By Roger Lanse

The Joint Powers Agreement, which would provide membership in the New Mexico Central Arizona Project Entity, relative to proposed water diversions from the Gila and San Francisco river basins, was called a pig-in-a-poke, fatally flawed, potentially harmful and throwing good money after bad, by residents clogging the public input session of the Silver City Town Council's June 23 meeting. They urged councilors to say "No" to participating in the JPA.

Mayor Michael Morones said that he sponsored this resolution to provide a forum for residents to let the Grant County commissioners know what town residents want. "It's important to this area to have residents speak their desire, their want, their will," Morones said.

Assistant Town Manager James Marshall stated that there are no prerequisites for membership. Applicants must only be public agencies. There are no requirements of financial assets, revenue streams, or expertise in managing complex business enterprises.

Funding for the project is limited to Arizona Water Settlement Act allocations, according to the JPA, Marshall said. There is no commitment from the Interstate Stream Commission or the State of New Mexico for any additional funding. JPA indicates that additional funding would come from the sale of water, which must be from within Southwest New Mexico. However, Marshall wondered who was going to buy that water locally, since Silver City and municipalities of the Mining District already supply 24,000 of the 29,000 residents of Grant County.

ISC and the state of New Mexico explicitly declare, Marshall said, that they shall not be obligated to provide any funding outside of what is allocated by the federal government in the AWSA and that all subsequent financial burden remains on the CAP Entity and its members, which include Grant County and Silver City. Yet, ISC retains complete budget and expenditure control of the New Mexico Unit Fund, including the authority to deny reimbursement.

Marshall continued, saying, the obligations Grant County would have to the JPA Entity are extreme and would create an excessive burden on Southwest New Mexico. "If we sign the JPA we are committed to plan, design, build, operate, repair, and maintain the project in perpetuity."

Marshall concluded by strongly recommending that council reject this resolution.

Town Attorney Robert Scavron read from a prepared statement. Some excerpts are printed here:

"I believe that any public entity that signs on to it (JPA) opens itself to uncalculated costs, with only a remote prospect of gain.

"The JPA does not limit the number of memberships available, nor provide for any qualifications of membership other than being a public agency. Thus, there may be entities with no financial resources or expertise to contribute. Yet, their vote is equal to a deep-pocket entity with far more ability and economic resources. A combination of those empty-pocket members can, as a majority of a quorum, bind the whole to substantial economic commitments. Further, that group may well end up in charge of making allocations of water to member users, an area ripe for favoritism and controversy. Signing a document that doesn't identify your potential partners, nor place any prerequisites on the quality of such partners is ill advised.

"The JPA is requiring the CAP (E)ntity to enter into an undrafted New Mexico Unit contract with the federal government. When entering such a contract, understanding how it's going to be paid for is vital. Especially, when the obligations are described as perpetual. We note that both the ISC and the State of New Mexico have no financial obligations regarding the New Mexico Unit project beyond what is provided by the federal government. The JPA doesn't authorize the CAP Entity to issue bonds or the power to tax. Yet, there is no business plan or due diligence which would allow the prospective signatories to the JPA to foresee whether the federal allocations will be sufficient to permit the project. The town has been asking the ISC for such business plan since 2004 to no avail. Starting a business without adequate financial resources, projected costs, and a market analysis is a recipe for disaster.

"So, when the federal money runs out, where is the money to come from? It won't be from the State or the ISC. It won't be from the federal government, which specifically advises the parties as to the limits of its contributions. And, in the absence of any identifiable customer base, it will not be from revenues. The remaining source would be contributions from the members of the JPA group, and in reality, only those that have deep pockets and a tax base."

Scavron's statement went on to detail problems with the implication of having the economic ability to complete the project when, in fact, that ability probably isn't there; the opportunity for huge liability; and being unable to pay contractors for services rendered.

Scavron ended his statement by saying, "In my opinion, the JPA is filled with misrepresentations regarding the ability to pay, to put the water to beneficial uses and to have the broad abilities to accomplish the undertakings. In contract law, a court will set aside a contract where one side has misrepresented material facts. When the misrepresentation is deliberate with an intent to induce another to contract, the matter moves from contract law to fraud, and at its most extreme, criminal fraud. For the local public official that knowingly and deliberately enters into an agreement that he or she knows to contain deliberate misrepresentations, it is in my opinion, conduct that may be considered malfeasance. Accordingly, as Town Attorney, I most strongly advise this council to refrain from entering this JPA."

Council then moved to approve authorizing the mayor to enter into a Joint Powers Agreement providing for membership in the New Mexico Central Arizona Project Entity, and the motion was seconded. Morones explained the motion to approve was needed so everyone would know what the council was voting on. All four councilors voted "Nay," and the motion failed.
Council then approved a resolution directing the town manager to confer and negotiate with the ISC and other potential parties to the JPA. Morones stated that as residents of Grant County town residents will be affected by whatever the county decides, and the town wants to ensure they are strongly represented in any JPA that comes up in the future. Marshall said that the purpose of the JPA is to divert water. "We need to be able to sit down at some point in the future to state what we want. I recommend approval."

In other business, council approved adding an additional section of Silver Street to the street improvement project between Pine and Lamb streets because of money left over from that project.

Deming Excavating Inc., submitting a low bid of $432,785.50, was awarded a street improvement project involving four streets, Arizona, Gila, Chihuahua and Sonora, in the Chihuahua Hill neighborhood. Consisting of paving, curbs and gutters, sidewalk construction, ramps and signs. Peter Peña, Public Works Director, estimated the project would start in about four weeks and be completed in 90 days.

Morones said that current policy leaves little discretion to the mayor to adjust to needs during the public input section of council meetings, so council approved certain changes in policies governing public input at regular meetings. Approved were allowing speakers to sign up at any time before the meeting and allows flexibility in the length of time allotted for the sum of speakers, which currently is 20 minutes. "We want the broadest amount of public input that we can," Morones said.

In final actions, District 1 Councilor Cynthia Bettison was endorsed as candidate for the position of director-at-large for the New Mexico Municipal League Board of Directors; Ted Lynn and Michael Dowd were appointed to the Library Board; and Ronald Phair to the Museum Board.