Water Deal Questoned

On July 18, 2017, the Virgin Valley Water Board (VVWB) voted to relinquish its interest in a 5-acre parcel of land purchased from Richard T. Bowler and Joseph L. Bowler III, doing business as the Virgin River 140 LLC., 330 N. Sandhill, Mesquite, NV.

034-00-001-013 map
Parcel 034-00-001

 

The 5-acres is part of 39.85 acres from parcel 034-00-001-013 located adjacent to the Virgin River a few miles southwest of Bunkerville and Mesquite NV.

In July 2001, the parcel belonged to area rancher John Lonetti Jr doing business as (dba) Meadowland Farm.

In the second week of January 2005 flooding occurred along the Virgin River, Meadow Valley Wash, and Muddy River.  Over 75 homes in Mesquite were evacuated. The flood damaged Beaver Dam Wash, at Beaver Dam, AZ and Half-Way Wash about 30 miles west of Mesquite and Bunkerville, NV and changed the boundaries of parcel 034-00-001-013.

On July 21, 2004, Lonetti Jr. dba Meadowland Farms granted parcel 034-00-001-013 to Transportation Nevada. An inquiry to identify Transportation Nevada with the Clark County Recorder went unanswered.

On August 1, 2005, Meadowland Farm LLC (Lonetti, Jr.) sold parcel 034-00-001-13 to Richard T. Bowler and Joseph L. Bowler, III, dba Rancho Riverside LLC, 330 Sandhill, Mesquite, NV., for $3,006,300. That same day a deed of trust was entered between the Bowlers dba Rancho Riverside and David R. Belding, 395 E. Sunset Road, Las Vegas NV.

On Aug 3, 2005, the Bowlers dba Rancho Riverside LLC took an option on the Meadow Land Farm LLC (Lonetti) parcel 034-00-001-013. On August 11, 2005, the Bowlers dba Rancho Riverside LLC passed the deed to themselves dba Virgin River 140 LLC.

On June 8, 2006, a lis pendens (Latin for suit pending) was filed on parcel 034-00-001-013. Listed on the pending suit with David R. Belding, Clark County Equity Title LLC. Equity Title of Nevada and the Virgin River 140 LLC as the 1st part. The suite lists Transportation Nevada as the 2nd part.

Lonetti, Jr. dba Meadowland Farm LLC transferred more land from the 034-00-001-013 parcel to the Bowlers dba Rancho Riverside LLC on March 18, 2008. Lonetti noted on that action that he reserved all water rights of “any kind or nature.”

When VVWB members Ted Miller, John Paul, Cecil Leavitt, Robert (Bubba) Smith and Kenyon Leavitt met on May 6, 2008, they discussed previous plans to spend $1.3 million to locate a Ramney Collector Well at the flooded out Half-Way Wash site. A Ranney Collector utilizes surface water and stream bank formations to remove sediments. During the meeting, VVWD Hydrologist Michael (Boomer) Johnson told the Board that  “they” were looking to purchase 5 acres of land at “another site” for the Collector.

When the same board met on May 15th, 2008 they voted to purchase five acres of parcel 034-00-001-013 from the Bowler’s dba Virgin River 140 LLC  for installation of the Ranney Collector Well. That parcel is about 23 miles east of Halfway-Wash site. Johnson said that “they” wanted to look at private lands first before looking at federal lands. The Board, absent Leavitt, agreed to purchase the land for an appraised price of $235,965. They agreed to spend $202,000 in earnest money. While Bureau of Reclamation (BOR) funding was identified for the project, Johnson warned that the money needed to be obligated.

On July 13, 2009, the Deed of Trust between Bowler’s Rancho Riverside LLC and their Virgin River 140 LLC with Belding was amended and restated with assignments of rents to Bowlers Rancho Riverside LLC.

On July 14, 2009, the Bowlers doing business as Virgin River 140 LLC entered into a Memorandum of Agreement to sell the 5-acres from parcel 034-00-001-013 to the VVWD.

