District buys Geneva's water rights

A bankruptcy judge has approved the $88.5 million sale of Geneva Steel's water rights to the Central Utah Water Conservancy District, a political subdivision of the state and a wholesaler of water to other cities.

The sale encompasses 48,500 acre-feet of water, which amounts to about half of the volume of water that is delivered annually out of Deer Creek Reservoir.

According to John Mann, regional engineer for the Utah Division of Water Rights, the transaction represents one of the largest transfers of water rights in the state's history.

"We think it's a great opportunity for the district," said Chris Finlinson, governmental affairs director for the Central Utah Water Conservancy District. "When you look at the cost of developing water and bringing the water down from the mountains, this is a tremendous bargain."

Calls to Geneva Steel seeking comment were not immediately returned.

Combined with last year's $40 million sale of Geneva's core steelmaking equipment, the water sale should satisfy the roughly $128 million owed to Geneva's secured creditors.

Included in the sale is 6,524 acre-feet per year of water, valued at $14.5 million, to Denver-based Summit Energy LLC, for use in a natural gas-fired power plant on 62 acres at the Vineyard site.

Finlinson said that enough water will be set aside for Geneva's future plans of a mixed-use development on its 1,700-acres. The development could include thousands of homes, businesses and light industrial facilities.

Finlinson added that the water rights the district is acquiring could be used for fast-growing communities in northern Utah County, west of the Jordan River.

"Five years ago there were about 500 people there," Finlinson said. "Right now there are close to 20,000 people. They are new communities, and they don't have the long-standing water rights that many of the other communities have, and so we anticipate a need for water in those areas."

The district is financing the deal, which is expected to close in early May, with revenue bonds.

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E-mail: danderton@desnews.com