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Utah legislator rips D.C. while raking in federal cash

Published August 14, 2012 2:17 pm

As water director, Noel secures millions for the summer homes of out-of-staters.
This is an archived article that was published on sltrib.com in 2012, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Cedar Mountain — Mike Noel is famous for his low opinion of the federal government in general and its environmental programs in particular. The Republican state lawmaker from Kanab has called the U.S. Environmental Protection Agency unconstitutional and has enthusiastically joined the push to "take back" millions of acres of public lands controlled by the Interior Department. But in his full-time job as executive director of the Kane County Water Conservancy District, Noel is tireless in his efforts to tap funds flowing to the state from the very federal agencies that he has so frequently attacked. He has boasted, for instance, about raising $25 million from the U.S. Agriculture Department to help his district build water projects on southern Utah's Cedar Mountain in the past decade. He also has helped secure federal funding for archaeology and construction at another water-district project, the Jackson Flats Reservoir. — The latest example » Noel has been the point man for building a new water system at a rustic, summertime-only subdivision on the dramatic cliffs above Zion National Park. Zion View Mountain Estates has been a poor man's vacation community, mostly for Las Vegans who were happy to own a patch of paradise without utilities or winter access but with lots of peace and privacy. This year, Noel has changed that by landing nearly $10 million in public funding to pay for an ambitious project to bring water to the hodgepodge of cabins, trailers and tent lots. And, someday, if the district's plans pan out, hundreds more homes could be built in the forests above the pink cliffs. The effort has prompted some to question whom exactly the project is intended to benefit — real estate speculators or vacation homeowners in a pinch? And is it right for Noel to leverage his clout as a legislator to do it? Noel did not respond to about a half-dozen recent requests for comment. Last fall, though, he insisted he was looking out for the people he represents. "I'm trying to solve problems and fix it for people — doesn't get me anything," said Noel, who earned $95,627 in salary and benefits from the district last year, according to utahsright.com. "I just said, 'Let's not take this piece of valuable property with 700 lots on it and turn it into zero assets for the people of Kane County.' " Cedar Mountain vacation properties — including what Noel calls some "beautiful multimillion-dollar homes" at Zion View — account for more than half of Kane County's tax revenue, Noel explained. Leaving their owners with dry cabins and lots they can't sell, can't insure and can't mortgage would lower property values and shift a heavier tax load to full-time county residents. "I truly believe," Noel persisted, "this will be an extreme burden on the whole county." — 'I don't want a town' » The Zion View community has been at odds every time the water question has surfaced in the past three years. In the latest round, the water district sounded confident it would collect the additional commitments to ensure the minimum 250 water hookups needed to make the project financially feasible. Some Zion View owners are grateful for the project and Noel's advocacy of it. Their water-hauling-and-tanks system was condemned last summer by the Utah Division of Drinking Water, which carries out federal safe-drinking-water laws. And now the water district has promised to put in the water system, plus a power and phone backbone, to the subdivision 7 miles from State Route 14 and 4.2 miles up a dusty dirt road in the Dixie National Forest. "We're excited about it," said lot owner Chuck Eddy, who runs the current water system for the Zion View Mutual Water Co. "Economically, this is the best thing to do, to go with the water conservancy [district]." Water company Chairman Dick Murn said having Noel's district take over the water system is the best way to provide safe drinking water. He asked the district for help three years ago when contaminants showed up in water tests and a state crackdown seemed certain. "From a regulatory standpoint," said Murn, a U.S. Bureau of Reclamation employee from Boulder City, Nev., "we're on a clothesline and hanging out to dry fast." But critics often use words such as "coercion" when talking about the takeover. Property owner Ken Hall and others say no fancy water system is needed — after all, they bought "dry" lots. "All of the sudden, they want to make it a town," said Hall, who filed an unsuccessful lawsuit over the water company's finances. "I don't want a town. I want to keep it rural, rustic." Under the conservancy district's current plan, lot owners would pay $9,500 for a hookup, hand over their water shares (or pay an additional $2,500) and commit to $25 a month for water service that they'll use only seasonally because the area is generally inaccessible October through May. Most owners are expected to finance their initial fee through the water district at 6 percent over 10 years, for a monthly bill of about $110. That wouldn't include the cost of the actual