The Committee on Government Affairs was called to order at 8:20 a.m., on Friday, March 26, 1999. Chairman Douglas Bache presided in Room 3143 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All Exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Mr. Douglas Bache, Chairman

Mr. John Jay Lee, Vice Chairman

Ms. Merle Berman

Mrs. Vivian Freeman

Ms. Dawn Gibbons

Mr. David Humke

Mr. Harry Mortenson

Mr. Roy Neighbors

Ms. Bonnie Parnell

Ms. Gene Segerblom

Ms. Sandra Tiffany

Ms. Kathy Von Tobel

Mr. Wendell Williams

COMMITTEE MEMBERS EXCUSED:

Mr. Kelly Thomas

STAFF MEMBERS PRESENT:

OTHERS PRESENT:

Chairman Bache called the meeting to order and opened the hearing on Assembly Bill 347.

Julie Wilcox of the Southern Nevada Water Authority (SNWA) introduced various members of the Advisory Committee for Groundwater Management of the SNWA. She began her testimony by giving a brief history of the advisory committee.

The Advisory Committee for Groundwater Management was established in 1997 as part of Assembly Bill 436 of the 69^th Legislative Session. A.B. 436 directed the SNWA to implement a groundwater management program for the Las Vegas artesian basin. Further back, in 1995 the 68^th Legislative Session had requested the SNWA to establish a citizens committee to look into various groundwater issues in the Las Vegas Valley. Many of the recommendations of the committee were then incorporated into A.B. 436. Those included directives to study protection, conservation, groundwater management, and groundwater education.

A.B. 347, the measure under consideration, was a bill that addressed the second phase of a management program, Ms. Wilcox continued. The committee studied aquifer protection issues and overall comprehensive groundwater management. When the committee began its study, there was no intention of changing state water law. They held four or five large public workshops in different parts of the valley. The committee looked at the problems and came up with ideas that would help aquifer protection, stabilize water levels and financially assist well owners.

Ms. Wilcox showed an 8-minute video that documented some of the high points of the Las Vegas Valley Groundwater Management Program. She referred the committee to the Report to the Nevada Legislature, dated December 31, 1998, which was distributed previously (Exhibit C). The report had all of the reports of the many meetings, information on groundwater, and water law information. She asked John Hiatt to testify.

John E. Hiatt, Chairman of the Enterprise Town Advisory Board, read from prepared text (Exhibit D). He had depended on a domestic well for 23 years and reiterated support for A.B. 347. As an analytical chemist and a Ph.D. in organic chemistry, he was also Chairman of the Advisory Committee on Groundwater Management.

Mr. Hiatt was a member of the original citizens committee that developed A.B. 436 of the 69^th Legislative Session. Many well users, himself included, spent hours discussing and debating issues. Under the authority established by A.B. 436, he felt the Southern Nevada Water Authority had come up with proposals for further progress.

A.B. 347, the current legislation, would provide for permanent recharge on behalf of well owners, thereby stabilizing water levels in critical parts of the Las Vegas Valley. It put into place workable options for any well owner in the valley who might find it necessary to hook up to the municipal water system. Those options included low-interest, long-term financing.

Problems facing well owners in the Las Vegas Valley were not all the same, Mr. Hiatt continued. A.B. 347 would move residents of the Valley closer to providing long-term plans for management and protection of the aquifer so well owners could use their wells as long as possible. He felt the proposals of A.B. 347 would help protect water levels, help lengthen the life of water wells in the outlying parts of the Las Vegas Valley, and lead to more awareness among the public of the importance of groundwater.

Assemblywoman Gibbons asked Mr. Hiatt if he were a member of the Nevada Well Association. Mr. Hiatt indicated he was not. Ms. Gibbons wondered how many members of his committee were affiliated with the Nevada Well Association, because she had received information that the well owners were against A.B. 347. Mr. Hiatt did not know, but assumed about 200.

Ms. Gibbons asked for an explanation of water rights.

Mr. Hiatt felt the State Engineer was in a better position to answer the question, but said he would make an attempt. If one had non-revocable water rights, it meant they were not revocable. They belonged to the owner. He could sell them or do whatever he wished with them. Revocable water rights, on the other hand, and often seen in quasi-municipal situations, meant exactly that, but if water was available and immediately adjacent to the property and a hookup occurred, those water rights basically disappeared. A domestic well owner was also in a revocable situation.

Ms. Gibbons had purchased water rights for around $10,000. Mr. Hiatt told her if she had purchased them, they were non-revocable rights.

Assemblyman Mortenson felt the bill mandated that people who pumped water should get an increase in the cost of their water in order to help pay for recharging the groundwater. He asked if his assumption was correct. Mr. Hiatt replied affirmatively.

