Complaint: AV Water defaulted on water rights payments
Andrea Corporation files complaint to foreclose on water rights
FARMINGTON — The AV Water Co. has defaulted on payments for the water rights of the Morningstar water system, according to a complaint filed by the Andrea Corporation in district court on Jan. 3.
The Morningstar water system serves Crouch Mesa and surrounding areas.
AV Water entered into an agreement with the Andrea Corporation to purchase the water rights for $2.45 million on April 22, 2016. Under the agreement, AV Water would pay the Andrea Corporation $12,500 monthly for 10 years, and interest would begin accruing at 5 percent a year starting April 22, 2017.
In the complaint foreclosing on the water rights, the Andrea Corporation states it has not received a payment from AV Water since June 24, 2016.
Gary Risley, an attorney representing the Andrea Corporation, said it is clear AV Water will not begin paying for the water rights. He compared the situation to purchasing a car. Risley said if car payments are not made, the car typically is repossessed.
Risley said he does not anticipate Morningstar customers losing water service because of the foreclosure.
"We have no desire to leave those folks high and dry," he said.
Risley said AV Water has been making money off the water without paying for it. He said the foreclosure will protect the water rights. He said the water rights in this area have been fully appropriated, and it is very rare to find new water rights.
Morningstar customers were urged to boil their water for several months in 2016 before a connection was built to transport water from the city of Farmington to the Morningstar customers.
Farmington Public Works Director David Sypher said the city has enough water rights to meet its contractual obligations to provide water to its customers, as well as the AV Water customers. But the agreement between the city and AV Water requires AV Water to have its water rights available if Farmington needs them. For example, population growth in the city could create a situation in which Farmington would need to use the Morningstar water rights to meet the demand of the Crouch Mesa area.
"It's going to have to be decided in the court," Sypher said.
While the agreement initially included the Harvest Gold water rights for a subdivision east of Bloomfield, the Andrea Corporation separated those rights from the contract in September to allow AV Water to transfer them to the Apple Orchard Mutual Domestic Water Consumers Association, along with the water system.
Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at firstname.lastname@example.org.