City of Carterville dispels Missouri American Water acquisition rumors

The City of Carterville is dispelling rumors that surfaced regarding the purchase of the city’s water system.

The city also believes the water system is best retained by the city for the benefit of its citizens.

Read the entire statement released by the City of Carterville below:

“In the summer of 2021 certain members of the public indicated a desire to sell the City of Carterville’s water system to a utility company. The Concerned Citizens for Carterville (“CCC”) provided statements alleging that seventy-three (73) citizens answered a survey and fifty (50) citizens wrote letters expressing their desire to pursue the sale of the City’s system. However, the list of these 73 individuals and the 50 letters were not provided to the City. Statements from CCC also indicated that Missouri American Water had reached out to Carterville City Administration to begin discussions of buying the City’s water system. This was inaccurate information. Missouri American Water never reached out to the City of Carterville to express an interest in purchasing any utility system from the City. Indeed, the only discussions at that time were between Missouri American Water and three (3) members of CCC. Those individuals, as confirmed by Matt Barnhart with Missouri American Water were Allison Pendergrass, Bill Oakes and Andy Martin.

Members of CCC made statements alleging that Missouri American Water had offered to purchase the City’s Water and Sewer system for an amount of $4.5 million and that this offer was based off of other comparable systems in other cities. It is important to point out that at no time did Missouri American Water ever request specific details and information about the Carterville water system to ascertain age, condition, total users, employees, costs, current contracts, planned upgrades, equipment inventory, or debts. This information would have been necessary to create an accurate appraisal of the City’s system. Furthermore, Missouri American Water never proposed an offer to the City of $4.5 million.

CCC members made statements alleging that Missouri American Water had requested to appear at a public meeting with the City Council to present information about potentially acquiring the Carterville Water System. No such request was ever received by the City of Carterville.

Due to the involvement from members of CCC the duly elected leaders of Carterville were placed in an unfortunate circumstance of trying to determine if a utility company was interested in purchasing the water system while trying to protect the interest of all its citizens by preserving closed negotiations, even though the CCC’s statements now meant the public and other utility companies could know that possible negotiations were occurring. As the City Attorney explained multiple times at City Council Meetings, matters such as legal negotiations, including the sale of real estate are exempted from open records while negotiations are continuing. This is to help protect the City’s position to obtain the best result from any negotiation in order to provide the best outcome for the citizenry.

In order to determine Missouri American Water or other utility companies’ interest in acquiring the City’s water system, if any, the City Administrator was directed by the Council, with the advice of the City Attorney, to reach out to certain utility companies to gauge any interest in acquiring the City’s water system. The City Administrator contacted Liberty Utilities to inquire if Liberty would want to pursue discussions of acquiring the City’s water system. After brief discussions and some data and information provided, Liberty determined it would not be advantageous for Liberty to pursue acquisition.

The City Administrator also contacted Mr. Barnhart at Missouri American Water. But this communication was after members of CCC claimed that Missouri American Water had reached out to the City and requested an opportunity to present information about acquiring the water system. Mr. Barnhart indicated Missouri American Water did not wish to begin any talks for acquiring the water system in a public meeting. Instead, for confidentiality of Missouri American Water’s proprietary information initial discussions would be through non-public and confidential communications. Mr. Barnhart also confirmed members of CCC had approached him. He further stated, once discussion begins with the City Council that he would no longer allow communications with CCC members. Mr. Barnhart also denied ever providing to anyone, including the members of CCC, an offer or estimate of $4.5 million as a purchase price for the water and/or sewer system. He stated that he did not have sufficient information to properly value the system and that this information could only be provided by appraisal involving data and information of extensive detail of the system. That information had not been requested by Missouri American Water or received. Therefore, no such offer was ever made.

Mr. Barnhart indicated Missouri American Water wanted to acquire both the City’s water and sewer system. However, City leaders informed him that the sewer system was part of an intermunicipal agreement between the Cities of Oronogo, Webb City and Carterville and governed by the Center Creek Wastewater Treatment Board (“CC201 Board”). Due to the nature of the existing intergovernmental cooperative agreement any acquisition of the sewer system was unlikely because the other municipalities would have to consent and agree to Missouri American Water’s acquisition and membership to the CC201 Board. Additionally, the most recent approved agreement by these partnering cities expressly limited any membership, current or future, to municipalities to conform to requirements under 33 U.S.C. 1281(g) that limits grants under the Federal Water Pollution Control Act to State, municipality or inter-municipal public owned treatment works.

In January of 2022 Missouri American Water did provide what Mr. Barnhart called a “conservative estimate” for the City’s water system in the amount of $1.5 million. This conservative estimate was provided without any exchange of data or information and there was no guarantee from Mr. Barnhart to the accuracy of this amount nor was it provided as an offer to purchase the water system. The City responded to this communication on January 14, 2022 and requested further information, as well as the next steps in the process. As of this date, no response has been received from Missouri American Water.

The City Council has discussed the information so far provided, including the conservative estimate. The City currently produces $300,000 in annual revenues from the water system. These revenues assist in funding maintenance of the system, but also pay for salaries and wages of all public works employees. These employees are necessary for more than just water. They are needed to maintain the sewer system, streets, stormwater and general maintenance within the City. Losing this revenue from the water system, if it were sold, would create budgetary difficulties to maintain a sufficient number of employees for these important areas of the city that serve to benefit the citizens and the public. Moreover, any profits from the sale of the water system would be directed first to retiring the current revenue bond debt on the water system. Based on the conservative purchase price estimate after payment of the debt and anticipated grant penalties the net profit from the sale could be less than $500,000.

The City Council also recognizes that if the water system sold to a utility company that future ownership of that system by the City would not be likely if the acquisition did not provide the desired outcome.

The Carterville City Council has been actively pursuing ways to improve the water system. This action by the city government predated any discussions or rumors of an interest from Missouri American Water. The City has received funding in American Rescue Plan Act (“ARPA”) funds, potential Environmental Protection Agency (“EPA”) grants, and other funding from state and county sources to improve the system for all citizens. The City has installed a secondary well using unexpended bond funds at no increase to end user fees. The City will continue to make necessary investments for improvement of this system. But the City Council has determined that the water system is best retained by the City of Carterville for the benefit of its citizens. Therefore, Council members have voted five to one to end any further discussions for the sale of the Carterville Water System to Missouri American Water at this time.”