As anyone who lives in a desert knows, having water rights on such a limited resource is key to the growth and financial stability of a community. At the recent joint meeting of the city council and the board of the Virgin Valley Water District (VVWD) city councilor and former VVWD director Kraig Hafen pointed out that the district lost senior water rights on Basin 221 by not filing paperwork properly. The statement raises several questions including where is Basin 221, and what does the loss of senior rights mean to Mesquite?
Geographically, Basin 221 is located to the northwest of Mesquite and is adjacent to Basin 222, which is the area where the VVWD gets its water from a series of wells on both sides of the Virgin River. Basin 221 is located wholly within Lincoln County, and not surprisingly it was the Lincoln County Water District (LCWD) that in 1998 filed for senior rights in the basin when former staff of the VVWD failed to submit the required information needed to maintain their senior rights. VVWD did complete an application in 1999, but was given secondary rights after LCWD.
What is surprising is who else filed for senior rights in conjunction with LCWD: Vidler Water Company. According to the company web site, “Vidler is a private-sector water resource company focused on the development of reliable water supplies in geographic areas lacking available water resources.” The company lists offices as Carson City, but is wholly owned by a stock exchange listed company, PICO Holdings Inc.
The Vidler web site also lists Tule Desert I (Basin 221) as a successful project teaming with LCWD to develop water resources. LCWD and Vidler drilled exploration wells and applied for new water permits. After the permits were granted, water rights “were sold in October 2005 to a group of real estate developers for a large master planned community project in Lincoln County for approximately $15.7 million,” according to the Vidler web site.
According to Wade Poulsen, general manager of the LCWD, the money was divided between Vidler, the water district and Lincoln County. Poulsen was not at the district when the deal was completed, but he believes that “After expenses for developing the water was deducted, the county and district share was approximately $4 million.” According to a prior agreement the county received 35 percent of the money with the remainder going to the water district.
Also according to Poulsen, there were seven developers involved in purchasing the water rights. The largest of them were Toquop Energy, which wanted the water to develop a proposed energy plant in Lincoln County, and land developers C&O Holdings, BLT Group and Mesa Group.
The land development projects are located on 13,000 acres of former BLM land immediately north of Mesquite. The seven developers paid BLM over $47 million for the land, which was four times the appraised value. The projects roads would go through town and in essence become a new neighborhood for Mesquite. All these transactions were at the height of the property boom, and development has been stalled since.
The loss of the senior rights was more than a loss of a potential water supply. The administrative lack of action potentially cost VVWD several million dollars and has made the development of a new master planned community on the north city limits not served by VVWD a potential reality.
Not serving the area is fine with VVWD. According to VVWD manager Kevin Brown “The developers came to the board in 2015 but they said no,” to providing water to the area. Brown believes that the district should prioritize providing water to the existing district.
The current staff and board of VVWD clearly had no role in the loss of rights. Current manager Kevin Brown also points out that “It would have been great to have the basin as part of our water portfolio, however, the cost of getting the water here would have required a 30 mile pipeline.” Brown believes that even if the district had retained the rights, the water would have been too expensive to bring to Mesquite. “A water pipeline could cost as much as a million dollars a mile,” said Brown.
The end result of not keeping the rights was clearly a loss of several million dollars, if not a source of new water.