Irrigation Districts Their Organization Operation and Financing

TECHNICAL BULLETIN NO. 254 JUNE, 1931 IRRIGATION DISTRICTS THEIR ORGANIZATION OPERATION AND FINANCING BY WELLS A. HUTCHINS Irrigation Economist, Division of Agricultural Engineering Bureau of Public Roads UNITED STATES DEPARTMENT OF AGRICULTURE, WASHINGTON, D. C. For sale by the Superintendent of Documents, Washington, D. C. Price 15 cent» TECHNICAL BULLETIN NO. 254 JUNE, 1931 UNITED STATES DEPARTMENT OF AGRICULTURE WASHINGTON, D. C. IRRIGATION DISTRICTS/ THEIR ORGANIZATION, OPERATION AND FINANCING By WELLS A. HUTCHINS Irrigation Eoonomiatj Division of Agricultural Engineering^ Bureau of Public Roads CONTENTS Page Pag« Introduction-- 2 Indebtedness to the United States not cover- Scope of bulletin 2 ed by bonds - 46 Definition and attributes of the irrigation dis- Warrants and notes 47 trict 2 State supervision 47 Present status of the irrigation-district move- Character of supervision 47 ment -— 3 Operation of State control 61 Areas 6 Investment of State funds in irrigation-dis* Sizes of oi>erating districts 7 trict securities ,—„—,- 54 Reasons for success or failure-- 8 Utah 54 Elements of economic feasibility 8 California 54 Causes of failure 8 Nebraska 55 Where the district has succeeded 10 Washington 55 Purpose of fornmtion 12 Oregon , 56 The electorate 15 Wyoming 58 Management 17 Relations with the United States 59 Handling of finances 19 Bureau of Reclamation 59 Financial officers 19 Indian Irrigation Service —* . 61 Accounting 20 General Land Office - 61 Other salient features 62 Assessments 20 Apportionment of water , 62 Methods of assessment 21 Eminent domain - Operation costs 25 Drainage Bonds 26 Electric power-__, .- 64 Validation Inclusion of municipalities 65 Interest 28 Inclusion of public lands — 65 Denominations 28 Local improvement districts..,, ... 65 Maturities 28 Cooperation with other districtç—,.,— 69 Disposal of bonds- 29 Dissolution 70 Refunding bonds 30 Irrigation-district development 70 Security for bond issues 31 Early Utah districts..., 70 Extent of landowner's responsibility for The Wright Act of California 70 payment ^f bonds 31 Early districts under the Wright Act 72 Procedure in case of default- The period of conservative development. 73 Financial reorganizations The promotion phase - 74 Character of irrigation-district bonds War development and the postwar The bond market depression 74 Present status of irrigation-district bonds. Recent activities-- 75 Integrity of irrigation-district bonds . Development in the several States 76 Maintaining bond integrity and.improv- Summary 90 ing the standing of district bonds 43 Literature cited 92 iThis bulletin supersedes Department Bulletin 1177, Irrigation District Operation and Finance, published in 1923 and presenting information as of Dec. 31, 1921. It brings the information on irrigation districts for the 17 Western States down to Dec. 31, 1938, except where specific reference is made otherwise. The bulletin was prepared under the direction of W. W. McLaughlin, associate chief, division of agricultural engineerijig, Bureau of Public Roads. The field work was done by Paul A. Bwing, Guy Brvin, and the author. Most oí the data concerning California districts were obtained under the direction of Prank Adams, Irrigation economist, University of California, under a cooperative agreement between the California State Department of Public Works, University of CaU- fornia, and the U. S. Department of Agriculture and were published in 1929 (2).« Valu- able Information has been furnished by State engineers or corresponding officials of the other States, by officers of individual districts, and by engineers, attorneys, bond dealers, and others actively connected with Irrigation district affairs. ^ Italic numbers in parentheses refer to Literature Cited, p. 92. 55477—31 1 1 2 TECHNICAL BULLETIN 2 54, XJ. S. DEPT. OE AGBICULTURE INTRODUCTION The unfavorable agricultural conditions that have prevailed since the publication of Department Bulletin 1177 have affected many irrigation districts adversely and have led to less favorable showings for certain groups than in 1921. Other groups, on the contrary, have maintained their 1921 standing. While developments of recent years have shown a large number of districts to be unfeasible according to present-day standards, the usefulness of the district as an operating organization or as a means of effecting development for which a real need exists, has not been impaired. SCOPE OF BULLETIN The data in this bulletin, with exceptions noted below, refer only to districts organized under the Wright Act of California, as amended and reenacted, and to the irrigation-district statutes of the other 16 Western States based upon the Wright Act. Montana has irrigation districts of two classes governed by sepa- rate statutes. The older class is independent of the Montana Irri- gation Commission; the other is under its jurisdiction. There is no other distinction, and until 1929 districts of the first class could elect to join the second. Both groups are included herein. Texas has several kinds of districts concerned with irrigation, the most important being