Sen. Matt Williams of Gothenburg (Dist. 36 of the Nebraska Legislature) introduced LB1136 during the 2020 Legislative session on behalf of The Central Nebraska Public Power and Irrigation District.
LB1136 is a bill to prescribe when an interest in a contract is prohibited and eliminate a prohibition against such interest by a public power and irrigation district board member. More to the point, the bill will permit members of a public power and irrigation district’s board to represent the interests of their constituents when it comes to discussing and providing input on matters related to standard form water service agreements and lot leases at District-owned property near Johnson Lake and Lake McConaughy.
To better understand the bill’s intent, background on the issue is necessary.
About two years ago, during the process of discussing the terms of lot leases for homes/cabins at lakes owned by Central, an inquiry was made by a third party as to whether or not two members of Central’s board of directors who own homes at Johnson Lake could participate in discussions about the leases, and vote in favor of, or against, the final lease agreement.
The two members of the board with leases at the lake did participate in discussions about the lease proposal – after all, they were elected to their positions largely because of the fact that they owned homes at the lake and would faithfully represent their constituents’ best interests, as well as those of the District – but they abstained from voting on the final long-term lease. As advised, they also sent letters to the Nebraska Accountability and Disclosure Commission (NADC) detailing their potential conflict of interest in the matter.
As the issue evolved, the ability of other members of the board who are irrigation customers to discuss and vote upon annual irrigation delivery rates was also called into question. Central sought an advisory opinion from the NADC which concluded that board members “… who have present or prospective water service agreements with the District may not participate in discussions and voting on standard form water service agreements.”
Again, the members were elected by their constituents precisely because they are irrigation customers and, as such, understand the issues related to the District’s irrigation operations. In short, they were elected to represent their constituents’ best interests.
The prohibition of voting on – or even discussing matters related to lot lease agreements or water service agreements — seems on its face to disenfranchise the very voters who elected the board members to their positions. Further, constraints on the ability of individuals from voting on, or discussing, matters related to leases and/or water service agreements places an obstacle to attracting potential board members in the future.
Central understands the NADC’s position; its members followed the letter of the law to interpret the current statute. However, Central does not believe the intent of the statute was to absolutely prohibit irrigation customers or lease holders from serving on Central’s board, or discussing and voting upon standard form agreements. Indeed, Central has for almost 80 years had board members who were irrigation customers and, since the more recent implementation of lake lot leases, board members who are cabin-owners at District lakes. Their ability to bring that knowledge and perspective to the board has proven invaluable over the years in discussions that pertain to those leases and/or water service agreements.
The bill would have the following effects:
First, the bill amends a section in the Nebraska Accountability and Disclosure Act so that it also applies to entities formed under Chapter 70, which contains statutes related to the formation and operation of public power utilities. Members of Central’s board could have an interest in a contract with the district. They would still be required to disclose a potential conflict of interest to the NADC and abstain from voting on the agreements in question. They would, however, be free to discuss and provide input to their fellow board members about said agreements, thus allowing them to more properly represent constituents who elected them to the board.
Second, the bill repeals a portion of statute to eliminate the prohibition against a member of certain boards from having an interest in a contract with the governmental entity. This is an unusual provision rooted in events which took place more than 80 years ago. It would also eliminate the current possibility that board members with lease agreements or water service agreements could be removed from the board.
The bill will have no effect on irrigation districts formed under Chapter 46 where, in most cases, only those individuals who are irrigation customers and/or landowners are able to vote for candidates for boards of directors or serve on those irrigation districts’ board of directors.
LB1136 had the support of the NADC at the bill’s hearing in February. Greg Heiden and DeDe Peterson, representing irrigation customers and cabin-owner, respectively, also testified in support of the bill, which was unanimously voted out of committee for floor debate. It was subsequently amended into LB1055 as part of a package of bills prioritized by the Government, Military and Veterans Affairs Committee. LB1055 was placed on select file without opposition on March 9 and was scheduled for advancement to final reading when the Legislature took an extended recess on March 16 because of COVID-19 virus concerns. The bill’s priority status will, hopefully, lead to its appearance on the Legislature’s agenda when the Unicameral reconvenes on July 20.
Central extends its thanks to Sen. Williams for sponsoring the bill and to Sen. Brewer and his committee for including it in a package of bills with a priority designation.