Missoula Mayor John Engen kicked off the press conference with his characteristic good humor. “Oh, no pictures, please,” he quipped as nine journalists filed into his City Hall office and photographers and camera operators jockeyed for a spot.
The one-liners proved helpful in diffusing what might otherwise be a difficult press conference. Engen invited the press to meet with him to discuss the future of Missoula’s water supply. Earlier that morning, Sept. 19, he learned via email from Algonquin Power & Utilities Corp. that the company intends to purchase Missoula’s Mountain Water Company and its parent company, Park Water, from the Carlyle Group.
Engen called out Carlyle’s arrogance in pursuing the sale considering the utility is currently embroiled in a legal battle with the city. “That was the most striking thing to me today,” Engen said.
In 2011, the Carlyle Group, which manages more than $200 billion in assets, bought Park Water from longtime owner Sam Wheeler. The deal set the stage for a bitter court battle between the city of Missoula and a multinational investment firm with very deep pockets.
Earlier this year, Missoula filed a lawsuit seeking to forcibly acquire Mountain Water through its power of eminent domain. The city argues in court filings that Carlyle promised Missoula first dibs to purchase Mountain Water when it again went on the selling block. In exchange, the city supported the deal with Carlyle, helping pave the way for regulatory approval. Missoula maintains that, as evidenced by its two declined offers to buy the utility, Carlyle reneged on the agreement, pulling, as city attorneys call it in legal filings, a “classic bait and switch.”
While a poll conducted by Missoula legal counsel found 70 percent of residents want the city to own Mountain Water, not everyone believes it should engage in an expensive legal dispute to get it. Some, including Missoula City Councilman Adam Hertz, who ran for office on a platform of fiscal conservatism, question the financial prudence of picking a legal fight with a company that has seemingly endless resources.
“Just as I’ve said from the get-go, I think that we’re just pouring good money down the drain,” Hertz says.
Even before Algonquin complicated an already snarled lawsuit with its $327 million bid for Park Water, legal expenses associated with the city’s fight for its water supply topped $500,000—or more than $100,000 above the city’s anticipated total costs.
The case still isn’t set for trial for another six months.
For Hertz and others who have spoken out in recent months, the Mountain Water sale represents government at its worst—reckless spending to the detriment of private industry and local taxpayers. Those critics also point out that Engen’s spending isn’t a new development: Between 2005 and 2015, city taxes have increased 44 percent (see chart on page 15).
“There’s no doubt the budget has ballooned since he’s been the mayor,” Hertz says.
While the Mountain Water fight represents the worst of government for Hertz, it illustrates the best to Engen. He believes elected leaders serve as community stewards. He adds that neither Carlyle Group nor Algonquin have local interests at heart. “We’re the best buyer,” he says, “because we don’t have a profit motive.”
Engen, now in his third term, is used to hearing criticism and, in this case, he cuts straight to the main issue: an ideological difference over property taxes.
“I believe that my view reflects the majority view of what taxes are in Missoula and, I think, maybe around the country,” he says. “But there is clearly another view that is held very strongly, that there are some things we ought to be in this together on, but not many. And maybe that’s the fundamental rub. I think there’s more that we should be in on together.”
But how much more can Missoula afford?