As Mr. Mortenson understood, the reason the water table had subsided in the Las Vegas Valley was because of expanding growth. Even though the supply of Lake Mead water was sufficient at the present, inadequate piping had been installed in certain areas, thus necessitating pumping of groundwater.

The scenario was partly correct, Mr. Hiatt replied. New infrastructure projects were already in place to bring additional Lake Mead water to the valley. In past years the Las Vegas Valley Water District did not have the pumping capability to bring enough water from Lake Mead, and thus relied on groundwater pumping.

Mr. Mortenson understood there was sufficient Lake Mead water to take care of the exploding population growth in the valley. But, as he saw it, the real sufferers from the receding water table were the well owners. With the drop in the water table, well levels dropped. Well owners would then be forced to connect to the municipal water system, necessitating increased fees for the water itself. A.B. 347 mandated an increase per acre-foot from $10 to $27. The revenue generated from the increased fees would pay for recharging the groundwater. Mr. Mortenson asked if even the Southern Nevada Water Authority would pay the fees as well.

Their ratepayers would pay up to $1 million in fees, Mr. Hiatt answered.

"Maybe you can explain to me why the Southern Nevada Water Authority is going to charge themselves extra money for pulling water out and distributing it to the populace, and then they are going to raise all their rates to accommodate in the face of that," Mr. Mortenson inquired. "Is that what you’re telling me?"

Mr. Hiatt explained he did not know the details of Southern Nevada Water Authority’s rate schedule, but he did understand that its only source of funding was through payments by water users, of connection fees, or service fees.

Julie Wilcox, in response to a request by Chairman Bache, attempted to resolve Mr. Mortenson’s questions. The water authority would pay the fees as always like everyone else, she said. A comprehensive groundwater management program was in place and was based on permitted rights and pumpage. Users with permitted rights paid for water by the acre-foot. A home with a domestic well paid a yearly fee.

Mr. Mortenson questioned the increase in fees from $10 to $27 for individual wells and $10 to $27 per acre-foot for larger water users. "The reason the water level went down was because the water authority had to pump extra water from the ground instead of from Lake Mead, and the reason they had to pump it from the ground was because of the development of housing was so great and so rapid . . . you didn’t have sufficient pipes to pull the water from Lake Mead? Correct?"

Ms. Wilcox deferred to Kay Brothers, Director of Resources for the Southern Nevada Water Authority.

There were about 40,000 acre-feet of non-revocable water rights in the Las Vegas Valley Water district, Ms. Brothers explained. North Las Vegas had non-revocable rights of about 5,500 acre-feet. As Las Vegas grew in the 1960’s and 1970’s and before the Lake Mead water was available, the water authority had revocable rights. With the availability of the Lake Mead water, the rights were revoked. The only water that was being pumped were the non-revocable rights of 40,000 acre-feet for the Las Vegas Valley Water District, and about 5,500 acre-feet for North Las Vegas.

Assemblyman Mortenson asked about a policy of the state engineer wherein it stated water should not be pumped at a rate greater than the natural recharge rate. Obviously, he said, that had not occurred in southern Nevada. "We have pumped far in excess of the natural recharge rate." Ms. Brothers indicated Mike Turnipseed, the state engineer, could better answer the question. Mr. Mortenson simply wanted to know why the water table was decreasing.

Ms. Brothers explained in detail the efforts put forth by the Southern Nevada Water Authority. She indicated that through the program of artificial recharge, the authority was putting between 27,000 and 30,000 additional acre-feet per year into the groundwater system in an attempt to bring the aquifer back into balance.

Mr. Mortenson applauded the authority’s efforts, but still wondered why the water table decreased in the first place. Again, Ms. Brothers referred Mr. Mortenson to Mr. Turnipseed for an answer. Mr. Mortenson agreed, but added, "If the water table has dropped because we need to pump water to feed the people, the growth, the new houses proliferating through the valley, these were the people who benefited from the water and . . . they benefited while the water table was dropping. Now we are trying to remedy that by pumping water back into [the ground] and we are saying, ‘Let’s charge the people – not the ones who benefited from this – but the little 6 percent [revocable water rights] people.’" He asked for an explanation.

John Hiatt explained everyone benefited from water. The greatest pumpage took place prior to 1971 before the formation of the Southern Nevada Water Project. Everyone used groundwater, he continued. People living on domestic wells depended on groundwater. People who lived in subdivisions and paid a regular fee for municipal water service depended on groundwater. Approximately 40,000 acre-feet per year were pumped from the ground to provide water for ratepayers, and those were non-revocable rights. He was not aware of any plan to voluntarily relinquish those rights.

Chairman Bache asked about city dwellers who paid a regular water bill, and if part of the money from the water bill was more or less helping to fund the water project.

Mr. Hiatt replied, "That’s correct. Basically everyone that drinks water or uses water is going to be helping to pay for this."

