Mesquite, NV. In part one of Battle Born Media’s (BBM) five-part series “reporter” Barbara Ellestad grossly misrepresented the May 2018 lawsuit filed by Paradise Canyon, LLC, owner the Wolf Creek golf club against the Valley Water District (VVWD).
Last Thursday, Ellestad published Part 2 in which she attempted to twist the original 2011 lease agreement as a defense against the lawsuit.
The headline in Ellestad’s Thursday article in BBM’s weekly Mesquite Local News (MLN) reads: “Lease agreement stated VVWD had right to increase rate.”
Ellestad is only partially correct when she says: “that so-called “right” is at the heart of the legal dispute.” The agreement says: “…the rent amount for the irrigation shares after January 1, 2020, shall be determined in the sole and absolute discretion of VVWD.”
In Part 2 she writes about a deposed conversation between water district attorney Jedediah (Bo) Bingham and Cory Clemetson, a partner with his brother in Paradise Canyon as if the water board has an absolute right stand justifies the right to arbitrary set the rate.
She reports that Bingham asked Clemetson: “So you understood the District did have the sole and absolute right to set the rate, meaning the District would be the one to determine what that rate would be and that the District would be unlimited in setting that rate?”
“Within the Mesquite marketplace, yes,” Clemetson says. “Within the Valley, yes. That was the intent of all of the board members that voted that night. That was the intent of Ken Rock. You know, that’s what we understood the intent was, and those were all the discussions, there were two separate marketplaces,” Clemetson replied.
Remember, these publicly elected officials are dealing with public water originally allocated for agricultural purposes more than 100-years ago and no longer needed today.
“all sources of water within the boundaries of the state, above and below ground, belong to the public (Nevada Revised Statute (NRS) 533.025 and 534.020).
It was pointed out in Part 1: that the VVWB holding shares in the Mesquite Irrigation Company (MIC) and the Bunkerville Irrigation Company (BIC) went on a spending spree between 1992 and 2010 to purchase water shares from their brethren holding similar shares. They set the purchase price in ranges from $992.00 per share in 1992 to $80,056.23 per share in 2008. They claimed, without justification, that those prices were the “market” rates.
Also as pointed out in Part 1, Article 8, Section 9 of the Nevada Constitution (the Gift Clause) prohibits “the donation, or loaning of money, or its credit, subscribe to or be, interested in the Stock of any company, association, or corporation, except corporations formed for educational or charitable purposes.” A water share is, in fact, a stock
There is no absolute right to acquire water stock in potential violation of the Nevada Constitution. [i] Further, the water board lacks an absolute right to price public water as if it were widgets put into the marketplace.
Here is why water is not a market commodity. Water is essential to life and the economic wellbeing of a community. Water is not an economic good that follows supply and demand, like other products where people have choices. You cannot substitute gasoline or nitrite acid for water.
Water is delivered in a non-competitive market with, few sellers and captive buyers. When the VVWB, or MIC and BIC shareholders set prices based on self-serving market rates, the prices rise to the level a profiteering monopolist would charge. [ii]
Normally public water rates would incorporate the cost of the services provided by the utility but should not reflect a monetary value placed on the water itself. Therefore, the true market value for potable water is the costs to deliver plus an interest rate tied to certificates of deposits.[iii]
The irrigation market is slightly different. In the United States users of irrigation water generally, pay for the cost of delivering the water to meet their needs and the cost of maintaining the irrigation network. They do not pay capital costs for the irrigation infrastructure. [iv]
The VVWD does not maintain or develop any infrastructure for the delivery of irrigation water. If there are any costs to delivering irrigation water, it is the marginal bookkeeping costs for public money.
The VVWB has used public funds to purchase MIC and BIC irrigation water shares at prices set by those shareholders, thus creating a profiteering monopoly under the rhubarb of market value. That is the Elephant in the court room and the shame that BBM and Ellestad are trying to hide.
We will follow and supplement Ellestad’s ranting’s for BBM in Parts 3 through 6.
[i] That issue is also a potential problem for the Southern Nevada Water Authority (SNWA) in their acquisition of shares from MIC and BIC shareholders.
[ii] Ayoo, Collins A. and Theodore M. Horbulyk. “The potential and promise of water pricing.” Journal of International Affairs. Vol. 61, No. 2. Spring 2008 at 93.
[iii] The use of a Certificate of Deposit (CD) rate is based upon the economic theory that it best represents the return on a public investment.
[iv] Organisation for Economic Cooperation and Development. “Managing Water for All: An OECD Perspective on Pricing and Financing.” 2009 at 18.