The city of Missoula can afford to buy Mountain Water Co. – and pay the legal bills – without raising rates, and with $33 million to spare.

That's according to a detailed estimate of finances that chief administrative officer Dale Bickell presented Wednesday to the Committee of the Whole of the Missoula City Council.

Based on current water rates, the city of Missoula can borrow up to $145.3 million, according to the presentation from Bickell.

The amount means the city can pay for the water company at $88.6 million and still afford a bundle of other related costs, including legal fees and capital improvements at some $6.35 million a year.

The finance sheet Bickell provided estimated the city's legal and professional fees at $8.5 million, and it estimated the city would borrow $8.3 million for capital improvements.

Earlier this month, the Montana Supreme Court affirmed the district court's ruling that ownership by the city of Missoula was "more necessary" than ownership by a private owner, then-defendant The Carlyle Group. Carlyle has since sold Mountain Water to the subsidiary of Canadian company Algonquin Power and Utilities Corp.

Councilwoman Emily Bentley, who supported the city's successful bid to force a purchase of the water system, said the financials show how much money was leaving the community under private ownership.

"We were being taken by a ride by Carlyle and Algonquin," Bentley said.

Mayor John Engen introduced the topic. He didn't make extensive comments, but he smiled for a while after Bickell shared the assessment the city "still has a lot of capacity" even at current rates.


Some costs are still up to judges in Missoula County District Court. For instance, the city must pay "necessary" legal bills for defendants, but the city is arguing that the defense overspent. A judge will determine the amount the city must pay.

The presentation estimated the city would pay $3 million for the defendants' legal bills.

In a separate case, a group of developers are arguing they are owed some $22 million they fronted to the utility to extend water lines into new developments. A judge will determine if Mountain Water has to pay the developers out of the $88.6 million it's getting from the city.

Councilman Bryan von Lossberg said the finances presented Wednesday include payments to developers in case the city ends up having to foot that bill. He said it's important that those developers get paid because they are operators in this community.

"We want to make sure that they are properly compensated," von Lossberg said.

Going forward, Councilwoman Michelle Cares said she would like to talk more about Mountain Water employees and details such as pensions. She said "murkiness" still surrounds the transition with staff.

Last week, the city of Missoula filed a motion to take possession of the water company and related assets, and the motion is pending in Missoula County District Court.

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Higher Education Reporter

Reporter for the Missoulian