Water fight focuses on rural county

Monday, Sept. 10, 2001 | 11:03 a.m.

Hearing

A hearing on Vidler Water Co.'s application to draw 2,000 acre-feet of water a year from rural Sandy Valley to Primm for development will be at 9 a.m. Wednesday and Thursday at the Sawyer State Office Building.

CARSON CITY -- Lincoln County is one of the poorest counties in Nevada, but its partnership with an aggressive development company may change its fortune.

The county has hitched its wagon to Vidler Water Co., one of the largest private land- and water-rights owners in Nevada.

The road to riches is water, considered liquid gold in Nevada.

Vidler is spending millions to develop water in Lincoln County to sell, then split the profits equally. County officials envision the deal as the path to financial stability.

But as Vidler has expanded through rural Nevada, it has touched off a water war with the Las Vegas Valley Water District, which has filed for water rights in four rural counties to serve the growing population of Clark County.

Critics suggest Lincoln County is a pawn being used by Vidler to inflate rates for water and eventually sell it to Clark County at higher prices. Vidler officials say they have joined forces with those in rural Nevada to preserve the water assets to promote development in those areas.

Dorothy Timian-Palmer, chief operating officer for Vidler, said the water district and the Southern Nevada Water Authority have "not taken kindly to us."

And the two are starting to butt heads more frequently in what may be a long battle.

Pat Mulroy, general manager of the Las Vegas Valley Water District, accuses Vidler of being a "water speculator" in an effort to drive up the price before selling it to Las Vegas or possibly Southern California.

Mulroy says Vidler has "taken advantage of Lincoln County to turn a dollar."

Lincoln County, with a population of 4,100, is strapped for cash, county officials say. It didn't have enough money for new schools and had to turn to the state for help.

Lincoln County Commissioner Paul Donohue says the partnership with Vidler will benefit both sides. "We're not in this because we see dollar signs. We're in this to protect our resources."

Once those water resources are developed by Vidler, Donohue said, the door will open to industry, jobs and a better tax base for the county.

Vidler and its sister company, Nevada Land & Resources Co. LLC, both based in Carson City, are subsidiaries of PICO Holdings, which also has business interests in Arizona and California and is involved in insurance.

PICO, based in La Jolla, Calif., paid $48.6 million in April 1997 to acquire Nevada Land & Resource Co., which owned 1.3 million acres in Northern Nevada and water, mineral and geothermal rights on the property.

It has sold about 100,000 acres but is still the largest private landholder in Nevada. Most of the land is in checkerboard parcels along Interstate 80 in Northern Nevada.

PICO, through Vidler, is bracing for a fight this week on Vidler's application to draw 2,000 acre-feet of water a year from Sandy Valley in rural Clark County, and send it about 20 miles for expansion of Primm.

Palmer, who drew high marks as public works and utilities director in Carson City, said Vidler found a "good producing well" in test drilling in the deep carbonate aquifer. The loss of the water would not hurt the other well owners in Sandy Valley, she said.

But Sandy Valley residents strongly disagree. They have sent more than 50 letters of protest to the state engineer's office.

"Stealing water from one area to develop another is unconscionable and probably unconstitutional," residents Joseph and Maria Litera said.

Resident John Bacher said his water table dropped during Vidler's test drilling and did not recover. Tom Knight said his well water turned brackish during the exploratory period, which hadn't happened in the previous four years.

In an attempt to avoid the state hearings, Vidler offered Sandy Valley a settlement of $200,000 to be used if any wells were affected by new pumping. All of the money after 10 years, if not used, would have reverted to Sandy Valley. But that offer was rejected.

The Sandy Valley application, however, pales compared with what Vidler is trying to do in Lincoln County, where the company wants to harvest 40,000 acre-feet of water. An acre-foot is enough to serve a family of four for a year.

Its first major project is drilling in the Tule Desert for water to serve a proposed $650 million power plant for Cogentrix Energy Inc. Vidler is in the process of trading some of its land east of Reno to the federal government for land in Lincoln County about 16 miles from the test well sites.

Vidler would then sell the property to Cogentrix, which has already paid $360,000 for an option on the water rights, with half of that going to Lincoln County.

Palmer said Vidler has spent $2 million so far on the test drilling and will have to spend another $2 million, an investment Lincoln County could not make, Ed Allison, a spokesman for Vidler, said.

Once state permission is obtained, the Vidler-Lincoln County partnership plans to sell 7,000 acre-feet a year to the power plant. Palmer estimates the contract with Cogentrix is worth $20 million, of which $10 million would go to Lincoln County. The contract would be for 42 years, and Lincoln County would own all of the water at the end of the contract.

Vidler would be reimbursed for its expenses.

"If we fail," Palmer said, "Lincoln doesn't owe anything," and Vidler is out $4 million. But, she added, "This is the first time Lincoln County has been able to develop its own resources."

Palmer said she hopes that state hearings on those water rights can start in November.

Vidler has also paid Lincoln County's legal fees to fight the Las Vegas Valley Water District's applications to pump 27,512 acre-feet a year out of Coyote Springs in Lincoln County to Southern Nevada.

But Lincoln County and Vidler did not protest the applications of lobbyist-businessman Harvey Whittemore to pump 29,000 acre-feet a year for a new proposed development, because the water would stay in Lincoln County, Allison said.

"As you know everybody is knocking on the door and trying to take it (water) into Clark County," Palmer said. "The water is going to stay there" in Lincoln County.

Vidler also was behind a move last week by the Lincoln County Commission to ask the state engineer's office to dismiss all pending applications by the Las Vegas Valley Water District to draw more than 100,000 acre-feet of water a year from Lincoln County.

"Lincoln County is trying to be progressive when it comes to water," Palmer said.

Mulroy suggests the tail is wagging the dog in this Lincoln County-Vidler contract, with the private company calling the shots.

"Lincoln County has given up its right to make independent decisions," she said. "They (Vidler) have veto rights. Vidler can veto anything Lincoln County wants."

She said there is a "legitimate question" whether a county government can turn over its decisions to a private company. Mulroy also suggests Lincoln County will see little money from the partnership.

All of the costs incurred by Vidler, including its profits, will come off the top before any payment is made to the county, Mulroy said.

All the moves by Vidler, Mulroy said, center on gobbling up water rights in rural Nevada to sell to Las Vegas at inflated prices. She said Vidler doesn't want to sell to farmers. "They want to sell it for top dollar."

Palmer countered that Vidler usually defers in decision-making to Lincoln County. Besides, she said, Vidler is taking all of the risks. The contract, she said, also says Vidler will recover all its costs over a period of time, not in one lump sum at the beginning. So there will be money flowing to Lincoln County.

In White Pine County, Vidler purchased the Robison Ranch 40 miles west of Ely, with nearly 10,000 acres of deeded land and 500,000 acres of permitted land for grazing.

Some residents, Palmer said, "were concerned we were going to transport the water to Las Vegas, and we are not."

Vidler wants to trade the ranch to the federal government in exchange for property near Glendale in Clark County, she said.

The Bureau of Land Management wants to make Robison Ranch a feed bank, where ranchers would bring their cattle if their ranges were burned out, she said.

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