Irrigation conversion discussion continues

Posted on March 7, 2019 by Vauxhall Advance

By Cole Parkinson
Vauxhall Advance
cparkinson@tabertimes.com

In Municipal District of Taber council’s ongoing exploration of converting a handful of quarters to new irrigation through Bow River Irrigation District expansion, the process has yet to be fully set in motion.

After being tabled again on Jan. 29, an update was brought forward to their meeting on Feb. 11 and gave council another chance to discuss whether or not they wanted to proceed.
BRID had notified the M.D. they had been approved for six quarters of new irrigation.

Upon discussion with leaseholders who were interested in converting, six had answered back stating they were still interested while another had notified the M.D. they were interested after estimated financial work had been done.

“How I see it is, it would be three different pump sites to service the six quarters,” said Brian Peers, director of municipal lands and leases.

Before that happens though, soil testing will need to be completed and administration estimated the cost to be $3,500 per quarter.

While the cost to move forward projects to be right under the $3 million mark, they would see an additional increase in total land value on the converted lands. Administration stated assuming a $4,000 per acre lease over 810 acres, would see a $3,240,000 increase in value on the lands.

“I don’t see much difference if we own them or they own them. The additional rent is going to justify the purchasing of the pivot over the same number of years basically,” added Peers. “On those six-quarters, we are receiving almost $19,000 in rent. Under the terms of the lease, we would remove any oil and gas on those quarters and the property taxes would double with being irrigated. That would equate to about $29,500, so we would more than compensate for the loss of rental from the other factors.”

One major hold up from council on the quarters was two of the original six quarters were located on tax-recovery tame grass.

While not native grass, council did express hesitation to move forward, as it may lead to further perception that they were willing to do the same to all native grass moving forward.

“They are tame grass, crested wheat primarily. They wouldn’t be deemed to be native grass, but they are tax recovery quarters,” said Peers. “It is certainly not seen in the same light as native grass.”

The other four quarters that expressed interest in converting are all located on dryland cultivation.

Another factor council was worried about was the perception relating to the tax recovery land they were still trying to get back from the provincial government.

“If we allow this to get broken, how does that impact (the land we are trying to get back)?” asked Merrill Harris.

Many on council wanted to remove the two tame grass quarters from the discussion.

“I think it’s a lot of money and a slippery slope even with tame grass/native grass. Once you break tame grass, it sends a message out that you are willing to break grass up. I know it is tame, but at the same time, it starts with tame and then the next one will be somewhat tame, somewhat native. It will be a snowball effect and that is not a message I want to be sending out,” added Coun. Leavitt Howg.

On the other side though, it was pointed out that council were the ones who had the ability to break tame native grass and it has been stated many times they weren’t willing to do that.

“I see a huge difference in breaking tame as opposed to native grass. We are the ones who control whether we are breaking native grass and I don’t think anybody at this table is in favour of breaking native up,” said Coun. John Turcato.

The other quarter added later, located at SE 27-13-17, had no financial information presented to council.

The other four quarters located at NE 26-13-17, NE 17-13-17, NW 17-13-17 and SW 16-13-17 all had information such as 2018 lease rent and potential future rent based on who provides the pivot.

Rent leases for 2018 were at $2,800.60 (NE 26-13-17), $5,135.70 (NE 17-13-17), $5,479.60 (NW 17-13-17) and $5,223.10 (SW 16-13-17). Meanwhile, the rent projected for each quarter if the leaseholder provided the pivot at $200 an acre was at $28,000 for each and $34,750 if the M.D. provided the pivot.

Debenture costs were also laid out on a 15-year and 20-year calculation with financial information for both options on who provides the pivot.
Development costs for both the 15 and 20-year debentures were slated at $2,736,550 if the pivot was provided by the M.D. and $2,066,550 if the pivot was provided by the leaseholder. Development total costs is estimated at $3,422,794 (M.D. pivot) and $2,584,780 (leaseholder pivot) on a 15-year debenture and $3,715,681 (M.D. pivot) and $2,805,960 (leaseholder pivot) on a 20-year debenture.

Annual debenture costs would be $228,186 (15-year debenture) and $185,784 (20-year debenture) with an M.D.-provided pivot and $172,318 (15-year debenture) and $140,298 (20-year debenture) with a leaseholder- provided pivot.

With the conversion, loss of dryland cultivation rental income was estimated to be $18,862.30, but the increase in revenue due to elimination of oil/gas payments and increase in property taxes on irrigation was $21,548.

“I don’t know if that is the right way to be spending this money,” stated Howg.

Others were more in favour of spending some money to convert as it would lead to further revenues down the road.

“For the future benefit, and we just came from an irrigation conference where they said every dollar invested in irrigation returns at $3 at GDP. This is money well spent and better for the community. If our forefathers had the attitude when irrigation came to not break any grass, I think we would look very similar to northern Nevada,” said Turcato.

“If we look at what the 2018 renting rate was on those six-quarters, it is $18,862.30 with the potential revenue with irrigation if the M.D. provides the pivot or the landowner provides it, it’s not even in that same ballpark. Plus, the farming revenues generated from an irrigated quarter for that farmer, the potential return to the economy looks different as well. There are some things in our M.D. that we have that others don’t, and that is water. We haven’t been prepared at this point to start selling our quarters for revenue and I think we know that we aren’t making any more land. If we have quarters that have the potential to earn more money, I feel I have a responsibility to figure out a way for the M.D. to generate more money,” added Deputy Reeve Tamara Miyanaga, who also stated she preferred having the leaseholder provide the pivot.

Council asked administration if the numbers were a good jumping off point as to what they could expect if they moved forward.

“Financially, it is essentially a project that pays for itself over those number of years. What is not included in here is value of the property, once this development is done on top of it paying for itself, the value of the asset is significantly increased once the water rights and irrigation infrastructure is installed,” said Bryan Badura, director of corporate services for the M.D. of Taber.

A motion was made to move forward on soil testing for the five quarters, excluding the two tame grass locations and was passed 5-2. Councillors Leavitt Howg and Murray Reynolds voted in opposition.

With the money to do the soil tests not in the 2019 budget, council also had to pass a motion to amend the 2019 budget.

A motion was made to add $17,500 to the budget for soil testing and was passed 5-2 with Howg and Reynolds voting in opposition.