When VVWB members John Paul, Karl Gustaveson, Leavitt, Ted Miller and Mark McEwen met on July 20, 2010, they discussed the Virgin River 140 LLC agreement. Foremost on their minds was the failure of Clark County Commissions to approve dividing out 5-acres from the 39.85 Acres in the 034-00-001-013 parcel.

In January 2012, Richard Bowler replaced McEwen on the VVWB. Six months later, on June 21, 2012, Nevada Title Company became the trustee for Rancho Riverside LLC. That action was immediately followed by a notice of breach and election to sell. A breach is normally accompanied by an unrecorded Declaration of Default. The notice to sell was recorded with the Clark County Recorder on May 7, 2013.

A year later, on June 27, 2014, the VVWD entered into a notice of interest with the Bowlers dba Virgin River 140 LLC in an attempt to recover their down-payment for the 5-acres of land in the 034-00-001-013 parcel. Board members at that time included: Ted Miller, Kenyon Leavitt, Sandra Ramaker, Richard Bowler, and Kraig Hafen.

Four years later, on July 18, 2017, Board members Nephi Julien, Ben Davis, Barbara Ellestad, and Travis Anderson discussed the status of Bowlers Virgin River 140 LLC deal. The board voted to relinquish its interest in their 5-acres of parcel 034-00-001-013. According to Linda Faas of the Mesquite Local News (MLN), the board hopes to get approximately $25,357 from a sale. Board member Bowler was absent from the meeting.

Note:

On November 21, 2016, Keith Harper, a real-estate appraiser from Las Vegas testified in the trial brought by the VVWB against their former Hydrologist, Michael (Boomer) Johnson, and former state water engineer Richard Coache. Harper testified that he talked with VVWB member Richard Bowler about the value of the Riverside river property that Bowler had acquired. Harper was looking to compare the Bowler purchase with a $1,040,000 paid by Johnson and Coache for 40 acres of similar property in the same general area.

According to Harper, Bowler said he acquired the property in anticipation that the city of Mesquite would develop in that direction. Harper testified that he did not use the reported value of the Bowler property as a comparison since it appeared to be an” arms-length” conveyance, where the price is inflated by those involved in the transaction.

According to Harper arm’s length sales are made between family members and may not reflect the market value of the property. Harper estimated that an acre of riverside property in that area was worth about $26,000 per acre.

Self-Serving Water Board

Recently the Nevada Legislative Committee on Natural Resources considered a Bill to allow appeals of water rates of five percent or more imposed by the Moapa Valley Water District and the Virgin Valley Water District (VVWD). Before acting on the bill, Yvanna D. Canela, D, NV. 10, Chairperson of the Committee required discussions between proponents and the Virgin Valley Water Board (VVWB).

One May 16, the Virgin Valley Water Board (VVWB) address the issue publicly.  VVWB members Ben Davis and Travis Anderson expressed a desire to continue to work on a solution. Board member Rich Bowler said: “I will never vote for outside oversight.” “Voters are our oversight,” he said. Board member Barbara Ellestad joined Bowler in suggesting that voters are the final decisions makers of the board’s actions. That is not true.  The VVWB is a sub-agency of the State of Nevada subject to legislation, legal statutes, and possible court action as well as general public oversight.

Over the years, both homebuilders and homeowners have experienced questionable rate increases. Now the Conestoga Golf Course (Pulte), Mesquite Gaming, and Wolf Creek Golf Course face increases in their landscaping leases of Virgin River water arguably “purchased” by the VVWB from shareholders of the Mesquite Irrigation Company (MIC) and the Bunkerville Irrigation Company (BIC).   One current Mesquite NV., City Councilman with knowledge of water issues, has stated that MIC and BIC water cannot legally be “purchased.”

Historically  MIC and BIC  shareholders used the Virgin River water for farming and livestock tasks and in some cases consumption. When farming and livestock practices died out, shareholders were stuck with virtually useless water. That existed until the formation of the Virgin Valley Water District in 1993. That legislative action gave the VVWB the power to use public money for, among other things, the acquisition and lease water.

