The new year is starting out on a high note for Virgin Valley Water District. District Manager Kevin Brown reports that Southern Nevada Water Authority, the water purveyor for Las Vegas, signed a contract amendment on Jan. 16, that will extend the agreement under which VVWD leases water to its neighbor for the next 15 years.
VVWD and SNWA have cooperated on water leasing for a number of years, with its most recent contract negotiated in 2014.
VVWD owns water shares of Virgin River water that exceed the current needs of water users in the district. That water is leased to SNWA. The amendment to the agreement that was signed this month will extend the partnership to 2034.
The amended agreement was voted on by the VVWD board of directors Jan. 21. VVWD will lease to SNWA 148 shares of Mesquite Irrigation Company water and 21 shares of Bunkerville Irrigation Company that it owns.
The contract sets a lease rate for MIC shares at $1,246 per share and BIC shares at $1,512. The variance in value comes from the age of the water rights in the shares and the quantity of water in a share. Older water shares carry a greater value because they have senior legal status ahead of water shares assigned after 1925.
The increased number of water shares available to lease to SNWA in 2020 come from shares that were returned to the district by Mesquite Gaming Palms golf course and Conestoga golf course in the past year. Those 130 water shares translate into a yearly lease value of nearly $162,000 for the district, helping to hold down costs for the 9,000 water users (individual hookups) that receive their water from the district.
VVWD is the sole provider of culinary water within its boundaries. All culinary water in the district is drawn from aquifers through a deep well system. Irrigation water, such as the water leased to SNWA, comes from the shares of surface water in the Virgin River that the district has purchased over the years.
In commenting on the new agreement, Brown indicated that it is favorable to VVWD in many ways. “We retain the right to fully serve needs of our local customers while assuring VVWD an income stream of $ 4million over the next 15 years.” The SNWA contract is reviewed every five years and adjusted according to the consumer price index for utilities.
The “going rate” for lease of any VVWD-owned water shares that become available in fiscal year 2020 was set by the board in March 2019, at $1,115.67 for MIC shares and $1,357.17 for BIC shares. Those rates were pegged to the 2019 average lease rate that SNWA pays to other area water shareholders. SNWA has contracted for the first right of refusal on any excess VVWD water shares that might become available for lease during the term of their contract.
Effect on Wolf Creek lawsuit
One of the major points in the ongoing civil lawsuit filed by Wolf Creek golf course against VVWD was an allegation by Wolf Creek that the district couldn’t lease the 130 shares it received back from the Palms and Conestoga golf courses to SNWA.
An amended legal complaint Wolf Creek made in July 2019 said, “Commencing in November 2017, and reiterated in May 2018 and August 2018, SNWA expressly and unconditionally notified the District that it was unable to lease the 130 surplus shares unless and until the ICS accounting method was modified which would necessitate an amendment to the 2014 SNWA Lease Agreement.
“As a result, despite having demanded and received the 130 surplus shares, the district has been unable to lease the shares to SNWA, lease the shares to third parties, establish beneficial use of the shares, or derive any revenues from the 130 surplus shares.
“Nevertheless, the district has publicly stated that Wolf Creek’s failure to return the shares has, and will, cause the rate payers to suffer a financial detriment in the form of rate increases…”
While it’s true that SNWA and the district have been negotiating changes to their agreement through the last year, all has not been lost to the district’s ratepayers.
The new contract says, “The Parties specifically seek to allow SNWA to lease the unused portion of VVWD’s shares of stock in MIC entitling VVWD to use certain water volumes and to compensate VVWD in arrears based upon the actual quantity of ICS water for which SNW A receives credit.”
Specifically the contract says “For Water Year 2019, SNWA will retroactively pay for unused water between October 1, 2018, and the effective date.”
That means VVWD will receive compensation for the 130 shares that were returned by the Palms and Conestoga golf courses back to the time they were returned thereby making Wolf Creek’s argument moot.
The new agreement also establishes beneficial use of the shares, an important element that satisfies the Nevada State Water Engineer.