Mr. Mortenson noted the cost of pumping water had increased by 270 percent, from $10 to $27. He hoped the rates for regular water users, such as people on a municipal system, would not increase by 270 percent.

Julie Wilcox did not anticipate a rate increase. Mr. Mortenson opined the penalty for artificial recharging went to the users who pumped water. He said the state parks were very upset about it. Water was a significant part of their operating and maintenance fees. The state parks had to request additional funding to pay for water. "You’re really punishing the people who are pumping water," he said.

Chairman Bache observed that Wayne Perock of the State Park System could better address Assemblyman Mortenson’s questions. He asked Ms. Brothers to continue her testimony.

Ms. Brothers showed some slides that depicted the Las Vegas Valley, and described how the valley had responded to the artificial recharge program. The water level had begun to decline in 1945. A large artificial recharge program was begun in 1987 and showed a definite trend of increasing water levels. When water levels increased, she explained, pumpage costs were less and the best parts of the aquifer were hydrated.

Leo Connolly, one of two community well representatives on the Advisory Committee for Groundwater Management, spoke in favor of A.B. 347. He asked that his remarks be read into the record (Exhibit E).

Mr. Connolly said:

Bill Starkey, representing the Sheep Mountain Homeowners’ Association, also favored A.B. 347. He, too, was a domestic well owner, and indicated his well had benefited from the recharge program. Since July of 1998 the level of his well raised by 27 feet. He felt he was indeed a beneficiary of recharge.

Over the past year, Mr. Starkey continued, the water authority had worked on an inventory of wells in cooperation with the state engineer. The inventory was about 90 percent complete. Approximately 4,800 domestic wells were identified, and the final count was expected to be between 5,000 and 5,500.

The information was put into a survey report (see Exhibit C, section 5, large map in holder). The advisory committee held four public workshops, and page 9 of the report (Exhibit C) showed the results of the workshops. Mr. Starkey detailed the many efforts of the water authority to educate the public. He concluded his remarks by reiterating he liked his domestic well and that it had taken him a long time to understand that a well was not like a water tap on a municipal system. He indicated he would be happy to pay the $27 fee for the recharge program and to implement financial help for those well owners who would need to take advantage of the low interest loan program.

Assemblywoman Gibbons asked if there were other well owners whose levels had increased. Kay Brothers replied that all wells in the Las Vegas Valley had seen some increase due to the recharge program. Ms. Gibbons wondered why the Nevada Well Association was against passage of A.B. 347. Ms. Brothers suggested Ms. Gibbons ask the well association herself.

Mr. Starkey addressed Assemblywoman Gibbons’ question. He felt part of the problem stemmed from the fact there were so few wells in that far-reaching area that were monitored. Not everyone had the benefit of the information provided by the water authority.

Chairman Bache asked Ms. Wilcox if the bill did not pass, would the recharge program be eliminated or at least reduced.

If the bill did not pass, Julie Wilcox replied, the Las Vegas Valley Water District’s artificial recharge program would not be affected. About 160,000 acre-feet of water were in the authority’s "bank". "It is our bank," she emphasized. However, the water put into the ground by recharge belonged to the ratepayers. It was part of the water resource plan for future planning, and was not considered part of the permanent "bank". People with permanent water rights would allow some of their water to be recharged back into the ground. Even though they were basically giving up the water, they knew it was good for the basin. The Las Vegas Valley Water District held permanent water rights of 40,000 acre-feet. The district was prohibited from drawing more than the 40,000 acre-feet, she said. However, the "bank" of water provided an extra source for emergencies.

Assemblywoman Berman asked why the Las Vegas Valley Water District needed passage of A.B. 347.

It was very important to work with well owners to have a comprehensive groundwater management program, Ms. Wilcox replied. The water district itself did not need the bill. However, assistance programs for well owners and users needed to be in place. Proper groundwater management helped everyone. A strategic program of artificial recharge in groundwater problem areas was already implemented. The authority also recognized the need for a loan program. If a well went bad or failed, redrilling and/or connection fees could be expensive. It was an immediate problem. The committee came up with the idea of financial assistance in order to put everyone on a level playing field.

Based on the present injection rate, Assemblyman Lee asked, when did Ms. Wilcox feel the groundwater level would be at the optimal point.

The program depended on the resources available to pump water into the ground, Ms. Wilcox answered. Water was not pumped from the ground between October and May. When water demand was lessened during those months, the pumps were reversed, and water was injected.

Mr. Lee wondered how long it would be for the water authority to be satisfied the water table was at its optimal level. Ms. Wilcox could not give him an answer. The aquifer basin was so large she had no idea how long it would take to fill it.

