Mesquite, NV April 29, 2018
The Virgin Valley Board (VVWB) is moving aggressively to end the golf industry in the Mesquite area through monopolistic-anti-trust activities designed to advantage shareholders of irrigation water to whom they have a binding economic relationship.
Their most recent move involved a monopolistic agreement with the Conestoga golf course (Pulte Del Webb) that has all the earmarks of government anti-trust behavior.
Board members Richard Bowler, whose family has shares in irrigation water, and Nephi Julian, whose sister is married to a major irrigation shareholder, pushed the Pulte deal thus continuing to affirm their support for inflating the value of irrigation shares. Both should have recused themselves from any vote on irrigation shares. [[i]]
Joining them was Travis Anderson who should have recused himself from the vote. His job with the city depends on earning money from city affluent which competes with irrigation shares for golf course watering. Agreeing to inflate the price of river water could arguably raise a price of affluent to just under the river water shares held by the VVWB. [[ii]]
Board member Ben Davis, an administrator for a Saint George (UT) taxi dispatch company, who lives in Mesquite, agreed with the other three to set an inflated price for Virgin River Water.
Barbara Ellestad had resigned from the board to become the unofficial press agent for the Board and irrigation water shareholders on the weekly Mesquite Local News.
The VVWB was established in 1993 primarily as a cash cow for Mesquite Irrigation Company (MIC) and the Bunkerville Irrigation Company (BIC) to offload their freely acquired unneeded irrigation water shares for a sizable profit.
In 1992, John Lee, Cresent Hardy, J.L. Bowler, Todd Leavitt and Sam Reber, all river water shareholders and officers of the Farmstead Water Users Association purchased 38 Mesquite Irrigation Company (MIC) shares (344.28 Acre Feet Annually) of Virgin River water. They paid Hildreth and Tonks, Warren Hughes, Ken Jensen, and Paul Jensen a total of $75,800 averaging $201.43 per Acre Feet Annually AFA for those shares.
In 1993, they formed the VVWB. At the first meeting, they voted to buy shareholder water. Reber set a share at about $3,000 or $331.00 for 9.06 AFA of river water In a share.
The price paid by the VVWB for one AFA in a share of irrigation river water rose to $741.14 in 1997. By the year 2000, the VVWB was paying $914.71 per AFA. In 2005 they paid $2,543.31 per AFA. In 2008 and 2009, they paid shareholders between $8,395.68 per AFA and $8,395.68 per share. In 2010, the amount paid to shareholder dropped to $7,560.71 for one acre foot of water annually.
In Nevada, the average purchase of off-Farm Surface Water for 2008 was $7.20. By 2013 it has raised to $13.60.
It is virtually impossible to lease irrigation shares for anything close to what the VVWB paid. Only two revenue sources exist to recover a fraction of what the board paid.
The Southern Nevada Water Authority (SNWA) which serves the Las Vegas Metropolitan area, will pay $1,246 fee per share ($174 per AFA). That is 13 times the $13.60 for irrigation water. They pay that rate because they can take and equal amount of underground water for each acre foot of irrigation water it collects and sends it back into Lake Meade. Underground water is far more valuable than highly polluted river water.
The golf course now pays $250 per share or $35.00 per AFA for shareholder irrigation water. That is about 3 times the 2013 off-farm rate. The VVWB wants the golf courses to reach 90 % $1,121 per share ($157 per AFA) of the SNWA. That is 4.4 times their current $35.00 rate and 11 times the Nevada lease rate for off-farm irrigation water.
The VVWB also wants to increase the Wolf Creek rates to the Conestoga rate and claw back any river water alleged to be unused
Further, the VVWB wants to claw back any “unused” irrigation water from the golf courses and lease that to SNWA. This leaves the golf courses potentially without water in an emergency. That emergency would likely be met by purchasing more MIC and BIC irrigation water at their inflated rates.
An amendment to the Conestoga deal makes the VVWB the sole arbitrator of “market rates,” and sole provider of irrigation water.
According to the agreement, “commencing January 1, 2036, the District shall have right (sic) to set the lease rate at whatever price the District may determine in its sole and absolute discretion and the parties expressly agree that in setting such rate the District shall not be constrained or limited in any manner whatsoever. In the event Conestoga is unwilling to pay the rate set by the District, all lease and other rights and obligations of every kind shall automatically terminate.”
In the final analysis, the VVWB is putting in place price agreements to inflate the value and delivery of irrigation water held by shareholders of MIC and BIC and therefore controlling the future of golf in the local area.
Conclusion:
All sources of water within the boundaries of the state, above and below ground, belong to the public [[iii]].” The VVWB has modified the intent of that statue to read: All sources of MIC and BIC irrigation water held by VVWB will be leased and priced, in perpetuity, at the sole discretion of the VVWB.
The practice of the VVWB seems to violate, at a minimum, the intent of Federal and State antitrust laws. These are a collection of federal and state government laws that regulates the conduct and organization of business corporations, generally to promote fair competition for the benefit of consumers.
The Public trust doctrine requires elected officials to hold in trust designated resources, including water, for the benefit of the people.
In 1983 The California Supreme Court ruled that reasonable and beneficial uses of water must be interpreted according to public trust needs.
While water resources protected under the public trust doctrine may not be monopolized by private entities, they nevertheless face great strains today from private use and misuse. Restoring the Trust: Water Resources & The Public Trust Doctrine, A Manual for Advocates
Endnotes:
[i] A conflict of interest arises when, public officers . . . . with which they have a significant pecuniary (financial) interest, and persons to whom they have a commitment in a private capacity to that person’s interests. NRS 281A.065 defines “commitment in a private capacity” . . . mean a commitment, interest or relationship of a public officer or employee: 3. to a family member or in-law related by blood, adoption, marriage within the third degree of consanguinity or affinity; NRS 281A.420(1) prohibits a public officer or employee from acting to approve, disapprove, vote, abstain from voting or otherwise act upon a matter.
[ii] “commitment in a private capacity includes one in which the public officer or employee has a significant pecuniary interest; or (c) Which would reasonably be affected by the public officer’s or employee’s commitment in a private capacity to the interests of another person.
[iii] public (Nevada Revised Statute (NRS) 533.025 and 534.020),
Excellent article, Mike. Everyone has to concentrate on water problems and usage as water supplies in the southwest continue to dwindle as a result of Global Warming.