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If the city of Missoula buys Mountain Water Co., it will take nearly $1.1 million in property tax payments off the rolls.

How will the city make up for the money, including roughly $250,000 that goes into its own coffers? Councilman Dick Haines said other council members have had no problems raising taxes, so he wouldn’t be surprised to see the body raise water rates, too.

“It may be cheaper to buy beer by the gallon than it would be to buy water here,” predicted Haines, who opposes the purchase.

On the other hand, Mountain Water Co. sends an estimated $2 million out of Montana for “overhead” costs, said city chief administrative officer Bruce Bender. If the city buys the infrastructure, all that money stays home.

“The benefit of having the utility owned by the people and owned by the government in the long term is a big benefit,” Bender said.

On Monday, the Missoula City Council will take public comment on an ordinance that gives Mayor John Engen the authority to begin negotiations with the Carlyle Group to purchase the company that delivers Missoula’s drinking water – or to attempt a condemnation of the company under the city’s power of eminent domain.

The purchase price has been estimated at anywhere from $50 million to $85 million.

If the city buys the company, it wouldn’t immediately pull the plug on payments to other government jurisdictions, Bender said. Instead, city officials have talked about negotiating “payments in lieu of taxes” so the hit is gradual.

“We’d commit to a full (payment) the first year, and then have some sort of declining amount every year that was reasonable,” Bender said.

At a certain point, the amount would hit zero, although Bender said he isn’t sure how long the city would make payments. Those details will be worked out as the city gets closer to a purchase price and terms of sale, he said.

“Certainly, our interest is to try to make it as long as we can afford it,” he said.

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If the city acquires Mountain Water Co., it also will be responsible for upgrading it, and the pipes are notoriously leaky. One benefit of local ownership is the city would take care of the fix, Bender said.

“We’d also have an interest in trying to be more aggressive on pipe replacement due to the high leakage,” he said.

Under private ownership, Mountain Water rates are regulated by the Montana Public Service Commission. If the city took ownership, Haines said, the council would set rates, and he’s concerned the body would raise rates the same way it increases taxes and fees.

“We never have an income shortage here in Missoula. We just raise taxes if we’re short on money,” said Haines, who opposes tax increases.

Councilwoman Cynthia Wolken, though, said council members elected locally are better equipped to set fair rates than Public Service Commission members, who are elected statewide, and are better qualified to do so than a hedge fund like the Caryle Group – Mountain Water’s parent company.

She said the details need to be ironed out, but she is confident the mayor is negotiating in the best interests of both ratepayers and taxpayers.

“Any seriously considered proposal will have to be a net gain for Missoulians to pass muster,” Wolken said.

Any purchase contract also would have to come before the Missoula City Council for approval.

Wolken agrees the council increases taxes, and she said it’s in direct response to citizens of Missoula who ask for services. For instance, she said, people call the city not only about emergencies but about things like couches in alleys, so the city is hiring two quality-of-life police officers to address those complaints.

In earlier conversations, Mayor Engen has said he believes the city could afford to purchase Mountain Water without an immediate increase in rates. He also has said that eventually, rates will go up.

Wolken, though, doesn’t buy Haines’ prediction that under city ownership, the cost of water will rival that of a sudsy beverage: “I don’t know what kind of beer Mr. Haines is drinking, but I hope he upgrades.”

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

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