In mid-May of 2010, the assumed owner of Wallowa Lake Dam, the Associated Ditch Companies, lost its legal nonprofit status.
Beyond that issue, the very ownership of the dam now appears to be in question as well. Wallowa County Treasurer Shonelle Dutcher Pryse says there are no records of the ADC paying taxes in Wallowa County.
Officials from the Wallowa County Assessors office say four of the five ditch companies that comprise the ADC the Silver Lake Ditch Company, Farmers Water Ditch Company, Big Bend Ditch Company, and the Wrenn & Dobbin Ditch Company own 16 acres of property where the dam sits at the northwest end of Wallowa Lake. Not listed as a land owner there is the fifth entity in the ADC, the Creighton Ditch Company.
The ADC might be the legal owner of the Wallowa Lake Dam, as is popularly thought, but the answer to that enigma lies buried in dusty paperwork in either the assessors or county clerks office, or both. And if ADC is the owner, it pays no property taxes on its only asset.
County Assessor Gay Fregulia jumps in at this time and says, because the dam is listed as agricultural status, no taxes would be paid on the dam in either case.
Carrie Kaufman, development and communication director for the Nonprofit Association of Oregon (NAO) says the consequences of ADC losing its nonprofit designation could be large or small. Fregulia agrees.
Kaufman says losing ones nonprofit status was a common occurrence during 2010 and 2011. She says the Internal Revenue Service gave plenty of warning in advance regarding new legislation requiring nonprofits nationwide to submit specific forms every three years or lose their tax-deductible status, and still many failed to comply.
According to Kauffman, at about the same time the ADC lost its not-for-profit status, 3,700 other nonprofits in Oregon lost theirs and, nationwide, 275,000 nonprofits suddenly were stripped of that cherished legal designation.
Its possible that the ADC since has paid money for reinstatement and waded through the mountains of paperwork necessary to reclaim the classification.
But even ADC president Tom Butterfield does not know if that is the case. He says the ADC has hired an accountant whos working on the problem.
The Chieftain left phone messages last week for Wallowa Lake Dam Manager David Hockett, but had not spoken with him by press time for todays issue.
Clay Peterson, who works on the NAOs online helpline, says, Best case scenario is that they (the ADC) get retroactive IRS approval in nine to 10 months.
In a separate but related matter, Butterfield said lawyers for the ADC determined the city of Joseph was an illegal participant in a 1996 water agreement between the two parties because the city hadnt filed for rights from the Oregon Water Resources Department to receive municipal water covered in that agreement. That, says Butterfield, was the reason for the request by the ADC to draft a new legal document that went into effect Jan. 1, 2011.
However, an official named Ivan Gall casts the matter into greater confusion still. As Eastern Oregon manager of the states Water Resources Department, Gall says the city of Joseph received a permit to withdraw 480 acre-feet of water for municipal purposes from the ADC on Aug. 25, 1997, and that permit does not need to be renewed.
Because the Water Resources Department is so backlogged with water claims, it literally takes years to finalize water right agreements, says Gall. And yet, he says the city of Joseph performed do-diligence on its claim in 2008 and is on track to receive final approval at an unknown time in the future.
As an aside, Gall said, Wallowa County is water-rich by Oregon standards.
In the first and second paragraphs, and adjacent to signatures at the end of the Joseph/ADC document implemented in 2011, ADC is identified as an Oregon nonprofit organization.
And that agreement went into effect at a time when the ADC was not an Oregon nonprofit organization, unless ADC accountants had fast-tracked extensive paperwork to regain that status retroactively.
But does it make any difference?
Joseph was receiving its allotted flow of water when ADC lawyers determined the city was not a legal party to the agreement (at a time when the Water Resources Department says they were acting lawfully) and the city of Joseph continued to receive water when the ADC was not a nonprofit entity as it purported to be when the 2011 agreement went into effect.
The upshot of the 2011 agreement is that the ADC will store up to 480 acre-feet of water for city use at an annual base assessment of $1,200. Asked why the annual rate seemed so low, Butterfield said the city of Joseph is a neighbor of theirs and that amount is consistent with the ADCs per acre-foot per year water charge.
And yet the basic problem hasnt changed. The concrete Wallowa Lake Dam, no younger than 83 years old depending on which records one turns to, is old and deteriorating.
A Chieftain articled published in 2009 stated the U.S. Army Corps of Engineers had listed the Wallowa Lake Dam in its high risk category, mandating annual inspections of the dam by the Oregon Water Resources Department. That article also stated the Corps had restricted the ADC to store no more than 72 percent of the water the dam originally was designed to hold.
Butterfield wants it known that the 72 percent water level incorporates a six-foot flood safety cushion. His explanation for that is that the dam could, for a significant period of time, store six additional feet of water and remain safe.
Oregon Department of Water Resources dam safety engineer Keith Mills said by phone last week, The Wallowa Lake Dam is safe as long as it is maintained at prescribed levels.
Wallowa County Commissioner Mike Hayward says hes posed the question of dam safety many times and agrees with Mills assessment of the situation. Haywards concern, however, is that if the problem isnt resolved, the water storage allowance behind the dam will continue to dip until a time comes when the dam no longer can store enough water to meet its downstream obligations.
Butterfield says the plan is to rebuild the dam but, as always, where to find the funds is the problem.
He said a plan once high on the ADCs potential list of solutions to sell stored water to willing buyers many miles downstream outside of Wallowa County no longer is a strong possibility. Another idea now being aired is the possibility of diverting water to potential buyers along Bear Creek and Hurricane Creek within Wallowa County. Presently, irrigators along those two streams experience low stream-flows late in summer months.
Hayward said in the late 1990s, when federal money was flowing, the U.S. Bureau of Reclamation offered to rebuild the dam if it could assume control of the water. He said the ADC balked at giving up its control.
When asked about that issue last week, Butterfield said, This is the first Ive ever heard of it.
Mills inspection of the dam last July, as evidenced in his seven-page report, noted significant cracks and spalls in the downstream face and abutment, significant vegetation growth near the dam that could lead to further cracking, and a significant loss of concrete at the outlet of conduits.
Butterfield said the ADC paid for tunnel repairs at the dam in 2006 and also did major work on the dam a few years earlier, though he admitted he was relatively new to the ADC at the time and knows no specifics about that work.
Board members for the ADC are Tom Butterfield, president; James Yost, vice president; and Dan Gover, Larry Waters, and Dave Turner, directors.