KINGMAN - The people of the City of Kingman were ripped off for millions of dollars when the city sold its initial 15,000 acre feet of Municipal-use water rights through the Mohave County Water Authority.
Now city leaders are licking their chops over the prospect of potentially taking in as much as $3.5 million they can use for pet projects like Kingman Crossing.
If HB 2142 passes, reclassifying the remaining 3,500 acre feet of water in Kingman’s allotment from industrial use only to municipal use, the city will make another huge mistake by letting the Mohave County Water Authority sell it at bargain basement prices.
The slurry pipeline from Mohave Generating is no longer used and extends to Golden Valley near the I-40 industrial corridor. It could send industrial water to the new generating stations and save 3,500 acre feet of groundwater in Golden Valley. Or it could supply the WalMart distribution center that is expected to be built. Or it could easily satisfy the 500 acre foot per year demand of the prison.
Why isn’t the Mohave County Water Authority making a grant to fund these improvements instead of trying to snag the water for itself?
To be fair, 3,500 acre feet of water is not going to make or break supplies anywhere. The Griffith Energy power plant on I-40 is allotted 4,850 of acre feet of groundwater a year by Mohave County. To put that in perspective, the City of Kingman uses about 8,600 acre feet a year.
Authority makes itself real good deals
The Mohave County Water Authority consists of representatives from Kingman, Lake Havasu City, Bullhead City, Mohave Valley Irrigation & Drainage District, Mohave Water Conservation District, Golden Shores Water Conservation District and the county (Tom Sockwell [who represents the Bullhead/Mohave Valley, Fort Mojave area]).
That is one member from Kingman. Every other member of the Authority comes from an area along the river that has a vested interest in cheap, plentiful water.
The Authority is, therefore, selling water to its members at discount rates.
Kingman should have gotten $15 million or more from the sale of its water rights if they were sold at current market rates in 1996. The people of Kingman lost $7.5 million and their Colorado River water rights.
The Mohave County Water Authority subcontracted to sell Kingman’s municipal water rights to Bullhead City, Mohave Valley and Lake Havasu City for $500 per acre foot in 1996.
Between 1990 and 1995 there were nine sales of water rights in Arizona. The average sale price per acre foot was $1,120. The lowest price per acre foot was $750 and the highest price per acre foot was $1,800.
The most recent available comprehensive statistics end in 2002, but in 2000 to 2002 the average market price for water rights in Arizona was $1,750 per acre foot. The highest price was $2,000 and the lowest price was $1,500.
State law put it in a great position to be self-serving
Because Arizona law under ARS 45-2244, Subsection H, says:
[The rate charged] for the Colorado River water made available to the authority members for municipal uses may be fixed for all or part of the subcontract term but [shall be established by subcontract to permit the authority member to provide the water to its customers at a reasonable cost as determined by the authority in the exercise of its discretion].
The Authority may set its rates at its own discretion.
And, in reference to industrial water rights it says:
The rate charged for Colorado River water made available to applicants for industrial uses may be established by subcontract or by tariff set by the authority. The rate charged may vary or may be fixed for all or a part of the subcontract term. The initial [rate charged per acre-foot shall not be less than the rate charged per acre-foot by a multi-county water conservation district, or its successors, for the capital and fixed operation and maintenance charges associated with an acre-foot of central Arizona project municipal and industrial water] in the year in which the authority subcontracts for the sale and delivery of the water.
It says that the industrial water must be sold at going CAP rates, which are generally near fair market value.
The only CAP water rights sold in the five-year period preceding the sale of Kingman’s water rights in 1996 were sold by the Harquahala Valley Irrigation district for $1,050 per acre foot.
Although the law permits the MCWA to set its own price it clearly intended to see to it the water was to be sold for fair market value. Kingman’s water was sold at less than half of market value.
Under ARS 45-2281, the law stated that Kingman would receive $7.5 million, but that law was enacted after the establishment of the MCWA and it having already determined the price at half the going rate.
State law doesn't seem to be an issue
Also, under ARS 45-2244 the law says:
Any subcontract under this section shall require the Colorado River water delivered pursuant to the subcontract to be used in the county in which the authority is formed.
The MCWA has numerous contracts for water delivery outside of Mohave County, including to Springs del Sol Domestic Water Improvement District, La Paz County; La Paz County and the Ehrenberg Improvement Association.
In 2008 the MCWA completed at least four contracts to deliver water outside of Mohave County, according to the Federal Register.
In a current transfer the MCWA recently purchased about 8,000 acre feet of water from Cibola Irrigation District for $8.4 million or about $1,050 per acre foot. It now intends to sell 2,139 acre feet of that water to Lake Havasu City for about $1,450 an acre foot. The profit on that sale is about $400 an acre foot.
The profit is about 80 percent of the price that it sold Kingman’s water to its own members in 1996.
