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Auditors Examine Canal Company Following Complaints

Auditors Examine Canal Company Following Complaints

Posted - Jan. 12, 2004 at 7:43 a.m.



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SALT LAKE CITY (AP) -- Legislative auditors are examining the Davis & Weber Counties Canal Co. following complaints about its management.

Rep. Dave Ure, R-Kamas, said he asked for the audit more than a year ago when concerns arose over the canal company's management practices.

Recently, Ure, chairman of the Water Resource Board, and Rep. Gregg Buxton, R-Roy, asked that the audit be bumped to the top of the auditor's list because of concerns by cities in Davis and Weber counties who get their secondary water from the company.

Legislative auditor Wayne Welsh said the audit will be completed in several months.

"It does have to do with management practices and how well the Davis & Weber Counties Canal Co. has been managed and have used their resources to maintain infrastructure and protect the water rights they own," he said.

New company manager Ivan Ray said he welcomed the audit. Ray was hired Dec. 1 to replace Floyd Baham.

"My goal is to have it open, and anybody who wants to see our financial statement or water rights can," he said.

Ray, a former canal board member, said he is putting together a long-term management plan that will cover the next seven-to-10 years. He is also creating a secondary water plan that shows how much of the company's water allotment is put aside for secondary water for Northern Utah cities. Along with that, he is providing a full disclosure financial statement. All of these will be given to the state.

Officials from several cities became concerned when their secondary water assessments continued to rise and their questions were not answered to their satisfaction, said Roy Watts, general manager of the Roy Conservancy subdistrict. Roy's district is the second largest holder of shares after Weber Basin. The Church of Jesus Christ of Latter-day Saints also holds significant shares. Other Northern Utah cities hold shares as well.

"(The cities) were concerned over a lack of openness that as a private company they were able to keep things under wraps," Watts said.

Last fall, Roy officials conducted a performance review of the company which found it appeared to be struggling, Watts said. Now, under new management, it appears to be stable, he said.

Ure said the company's private status creates a gray area on how much financial information the company has to release. The state is able to audit the company because of its loan involvement.

The water board authorized a $25 million loan to the company from the state's revolving water loan fund after a catastrophic canal break in 1999 damaged more than 60 Riverdale homes. That money was to be used for rehabilitating the canal and other infrastructure. The company also took out a $35 million loan for secondary water development.

(Copyright 2004 by The Associated Press. All Rights Reserved.)

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