Article 8, Section 9 of the Nevada Constitution, known as the gift clause. That article states: “The State shall not donate or loan money, or its credit, subscribe to or be, interested in the Stock of any company, association, or corporation, except corporations formed for educational or charitable purposes.”
“I’m not sure how much water is in the (222) [Virgin River] aquifer now; I couldn’t even estimate how much is there.” In the same article, Aaron Bunker, the Virgin Valley Water District’s (VVWD) Hydrologist and Assistant General Manager, said: “It would take extensive work to figure out how much water is in the aquifer.”
Jason King, Nevada Water Engineer on June 19, 2015, to a Desert Valley Times reporter.
Preface
On May 14, 1927, Judge William Orr of the Tenth (now Eighth) Judicial District Court, Clark County, Nevada, [i] over-allocated 45 Bunkerville Irrigation Company (BIC) stock shareholders appropriations of 6,268.81 Acre Feet of Water to cover 865.85 (proof 02038) cultured acres with an entire summer and winter allocation of 7.2 acre-feet of water annually. The Decree also over-allocated 68 Mesquite Irrigation Company (MIC) stock shareholders appropriations at 7,724.91 Acre Feet of Water to cover 1,066.97 cultured acres (01968) with an entire summer and winter allocation of 7.24 feet of water.
In total, the original Virgin River decree allocated 13,993.72 acre-feet of water to cover 1,932.82 cultured acres 7.24 annually, more than twice (2.4) the three acre-feet per year per acre limited amount established on February 26, 1907, 1907 by the Nevada legislature.
The 1927 Virgin River Decree (as modified) increased the water appropriated to BIC shareholders to 8,115.94 to cover the same amount of ground increasing the irrigation flow to 9.05 AFA. And it increased the amount of water to MIC shareholders to 9,669.56 while holding granted the irrigation area the same, also increasing the flow to 9.05
In total Virgin River shareholders, they had 17,785.50 acre-feet of water to cover 1,963.08 cultivated acres at a flow rate of 9.05 Acre Feet Annually, or three times the AFA or three times the limit established in 1907.
[i] Judgment and Decree in the Matter of the Determination of the Relative Rights in and to the Waters of the Virgin River (Virgin River Decree) was entered on by the Tenth (now Eighth) Judicial District Court, Clark County, Nevada.
1993
May: Virgin Valley Water District created
In May 1993, Nevada Republican state senator R. Smith (R, Clark 2) introduced Bill Draft Request (BDR-S.B. 50) to Create the Virgin Valley Water District (VVWD) as a political subdivision of this State to “adequately and efficiently provide water service for the economy and well-being of the residents of the Virgin Valley area.” The legislation passed with an overwhelming majority of both the House and Senate. U.S. House representative Dina Titus (D, NV.1), then a member of the State Senate (Clark 7), also voted in favor of establishing the District. However, Ann O’Connell, R Clark District 5, voted against forming the District. The District became a political subdivision on May 10, 1993.
June: VVWDB drives Virgin River Water stocks to $3,000 per share.
When the VVWD Board (VVWDB) first met on June 9, 1993, John Lee, Cresent Hardy, J.L. Bowler (1909-2004), Todd Leavitt, and Sam Reber, all stockholders in either MIC or BIC or both, assumed the role of the first Board of the Virgin Valley Water District (VVWDB) and immediately focused on using public funds and bonds for developing domestic water and purchasing Virgin River stocks held by MIC and BIC shareholders.
To establish their Authority to set a rate, they first accounted for $75,800 for 46 Virgin River water stock shares previously purchased by Farmstead Water Association and the Bunkerville Water Users Association into the newly established Water District. That action set a baseline Virgin River “market value” at $1,825 per share, slightly lower than the $2,250 City of Mesquite elected officials “gifted” to Lyle Hughes in 1992 for river water stock shares.
However, that $1,825 per share rate did not last long. At the meeting, shareholders Lee, Hardy, Bowler, Leavitt, and Reber set the stock price at $3,000 per share.
1995
September: VVWDB ups Virgin River stock shares to $5,000 per share.
And in Mesquite, VVWDB accelerated its stock share price for excessive irrigation water. During a VVWDB meeting, Hardy argued that the $6,000 per share that the City of Mesquite paid Larry Reber [on September 1, 1995, for two [MIC] stock shares was an average and fair market value. Hardy said that Dennis Rider had purchased stock shares and did not pay over $4,000 per share. Therefore, he said, $5,000 per share was adequate.
