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Missoula council OKs mayor to negotiate Mountain Water purchase
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Missoula council OKs mayor to negotiate Mountain Water purchase

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Mayor John Engen is free to begin negotiating with the Carlyle Group to purchase Mountain Water Co., but members of the public urged him to proceed with caution.

On Monday, the Missoula City Council voted 10-2 to approve an ordinance that gives the mayor authority to hammer out a deal to buy the water company – or begin the condemnation process. The council would have to approve any future purchase contract or move to condemn.

Initial estimates put the purchase at anywhere from $50 million to $70 million, including transaction fees. However, Mayor Engen and members of his negotiation team said the ordinance gives them permission to delve more deeply into financials and arrive at a more accurate figure.

At the meeting, some members of the public said they feared an increase in rates under city ownership. One citizen also spoke with passion about her opposition to the water company’s ownership by a multinational corporation, and financial and legal advisers discussed – in sometimes intricate terms – the way they would crunch numbers to arrive at a realistic offer to Carlyle, the global hedge fund that bought Mountain Water and its California parent a couple of years ago.

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Paul Eichwald, an interested resident of Missoula County, said his father always recommended he examine negative consequences in order to be pleasantly surprised if a positive outcome emerged. He encouraged the mayor to investigate the ways a deal might go bad and present that scenario to the public.

“If you could address what is the worst-case scenario on this potential investment by the city, I would appreciate it,” Eichwald said.

Kara Colovich, who is studying climate change and environmental studies at the University of Montana, said she believes now is a good time to buy the system. Down the road, she said, the city will take on more risk and more cost in such a deal.

“I’m just passionate about this issue of climate change, and I’m worried for our future generations,” Colovich said.

City elections are underway with ballots in the mail this week, and several candidates offered their take on the ordinance. After Peggy Cain tried to offer a second round of public comment, she drew a gavel pounding by the mayor, who runs the meetings.

In her first comment, Cain said she wasn’t convinced a deal should go through. While she supports some type of public ownership model, she doesn’t believe a purchase will be affordable.

“I’m hoping in my lifetime we can own our water, but right now, we just can’t afford it,” said Cain, hoping to unseat Engen.

Later, Cain returned to the mic to speak again on the same matter. Typically, when Engen tells people they get just one shot at public comment, citizens return to their seats.

Cain, however, continued her comments, and Engen pounded the gavel with apologies to those who had followed decorum.

“You are out of order,” he said.

At her seat, Cain retorted, “You are out of order.”

She admitted after the meeting that she had lost her temper.

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Councilors voted on the matter after some questions but little discussion. Councilors Dick Haines and Adam Hertz opposed the measure, and all the others supported it but with varying degrees of enthusiasm.

Councilman Jon Wilkins said he questioned the timing of the ordinance and many other aspects of the deal. At the same time, he had to support the beginning of negotiations because he believes in the end game.

“I also deep down think we ought to own our water,” Wilkins said. “Is this the best way to get it? I don’t know.”

Councilman Ed Childers said the government is the people, despite the sentiments of some members of the public. And he believes the people should manage their own water.

“Mountain Water wants a 10 percent return on their money, and the city just wants to make sure there’s water coming out of the tap,” Childers said. “I think we can do a better job that way.”

And if the city can’t do a better job, the ordinance also allows the mayor and the council to find out, said Councilman Alex Taft. He supported the ordinance because it gives the city the opportunity to learn more about a possible purchase.

“I think the question before the body tonight is not whether this is a good deal. That’s for further down the road,” Taft said.

Councilman Hertz, who opposed the ordinance, said he felt like he was being asked to base his decision on feelings instead of figures. He wanted more details about a variety of the related costs before voting on a measure that might lead the city down a costly road of condemnation.

“I’d like to make a decision based on facts, and I haven’t seen any financial projections whatsoever come out of the administration,” Hertz said.

Engen and his advisers pledged the details would emerge if the council gave them the nod to move forward.

Reach Keila Szpaller at @keilaszpaller, at keila.szpaller@missoulian.com or at (406) 523-5262.

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Missoula Mayor John Engen anticipates moving to condemn Mountain Water Co. as one step toward public ownership. On Monday in a unanimous vote, the Missoula City Council authorized Engen to make a $50 million offer to purchase Mountain Water from the Carlyle Group, a global hedge fund.

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