The authority makes almost as much as the people from its deals
It is interesting that in the sale to Lake Havasu City the MCWA keeps 10 percent for its operating budget. Any remaining money made on the sale goes to a fund for the development of new water resources and another for acquiring new water resources. That means MCWA keeps $310,000 for its operating budget. The development fund and acquisition fund get $545,000. This money belongs to the people of the county for water resource development.
Current fair market value for water rights is more than $2,000 an acre foot. That means the people should benefit to the tune of $1.6 million. They won’t. It is a done deal.
But, the Authority made another sweetheart deal to one of its constituents to the detriment of the rest of the people in the county.
A state-established entity with no office, no phone, no Web site and no records
The Mohave County Water Authority is a government agency appointed by the state legislature, but it operates in a vacuum. It has no physical address, phone number or even a Web site. It reports only to the legislature and the governor. Its records are unavailable to the public, including its financial records, even though by law the records must be available to the public. It operates with virtually no oversight.
It has enough water that it can sell it to entities outside the county, even though that is a violation of the state law which enabled its existence in the first place.
Its grant and acquisition funds (90 percent of all revenue received from water subcontracts) must be devoted to developing new water resources or acquiring water for the county. It appears that the only thing it has done is to buy and sell water rights. The records of the authority subcontracting to purchase water rights from other entities are extensive. Virtually no record exists of the MCWA spending money within the county to develop new water resources. Such records may exist, but 40 hours of searching for them through public and private records yielded no results.
Further, there is a demand for industrial category water in the county. The MCWA simply has not made the sale. That may be because, according to law, it MUST get fair market value for that water.
Then there is one other minor detail. In 2007 MCWA members had more than 30,000 acre feet of surplus water.
What's the hurry?
What is the rush? Why is the MCWA so anxious to get its hands on 3,500 acre feet of water when its members does not come close to using its current allocations.
- Because the Mohave County Water Authority’s records are shrouded in secrecy
- And, because the people of Kingman were deprived of the fair market value of the initial sale of 15,000 acre feet of water
- And, because the Authority has surplus water it can sell to entities outside the county
- And, because it appears the Authority operates outside the law
- And, because there is no guarantee the people of Kingman will receive fair market value for the 3,500 acre feet of water that is earmarked for industrial use
- Unless the Mohave County Water Authority opens its books to the general public
- Unless some form of oversight is established
- Unless it ceases to move water out of the county
- And, unless it promises fair market value for the sale of Kingman water
- It would be an exercise in very poor judgment to allow the Authority access to the city’s remaining 3,500 acre feet of Colorado River water.
We are 14 years down the road from when the average price was $1,120 per acre foot. We are nine years down the road from when the average price was $1,750.
But, a current transaction has the Authority selling water to Lake Havasu City at $1,450 per acre foot.
With the primary objective of the Mohave County Water Authority members being to sell themselves water at the lowest price possible.
How can the City of Kingman expect to get fair market value for giving up a precious water resource forever?
The answer is to encourage your representatives to vote no on SB 1358 and HB 2142 and preserve this precious resource for the industrial needs that are certain to develop in the future.
Current Colorado River water allocations for Mohave County Water Authority members and their most recently reported usage levels
- Kingman used 8,600 acre feet of groundwater in 2006
- Lake Havasu City’s Colorado River allocation is 25,180 and used 15,800 in 2007 – surplus was 9,380 feet
- Bullhead City’s allocation is 21,210 and it used 11,405 acre feet in 2007 – surplus was 9,805 feet
- Mohave Water Conservation District has 4,800 allocated and used 1,008 acre feet in 2007 – surplus was 3,792
- Mohave Irrigation District’s allocation is 41,000 and it used 35,470 in 2007 – surplus was 5,530
- Golden Shores is allocated 2,000 acre feet and it used 470 in 2007 – surplus was 1,530 feet
Total surplus in 2007 of MCWA members was 30,037 acre feet
All of the Colorado River water allocations to MCWA are fourth priority except a small amount of fifth and sixth priority water.
Sun 03 May 2009 14:06:59 CDT
What don't you like about SB1358?
Fri 27 Mar 2009 02:27:43 CDT
The story is a column and clearly labeled as a column. Therefore it expresses my opinion on some items.
However, based on statements made by speakers at the Town Hall meeting on HB 2124, I cannot find any errors in fact.
Please be specific about any errors in fact so I may identify them. Also provide documentation so they may be verified. All facts in my column can be documented by public records.
Documented mistakes will be corrected publicly.
Ric Swats, Publisher
Thu 26 Mar 2009 19:10:21 CDT
I see that the many errors in your article have not been corrected. I hope you got enough information last night at the Town Hall meeting to revise your article accurately.
Meetings are public and I invite you to attend one in the future. All records are public knowledge and the Authority does not operate outside the law.
Carole Young
Secretary/Treasurer Mohave County Water Authority