My comments for this afternoon's public hearing

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Steve Verhey

Ellensburg, WA 98926

May 29, 2014

Kittitas County Commissioners

205 W 5th AVE Suite 108
Ellensburg WA 98926-2887

Comments regarding proposed water bank purchases, public hearing May 29, 2014.

At nearly $2.5 million, this proposal represents a major purchase, and it’s being done hastily and without an appropriate process, public notice, due diligence, or cost-benefits analysis. This is a bad deal for Kittitas County, it’s a bad deal for prospective homeowners, and it’s a really bad for farmers and for the future.

These water deals are bad deals for reasons any businessperson can understand and explain: risk, price, and timing.

First, risk: the agreements say, in essence, that the county, not the sellers of the water rights, are responsible for any problems with transfer of the water. In other words, if Ecology or anyone else finds that the rights are inappropriate, and if the rights lose value or even become worthless, the county loses all of its investment.

Now, price: if the deals are completed the county will pay up to $51,000 per acre foot for these water rights, for an average of over $23,000. Yet some of the other water rights cost $13,000 or less, and even that seems very high. At the highest prices, the county itself is responsible for grossly inflating the price of water in the county. Any normal businessperson would walk away from prices like these, and that’s what the county should do in this case.

Finally, timing: there is no crisis in access to water rights, and there is no reason to enter into any agreement hastily. A reasonable businessperson would take the long view and wait for the best deal. This is especially true for this program, since the county is essentially taking a problem that belongs to private businesses and individuals and turning it into a public problem.

The whole idea of purchasing something in volume and in advance is to save money and influence the market downward. These deals do the opposite. The county should put its money back in its pocket for now.