Questions, Pt. 2

Below, I noted that I have received documents from the City of Great Falls in response to my earlier requests. This post offers the conclusion to my initial thoughts regarding the documents I received.

In re-reading my post, I have to apologize for my sarcasm. It was late and I was a little rummy. But holy smokes folks, it strikes me that we are incredibly exposed on this coal plant issue. Apparently much of the legal framework that will govern our involvement in the Highwood Generating Station has not been finalized, and the City is instead proceeding to spend millions of dollars on the good faith and good intentions of our partners.

Partners? Did I say partners? Well, not so fast. Based on the latest documents I received from the City, I still cannot tell what our relationship to SME is or is not. Are we members of SME, are we partners with SME, or both?

This whole question might seem like very technical legal jargon. In fact, at this stage of the game it is probably the most fundamental issue surrounding our significant financial investment. What is the entity or entities? Who are the owners? What do we own? How do we own it? Why did we choose this particular ownership vehicle?

We know from Ms. Bourne's letter to me of January 29, 2007, that there is no extant, written "development agreement" between SME and the City of Great Falls and/or ECP. In other words, the City and SME have not entered into any overarching agreement that comprehensively dictates the terms of the relationship between the two entities. This does not mean that there are no "agreements," because some agreements can be oral (although I would suggest that when dealing with millions of dollars of public money, good practice would require written documents.)

Ms. Bourne outlines various agreements and City Resolutions that "demonstrate the joint venture with SME." With all due respect, I disagree. The lawyers among you might quibble a bit with me, but in most important respects a joint venture is nothing more than a partnership. A partnership is "an association of two or more persons to carry on as co-owners a business for profit." (There is, of course, a question of whether or not this operation will be carried on "for profit," but for now assume that's not an issue.)

One of the documents referenced by Ms. Bourne is a Wholesale Power Contract. While I am hesitate to make this statement as an absolute, I believe it is highly unlikely that this document offers evidence of a joint venture between SME and the City of Great Falls. This document provides terms under which the City can purchase power from SME. It is largely inconsistent with a joint venture. Look at it this way. If you go to a local dealership and sign a contract to buy a car, have you and the dealer entered into a joint venture to buy and sell cars? Of course not.

This whole issue is complicated further by numerous statements of City Staff. For example, in this December 6, 2005, Agenda Report, Ms. Coleen Balzarini states: "The City of Great Falls has been a member of Southern Montana Electric Generation and Transmission Co-Op since August of 2003." I checked the minutes of the two August 2003 Commission meetings (here and here) and I cannot find where we entered into any agreements to joint the SME Cooperative.

Membership in a cooperative is not something one should take lightly. While not directly analogous given the nature of cooperatives, a 'member' of a co-op is an 'owner,' similar, somewhat, to a shareholder. What rules dictate our relationship with the other members of the co-op?

Well, some of those 'rules' are provided by statute, for example here. Most, however, of these rules can be found in the organizational documents of the cooperative itself, and needless to say these have not been produced. (Although I requested them from SME by a letter that went out in yesterday's mail.)

So, despite the fact that I cannot find a vote whereby we became members of the cooperative, and despite the fact that I still do not have any Bylaws or member agreements for SME, our City Commission has been repeatedly told that we are members in the SME cooperative.

How much do we own? Why, "17% to 26%," of course. We have been pouring money into this entity for years now, and the ownership is not fixed? Where are the documents that show we own any of it?

I'm still looking.


free thought said...

"Know when to hold 'em, know when to fold 'em."

(It seems to fit with your new hillbilly thesaurus enhanced writing style).

a-fire-fly said...

The City Commission approved Ordinance 2861, Authorizing the City to establish an electric utility, on October 7th 2003. Between sept 2 2003, when it is 1st brought up,(with no mention of SME) and Oct. 7th, we apparently became members of SME, but there is nothing in any Commission records to show how it happened.

Anonymous said...

I certainly do appreciate the information, as well as your time, energy & effort (oh and that $34+) . I generally check your blog every day or two and rarely do you disappoint! many thanks to you and A-fire-fly for all the research!