Ranch losses spur doubts

So far, the ranching business has not been kind to the Southern Nevada Water Authority.

During the past fiscal year, the authority lost more than $628,000 on its collection of working ranches in eastern White Pine County, and officials expect to lose at least $200,000 more this fiscal year.

That would bring the authority’s total operational losses to almost $1.47 million since the wholesale water agency spent almost $79 million to buy seven livestock operations in Spring Valley in 2006 and 2007.

Now water authority board members Steve Sisolak and Steve Kirk are calling on the agency to rein in its ranches — or at least do a better job of explaining why the bottom line isn’t the only concern in Spring Valley.

"Is there a break-even estimate, or are these things just going to lose forever?" Sisolak said Thursday after the board heard a financial update on the operations. "You can’t have a $78 million ratepayer investment and lose $600,000 a year."

"This is something we need to be able to defend to our constituents," Kirk said.

Water Authority General Manager Pat Mulroy said it is important for the board and the public to remember that the property was bought to manage water resources, not to turn a profit on cattle, sheep and hay.

Spring Valley lies at the northern end of the pipeline project the authority has proposed to carry groundwater to Las Vegas from across eastern Nevada. Most of the water that could fill the pipeline will come from the valley, which stretches about 110 miles from north to south but does not contain a single town.

On its way to becoming Spring Valley’s largest private landowner, the authority bought 23,000 acres, 900,000 acres of federal grazing rights and 40,000 acre-feet of surface and groundwater rights.

To keep the water rights, Nevada law requires the authority to put them to beneficial use, in this case by growing feed and raising livestock.

The ranching operation includes 4,000 sheep, 1,300 cows and 1,500 acres of hay fields, all of it run by a staff of four water authority workers, seven full-time contract workers and 17 seasonal workers.

Ranch revenue for the past fiscal year — coming from rent and the sale of cattle, sheep, wool and hay — was a little more than $1.5 million. Expenses were nearly $2.13 million.

"We’re not managing these ranches to be in the ranching business. We’re doing it in order to manage the environment in that basin," Mulroy said.

Richard Holmes, environmental resources director for the authority, said the ranchland is being used to help answer questions about the potential effects of large-scale groundwater pumping on both natural and agricultural resources in Spring Valley.

"We think this is a real tool, an on-the-ground, in-hand resource," Holmes said.

He added that some of ranches’ water could be diverted to different areas to help mitigate any damage that might occur to neighboring property or the environment once the authority starts pumping groundwater out of the valley.

Mulroy said state and federal officials will require the authority to conduct and pay for an array of monitoring and mitigation work in Spring Valley regardless of who owns the ranches. Revenue from the farming and livestock operation should help offset some of that work, she said.

A large share of the losses to date can be traced to repairs, equipment upgrades and other capital improvements that were made shortly after the authority bought the ranches, Holmes said.

"We are improving but not yet at the break-even stage," he said.

A private rancher might have deferred or ignored some of the improvements, Mulroy said, but the rules are different for a government entity subject of strict regulations and greater public scrutiny.

"There are things that a rancher can get away with that we can’t get away with," she said. "There are corners we can’t cut."

Mulroy said the goal is to have the ranches break even but not at the expense of being responsible stewards of the land and good members of the agricultural community.

Ranch Manager Brandon Humphries offered a topical example, given the weather outside Thursday.

If more than about a foot of snow accumulates where the livestock normally grazes, the animals have to be fed by hand.

A private rancher just looking out for the bottom line might not worry about whether his competitors have enough hay stocked up to help their animals ride out a snowstorm, but Humphries said the authority keeps extra bales just in case the other operations in Spring Valley need them.

"We want to be good neighbors," he said.

Contact reporter Henry Brean at hbrean@reviewjournal.com or 702-383-0350.

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