042917-mis-nws-city-water

Missoula Mayor John Engen hugs City Council president Marilyn Marler on Friday after Engen announced that the city and Liberty Utilities have reached an agreement that allows the city to take possession of the water utility by the end of May. The city will pay $96.4 million in the agreement.

The doors are open at Missoula Water.

"The biggest change will be (that) the future of the water system is secure," said Mayor John Engen. "And our commitment to bringing the system to an industry standard will be made manifest through ownership.

"The things that won't change, because I have tremendous confidence in Dennis (Superintendent Dennis Bowman) and all the employees, is that service won't be interrupted."

Last week, the city of Missoula bought the water utility, and the mayor and the water superintendent talked about the transition, the milestones achieved and the challenges ahead.

In a case that went to the Montana Supreme Court, the city of Missoula successfully argued in 2015 that public ownership was "more necessary" than private ownership, and it won the right to use its power of eminent domain to force a purchase of Mountain Water Co.

"If there was a clear hurdle, necessity was that hurdle, and it was a high hurdle," Engen said. "And the burden was upon us to present evidence that indeed public necessity outweighed private ownership here."

Other related court battles followed, including an appeal to the Montana Supreme Court, a proceeding that set the price tag at $88.6 million, and a fight over which party would pay the money the water company owed to private developers.

Thursday, the city cut a couple of checks to seal the deal, and the title transferred to the city of Missoula. The legal challenges are largely put to bed, and the city moves onto the logistics of turning a private utility into a public division.

"It's an IT puzzle. It's an accounting puzzle. It's an operations puzzle," Engen said. "And these folks (the mayor's transition team) have been incredible in the way that they have anticipated those issues and worked to solve them."

***

Another puzzle is how well the city of Missoula's leaders and water employees will get along.

The parties were at odds during the trial and after it, and Engen said the fact they all had to talk through lawyers due to the litigation made it difficult to communicate. That changed Friday, though, when the mayor talked directly with staff for the first time.

“I’m grateful to have you on the team,” Engen said. “I’m grateful to have you as part of the family of the city of Missoula and engaged in what we do every day, which is service.”

In an interview, the mayor said he hopes that former Mountain Water employees become comfortable being municipal employees and feel free to share ideas.

"I hope that if folks get to know me, they recognize that the door is open, that I honor my commitments, that we as a municipality operate ethically, that we provide opportunities for growth, that we believe in paying people a fair wage for doing a day's work," Engen said.

At least for now, Missoula Water will operate out of Mountain Water's old building at 1345 W. Broadway.

The mayor said the city is planning to create a facilities plan that addresses how its various offices will be used for the long term. City Hall is bursting at the seams, and it may make sense to move some functions together, he said. At this point, it's still early to know for sure.

"On day one, we're just going to have folks report to work, and we'll work through the rest," Engen said.

***

The city is also going to start fixing the leaky system.

As far back as 2009, members of the Montana Public Service Commission were growing impatient that the water system spilled roughly 40 percent of the water that it pumped, but Mountain Water officials argued rates would have to skyrocket to quickly fix the pipes. In a heated meeting, they said the utility had to balance the need to repair infrastructure with the need to keep rate increases reasonable.

In 2015, during the eminent domain trial, an engineer from a national engineering firm who testified on behalf of the city said the leakage rate had reached 57 percent one recent year and described it as "unprecedented" among water systems in the country.

Last week, Engen said the city plans to put an estimated $6 million a year into the system, and Bowman said he had a plan of priorities that would be considered as part of the budget process. Bowman is already coordinating with the city streets division so crews can take advantage of times the asphalt is torn up to do needed water pipe repairs and replacements at the same time.

"When we show up in a neighborhood, we're going to try to take care of everything on that block so we don't have to come back and interrupt the neighborhood," Bowman said.

The mayor said the city will seize those opportunities and may be able to invest more than $6 million some years. A 2 percent rate increase is planned for 2021.

"I would think that over the course of the next 15 years, we ought to be able to have the system up to an industry standard," Engen said.

***

After Judge Karen Townsend ruled the city had proven public ownership was more necessary than private ownership, the city worked to move past other obstacles, legal and logistical.

One trick this month is that the city needs to read all the meters in short order, Engen said. Last week, ownership changed overnight, and the city will need to be certain customers are billed appropriately for the month of June and the right parties are paid.

"That's a big piece of business," Engen said.

Once customers do get their first bill from Missoula Water, he said they'll get the best in customer service, and one more benefit: "They are also making an investment in the future of the system."

The mayor said he's pleased the employees of Mountain Water came to work for City Hall, and he believes they're up to the tasks of transition and take pride in their work delivering water.

"These folks care about what they're doing, and they care about their friends and neighbors," Engen said. In that regard, he said they're like city cops, firefighters, and council members.

For months, he said employees have been "wringing their hands" to ensure the transition doesn't cause any harm. He said Bowman is committed to customer service, and the IT folks working on the transfer of customer data, another logistical challenge, are on their toes.

"All that information needs to transition from their servers to our servers, and that's a big piece of business," Engen said. "We've got IT folks that are confident yet appropriately nervous about making sure that happens."

***

The city of Missoula recently bought Eko Compost too, but the mayor said the former owner wanted to sell, and Engen isn't interested in building an empire. He went to bat for water security, but he wouldn't for, say, a car dealership.

"We believed and still believe that this resource absolutely belongs in the hands of the public, where it can be managed through stewardship, rather than through return on investment," Engen said. "Where the board of directors is directly accountable to the folks they serve. Where citizens have direct input into operation, and where commoditization is no longer an issue.

"This isn't flip this house. It's the stuff of life."

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Higher Education Reporter

Reporter for the Missoulian