LAS VEGAS — Nye County was booted out of a bankruptcy settlement plan involving the defunct Willow Creek Golf Course Wednesday after a judge rejected objections raised by District Attorney Brian Kunzi over language that would have allowed park easements on some of the property.
Nye County was invited to participate in the Chapter 11 settlement in order to secure an agreement from a creditor of Caldera P&G, which owned the golf course before declaring bankruptcy last November.
The initial settlement plan called for the county to agree to give preferential zoning to a creditor who will get a 9.1-acre parcel with the course’s former clubhouse on it. The county was also to pay $100,000 to the bankruptcy trustee in exchange for park easements on six parcels.
Utilities Inc. of Central Nevada, which uses the golf course’s ponds to discharge effluent and owns $8 million in water rights on the property, gets the remaining 15 of 16 parcels on the 174-acre property.
UICN and the county could not come to terms over language in the easement agreement. Among the snags was that the county wanted water rights on the easements. Also, an “open use” designation on the easements proved too much of an obstacle for the utility, since it could not confirm exactly what the term entailed.
The bankruptcy trustee last month filed a modified settlement plan with the court striking any role for Nye County. However, the judge forced the parties back to the table in order for the county to participate in the plan. A hearing on Aug. 7 concluded with what seemed to be an agreement between UICN and the county. However, negotiations came to loggerheads when Kunzi rejected interpretations of the new agreement being made by UICN’s attorney, Laura Granier, with Lionel Sawyer & Collins in Las Vegas.
“After we left here we had some communications back and forth between myself and Mr. Kunzi on behalf of the county simply trying to confirm what we all meant by a couple of the key terms that were used, specifically what we said when we had the discussions off the record here that it was a deal breaker if we had to consent to the county providing itself fresh water in the easement agreement. And that became an insurmountable obstacle,” she told the judge.
Kunzi said it wasn’t the county that was rejecting the agreement made at the earlier hearing.
“The party who is not accepting the agreement as written is UICN. Nye County has done everything it was supposed to do,” he said.
Granier denied that assertion.
“We absolutely did not reject the agreement. All we did was try to confirm to him that there was a meeting of the minds as to what the additional terms meant. … Mr. Kunzi did not agree.”
Kunzi told the judge the county wanted two weeks to present its own settlement plan in light of the obstacle with UICN. It basically would have called for a liquidation of the golf course and ultimately its purchase by the county.
“We also offer to pay to operate this system. Nye County is willing to go in and do what’s necessary,” he said.
Judge Linda B. Riegle, however, wanted a legal basis for the county’s objection to the trustee’s request to strike Nye County from the plan. She referred several times to the ponds on the golf course, which parties all agreed were potential environmental hazards — Caldera P&G’s bankruptcy stems in part from costs associated with litigation for refusing to fix the ponds.
Riegle, already upset with the attorneys for not confirming an agreement earlier, asked Kunzi what would happen if a kid fell into one of the ponds while the county was busy coming up with its plan.
“What happens in two weeks? What happens with that environmental hazard in two weeks? What if a kid dies in that pond? What if a child falls into that pond? I’m serious,” she said.
Kunzi said the pond in question had never been fenced and no safety issues ever reported from the nearby high school.
The exasperated judge then simply agreed to confirm the modified plan offered last month that struck out any role for the county.
“Okay, so UICN has approved the plan, Nye County has not. The plan takes effect as docketed,” she said before moving on to another case.
After the hearing, Kunzi was asked his reaction and he said simply, “The county’s out of it.”
However, on Thursday he made a fuller statement on the whole ordeal, including UICN’s earlier fight against Caldera’s principal Jim Scott, who was forced into bankruptcy. Kunzi raised questions about why UICN, though it argued throughout the case that the ponds were an environmental hazard, has spent some $1.5 million on legal fees, but nothing to date to fix this so-called imminent health risk.
Kunzi says the judge’s decision is good for UICN and Lionel Sawyer & Collins, but bad for Pahrump residents, many of whom also happen to be UICN ratepayers. He fears the exorbitant cost of all the litigation will simply be passed along to customers.
“The affect of the Judge’s decision means the $1.5 million in attorney fees is uncollected. There will be an attempt to collect these fees through a rate case. UICN will have spent over $1.5 million on legal fees over several years to remediate ponds they argued were a threat to public health. The only thing $1.5 million dollars in legal fees got us was putting the owner of the property (Scott) in jail for a few days. Spending the money on attorney fees instead of fixing what UICN believed was an imminent risk to public safety defies logic and good sense. Nye County believes this wasteful expenditure of time and money has done nothing but line the pockets of the law firm and should not be paid for by the residents of Pahrump,” he wrote via email.
Kunzi said ratepayers would likely be on the hook for much more than just legal fees.
“UICN now claims the costs to now do the actual remediation will be in excess of another million dollars. These costs too will be passed onto the ratepayers,” he wrote.
Also presented in his lengthy reaction to the ruling, Kunzi said he suspects there may have been a cozy, behind-the-scenes relationship between the trustee’s attorney Robert Atkinson and Granier that favored UICN’s interests.
“I find it interesting that the Trustee used the exact same language during the court hearing as Ms. Granier used during the Board (of county commissioners) meeting (Tuesday night). Also, I spoke with the Counsel for the Trustee Wednesday morning to report the results of the Board meeting. He indicated he had not spoken to Ms. Granier. I tried to convince him of the benefits of allowing the County to force liquidation. His concern was with the cost of operating the pond system for a few more months. I offered the possibility of the County to assume those costs, as we had earlier during the negotiations, to be reimbursed from the proceeds. I was more than a little surprised that Ms. Granier offered that as part of her proposal (on Wednesday), which I do not believe was a coincidence. This was the third time something I had discussed with the Trustee was presented by Ms. Granier as her plan. I also learned yesterday at the hearing that the attorney for the owners of the executive golf course is the husband of an associate attorney that works closely with Ms. Granier.
“Unfortunately the outcome was predetermined and the residents of Pahrump are left to pay the bill,” Kunzi wrote.
The district attorney believes the county was simply used to get a preferred creditor in the case, a money lender named Michael Zucaro, who has a $537,500 claim against Caldera P&G, to agree to a settlement that didn’t include selling all of the parcels.
“Once this was done, then Nye County no longer fit into the plans,” Kunzi wrote.
Zucaro was at Wednesday’s hearing without his lawyer, who he reportedly fired after the Aug. 7 hearing. Asked for a reaction to the judge’s ruling, he said he was happy that the long process was coming to a close.
“I’m happy it’s finally over with and that I can recoup my losses on that property,” he said.
The lack of a written agreement with the county over preferred zoning on his property did not seem to concern Zucaro.
Meanwhile, UICN still needs final approvals from the Nevada Public Utilities Commission and department of environmental protection.
UICN officials have hinted that they are planning to develop the property for beneficial use to the community and surrounding neighborhood.