To understand the latest obstacle blocking a more than two-decade effort to bring more water supply to a part of the state that really needs it, drive about 6 miles northwest of this south Iowa town and have a look. Perched in the tall grass on the side of a gravel road near a pile of junk, dead trees and discarded tires are three structures: a weatherworn, early 20th century farmhouse with holes in its floor, ceiling and roof; an abandoned shed; and an equally aged and battered red wooden chicken coop. Area leaders learned at the end of February that the historic nature of that old farmstead, a common scene of rural decay in the Midwest, could be the next obstacle between them and roughly $60 million in federal funding needed to begin work on a new reservoir in the South West Creek watershed. The huge project, local officials say, could eventually serve as many as 30,000 people in drought-ridden south-central Iowa and northern Missouri. But the list of problems that have confronted...