On June 9, 1993, the first VVWD board members John Lee, Cresent Hardy, J.L. Bowler, Todd Leavitt, and Sam Reber, voted to purchase shareholder water. Reber set a  share at about $3,000.

The standard way to measure water is not by shares but by the Acre Feet of water delivered yearly (AFY). Originally the Board valued a BIC share at having 10 AFY in each share. Originally they valued a  MIC share at 7.24 AFY per share. At $3,000 per share,  one-acre feet of water delivered yearly would cost $300. At the same price, one AFY of MIC water would cost $414

On  March 28, 1996, the VVWB increased the per share amount from $3,000 per share to between $4,000 and $5,000 per share. That equates to between $400 per AFA if BIC water and $690 per AFY if MIC water. Those amounts never held.

For example, in 1997 J.L. Bowler, Sam Reber and Rita Pulsipher among others received $6,000 per share ($828.73 per AFY) for MIC water. That year, Anna (Bowler) Hardy, Milissa Pulsipher and Eldred and Ruby Leavitt and others received the same $8,287.30 ($828.73 per AFY) for BIC water. Those rates continued to rise.

In 2005 Larry Reber received $22,806 ($3,150.00 per AFY) for one share of MIC water. Kelly and Karla Jensen and others also received $31,500 ($3,150 per AFY) for each share of BIC water purchased by the VVWB.

By mid-July 2008, the Board had spent $2,913,362.90 for 426 shares (3,332.64 AFY) of MIC and BIC river water.  On July 21, 2008, board meeting Cecil Leavitt said they had enough river water. Nonetheless, from about July 24, 2008, to May 4, 2010, the VVWB spent an additional $9,246,307.96 for 125 shares (1,065.08 AFY) of water from MIC and BIC shareholders that Leavitt said was not needed. Again costs varied. For example,  in 2008, Steve Tietjen, Mike Black, and the Oasis Golf Club all received $71,422.72 per share ($9,865 per AFY) for each of their MIC shares. That year,  Leoona Tanner received ($86,000) per share ($8,600 per AFY) for one share of BIC river water.

The price also differed among sellers in 2009. For example, Bunk Farm LLC (Duane E. and Mona H. Magoon and Ron and Carolyn Leavitt and Lyle Holdings LLC) received $80.056.23 per share ($8,600.00 per AFY) for BIC water. However, Cresent Hardy (dba Bunk Compound) received $80,056.23 per share ($8,005.62 per AFY) for BIC water. The VVWB also paid Hardy $425,000 for 1.18 acres of land for an arsenic plant. The price was considered artificially high.

In total, the VVWB spent $12,159,670.86 of ratepayer and debt funds (earmarked for infrastructure repairs) for a total of 551 shares of MIC and BIC water. Digging two wells, pipes, and pumps would cost about $4 million. They could deliver about 6,392 AFY of water. That investment would have saved ratepayers $8,159,670.86 and produced 1,984.28 AFY more water per year. About 51% of Nevada farmers and ranchers use groundwater for irrigation.

The evidence suggests that past VVWB members acquired more shareholder water than necessary at outrageously high prices.  It also appears that they obtained that water, in part, with bond funds earmarked for maintenance and repairs. The evidence further suggests that deals were made between Board members and individuals to whom they may have had a familial relationship or close personal affinity. More recently, one City Council has said that  BIC and MIC water cannot be purchased.

All of these issues must be legally resolved by the Clark County District Attorney before any more discussion about the leasing of shareholder water.

 

Note:  A complete Case Study of the Virgin Valley Water District by Michael M. McGreer will be available in print and digital format on Amazon in the Fall.

Forensic Investigation Urged on Water Deals

Mesquite, NV.  Jason King, the Nevada State Water Engineer, and Steve Wolfson, Clark County District Attorney need to immediately open a forensic investigation into how and why the Virgin Valley Water Board (VVWB) acquired river water shares from the Mesquite Irrigation Company (MIC) and the Bunkerville Irrigation Company (BIC).

