Mayor’s Office Responds to City Councilor’s Claims of Mountain Water Bonding Problems

KGVO News received an email from the office of the mayor regarding the weekend story in which Ward Two's Harlan Wells expressed concerns about the city's ability to secure short or long-term financing for the Mountain Water Company.

Communications Director for the City of Missoula, Ginny Merriam, provided the following responses to the issues raised in the story.

"The administration and our financial consultants did not present two funding options to the City Council last Wednesday. We presented a financing plan that calls for short-term financing through Barclays first, followed by long-term financing down the road.

The city is intentionally choosing short-term financing from a single lender, with the advice of our financial adviser and our internal experts, for a number of reasons.

Bonding takes too much time – months longer. We need to be able to act quickly on financing as soon as the judges rule on the remaining decisions, which have a range of possible financial outcomes.

Every number on the screen in the Powerpoint except the $88.6 million purchase price is an estimate. We don’t want to create 30-year bonds for an amount that’s imprecise, just to cover contingencies that may not come about. Actually, it might not be possible to do long-term bonds without access to specific information about the system that Mountain Water insists they will not provide until the City deposits the money for the purchase – so, chicken-and-egg. The $116 million loan will really operate like a line of credit.

Owning and operating the utility for some time will give the City familiarity with the system and enable us to know in more detail what improvements need to be made and in what order, leading to a more precise  loan amount. Throughout litigation, and to this day, we have had limited first-hand information about the condition of the system. We know that the system can provide water and that leakage is about 50 percent, but knowing in detail what causes the leakage and what needs to be done will only come with first-hand observation.

Short-term rates are good now.

It’s important to note that the City chose Barclays through a competitive Request for Proposals process, and the City Council was represented on the committee that made the selection. Barclays has now worked with us for more than 2 1/2  years."

KGVO thanks the mayor's office for their response.