BAR HARBOR – Members of the Warrant and Futures committees gave their approval Monday to a Town Council effort to take municipal control of the privately owned Bar Harbor Water Co.
The Futures Committee voted unanimously Monday afternoon to support a warrant scheduled for community vote at a Nov. 29 special town meeting. An affirmative vote will give Bar Harbor’s municipal officials the right to purchase the water company through the process of eminent domain, against the wishes of the company’s board of directors.
The town began the process nearly two months ago, when councilors learned that the Bar Harbor Water Co. planned to merge with Consumers Maine, the Rockport-based division of a large national utility conglomerate called Philadelphia Suburban.
Consequently, Consumers Maine and the town of Bar Harbor have battled for control of the water company with dueling publicity campaigns and closed-door legal wrangling that built mistrust between the factions throughout the fall.
But Monday’s meeting was the first chance for all the players to lay their proposals and their motivations before the public.
Town officials cited the need for local control of the municipality’s water.
“If they own it, you’re going to have no say in anything. This is your town, your moment, and it should be your water company,” said Councilor Matt Horton.
Water company representatives argued that the merger has been planned because their board of directors believes that Consumers Maine can do the best job managing the complex business of water distribution.
“I don’t think the town can run it as efficiently as they [Consumers Maine] can,” said Don Hobbs, a member of the Bar Harbor Water Co. board of directors. “Why put the tax burden on the town if you don’t need to?”
Following two hours of contentious and often personal debate between community members, Consumers Maine personnel, water company representatives and town councilors, the Warrant Committee cautiously added its stamp of approval to the eminent domain purchase with a 12-4 vote Monday evening.
Much of Monday’s debate centered on the disparate rate increases proposed by the town and Consumers Maine. Bar Harbor officials project water rates no more than 23 percent above the current rate during the next five years, while Consumers Maine has stated that rates would be raised at least 15 percent, but no more than 30 percent during the same time period.
However, the formulas to calculate those numbers used countless different variables – among them, Bar Harbor plans to spend $1.5 million in capital improvements, while Consumers’ Maine has pledged $1 million and the two projections use different consumption increases over the next five years.
After furious calculating and several rate revisions, the general feeling Monday night was that the numbers are meaningless.
“I haven’t seen the detailed numbers, but there’s not enough to convince me that we’ll save or lose a tremendous amount with one or the other,” said committee member Robin Weir.
Rather, Warrant Committee members questioned the legal and tax consequences that Bar Harbor could face as a result of using eminent domain to take control of the water company’s real assets, which include its pipes, water rights and pumps.
If the town utilizes eminent domain to purchase the assets – estimated by Consumers Maine to be worth about $2.7 million – tax consequences could boost the cost to nearly $5.5 million, according to the water company.
Town Attorney Lee Bragg countered that he could delay the consequences of the capital gains tax through the same legal means that Consumers Maine is using, thus the $4,039,100 purchase price included in the bond that Bar Harbor residents will consider in November.
Citizens also questioned the legality of eminent domain in this case, given similar efforts that recently landed the municipal governments of Winter Harbor and Rangeley in court.
“We’re not condemning property to build a road,” said warrant committee member David Lind. “We’re condemning a corporation.”
Bragg assured residents that the town’s approach is legally sound. But the water company would have the right to challenge any minor aspect of the eminent domain process with a lawsuit, he said.
Water company officials did not comment regarding their intent to sue.
However, Judy Hayes, president of Consumers Maine, stated at a previous public meeting that her company would not pursue legal remedy if Bar Harbor approved eminent domain through the proper channels.
Bragg said that the town was continuing its efforts to negotiate a per-share purchase price for the Bar Harbor Water Co. with its legal counsel Chad Smith. And the threat of eminent domain proceedings has nudged both sides closer to reconciliation, added Councilor Tom Burton.
In response, a divided Warrant Committee voted for the eminent domain measure so the issue could go before the full town on Nov. 29, perhaps promoting the solution that everyone desires – civil negotiation between the town and the Bar Harbor Water Co.
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