Various members of the water board have intentionally or unintentionally misrepresented the amount of ground water potentially available to the community. Doing so, makes it appear that a need for river water exists.  The board claims (without MIC and BIC) totals of:

  • Groundwater is equal to 12,349.29 (58% of total) Acre Feet Annually (AFA).
  • Spring water equal to 2,500 AFA (12% of total) and
  • Stream (river) water equal to 6,580.00 (31% of total)

Total = 21,429.29 AFA

However, the district has applications on file with the state water engineer equal to 211,747.49 Acre Feet Annually (AFA) of water. The applications break down as follows:

  • Groundwater applications equal to 208,866.53 AFA. That is 98.64% of the total. Groundwater further breaks down as 23,658.60 (11.33%) AFA that is ready for action (RFA) 62,896.44 (77.99%) AFA is ready for action (RFP) and 22,311.49 (10.68%) is permitted or certified.
  • Spring water applications equal to 296.33 AFA which is 0.14% of the total, and
  • Stream (river) water equal to 2,584.63 AfA or 1.27% of the total.

To move groundwater categorized as RFA to beneficial use requires the water board to “prove” that the district has the financial ability (NRS 534.080) to put the amount desired to beneficial use within five years. Protests are harder to argue. They come from individuals, other government agencies and from the state engineer. The state engineer often protests to protect the perennial yield from the basin.

Between 1993 and 2010 board members spent $12,153,670.86 for 3,155.70 AFA of river water held by shareholders of the MIC and 1,484.44 AFA of river water from shareholders of BIC. Ostensibly this total of 4,640.14 AFA of river water was for irrigation use.

It is not uncommon to use cleaner groundwater for irrigation. In Nevada, about 55 % of the total groundwater is used for irrigation. One ground water well can produce about 3,193 AFA of water at the cost of between $1.5 and $2 million. Two ground water wells would produce about 6,392 AFA or 3,236.3 AFA more than the river water purchased. Further two wells would have saved ratepayers between $ 8,153,670.86 and $9,153670.86. These excess expenditures account, in part, for the increased rates for water users and increased fees for developers. There is no legitimate excuse for not acting to obtain 6,392 AFA from the 23,658.60 AFA of groundwater ready for use.

The water board has consistently rejected efforts to study the basin. When former hydrologist Mike Johnson was asked why the board consistently rejects a basin study, he said: “because if the public knew how much water was in the basin, there would be no need to purchase water from shareholders of BIC and MIC.

A forensic investigation is needed to look into the need to purchase river water when it appears enough ground water exists at a lower cost. The investigation must also examine the familial relationships and affinities held between virtually all of the buyers and sellers of MIC and BIC shares for potential legal violations. Also, the investigation should confirm that shares purchased were not the same shares leased to the SNWA by the same shareholders.

The current board still deals with water acquired from MIC and BIC in the past. If that water was improperly acquired, then they must stop dealing with it and see that it is forfeited and returned to the public domain.

 

End Notes:

  1. An Acre Feet Annually (AFA) is one foot of water covering one acre of land in one year. Or, one AFA is approximately enough to service two homes each with 4 members.
  2. The state records the interpretations of paper records and disavows any errors, omissions, or accuracy of the information. Instead, they ask users to their date to refer to the records. As near as possible, the records associated with these water applications were reviewed.
  3. Well estimates come from expected pumping rate for VVWD new well 27a

 

 

 

Pardon Urged in Water Case

Mesquite NV., Nevada Governor Brian Sandoval should pardon former Virgin Valley Water Board (VVWB) Hydrologist Mike Johnson and his business partner Robert Coache who were selectively prosecuted in a water deal sanctioned by members of the Virgin Valley Water Board (VVWB).

