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Current Events: Settlement ends Missoula water system ownership saga

Missoula Water
Posted at 11:40 AM, Feb 28, 2022
and last updated 2022-02-28 13:40:09-05

MISSOULA — This edition of Current Events with Missoula Current founding editor Martin Kidston takes a look at the recent agreement over a legal battle with the former Mountain Water Company.

“The city started wrangling with Mountain Water Company back in 2014. In 2017 they finally won their eminent domain case in district court, allowing them to take acquisition of Mountain Water Company. They paid $88 million for that water system, taking that system out of corporate ownership into public ownership. That was seen as a big victory,” Kidston explained.

“But shortly after they won in district court the city decided to file a "bad faith" claim against Carlyle Infrastructure Partners. That bad faith claim, the judge agreed that should go forward for arbitration. So, Carlyle and the city went to arbitration in front of a panel to settle that bad faith claim. The panel ruled on behalf of Carlyle Infrastructure Partners, saying the city didn't have enough evidence in writing to establish their claim.”

“As a result of that, the city was on the hook for quite a bit of money to pay to Carlyle and to settle some of the past lingering issues in court. Instead of continuing down that road, the constant bickering back and forth, Carlyle reached out to the city and said let's get this over with. Carlyle asked for $5 million in settlement fees,” Kidston continued.

City of Missoula reaches $4.13M settlement agreement with Carlyle over water fight

“The city negotiated and settled on $4.31 million. That's what the city will be paying Carlyle. The benefit of that settlement is that it brings closure to the situation, brings an end to the long fight and it allows the city a saving. They possibly could have been on the hook for $15 million if they didn't reach arbitration. This brings an end to all that and allows the city to get off the hook for what they could have been indebted for.

Missoula officials say that taxpayers will not see any implications as a result of the settlement. The city also feels the deal is worth the money.

“Taxpayers will see no implications of this settlement agreement according to city officials. The mayor and others have said that taxes will not increase at all to pay for this settlement, water rates will not increase at all to pay for the settlement agreement,” Kidston said.

“How the city will pay for it; they bonded for over 20 years to pay back that $4.1 million, paying roughly $318,000 a year to pay for the settlement. In doing so they can take the revenue out of water department revenues to pay for it and the capital improvement plan as opposed to taxes and increased water fees, so in that sense, the taxpayers won't see any increase at all.”

“On the other question, yes, the city believes it was worth it. It's almost unanimous amongst all city council members, especially those who go back so far. They still own the system and their drinking water. Before it was under corporate leadership, and that ownership owned the water and took deep profits out of it and sent it back to their owners,” Kidston said.

“The city owns all that revenue instead of sending it back to the profit owners, and now can invest it back into the system. Missoulians now have safe drinking water and their drinking water system is being improved every year by millions of dollars. So, in that sense, the city feels like it was worth it.