water, which would run $2 per 1,000 gallons. No one is being forced to sign up, the district notes, but those who don't will almost certainly have to pay more in the future. "In other words, they can shove it down your throat," said Hall, who owns four lots. "Government's out of control when they can do that to you." Hall and fellow resisters have failed to halt the project. The district already has cleared trees and widened roads, some of which wriggle through musky conifer forests like deer trails. And, though the district doesn't own the project until water starts flowing, it's close to getting special-use permits from the Forest Service for a 350,000-gallon storage tank and 20 miles of underground pipe. Work could begin by month's end. — Public money » Noel's biggest accomplishment on the project's behalf is securing promises of $9.9 million in public money for it. Noel pressed two state panels in person and behind the scenes to land a sweet package: a $7 million, 30-year, zero-interest loan from the Permanent Community Impact Fund Board and a $2.9 million, 30-year, 4.71 percent loan from the Utah Drinking Water Board. Both boards routinely juggle countless applications from communities in need. And both struggled — at least initially — with Noel's request for Zion View. In September, Noel went before the impact board seeking half the $7 million in grants and half in loans. Members chafed when they learned the area is a summer playground mostly for Las Vegans because, under the board's guidelines, second-home projects don't qualify for grants. Also weighing against it were board guidelines saying its money — from loan repayments and federal mining-severance taxes — is to be used to help communities cope with the wear and tear of mining on federal lands. But the mining that takes place in Kane County is on private lands, so it's not a good candidate for funds. In addition, board guidelines spell out a $5 million cap on project funding, though its director calls it a "soft cap" that can be waived in flush times, as has been the case in recent years. On the agenda for the July meeting, for instance, was a $20 million road improvement project in Uintah County and a $17 million request for a new Carbon County courthouse. — Making the pitch » Noel's September appearance before the impact board was somewhat unusual. According to board minutes, he was one of only four lawmakers attending such a meeting in the past 2½ years and the only one to personally make a funding presentation. At first, board members bristled at his request, quizzing Noel on why less-expensive options weren't being considered, such as updating the existing water source or digging a new well. "You can drill a lot of wells with $11 million," said board member Michael Milovich, a Carbon County commissioner, referring to the project's estimated cost last fall. Noel dismissed those options as impractical. The board settled, at the time, on a 30-year loan at 2.5 percent interest, less than the cost at market rates. The sole "no" vote came from Steve Simpson, a lawyer, businessman and sometime developer who heads the Bluff Special Service District. He said the county should have had the developer build in the cost of utilities at the outset. "It looked like these people had paid relatively low prices" for dry lots, said Simpson, "and now Representative Noel was looking for a subsidy for something those people should have paid for long ago." As the board prepared to finalize the funding package in October, two fellow Sagebrush rebels on the impact board stepped up to try to help Noel get even better terms. Uintah County Commissioner Mike McKee and San Juan County Commissioner Bruce Adams proposed loaning the district $6 million interest-free and $1 million at 1 percent interest. McKee told how Noel had called him and other board members to explain it would be "very difficult to make that [original package] work." But only the two commissioners liked that idea, so the board stuck with the original funding offer. It didn't last, though. With a letter from Noel tucked in their February meeting packets, impact-board members took up Zion View once more. The new terms proposed were the best yet: a loan of $7 million for 30 years, interest-free. There was no discussion about the change in the public meeting aside from Chairman Gordon Walker's comment that "as we looked at it, we realized that it might be [to] our advantage financially if we made the change." He didn't elaborate. The board approved the new terms, with Simpson again casting the lone no vote. Noel that Thursday morning was already late for a Capitol Hill meeting of the legislative spending panel for environmental programs on which he sits, and he got up to leave. "Representative Noel," said Walker, "may I say we appreciate the work you are doing at the Legislature." Contacted later, Walker told The Salt Lake Tribune that there was "absolutely not" any favoritism shown toward Noel. He said the reason for recasting the Zion View loan was that it helped in "balancing" the board's funding portfolio, which he described as a kind of bookkeeping strategy. — A second front » The drinking-water board also wrestled with Zion View. Its members — engineers, water-system managers and elected officials — are like those on the impact board in that they continually struggle with more requests than