During a VVWDB meeting, Hardy argued that the $6,000 per share that the City of Mesquite paid Larry Reber [on September 1, 1995, for two [MIC] stock shares was an average and fair market value. Hardy said that Dennis Rider had purchased stock shares and did not pay over $4,000 per share. Therefore, he said, $5,000 per share was adequate.
1996
March: VVWDB pushes River stock price to $6,000 per share
On March 28, 1996, Bobbi Coughlin came to the Virgin Valley Water District Board (VVWDB) with 12 shares of MIC water. [1] She asked for $7,500 per share. This request erupted into a discussion about the value of a “share.” The Mesquite City Council, with Crescent Hardy as a council member, settled the argument in 1997. Hardy voted to increase the value from his previous $5,000 per share argument to $6,000 per share, arguing the City of Mesquite Council [With him as a member] paid for two [MIC] shares was an average and fair market value. Reber seconded the motion, and it carried 4 to 1. Vinnie Leavitt opposed it. [2]
[1] 12 shares * 7.85 AFA per share = 94 Acre Feet Annually (AFA)
[2] March 27, 1996, Virgin Valley Water District Board meeting.
1999
VVWDB puts Virgin River stock Shares at $8,287.30
In 1999 Water District board members Sam Reber, Harold Wittwer, Cecil Leavitt, Charlne Hughe Kathryn Leaitt “gifted” $439,060.01 to several shareholders, including the Leavitt Land and Development Compan, Dannie and Sharon Leavit and the Wittwer Family Trust for 63 shares. The Board paid $8,287.30 for BIC shares and $6,000 for a MIC share.
2005
Patricia Mulroy for Southern Nevada Water Authority (SNWA) in Las Vegas pays $11,686,500 for 350 Bunkerville Irrigation Corporation (stock shares).
In 2005 Mulroy, for the SNWA, expanded the Virgin River market by purchasing (not leasing) 350 BIC Shares of BIC stock shared from The Dixie and Anne Leavitt Foundation for $11,686,500 or $33,390 per share.
July
VVWDB pushes BIC stock prices to $31,500 per share
And on July 25, 2005, VVWDB members Hafen, Theron Jensen (replaced Charlene Hughes), Dave Bennett, Cecil, and Kenyon Leavitt gave Abbe Green and Don Lee $68,418 for 3 MIC shares raising that per share price to $22,805. Two months later, the same Board gave Kelly and Karla Jenson $126,000 for 4 BIC shares, raising BIC prices to $31,500 per share.
2007
April: VVWDB ups Virgin River Water Stocks to $31,500 per share
In April of 2007, VVWDB members John Paul, Ted Miller, Kenyon and Cecil Leavitt and Dave Bennett paid Erik and Judy (Leavitt) Laub [1] the going rate of $31,500 for one BIC water stock share.
[1] Randy Laub serves on the Virgin Valley Water District Board.
December: Secretary of Interior sets Intentionally Created Surplus (ICS) and a Tributary Conservation ICS policy
On December 13, 2007, Secretary of the Department of Interior (DOI) Dirk Kempthorne signed a Record of Decision [i] adopting the 2007 Colorado River Interim Guidelines for Lower Basin Shortages and the Coordinated Operations for Lake Powell and Lake Mead. And the Guidelines establish criteria for developing and delivering Intentionally Created Surplus (ICS) and a Tributary Conservation ICS as a theoretical way to avoid Lower Basin shortages and benefit Lake Mead and Lake Powell.
According to Brenda W. Burman, The Commissioner for the Bureau of Reclamation (2017-2021), the 2007 guidelines had two significant impacts. First, it reduced the likelihood of litigation between or among the Basin States. Second, she said, it replaced the interim nature of past federal guidelines with operational rules over a more extended period. Extending the time frame allowed those concerned to eliminate the need for permanent or perpetual agreements. Further, the extension provided the opportunity to gain valuable operating experience in a system with highly variable supplies and many emerging challenges.
Under the Department of Interior – Bureau of Reclamation ICS contract guidelines, in return for cash, Virgin River stockholders of MIC or BIC stocks sign a “Forbearance Agreement with the SNWA the Nevada Water Engineer, and the Colorado River Commission of Nevada (CRCN), attest that they have followed their land and allow their historical irrigation shares of to flow freely into Lake Mead (through the Overton inlet). After paying for the river water stock shares, SNWA takes a credit that allows them to add more Colorado River main flow water (not 1927 decreed Water) to serve their growing Las Vegas Metropolitan community.