The January 2017 felony convictions of Johnson and Coache resulted from a March 18, 2008, water deal involving Clark County (NV) rancher John Lonetti, the Southern Nevada Water Authority (SNWA) and the Virgin Valley Water District (VVWD) of Mesquite, NV. In the transaction, Lonetti received $3.1 million dollars from the SNWA for two river water permits. Johnson received a consulting fee of $1.3 million.

The deal benefited the water district community by increasing the volume of water available.  The water board traded 896 Acre Feet Annually (AFA) (priority date 1929) of water for 1,200 AFA (priority date 1990) from the SNWA., A 5,000 AFA cap was removed from the surface water, and the district acquired all senior groundwater held by the SNWA.

Former Board member and former City Councilman Kraig Hafen  told the board: The agreement was “probably a good deal.” Former Board Member, Ted Miller, who voted for the deal, said that the actual monetary value of the water being exchanged was not important to the VVWD Board. Rather, he said the VVWD “was getting more water from SNWA that it could lease to its customers.” John Paul, Board President at the time, stated that “his primary purpose was to own the water and not a return on money from leasing. “After the deal, Miller argued that given the amount of money Johnson earned in the transaction the board should consider cutting his contract.

Johnson’s legal jeopardy, and by extension Coache’s,  did not begin with the 2008  deal. It was April 1999 when former district manager Mike Winters and board attorney George Benesch approached Johnson, then employed by the SNWA, with a deal.  The board needed Johnson’s expertise in hydrology and geology to build a sustainable infrastructure to serve the growing communities of Mesquite and Bunkerville.

Winters and Benesch on behalf of a board asked Johnson to leave his $90,000 per year job with the SNWA. He was offered $65,000 per year and the ability to contract on water issues “off-the-clock” to make up the salary difference.  The board also paid into his state retirement account. The VVWD is a subdivision of the state thus Johnson technically became a state employee. As a state employee, Johnson was prohibited from any outside work in hydrology. Further, such work rendered Johnson and all associated with such outside work liable for prosecution for any number of statutory reasons. That contract continued to be approved by various VVWB members until his resignation on August 17, 2010.

Benesch testified for hours at the Johnson-Coach trial.  He said among other things that:

“Some Board Members had a bias against Michael Johnson,”

“In my opinion, about 2008 the VVWD Board became more and more dysfunctional and were “all over the place.”

“New Board Members came in with a specific agenda,”                                                                                                                                                 

“The VVWD Board became the most dysfunctional Board he has ever dealt with in his decades of working with dozens of such organizations,” and                                                                                       

“In a general sense, [referring to the prosecution] they were “paying somebody back.”

Several people were involved in the 2008 deal, but only Johnson and Coache were selectively prosecuted. Clark County Deputy Prosecuting Attorney Marc DiGiacomo bragged about the selective prosecution of Johnson and Coache.  He told board member and Mesquite Local News (MLN) reporter, Barbara Ellestad that he relied on Water Board attorney Bo Bingham in creating the case against Johnson and Coache. DiGiacomo claimed that: “we likely would not have heard about this crime.”

DiGiacomo told Ellestad that “his (Bingham’s) lawyers know all of the discovery in the case. Anytime we needed to know something he (Bingham) and his lawyers were fantastic about helping us.”

DiGiacomo did not take the time to fully research the case. He told Ellestad,  “Our office just didn’t have the time to read hundreds of thousands of pages of documents.”

Allowing the water board attorney to narrow the case to Johnson and Coache is a selective prosecution at its worse and DiGiacomo erred in not recognizing that. Selective prosecution is not a defense. It is an assertion that the prosecutor (essentially Bingham) brought the charges for reasons forbidden by the Constitution. That document expects that everyone must be treated equally under the law without privilege, discrimination, or bias.

At sentencing, District Judge Richard Scotti awarded the VVWD the $1.3 million received by Johnson in the case. However, when one adds the legal fees paid to Bingham and his attorneys it is likely to come out something close to a wash.

Water: exist or not?

Rachel Dahl, CEO of the taxpayer funded Mesquite, NV Regional Business Inc. (MRBI) is touting water access as an incentive to attract businesses to Mesquite.

