A legal opinion drafted by Price River Water Improvement District legal counsel Nick Sampinos was reviewed at the regular PRWID board meeting on Tuesday.
The document concerned the contract that PRWID signed with Wellington city in 1978 and how the agreement regulated water pledged to the district. The legal opinion also addressed whether the water could be used for other purposes once committed.
"At the request of the board, we met with counsel," explained district manager Phil Palmer at the Aug. 2 meeting. "I gave him my understanding on both the original contract and the supplemental agreement and now he has drafted a response to the situation."
Questions about the contract recently surfaced due to issues that have arisen in the last two years.
The first issue had to do with the rates charged to Wellington by PRWID as compared to other public entities to which the improvement district sell water.
The first concern arose when Helper needed emergency supplies last year during a water line failure.
The district sold the emergency water to Helper at a rate lower than what Wellington, a regular customer, was paying.
However, the emphasis at Tuesday's meeting focused on a second issue regarding the contract that came up in spring 2005.
Wellington had asked the state water engineer to allow the city to utilize shares the town owns, but had pledged to the district.
Several additional concerns were also addressed in the legal opinion. But Wellington Mayor Karl Houskeeper, a member of the PRWID board, asked the panel to center the discussion on water rights since "that is the biggest concern" that arose when he ran the PRWID opinion past the city attorney.
During the PRWID board meeting, two matters involved in water rights emerged as the main topics of discussion.
One topic focused on how many shares PRWID should have committed to them to provide water to Wellington. The second was whether, in the case that some of those shares aren't being used by PRWID during any certain year, whether Wellington should have use of that water.
"As I understand it when the district signed the contract with Wellington in 1978 the city had 463 residential hookups, 40 commercial connections and five industrial customers to serve for water," said Sampinos. "There was no water pledged at that time, and under that contract PRWID agreed to provide water to those existing connections."
Palmer pointed out that when the district takes over a water company they generally don't collect shares for the startup.
But after that time, according to both Houskeeper and PRWID staff, any time a connection in the city was added the contract spelled out that Wellington had to commit a share of water for each one.
"The shares that PRWID had pledged to them have all come from growth in our town," said Houskeeper. "Presently we have 680 connections."
Housekeeper pointed out that the agreement is vague and confusing on a number of points concerning water use, and Sampinos agreed with him.
"However I think it is clear that Wellington still owns those committed shares and can use them as they want," stated the mayor. "But they are still committed to PRWID."
Palmer took issue with that saying that he thinks that is where the discrepancy between the district's and the city's understanding of the issues.
"It looks like to me that Wellington can use part of those shares, but only if the district gives them that right," he stated.
But Houskeeper said that the way his city looked at the agreement any use wasn't at the districts discretion.
"The use is allocated on the agreement with our city," he said. "The agreement allows Wellington to use the water whenever it wants too."
As the discussion continued both sides started to realize that it seems most of the problem with the situation arises out of the accounting of how much water is actually pledged to PRWID from Wellington.
"I think in many years there are extra shares in the system that would allow us both to serve our needs," said Houskeeper.
Sampinos said as he looked at it he felt that possibly some of the misunderstanding comes from the fact that both sides have differing numbers on what has actually been pledged.
Board member Tony Gonzales made a motion that the two sides' legal counsels along with some PRWID and Wellington staff get together to work out the situation and the board decided that would be a good idea.
In another piece of business assistant district manager Jeff Richens reminded the board that later this month the district would be holding a public hearing on a tax increase the district is requesting. This will be the second and the last public meeting on the issue. The first was held last December, but the cost to taxpayers has changed because the district did not have a certified tax rate on the increase last year.
"The increase would be considerably less than we thought before, in fact about a third less," said Richens. "The increase on a $150,000 house would be $11.14 per year or about 93 cents per month."
That increase would bring the total tax per year paid to PRWID per year by the owner of that same home to $80.27. The increase would bring in about $164,000 per year more to the district.
Board member Tom Matthews suggested that before any tax increase be enacted that the board should ask all supervisors in the district to look to see where they can cut their budgets to keep the district running as lean as possible. He also suggested that the board could possibly enact the tax for only one year.
But Sampinos said he thought that a one year tax couldn't be put in place and Guido Rachiele, the board's secretary cautioned that any talk of such a limit could mislead citizens.
Houskeeper agreed with Matthews about examining the district's operations and also suggested that if the increase were enacted, language could be put in the motion that the board review whether the increase should be sustained from year to year.
The tax increase hearing will take place before the regular PRWID board meeting on August 16 at 7 p.m.