The intent of the authors of the ICS program assumes that once stockholders no longer irrigate their land, some mathematical amount of Virgin and Muddy River water will be free to flow into Lake Mead through the Overton (minus an amount for evapotranspiration). And under the forbearance agreement, river water stockholders must declare and show, through remote sensing, that the fallowed land currently is, or historically was, and otherwise would have been irrigated in the next Year.
Under the guidelines, SNWA authorities pay a hefty sum of public funds to appropriators of tributary Water to not use that source and allow it to flow some 80 miles downstream into Lake Mead. SNWA converts “flow credits” (with some adjustments) to domestic Water for their Las Vegas Metro area customers.
2008
April: SNWA sets aside $40 million for Virgin River stock purchases
On April 17, 2008, the SNWA, under Mulroy and governed by Board members Shari Buck, Chair, Rory Reid, Vice Chair, Andrea Anderson, Chip Maxfield, Lois Tarkanian, and Steven Kirk, voted to set aside $40 million in public funds to acquire publically owned but appropriated river water stocks from the Muddy and the Virgin River shareholders as part of the ICS project.
2010
VVWDB purchases of MIC and BIC shares hit $12,159,670.86
Between 1993 and 2010, shareholders sitting on the Virgin River Water District Board (VVWDB) redirected ratepayer funds required to develop underground Water for domestic use to acquiring 551 stock shares for $12,159,670.86, ranging from a low of $900 for a MIC share to $72,000 for a BIC share by 2010.
Budget Impact
In 2008, the average cost of Nevada river irrigation water was $7.20 per Acre Foot Annually (AFA) [1] or $51.69 per share.
In 2013 Off-Farm irrigation water prices equated to $13.60 ($97.65 per share) in Nevada, $29.43 ($211.30 per share) in Arizona, and $45.59 ($ 327.32 per share) in California.[2],
On December 5, 2019, Wesley Smith, Chief Financial Officer for the VVWD, put the Boards debt at $20 million, incurred from the purchase of MIC and BIC’s stock shares and some underground water shares. By 2019, the Board had paid 12,159,670.86 [for 551 shares] for a gross average of $22,068.36 per share, leaving $7,840,329.14 acquired from other sources. [3]
Historically, the VVWDB set prices for MIC or BIC irrigation water they leased to local irrigators at $150 ($20.89 per acre-foot) to $250 per share ($34.81 per acre-foot). [7] However, VVWDB members Nephi Julien, Ben Davis, Richard Bowler, Randy Laub, and Travis Anderson moved to increase the share rate for local golf courses from $250 per share to $1,246 per share ($173.53 per acre-foot) a rate the Southern Nevada Water Authority paid for Virgin River Water they converted to domestic use.
According to Smith, that debt contributed to an increase of 35 % in 2010 and 94 % in 2015 for the approximately 10,000 culinary (underground) water customers served by the Virgin Valley Water Board (VVWB). Smith said future river water use would cost multi-millions of dollars to clean for culinary use, and the purchases would continue to cause rate increases over the next ten years.[4] [5] [6]
[1] U.S Department of Agriculture, Farm and Ranch Irrigation Survey at: https://goo.gl/jzQHLN
[2] Average Purchased Water Cost ($ Per Acre-Foot) for Farms Using Off-Farm Surface Water, by Farm Size and State, for 2008 Irrigated Farms at: https://goo.gl/DFpzUR
[3] McGreer, Michael M., Mesquite Irrigation Company, Bunkerville Irrigation Company Records request provided by Virgin Valley Water District.
[4] Sylvester, Jeffery deposition of Wesley Smith on December, 5, 2019, in Paradise Canyon vs. Virgin Valley Water District civil case.
[5] Ibid, Smith deposition.
[6] In addition to the costs, the effort would only yield about half of what is processed.
[7] An acre-foot annually differs from a share whereas a share is a number of acre-feet. For example, If a share includes 7.18-acre feet at $3,000 per acre-foot then the share cost is $21,540 (7.18 *$3,000=$21,540).
Virgin River Water Board River stock purchase Tables
Share purchase summary
