LEHI — A recent letter from Lehi's lawyers to the Lehi Irrigation Company outlines new ways to untangle issues created when the nonprofit company held an illegal water-share auction in January.
The letter proposed a procedure for the company to return water shares that were sold at the auction. While the auction was unwound in June, the irrigation company has struggled to find ways to return shares that, so far, have proven very difficult, if not impossible, to retrieve.
Ken Rushton, Lehi's attorney, declined to discuss the details of the letter because negotiations with the company are under way. However, Rushton said the city was looking to resolve the missing shares of all affected shareholders, not just shares that are connected to the city.
"We've had ongoing letters and communication with the irrigation company all during this process," Rushton said. "It's been a matter of ongoing discussion and negotiation as to how to resolve these issues."
Also, during the negotiations, city officials have asked members of the irrigation company's board to resign. Rushton said city leaders thought the resignations "needed to happen from the very beginning."
"We have made that recommendation a number of times over the course of our discussions," Rushton said.
So far, former Lehi Irrigation Company president Stan Lewis has resigned, but Ruston said he is unaware of other responses from the company.
When contacted by the Deseret Morning News, Lewis declined to comment.
Attempts to contact Lehi Irrigation Company's attorneys also were unsuccessful.
Lehi Mayor Howard Johnson said the city asked the board to resign as a part of correcting circumstances surrounding the auction. Johnson said he was concerned that if the same board members remained in place, another illegal auction could take place again in the future.
"The city is a major stockholder, and as a stockholder, we wanted things to be right," Johnson said.
Johnson said the company cannot retrieve at least 38 shares that were sold at the auction. The auction was originally unwound because the company sold more shares than necessary to pay late assessment fees.
Since then, some of the 38 shares have traded multiple hands and now belong to the city. Shares a city has received cannot be retracted according to state law. Although private citizens can resell or trade their water shares, cities cannot. That puts the shares Lehi received as a result of the auction in a kind of black hole, and they cannot be returned.
Some shareholders, however, got back their shares. Evan Johnson and Jim Garside, who filed a lawsuit in 4th District Court against the irrigation company when their share was lost, received their share last week.
Johnson also received $2,050 from the company for legal fees, Johnson said.
"It's turned out wonderful," Johnson said. "It's unfortunate that a shareholder would have to go to such extreme measures to have irrigation companies do their duties. There seems to be a misunderstanding about who owns the company."
Rushton said the city is not currently planning on filing a lawsuit against the company.
E-mail: achoate@desnews.com