No action was taken on a request by Coyote Springs Investments to the Lincoln County Water District to have their monthly standby fees reduced on their purchase of water from Kane Springs.
Water from Kane Springs for development on the Lincoln County side at Coyote Springs is not being used at the present time, but CSI does pay the district a $15,000 annual standby fee.
Water District legal counsel Dylan Frehner said CSI’s standby fee can be reduced to $10,000 a year when one of two things he has proposed take place. “They purchase all of Vidler Water Company’s remaining water now, or Vidler’s five-year option they had to purchase water expires, whichever comes first.” Vidler’s option expires Sept. 1, 2016.
CSI requested at the March 16 Water District meeting to have the standby fee reduced to $5,000 a year.
Frehner said he and Water District General Manager Wade Poulsen discussed the two options in mid-March in a conference call with CSI legal counsel Emilia Cargill and CSI owner Albert Seeno.
He explained in 2010, LCWD enacted an ordinance that any water of which the district has ownership will be not sold outright, but rather as a will-serve. “A developer is allowed to buy water from us at a fair market value, but then it is dedicated right back to us and we dedicate it to that area specifically,” he said.
After discussing the matter, the Water District Board members decided to take no action, because Albert Seeno had told them “he wanted to take a little more time to look it over and possibly make counter-proposals,” said Poulsen.
Cargill said it is her understanding when CSI makes their first water connection to receive water from Kane Springs, “the standby fee goes away.” But there is some disagreement on that point because of language found in the Second and Third Amendments, and the two agencies “have very different positions at present.”
She said CSI is certainly not in a position currently to bring water from Kane Springs. “There is still a lot of infrastructure at Coyote that has to be made before we can turn any water on.”
Frehner said LCWD’s position on reducing the standby fee comes from language in the Third Amendment. He said one of the sections there says the standby fee will become proportionate, but not eliminated, when CSI begins drawing the water.
He explained proportionate to mean, “If, for example, they have the ability of 1,000 acre feet and only use 100 acre feet, then the fee would go down proportionately. It would be reduced by 10 percent.”
Frehner said CSI’s position is they have already paid at least $1 million for the water, and that’s enough. However, he said, there still needs to be a standby fee, to hold the water until CSI can begin using it.
Negotiations between the two parties on this and other issues will continue.