Missoula’s win, Apple Valley’s gain? (August 5, 2016)

Barb Stanton: Ruling bodes well for town’s acquisition effort

MISSOULA, MONTANA — The Montana Supreme Court ruled 5-2 Tuesday in favor of the City of Missoula’s eminent domain purchase of Mountain Water Co.’s water system, a move Apple Valley officials said bodes well for public ownership in the town.

After what Justice Patricia Cotter described as an exhaustive review of the record, the majority’s opinion was that the Missoula County District Court correctly concluded in June 2015 that evidence showed that municipal ownership of the water system was ‘more necessary’ than its use by a for-profit enterprise, according to the Missoulian.

The vote clears a path for Missoula’s $88.6 million purchase of the water system currently owned by Liberty Utilities.

Apple Valley Mayor Barb Stanton on Wednesday called the ruling in favor of Missoula not surprising.

It’s the same argument our community has been making to us as Apple Valley’s rates have gone through the roof, Stanton said. A for-profit water company is there to make a profit. A community-owned system is there to serve the community. But while Stanton concluded that the endorsement of community ownership bodes well for Apple Valley, and Town Manager Frank Robinson described the two water systems as nearly identical in size, Greg Sorensen, president of Liberty Utilities California said the decision has no relevance in the town because the systems and situations are not comparable.

The ultimate impact and cost of the City (of Missoula) acquiring the water system was significantly greater than the residents were originally promised, Sorensen said.

In 2014, Missoula Mayor John Engen estimated the city would pay $400,000 total to its own lawyers and the same for attorneys representing the water company and its owner, according to a Missoulian report. At the time, the city planned to spend $4.24 million in overall transaction costs — including legal fees — to condemn the water utility.

Months later, however, Engen said the city had already paid nearly $400,000 in legal claims, which resulted in a recalculation of the projected total bill for attorneys.

On Wednesday, Missoula spokeswoman Ginny Merriam told the Daily Press the city has paid approximately $6.1 million in attorneys and experts fees.

As of January, Apple Valley had spent more than $1.1 million on its acquisition, a transparency report showed, and the total estimated cost of acquisition stood at $3.5 million.

A request was made on July 6 for updated costs; however, Town spokeswoman Kathie Martin responded only with legal fees and legal costs for the eminent domain action only that totaled nearly $346,000.

A full transparency report will be presented to the Town Council sometime this month, according to Martin.

Of the 129 municipalities in Montana, Missoula is the only one that does not own its own water system, court documents show, and Merriam said support for acquisition among residents has been excellent from the beginning.

We have had some signs of litigation fatigue in the community that you’ll see in letters to the editor (in the Missoulian), Merriam said.

Missoula filed for condemnation in May 2014, more than two years prior to Tuesday’s ruling. Apple Valley’s condemnation filing came just seven months ago, and there’s been little movement in the case outside of a July 7 continuance of the trial setting conference for the purposes of discovery, court records show.

What could complicate the issue further is the Right to Vote on Debt Act, one of two competing measures set to appear on the November ballot. Passage of the RVDA would set up a future vote on the town’s acquisition of the water system and set the stage for similar votes on future enterprise acquisitions in the town that exceed $10 million.

Town officials contend that a vote would add time and cost to the acquisition process, and the Council approved an alternative ballot measure as a result that, if passed, would allow for similar oversight as the RVDA, but with acquisition of the water system excluded from voter approval.

Merriam said no resident in Missoula went so far as to bring forth a ballot initiative on acquisition like Pat and the late Chuck Hanson did in Apple Valley with the RVDA.

The City Council could vote to not spend anymore money … (and) one Council member (Harlan Wells) did threaten a ballot initiative, but never followed through, Merriam said.

Source: Matthew Cabe, Daily Press