NRDs at loss for payment plan

The $8.8 million that the Republican River Basin Natural Resources Districts agreed to pay irrigators for their surface water is due Dec. 5 and the NRDs still don't know how to come up with the money.

Dan Smith, general manager of the Middle Republican NRD, told board members at their regular meeting Tuesday night in McCook that if payment is not made by the agreed date in December, the NRDs may have to add an estimated $2,200-2,400 per day in interest for being in default of the agreement.

The Middle, Upper and Lower Republican NRDs purchased the water from the Frenchman Valley and Fren-chman Cambridge Irrigation Districts and the Riverside Irrigation Co. to send the water downstream to Kansas.

Smith and other Republican River NRD representatives will meet with Nebraska Gov. Dave Heineman to see what options are available for funding.

Smith ran through the list of alternatives.

"An outright gift of some kind? Not likely. Legislative action? That's too far down the road and would take too long," he said.

The NRDs had planned to finance the water purchase with a $9 million bond to be paid back by additional property and occupation taxes assessed on residents in the Republican River basin area, as authorized by LB701.

But the bonding company refused to issue the funds, citing a pending lawsuit that challenges the constitutionality of using property taxes for a state issue.

The bonding company required the NRDs to have the property taxing authority, as there is no history of repaying bonds with just occupation taxes, Smith explained at previous meetings.

The lawsuit was filed in the Nebraska Supreme Court by nine landowners in the Republican River Basin area. It was rejected, as the Supreme Court refused to take original jurisdiction and has now be en re-filed in Lancaster District Court in Lincoln.

Dave Cookson, Nebraska deputy attorney general, told the board that a tentative agreement has been reached with the plaintiffs to have the suit heard before a trial judge as a "trial-on-merit case."

This would expedite the case as quickly as possible, he said.

"Our goal is to have this in front of the judge by the end of the year," he said, but he noted that it would be up to District Judge Paul Merritt as to when the case would be heard and when he would issue a ruling.

In a trial-by-merit case, both sides presents their arguments and the judge issues his decision.

Although a district court case can take up to 18 months to resolve, some cases are put on an advanced schedule, Cookson added, such as death penalty and surface water cases, and the method was used most recently in the Hergert regent lawsuit.

"The idea is to move this along as quickly as possible," he said.

The lawsuit did not ask for an injunction against property or occupation taxes so counties could still collect the taxes and place the funds in an escrow account until the ruling. But if LB701 is declared unconstitutional, the county treasurers would have to refund the money, which Cookson described as a "paperwork nightmare."

All the more reason to have the lawsuit put on the fast track, he said, as a speedy resolution will save counties extra time and money.

The possibility exists that the case could drag on, if the plaintiffs appeal the District Court's decision to the Supreme Court.

If LB701 is declared unconstitutional, the governor could address the issue by calling a special session of the Nebraska Legislature, officials said.