What does the City of Great Falls own?

Over at Dave's place, he has reprinted the City of Great Falls' response to a recent letter to the editor from a local accountant. (You can find the accountant's letter here.)

This response was provided to the Tribune on December 15, 2006, but they apparently do not feel it is newsworthy enough to be printed immediately. I will comment more on the response as soon as I am able, but in the meantime, I have another question about Electric City Power.

You see, in Coleen Balzarini's response to the accountant, she takes obvious umbrage at the accountant's negative characterization of the City's activities and his insinuation that, perhaps, the City's staff has been somewhat less than completely forthcoming about the project. The problem, though, is that little things keep coming up that cause an objective observer (me) to start questioning things.

For example, I want to know just what the City of Great Falls, through its subsidiary company, Electric City Power, is going to own for its investment. We do know, for example, that the "City of Great Falls will be responsible for financing 25% of the total cost, or about $128 million." I have personally heard staff say that we will be a 25% owner of the new utility, and in writing they state that "the City is a 25% partner in an organization called SME."

Yet, in the City's audited financial statements, Note 1(c), p. 37, we learn that, according to our auditor, we will own only 17.58% of this joint venture. Thus, assuming the representations are otherwise true, we are paying 25% of the cost, yet we'll actually own less than 20% of the entity. Huh? This is an overstatement of our interest by about 42%.

Why would the City overstate our interest? Is it because taxpayers might look askance at a venture whereby we seem to be 'carrying' our other partners? Is this good business? Shouldn't we question the board of directors of ECP about why they are willing to pay a 42% premium for ownership of an unbuilt, unproven power station?

Why isn't the Great Falls Tribune asking this question?

As a final aside, I refer to myself as an objective observer. Why? Because I am not actually opposed to the Highwood Power Plant and would actually like to support it. But everything I look at seems to raise questions, like the aforementioned overstatement of our interest, the involuntary dissolution of the corporation, and the apparent carelessness in governance.