water-improvement districts and water- control and improvement districts. The laws governing water-control and improvement districts go far beyond the scope and purpose of the original irrigation district law. Nearly all such districts formed to the present time, however, are primarily irrigation proj- ects, and a number of water-improvement districts have assumed the status of water control and improvement districts without alter- ing their main purposes. The present situation is such that a sepa- ration of these groups in this bulletin would be impracticable. Several other States have districts concerned with irrigation, in addition to irrigation districts, their status being less closely inter- woven with that of the original irrigation districts than in the Mon- tana and Texas cases cited. Their activities are referred to under Irrigation District Development (p. 70), but data concerning them are not otherwise included. DEFINITION AND ATTRIBUTES OF THE IRRIGATION DISTRICT The irrigation district may be defined as a public or quasi munic- . ipal corporation organized under State laws for the purpose of providing a water supply for the irrigation of lands embraced within its boundaries, empowered to issue bonds, and deriving its revenue primarily from assessments levied upon the land. The fundamental attributes of an irrigation district are : It is a public corporation, a political subdivision of a State with defined geographical boundaries. It is created under authority of the State legislature through designated public officials or courts at the instance and with the consent of a aesignated fraction of the IRRIGATION DISTRICTS ó landowners or of the citizens, as the case may be, of the particular territory involved. Being public and political, the formation of a district is not dependent upon the consent of all persons concerned, but may be brought about against the wishes of the minority. In this respect the district differs fundamentally from the voluntary mutual company and the commercial irrigation company.^ It is a cooperative undertaking, a self-governing institution, man- aged and operated by the landowners or citizens within the district. Supervision by State officials is provided for to the extent of seeing that the laws are enforced, and in most States is extended in greater or less degree over organization, plans and estimates prior to bond issues, and construction of works. It may issue bonds for the construction or acquisition of irrigation works, which bonds are payable from the proceeds of assessments levied upon the land. Hence, it has the taxing power. Each assessment becomes a lien upon the land. While the ultimate source of revenue, therefore, is the assessment, an additional source frequently provided for is the toll charged for water. Other revenue may in some cases be obtained from the sale or rental of water or power to lands or persons outside the district. Finally, the purpose of the irrigation district is to obtain a water supply and to distribute the water for the irrigation of lands within the district. Additional authority is granted irrigation districts, almost without exception, to provide for drainage. In some States districts may also develop electric power. These additional powers, however, are subsidiary and are intended to make more effective the principal function of the organization, which is to provide irrigation water. For a full discussion of the legal nature of the irrigation district, see (9). PRESENT STATUS OF THE IRRIGATION-DISTRICT MOVEMENT The.location of active irrigation districts is shown in the map of the 17 Western States which have irrigation-district laws. (Fig. 1.) The cumulative chart (fig. 2) shows the growth of the district movement through the 42 years of district activities extending from 1887 through 1928, and the proportion of districts now active. Table 1 gives the number of districts formed in each State each year, arranged in the order in which the several irrigation-district acts were passed. »The constitutionality of the irrigation district law was upheld by the United States Supreme Court in the case of Fallbrook Irrigation District v, Bradley, 164 U. S. 112. decided Nov. 16. 1896. TECHNICAL BULLETIN 2 54, U. S. DEPT. OF AGRICULTURE Operating. Onätr conatrucNon.. Preliminary stage— > FiGUEB 1.—Location of all active irrigation districts in the United States, December 31, 1928. Inactive districts, even though legally alive, are not included '800 800- 700- 600-^Operating 400-^I Under construction Prelinrïînary stage 300 I^ 200- ^ • S^ Inactive 100-1 .1. 1890 1900 1910 isao Status at cfose of 1928 FiGUEE 2.—Cumulative chart showing total number of irrigation districts formed to the end of each year, 1887 to 1928, inclusive, and status of districts at the close of 1928 IRRIGATION DISTRICTS Ö TABLE 1.—Irrigation districts formed in 11 Western States to December 31, 1928, J)y years 8 •i o fi ifi Year •S B 1 1 1 o O 1 M 1 1 1 1 1 1 i i O 1 & 1887 14 4 1888 7 7 1889 6 6 1890 11 16 1891 13 2 (0 0) 15 1892 3 1 4 1893 4 4 1895 1 Q) (0 19 10 1896 3 3 1897 2 2 1898 4 4 1900 1 ' 1 1901 '""'"* 1 1 11 3 1902 .

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