engaged in making sure that our financing was in place, that we had a transition team working, that we understood where we were in terms of some management issues, and some software issues. We are ready to go."

Engen says the city is set to pay the $88.6 million price tag for the water system as determined by a valuation commission. The city has spent approximately $6.1 million waging its legal battle for control of the utility.

"We have financing in place to not only pay that bill but to round up operating capital. We’ll be able to be in business almost immediately. Our bank was waiting for the decision from the Montana Supreme Court and with that decision they’re ready to write that check."

He says Mountain Water ratepayers have no reason to fear sticker shock.

"All of our models suggest that we are in a position to purchase service debt and operate at current rates. As I’ve long said, rates will go up at some point, but they’ll go up more slowly than they would under private ownership. All of that money will be reinvested in the system rather than getting siphoned off to shareholders a long way away."

Missoula’s Chief Administrative Officer Dale Bickell estimates it could possibly take two to three months for the city to close the deal to acquire the water system.

That’s assuming Carlyle and Mountain Water don’t appeal to the U.S. Supreme Court.

Carlyle did not respond to our interview request today.

Mountain Water Company president John Kappes isn’t yet commenting on this week’s ruling.

Mayor Engen was non-committal on Wednesday about Mr. Kappes’ future.

"You know, we don’t know about Mr. Kappes. We’re going to have to have some conversations."

Edward O'Brien: Why?

"Because we haven’t had a direct conversation with him."

EO: Do you want him?

"I think we want to talk with him. We’ll have to see if he wants us."

Engen characterizes the city’s conversation with lawyers representing rank-and-file Mountain Water employees as ‘productive and cooperative’.

"I hope this decision helps those folks make more decisions about what they’d like to do. We’ve been consistent; we want those folks to come work with us at the city and continue to do the work that they’ve done."

But some Mountain Water Company employees have publicly criticized Engen and his plan to acquire the utility by eminent domain.

The mayor says they have no reason to fear retribution.

"One of my heroes in this world is Abraham Lincoln. As I told staff and attorneys at a meeting yesterday, we are now Lincoln. This is about making it work with malice toward none."

Edward O’Brien first landed at Montana Public Radio three decades ago as a news intern while attending the UM School of Journalism. He covers a wide range of stories from around the state.  
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