A LETTER BY MAX HENRY

 

I served on the Skyline Mountain Resort Board of Directors from 2000 to June of 2016. During that time water issues were one of our biggest challenges.

 

1- As a private entity we were required by the Utah State Division of Water Rights to show beneficial use of our water rights, or they could cancel or take back the water we could not show we were beneficially using. We filed for extensions every 5 years and the extension was usually approved but they did take back 50-acre feet of water because we could not show beneficial use. We could not hold water rights for future development.

 

2- Our water rights were various classifications; culinary, irrigation, stock watering, etc. with multiple points of diversion; main well, Shelley well, archies hollow, 8 unnamed springs, spring canyon irrigation, birch creek irrigation, etc.

 

3- The water system in the full time area did not meet the State drinking water standards for the following reasons: inadequate pressure at many of the connections, storage capacity for the number of connections, fire hydrants with inadequate storage capacity and water line size (for fire hydrants the State requires enough storage capacity and water lines capable of delivering 1000 gallons of water per minute for 2 hours or 120,000 gallons of storage) Our storage capacity at that time was one storage tank with 55,000 gallon capacity.

 

4- Because of the inadequacy of the water system there was a moratorium on any additional connections. Lot owners wanting to build in the full-time area could not get a building permit because they could not connect to the water system.

 

5- At that time, we were also working with the county to get SMR approved as a subdivision so every member could get a deed to their property and the water system did not meet the requirements of the county for a subdivision.

To address these issues the Skyline Mountain Special Service District (SMSSD) was created. As a quasi-governmental entity, they have 50 years to show beneficial use and they can hold water rights for future development. The SMSSD transferred all the water rights into municipal use classification, which is not available to a private entity, but means that the water can be used for most any purpose rather than the designated use (culinary, irrigation, stock watering, etc.) that we had as a private entity. To correct the other problems with the system it was necessary to develop a whole new water system in the full-time area with additional storage and water lines capable of the required flow for fire hydrants and pressure for home connections. To develop the water system, it was necessary to borrow money and the SMSSD could get a much more favorable interest rate and terms than we could get as a private entity. While we could see that there were many benefits to having the SMSSD operate the water system for SMR we had some concerns. First, transferring the water rights and water system along with all of the water facilities to the SMSSD. To help alleviate this concern the License Agreement between SMR and SMSSD was created. One section of that agreement states, “Assignment and Reversion. SMSSD shall not assign or convey its interest in the rights created under this License Agreement, except as necessary to secure financing for water system improvements. In the event that SMSSD ever dissolves, all of SMSSD’s rights under this license Agreement shall automatically revert to SMR upon the initiation of the dissolution process by SMSSD.” Second, SMR and SMSSD would be two separate entities with different governing Boards. SMR would have no control over the SMSSD, but the two Boards would be expected to work together for the benefit of SMR members. To help alleviate this concern the governing Board of the SMSSD would be members of SMR and one would also be a member of the SMR Board of Directors. A Water Operating Agreement was also created for the SMSSD and SMR Boards to follow in operating the water system. It is my opinion that the SMSSD was the best and maybe the only reasonable way to address and correct the issues and problems with the SMR water system and can continue to benefit the members of SMR.

 

6- Sanpete County required SMR to have sufficient water rights for each of the lots in the subdivision to meet the State and County requirement of .45/.25-acre feet per lot prior to approving the subdivision. I have attached the County Commission meeting minutes of (Oct. 21st, 2014 & Nov. 18th, 2014 & Dec. 16th, 2014). that shows that the County was satisfied that SMR met that requirement. I have also said that I realize that the 222.85-acre feet that the Resort deeded to the SMSSD was not sufficient, but that SMR also owns 55.5 or 58.5 shares of Birch Creek Irrigation water that has a value of 2-to-6-acre feet per share depending on what mother nature provides.

 

 

Max Henrie Lot’s J-70 and J-76