City Councilor Concerned Over Long Term Financing For Mountain Water Purchase
At Wednesday's Missoula City Council's Committee of the Whole, members heard reports from experts involved in financing the debt incurred by purchasing the Mountain Water Company.
Ward Two's Harlan Wells says he is very concerned about the city's ability to secure either short-term or long-term bond financing through the banking company, Barclays.
"A couple of city councilors, including myself, started asking questions about the bond rating, and they said that they couldn't tell us, and that started raising some red flags," Wells said. "I started asking more in-depth questions, and one of them was, in two weeks are we going to see both proposals side by side, and the answer was no, we would not. What they were trying to do was soft-sell us on the reality that the only option available to the city right now is short term financing."
Wells said in his view, Barclays is not comfortable with the city's ability to manage that water system yet, and is not willing to give them long-term financing that the city could afford to pay.
"So, once again, the mayor, in his misguided attempt to own the water system, has been misleading the people," he said. "One of the reasons why it was 'more necessary' was the city's ability to have long-term fixed-rate debt that would be a benefit to the water user. Now, as it's turning out, that it's going to be a short-term floating rate that will have to be financed in 18 to 36 months, with no guarantee that we'll be able to refinance it."
Wells is concerned about what will happen after that 18 to 36 month period.
"If the economy goes bad, or interest rates soar, and we can't refinance it, what's going to happen to the utility? Does it get taken from us, or would it be repossessed by the bank? ," Wells asked. "That's my big concern now," he said. "Even though I was against the hostile takeover of the water system all along, now I'm really concerned because of the financing."