Mayor John Engen Counters Mountain Water Lawsuit Criticism

Missoula Mayor John Engen calls the nearly $4 million the city may spend in legal fees to acquire the Mountain Water Company from the Carlyle Group as essentially 'closing costs'.

Last weekend the Missoulian published a story stating that the city of Missoula's estimate of $400,000 in legal fees as it prepares for the court case approximately six months away, has already been surpassed.

Ward Two City Councilor Adam Hertz told KGVO News last Sunday that the total 'could be in the millions," and that the taxpayers and rate payers would be ultimately responsible to pay the bill.

Engen, speaking from his office on Wednesday afternoon, said the law firms representing the city in the condemnation litigation have been working and are being paid.

"We've been paying our legal team since we began the condemnation process," Engen said. "We had an original estimate of about $400,000 to get us through to the trial, and we're a little shy of that number today. So, what I have done is ask our legal team to give me an estimate on where we will be through trial in March. We know that litigation can be an expensive proposition. Anyone who's ever been engaged in a legal proceeding knows that there are lots of variables that can't be foreseen."

Engen confirmed that the total transaction costs will be in the millions.

"In the large picture here, we are assuming transaction costs of somewhere on the order of $4 million," he said. "We think these costs are certainly manageable within that budget. Frankly, I don't believe there's an alternative here. The company is for sale to the highest bidder, and the highest bidder will want to make a return on their investment, and there are only two ways to do that, to raise rates, or cut services and people. We can do this better and less expensively."

Engen addressed the issue of using the city's judgment levy to pay the legal costs should the condemnation lawsuit fail.

"We're involved in paying for a lawsuit that frankly began before I was in office that will most likely cost around $400,000, and we are paying a significant portion of that this year without a significant tax increase, and we are using the judgment levy tool to do that."

Engen also addressed a question about the law firms hired by the city in the condemnation lawsuit, and why there was no open bid process used to make that selection.

"We're using both Datsopoulos, McDonald and Lind, as well as Boone Karlberg," he said. "Our bond counsel who we've been working with for many years, Roy Kogen, as well as our lead condemnation attorney from Perkins Coie out of Seattle, Harry Schneider, interviewed local firms and made recommendations to me and we selected those local firms. As far as the open bid process goes, these kinds of professional services are excluded from the statute."

In concluding the interview, Engen said he does not foresee any 'significant overage', when it comes to legal fees. The total transaction costs Engen estimates at about $4 million.

"Basically, if you think about it like a mortgage, these are closing costs, Engen said"