The Role of the Mayor and City Council in Supporting the Sale

At the end of September the Mayor and the City Council each put forth a document stating the City’s position on the Carlyle purchase of Mountain Water.  While these documents share many common themes, they are not identical, which leads to the question of “Which party ultimately speaks for the City when the Mayor and City Council take separate action with respect to an issue?”  A look at Missoula’s city government and how it functions sheds some light on this question.

Missoula is a self-governing municipality that functions under a City Charter.  Montana’s local government statutes provide that a city’s self-governance charter establishes the city’s, “executive, legislative, and administrative structure and organization. . . .”  According to the City’s Charter, the legislative branch, which is the City Council, is the rule and policy making branch of the government.  As a result, it has the power to “. . . enact such ordinances and resolutions [as are] necessary for the protection and benefit of the people’s health, welfare and security.” (Art. II, cl. 1).  The City Council thus authorizes the Mayor to execute documents on behalf of the City.

The Mayor is Missoula’s executive, and is authorized to “execute all ordinances and resolutions passed by the City Council.  The Mayor shall also execute all documents on behalf of the City following approval by the City Council.” (Art. III, cl. 4) The Mayor can also veto any ordinance or resolution passed by the City Council, but that veto is subject to an override by a two-thirds vote of the full City Council.

In the context of the Carlyle purchase, the Mayor first signed an agreement with Carlyle on September 22, and then a City Council resolution followed four days later.  That agreement states that the City will support the Carlyle purchase before the PSC without condition.  The night before the Mayor signed the agreement with Carlyle, the City Public Works Committee sent a draft resolution to the City Commission regarding the sale of Mountain Water to the Carlyle Group.  The draft resolution has red-line editing and reflects an evolving opinion on the sale, but it essentially proposed that the City Council oppose the sale unless two conditions were met: (1) “an enforceable guarantee of a right of first refusal [for the City] to purchase the water utility from Carlyle Group,” and (2) “further stipulations . . . to ensure clean, affordable and reliable drinking water for Missoula’s residents.”

After the Mayor entered into the Agreement, the resolution was further modified.  In its modified form, it expressed support for the Mayor’s Agreement, but it also maintained that clear conditions on the sale are needed to protect consumers.  By a vote of 11 to 1, the City Council passed the modified resolution at the September 26, 2011 council meeting, including the following language:

“NOW THEREFORE BE IT RESOLVED that the City Council supports all reasonable efforts by the City of Missoula to acquire Mountain Water Company; and

BE IT FURTHER RESOLVED that the Missoula City Council recognizes the Letter Agreement as an enforceable guarantee of a right of first refusal to purchase the water utility from the Carlyle Group; and

BE IT FURTHER RESOLVED that the Missoula City Council supports placing further stipulations, as requested by the Montana Consumer Counsel, on the sale of Mountain Water Company to the Carlyle Group to ensure clean, affordable and reliable drinking water for Missoula’s residents.

BE IT FURTHER RESOLVED that, in the presence of a clear path to public ownership and conditioned on stipulations that protect the assets of Mountain Water as requested by Montana Consumer Counsel, the Missoula City Council finds the sale to Carlyle Group compatible with the public interest.”

Based on the timeline of events, the City Council appears to have ratified the Mayor’s Agreement after it was executed.  In the course of that ratification, however, the City Council also announced a clear policy of opposing the Carlyle purchase unless the PSC imposes certain consumer protection provisions upon the sale.  Because the City Council holds policy and law making authority under the City Charter, it appears that the Council is exercising that authority to require something more from the Carlyle Group before its purchase moves forward in the PSC proceedings.