When Barbara Ellestad, the “reporter” for the Mesquite (NV) Local News (MLN) left her position as an elected official on the Virgin River Water Board (VVWB), she immediately launched into acerbic attacks on the owners Paradise Canyon and their business Wolf Creek Golf Course. Supporting Ellestad is Kirk Kern, the Battle Born Media publisher for MLN. He has been advised that much of what Ellestad says is misleading, filled with innuendos and could be libelous. Once or twice Kern has published opinions questioning Ellestad’s “yellow journalist” approach to the truth. Unfortunately, he most often lets her questionable work stand without opposition. Now she has decided, and Kern apparently approves, to launch 5-part series casting aspersions against the owners of Wolf Creek and their supporters in a desperate attempt to hide from the public the questionable behavior of the majority on the VVWB and their attorney over time. Nevada-today will supplement her articles with additional information that puts what she says into a context that is more suitable for an open and honest exchange of ideas.
Ellestad proposes in:
supplement to Ellestad’s Part 1:
It is true, as Ellestad says in part 1, that Paradise Canyon, LLC, filed a lawsuit in May 2018. It is only partially true, as she says that it was over a 2011 lease agreement. In fact, the owners of Wolf Creek felt that increasing their irrigation rates from $250 to $1,246.00 per share (now reduced to $1,115.67 per share) was inconsistent with local irrigation rates, was arbitrarily and capriciously and violated Nevada contract law. In other words, it is the action of the board, not the contract itself that they contest.
She is somewhat misleading when she writes about the 2004 sale of 61 shares of Paradise Canyon water for $402,600 ($6,600 per share). She ignored that it was the same price water board board members Kraig Hafen, Cecil Leavitt, Dave Bennett, Charlene Hughes, and Kenyon Leavitt gave to Martin Development. She ignores that those 61 shares were only 11 % of the 551 irrigation water shares purchased by the water board between 1993 and 2010. She also ignores that the $402,600 was only 3% of the total $12,159,670.86 spend by the water board in those years from Virgin River water shareholders. She failed to say that the Water Board was not formed to deal with water shares, it was formed to deal in potable (underground) water.
She also failed to tell the public that the price paid by the VVWB for one share of MIC irrigation water in 1992 was $992.00. By 2005 it was $31,500 for a BIC share and $22, 806 for a MIC share. In 2008 it was $71,422.72 for a MIC share and $80,056.23 for a BIC share. Why the share prices differed between MIC and BIC was allegedly based upon the age of the share Higher price for older shares.
It is virtually impossible to lease irrigation shares for anything close to what the VVWB paid over those years for water shares. So they want the public to believe that a price received for MIC water from the Southern Nevada Water Authority (SNWA) is the market rate established under the Bureau of Reclamation (BOR) Intentionally Created Surplus (ICE) program.
The water board claims that the SNWA rate for MIC water shares they hold is $1,115.67. Therefore, Wolf Creek should pay the same amount. What SNWA pays for irrigation water is not the market rate. SNWA pays the higher rate because they can take and an equal amount of underground water for each acre foot of irrigation water it collects and sends it back into Lake Meade. Underground water is far more valuable than highly polluted river water.
In Nevada, the average purchase of off-Farm Surface Water for 2008 was $65.00 per share. By 2013 it has raised to $123.60 per share. Wolf Creek currently pays about twice that amount ($250 per share) to the district, which wants to raise their rate to nearly 8 times the 2013 rate. ($123.60 vs. $1,115.67)
Of course she, the water board and their attorney cheerfully ignore that 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 share is, in fact, a stock.
As important, she failed to report that on Oct 1,2003, Board attorney George N. Benesch sent a letter to VVWB member Kraig Hafen, who holds extensive shares in the Mesquite Irrigation Company (MIC), reminding him of the district’s interest in acquiring Paradise Canyon shares. Benesch remind Hafen that he (Hafen) had said he would not personally move to purchase those shares. Nonetheless, according to Benesch, Hafen, without notice to the board, did enter into an agreement to purchase the shares .
Benesch reminded Hafen that under NRS 281.421 the Nevada Legislature declared that it is the pubic policy of the state that a public office is a public trust and shall at minimum he has a fiduciary duty to put his personal interests aside and act in the best interest of the district. Benesch asked Hafen to assign his interest in the purchase to the district or step aside in his efforts to purchase the subject shares. If not, Benesch said it is his intention to raise the issue of your conflict with the Court and actively oppose the approval of the sale.
Finally, in part 1, Ellestad tries to make the case that Wolf Creek makes a lot of money, and therefore, they can afford to pay an increase in water prices.
Wolf Creek is indeed a popular place for golf. People indeed come from all over the world to play there. It is also true that to play their one pays a premium. It is also true that it is the best golf course in the area and well worth the price.
Ellestad reports that Bingham asked Clemetson “Has Wolf Creek ever done any studies on how much it would have to charge for a round of golf if the [irrigation lease] rate was increased to $1,115?”
Bingham’s question is economic nonsense. While paying for water is an important price consideration, it is not the only consideration. Clemetson was correct when he responded: “No, we haven’t engaged in a study. We look at what we think the market could possibly handle, you know, what our customer will come out and pay.”
Ellestad is correct when she says that: “Much of the lawsuit hinges on the water district raising its lease rate for irrigation shares from the current $250 Wolf Creeks pays now to $1,115 beginning in January 2020.” But she ignores that more importantly, the case is about the actual (not contrived) market rate of water and how that rate was decided and by method
Most importantly, she ignores the main question: “What the heck is the water board doing dealing in MIC and BIC water shares, apparently in violation of the Nevada constitution, and who benefited”?
We will continue to follow Ellestad and comment accordingly.
Share prices for this article are based upon the original allocation of 9.06 acre feet yearly (AFY) of irrigation water per share. However, the amount of water currently allowed per share by the Nevada Water Engineer has dropped to 7.18 AFY which means less water for the district at the same higher price.