Lucas M. Thomas, in a February 3, article in the Desert Valley Times (DVT), quoted Dahl as saying that water within the Virgin Valley “could provide an incentive for companies looking to move that might not have access to water in other areas of Southern Nevada.  Her comments came during a meeting with the Las Vegas Global Economic Alliance where Thomas reports Dahl also said that  “she spoke to two separate people who expressed interest in Mesquite for that very reason.

No one knows how much water is available in the Basin that serves the Virgin River Valley. Nor does anyone know how decades-long droughts impacted the entire Southern Colorado River Basin that feeds that water sources. Nor do water board officials understand how water demands from Las Vegas and St. George drain the local aquifer as do local earthquakes and potential fracking projects advanced during the Trump administration.

Dahl is simply repeating misleading statements by Water District representatives and others.

In April 2015, Kevin Brown, manager of the Virgin Valley Water District (VVWD) said that  “Mesquite and Bunkerville have sufficient water for decades.” However, on June 19, 2015, Jason King, State Water Engineer, told the DVT, “I’m not sure how much water is in the aquifer now; I couldn’t even estimate how much is there.”

On September 8, 2015, Barbara Ellestad, in her role as editor of the Mesquite Local Newsellestad-not-happy (MLN)  told Lieutenant Governor Mark Hutchison,“we don’t have an issue with water.”

Let’s go back a few years. In December 2011, that Board, charged then VVWD Manager, Ken Rock with performing a “Hydrologic Evaluation of the Lower Virgin River Basin (221, and 222), Clark and Lincoln Counties, Nevada, and Parts of Washington County Utah and Mohave County, Arizona.”  Rock acquired a proposal by the United States Geological Survey (USGS) to study the issue. Rock was eventually fired, and the USGS project rejected on a 3-2 vote of the board. Former board members Sandra Ramaker and Karl Gustaveson dissenting.

During a February 2014 meeting between the Water Board and the City Council, Ellestad argued that because the study involved Utah and  Arizona, the VVWD could do nothing about the results. Therefore, she would not support spending $500,000 for a study. That is nonsense. Scientific studies drive models that are helpful for all decision makers and do not discriminate between states.  Second, the price tag ignores potential federal grants and other economic sources.

rapson-on-studiesAt the same meeting, Councilman George Rapson made the dubious comment that if the State Engineer granted permits sufficient water was available. Permits are not equal to water. Basins can be, and often are over permitted. Remember what King has said, “I’m not sure how much water is in the aquifer now; I couldn’t even estimate how much is there.”

In simple terms, those alleging ample water available are assuming they know more than the state water engineer while dismissing environmental facts and possibilities. Further, they apparently assume that the area will grow slowly, and tens of millions of dollars will be available to meet future demand.

A Virgin Valley Water Board briefing, not widely distributed reports that “based on groundwater rights, only 3,076 Equivalent Development Unites (EDU’s) remain for future “will serve.”  One EDU is equal to one family home. Will serve is a dubious commitment to provide water when required.

Once contractors reach 3,076 homes or some combination of business and homes, a briefer said: “surface water will have to be developed for potable water use, treatment plans build  (at the cost of about $60 million dollars), and irrigation leases for golf courses pulled back.”

Keep in mind that it is not the VVWB that makes decisions about water allocation.  It is julian-videoactually, the City Council. On Tuesday, October 20, 2015, Virgin Valley Water Board  (VVWB), President Nephi Julien told participants that the Mesquite City Council, not the Water Board, controls water allocations.

According to Julien, “it is not our right to determine that someone gets water before somebody else.  They (The Council) are the ones who control that. ” The only limits are the number of permits available.

ballweg-at-press-conferenceWhen Candidate, now Councilman  David Ballweg ran for office, he said: “The first thing I want the public to understand is that the city council has no impact or say in district water policy.”

There is a lot more to the water story than space allows. It is past time for the people to come together and develop an action plan to overcome local official misrepresentations about water availability.