money. Zion View was one in a crowd of applicants with roughly $200 million in requests that were seeking part of the $25 million available for projects. Noel worked with drinking-water staff for months behind the scenes, as project proponents typically do, before making a formal request in January for a $2.9 million loan. That was less than a third of the original loan-grant package the district wanted. Still, the board saw red flags. The board's estimate was that the project's overall cost amounted to $44,000 per connection for 250 lots, or $26,750 per connection if all 411 lots opted for meters. Then there was the board policy adopted last summer limiting funding for second-home projects and a Legislature-imposed condition barring state money for projects primarily benefiting out-of-staters. Eagle Mountain Mayor Heather Jackson, a member of the drinking-water panel, didn't like committing Utah money to a project that wouldn't aid Utahns who needed water year-round. "Obviously, we want to help out the communities in need and not speculative areas," she said later in a interview. Noel asserted that many lot owners had Utah roots. "Most of them were Utah residents at one time," he told the board. "But there were no jobs in southern Utah, so they went to Las Vegas. Now there's no jobs there, so they want to move back." Ironically, a big selling point for the funding was the board's own notice of violation last summer. Zion View's water-hauling system had to be shut down because it no longer meets state safety standards. "What you're really funding is a public water system," Noel said after a board member questioned the project. "We can try to make it so [Zion View] gets off this hit list and becomes a public system and protects the property values and the assessed valuation." In effect, the water district had already done that 10 times over on Cedar Mountain, where it had taken over faulty water systems serving 2,000 lots during the past decade. In March, the board voted 5-4 in favor of funding the project from EPA grant monies at 4.71 percent, 1 percent lower than market rates, for 30 years. Last week, the Division of Drinking Water closed the loan for just over half the original amount, $1.5 million. Tage I. Flint, a member of the state panel and general manager of the Weber County Water Conservancy District, said he voted "no" because he thought the interest rate should have been lower. "Even with second-home subdivisions, they need the help," he said. "And they're the state's No. 1 violator." — Hatch Act complaint » Ultimately, the Kane County Water Conservancy District envisions up to 700 connections in the area of Strawberry Ridge, including Zion View, the mostly primitive Skyhaven Mountain Retreat subdivision and 200 acres of undeveloped school-trust lands in the county. But if the Alliance for a Better Utah has anything to say about it, Noel won't be leading the effort. In December, the progressive-leaning group filed a federal Hatch Act complaint against Noel over his dual roles as a state legislator and top executive for the Kane County Water Conservancy District. Noel has said his status as an independent contractor with the water district will thwart the complaint, now under review by the U.S. Office of General Counsel. Regardless of the case's outcome, Bill Allison, editorial director for the nonpartisan, nonprofit good-government group, the Sunlight Foundation, sees a clear conflict of interest here. "He's sitting in both chairs and wearing both hats," Allison said. "There are all kinds of ways this can be problematic." fahys@sltrib.com Twitter: @judyfutah -

The money behind Zion View subdivisionThe original $18.7 million project proposed last year by the Kane County Water Conservancy District for the Zion View Mountain Estates subdivision has been whittled in half.Now estimated to cost $9.3 million, the project would pipe water to the subdivision from another water district project about four miles away in Strawberry Valley north of Zion National Park.Under the plan circulated by the water district this spring (at the time the estimated cost was $11.1 million), lot owners would pay $9,500, surrender water shares worth about $2,500 apiece and pony up $25 a month for service. Each 1,000 gallons of water delivered would cost $2 for the first 15,000 gallons. In addition, the district said, those who opt to finance the connection fee over 10 years, would pay an additional $85 a month.That plan differs dramatically from one the Utah Division of Drinking Water envisioned when it approved a loan of $2.9 million at 4.71 percent interest for the project, which would supplement $1.1 million in upfront lot-owner funds and a $7 million no-interest loan to the district. The drinking-water division planned on 294 hookups pitching in $147 monthly to cover operations and loan repayments.Add up all the fees, plus the interest payments from those who opt for district financing, and the project financing plan is around $2 million shy of covering total project costs. How would the district make up the difference? Randy Brown, who handles the district's books, said any shortfalls would be made up with fees paid by future hookups — the district estimates the line could serve up to 700 in three subdivisions around Strawberry Point — and, if necessary, increased rates and taxes on Cedar Mountain.Judy Fahys