The Virgin Valley Water District heard another side to the proposal for a golf course water co-op at its Sep. 19 meeting. Interest in such a co-op is a popular notion with many, seen as a means for finding a workable solution to future pricing of irrigation water for the courses. After several months of rumored formation of a co-op, the outlined proposal for such a group was laid out at the last VVWD meeting by longtime golf course manager and Mesquite city councilman, Brian Wursten.
Endorsing the general prospect of a co-op, VVWD board member Rich Bowler asked Wursten most of the questions in that meeting. (See MLN 9/07/17). Wursten gave no specifics on actual structure of the co-op, but stated that all the major courses in Mesquite would sign on. He said a co-op would not be established if VVWD were to raise golf course water share rates to equal the $1246 price paid by Southern Nevada Water Authority (SNWA) for water leased from VVWD. He proposed VVWD should charge no more than the City’s price of $608 for equivalent gallons of treatment plant effluent.
Tuesday’s continuation of the topic opened with Board member Travis Anderson offering to abstain from vote or debate on irrigation water share pricing or the co-op topic because he is employed as city engineer for Mesquite. His salary is paid from the city water treatment plant budget, funded by city sale of effluent water to the golf courses.
Other board members and board legal counsel Bo Bingham subsequently recommended Anderson seek a final decision from the state ethics committee before he completely removes himself from the discussion. Anderson’s offer of recusal was followed by board member Rich Bowler’s disclosure that while his parents own irrigation water shares, he will not withhold his board vote on issues related to pricing or the co-op.
Board member Barbara Ellestad then read a lengthy prepared response to Wursten’s pricing proposal, in which she questioned structural and financial aspects of such a co-op.
VVWD currently provides water for the valley from two sources: culinary water pulled from aquifers by deep wells operated by VVWD, and irrigation surface water shares owned by the district. The rate charged for local use of irrigation water shares has remained static at $250 per share (about 2.3 million gallons) since the last lease contracts were signed with Wolf Creek and Conestoga Golf Courses in 2011. That rate contrasts sharply with the $1246 rate VVWD receives from SNWD for water shares leased to Las Vegas.
Golf course operators have stated that if VVWD raised the price on local leased shares, the added cost would put them out of business. With the local contracts expiring in 2019, the future pricing of water shares has become a heated topic.
Prefacing her prepared statement, Ellestad repeated her support for the Mesquite golf industry and said she does not want any course to close. She questioned the idea that the major courses in the city could hold a co-op together when their water needs differ dramatically, saying, “Conestoga and Wolf Creek seem to be the only ones to benefit from a reduced share rate.”
Golf course water sources are a convoluted mix. Mesquite Gaming uses some VVWD water and other privately-owned water at the Casablanca and Palms courses. Falcon Ridge Golf is a primary user of city effluent. Oasis Canyons and Oasis Palmer courses own their water shares and provide some water to Conestoga golf course. Conestoga also contracts for VVWD water and city effluent. Wolf Creek uses VVWD water while holding a city contract that requires it to buy effluent. Abundant winter supply of effluent is adequate for the courses, but they need VVWD water about six months of the year.
Ellestad referenced Wolf Creek’s contract with the city that obligates purchase of up to a million gallons of City effluent a day, while their contract for $250 VVWD water stipulates that the course would use “other water sources before using VVWD water.” She maintains that much of the question of discounted future water pricing would be solved if Wolf Creek met its contractual agreements with the city and VVWD.
A key point of her criticism of the co-op proposal was the fact that in 2014 VVWD asked Wolf Creek and Conestoga to each relinquish part of their 150 contracted water shares when metered use showed that the courses used no more than about 110 shares. The remainder of the unused contracted water literally flows downriver without compensation to anyone.
If relinquished, VVWD could lease that excess water to SNWA and recognize a significant financial gain at a time when the board was forced to raise metered user rates 76 percent due to financial shortfalls in the district. Both golf courses declined to release any of their contracted shares, though they could have also benefited from a reduction of cost they pay for unused shares.
Ellestad disputed claims by golf course management that their costs would skyrocket if water shares were pegged at the SNWA “going rate,” of $1246. Using a chart of hypothetical scenarios, Ellestad concluded that even at $1246 share pricing, the financial impact would be about $55,000 per course per year if they purchased only the amount of VVWD water they actually used. Wursten and a representative of Wolf Creek questioned her figures that showed 365 days of revenue for the courses, and pointed to competitive factors and other economics that impact pricing for rounds of golf.
Ellestad concluded, saying Wolf Creek and Conestoga should show good faith in dealing with the district by immediately relinquishing excess water shares back to the District so that pricing issues could be discussed for the co-op. She also requested that VVWD general manager Kevin Brown ask the city for a copy of its actual production and receipts for effluent water sold to the golf courses before any discussion of VVWD share rates would take place.
In other business related to the rates for water for new development hookup charges (SDC), the board voted to go forward with updating its development unit pricing that has stood unchanged for 20 years. Staff was directed to flesh out projections for district finances based on a model in which SDC rates were raised to $2500 in 2019, with 3 percent annual increase each year following. No board action can be taken to raise rates without public notice and hearings.
Brown presented his annual report to the board, indicating that financial and project goals had been met in the fiscal year ending June 30. He stated that key projects are on track for the near future. The Virgin River Transmission Line is now operational, with water flowing. Bids have opened for the Flat Top Mesa tank replacement and Bella Horizon water pressure testing is being done.