City of Wichita - Chapter 5 Page 63
Sunday, February 12, 2012 :: Currently 16 degrees in Wichita

Photo of Boeing plant
The United States Department of Defense expressed an interest in Wichita's water supply because of the presence of defense contractors in the city.

Arkansas River or the area southeast of the city; 3) the city manager should inform the Water Company that its planned meeting on its proposal was cancelled, but that future discussions were possible; 4) no further action was necessary for the Salina firm of Wilson and Company, which had offered to study the area southeast of the city (Boeing had first reported on that area in December of 1955, following its request to the Air Force to study it as a possible industrial water source, but it was not considered sufficient for the city's needs); 5) City Manager Smith was instructed to file an application with the state for water rights on the Ninnescah as soon as possible; 6) the city was to appeal to the Supreme Court the decision denying condemnation proceedings in Harvey County for the 66-inch pipeline; 7) the Water Company would be notified that Baird and Howse were ready to begin notification for determining a fixed price for company property; and 9) the manager would report on acquiring land along the Big Arkansas River near Bentley for an emergency well field. At the same time, the commission expressed its intent to place the water matters on the August primary ballot. The resolution was very comprehensive and set the stage for the final steps to be taken.

By January 31, the Kansas State Board of Agriculture had acknowledged receipt of Wichita's application for appropriated rights in Cheney Reservoir. The same day, the commission voted to purchase 104 acres of land south of Bentley on the bend of the Arkansas River to use as a site for an emergency well field. Black and Veatch was hired to develop the specifications after spirited debate in which Baird argued that the firm was getting too much business from the city. The six wells were designed to be completed by June 1, in order to meet the summer demands.

The Water Company soon responded to the city's new position. In a communication to the city, the company disagreed with the reports by Black and Veatch and The Investment Group. But in its comments, it withdrew its proposal from further consideration and set March 13, 1956, as a date for beginning negotiations on the value of its property.

On March 6, Howse made a complete report to the commission on the water situation, prompting a resolution designed for encouraging conservation and accelerating production in the emergency well field. The crisis was getting closer.

In beginning negotiations with the commission on March 13, 1956, the company "made it plain they do not wish to sell the Wichita Water Company to the city and will not do so unless the city forces the action." At the same time, "The City Commission made it equally clear that they intend to force the issue." (Beacon, 3/14/56). Three options were available for purchase, according to the city officials: purchase of the common stock, appraisal as provided for in the franchise, and condemnation. The first option was determined to be the cheapest by far, $18.6 million. However, that option had been made to the city by the American Water Works and Electric Company in 1942, which owned the Wichita Water Company at that time. In September, 1947, the controlling interest in the Wichita company had been sold to the American Water Company, Inc., of Philadelphia, which claimed not to be bound to the agreement. The company advised the commission that since it was not a willing seller, it would only negotiate under the terms of the franchise and did not see the stock purchase option of its predecessor as binding. Furthermore, it would go to the Supreme Court if necessary, requiring eight to ten years of litigation. The city argued that an enforceable obligation existed and that it intended to require compliance. Throughout the entire negotiation process, the two sides never wavered, leaving a negotiated purchase price as the only real alternative.

Over the next several months, activities continued in all spheres, with water consistently grabbing the headlines. On March 9, 1956, an important step was taken when Speir, the Newton attorney involved in the Equus Beds dispute, came before the City Commission in an unscheduled appearance. Speir offered to relinquish his claim to the water rights on the Ninnescah, if the city would restate its intention to use the Ninnescah for its water and promise to treat the farmers fairly. Although his application had been extended until December 1, 1956, he would assign it to Wichita if it was in the best interest of reaching a settlement on the Equus Beds issue. Immediately after he spoke, the commission unanimously passed a resolution granting Howse's wish to reaffirm the city's intention to go to the Ninnescah for additional water supply and in so doing to "treat people there with every right they should be accorded." Following the commission's acceptance of his offer, Speir said, "I accept the proposition and will execute the legal papers when the city's legal staff is ready." (Beacon, 4/10/56). The statutory time limit of December 1 on his application for water rights was allowed to expire and a major hurdle facing the city in its search for water had been cleared. As the Eagle's headline read, it had made the "Way Clear for New City Water Supply."

Much of the time was spent on the litigation which continued to plague the city. Although it was winning the suits, time and delays were resulting. On June 12, 1956, the commission took a step toward acquiring the Water Company by hiring a Chicago firm of consulting engineers, Alvard, Burdick, and Hawson, to appraise the Water Company's properties to gain a figure for use in the November, 1956, election. The vote was not without controversy, since the other main contender was Black and Veatch, long-time consultants for the city. Criticism had surfaced about the company and the city's reliance upon it. The firm requested a hearing on the validity of the charges, and on July 17, 1956, the controversy was settled when the commission voted 4 to 1 (Baird opposed) to extend a vote of confidence to the firm.

While the lawsuits were pursued, work continued on the 23-mile, 66- inch pipeline to the Equus Beds, initiated years before. Work by Martin K. Eby Construction Company had begun on July 6, 1955, and was finally completed on June 29, 1956, extending three miles into Harvey County northwest of Bentley. Although the pipe was laid, for the time being water would be obtained from the wellfield the city already had and a reserve field south of Bentley. The application for 25,000 additional acre feet of water from the Equus Beds to be taken by the new pipe was pending with the Water Resources Division of the State Board of Health as numerous court challenges were made by farmers. Over $4,000,000 had been spent on the infamous line, with three miles of 42-inch pipe to connect it with the existing 48-inch line still left to be completed.

By the end of the summer, the final steps in the process were underway, and just in time, as problems continued to confront the city. Breaks in the 48-inch line occurred on May 20 of 1956, necessitating use of emergency wells in Sim Park, which could only supply enough for a couple days. Other smaller breaks occurred in the summer and on August 28, 1956, the line broke again, shutting off the supply from the Equus Beds. Although it was repaired quickly, it was a critical period. Over 40 breaks had occurred in the line since it was built in 1940. In August, the Chicago firm completed its evaluation of the Water Company's price of $26,944,000, and after conferences and negotiations with the company, submitted its report to the city on September 4. On August 17, the Bureau of Reclamation presented the estimated costs for the Cheney project. Finally, on September 7, 1956, a complete review of the municipal water problem was conducted to make the decisions necessary for the November elections.

During the September 7 meeting, a variety of crucial issues were discussed. The Chicago appraisal firm established three major facts in its report. First, the common stock of the Wichita Water Company was valued at $19,156,376 for use in pursuing the 1942 stock purchase option. Second, the fair value of the properties of the Water Company, plus or minus five percent, was set at $29,500,000. Finally, the firm estimated that it would cost the city in litigation and appreciation of the company's assets of $2,500,000 for each year of delay caused by litigation. Therefore, selecting the appraised value would result in a very substantial savings, when comparing that cost to the cost of the stock takeover plus five to ten years of litigation.

In the discussion, L.R. Hawson of the consulting firm explained and defended the figures. He discussed the trend away from privately owned utilities and said 80 percent were publicly owned at the time, while 70 percent had been private a few decades earlier. He denied the charge that private companies were more efficient, claiming public utilities could be just as efficient or more so, and could move faster by eliminating the objection of risking private funds. When questioned, Howse recommended the city purchase the plant, telling the commission it had to

Cover of Water History book

Water Utilities
City Hall, 8th Floor
455 N. Main
Wichita, KS 67202