In answer to a question from Assemblywoman Segerblom, Mr. Wilcox described the Las Vegas Basin like a huge bathtub. It was a closed basin. That was the main reason the artificial recharge program worked so well.

Chairman Bache commented that the 3 million acre-feet of water pumped since 1955 was equivalent to 10 years’ worth of water available from the Colorado River. Nevada was entitled to 300,000 acre-feet per year from the river.

Ken Rawson, representing the municipal ratepayers of the Citizens Advisory Committee, had been a member of the original Groundwater Citizens’ Committee formed in 1996. Several major issues emerged from the 1996 meetings, he said. The resource of the water aquifer was a finite resource, in that it would not last forever, and was in danger. People were not concerned about the costs of the water involved. Rather their concerns were about declining water levels, and the costs of connection to municipal water. The loan program was developed to help people deal with those costs.

The bill would provide up to 5,000 acre-feet of permanent groundwater recharge per year. Of that, at least 2,000 acre-feet was designated for the northwest portion of the aquifer where the need was greatest. Low-interest financing would be provided for those who needed to connect to municipal water.

Ken Albright, an employee of the City of North Las Vegas, was a member of the Advisory Committee for Groundwater Management and represented municipal water purveyors who owned or operated wells. He spoke from a prepared statement (Exhibit F).

Mr. Albright told the committee that North Las Vegas was the only entity other than the Las Vegas Valley Water District which conducted artificial recharge into its aquifer. With the implementation of A.B. 347 everyone would be asked to participate because permanent recharge was not cheap. Ratepayers could not be expected to carry the full weight of an initiative which also benefited individual well users and all other holders of water rights.

Terry Stimson, Craig Ranch Golf Course, North Las Vegas, spoke in favor of A.B. 347. Mr. Stimson’s family bought the land and 500 acre-feet of water rights for the golf course in the 1960’s. At that time, he said, the main well was producing 900 gallons per minute. The same well today produced 300 gallons per minute. He figured the fees of $27 per acre-foot would cost him $13,500 per year to water his golf course. He consulted with hydrologists and well drillers and came to the conclusion the fees paid for the artificial recharging was a good investment. He hoped that with artificial recharging he would not be forced to either deepen his existing wells or drill new ones. A new well would cost him around $200,000 and be drilled 1,000 feet deep. He hoped it would be the last well he would have to drill.

Michael Turnipseed, State Engineer, Division of Water Resources, reiterated the history of the revocable permit system in Nevada. In 1941, Mr. Turnipseed said, it was realized the Las Vegas Basin was in potential danger of being overpumped. Prior to that time all wells were artesian. Water flow was from the top. However, pressures declined and springs dried up. In 1955 the legislature authorized the Division of Water Resources to issue temporary permits that could be revoked upon service of Colorado River water. At the time the state had a Colorado River allocation, but it was only at that time the first water from the river came into the Las Vegas Valley.

A pipeline was built to outlying districts of Las Vegas and a small amount of Colorado River water came into the basin. Revocable permits were first issued in 1955, but it was not until the Southern Nevada Water System was built in 1971 that the largest number of revocable permits were issued.

The State Engineer’s Office was a presence in the Las Vegas Valley 40 years before the Las Vegas Valley Water District became interested in groundwater management, Mr. Turnipseed continued. His office took water level measurements, inventoried pumpage, and did the first mapping of 4,800 domestic wells. Over 1,200 meters were read on a regular basis, and a yearly report was produced that documented every permit in the [Las Vegas] Valley. The artificial recharge program was monitored.

Well drillers were regulated on a statewide basis, most intensely in the Las Vegas Valley and Pahrump Valley. However the State Engineer’s Office had no legislative authority with regard to conservation, wellhead protection or water quality.

Part of the purpose of A.B. 347, Mr. Turnipseed explained, was education of people about conservation, and to establish a wellhead protection program, which insured that abandoned wells were properly plugged. He addressed Mr. Mortenson’s concerns about putting the burden of assessment on a small percentage of well owners, and reiterated his support of the financing program in A.B. 347.

Mr. Turnipseed reminded Mr. Mortenson that at one time revocable permits represented about 30 percent of the pumpage in the valley. Since the State Engineer began revoking permits in 1971, including the Las Vegas Water District and the City of North Las Vegas, about 20,000 acre-feet of water rights were eliminated through the revocable permit program. At the time the program began, he said, the idea was that all permits would be revoked and water users would be entirely on Colorado River water. The emphasis was to decrease reliance on groundwater and increase usage of Colorado River water.

Wayne Perock, Administrator, Division of State Parks, was concerned about financial impacts on the State Park system. He read from a prepared statement (Exhibit G). While the division did not oppose A.B. 347, it realized the increased water fees would have serious consequences for the operating budget of Floyd Lamb State Park. He asked for a fiscal note to be added to A.B. 347 to cover the additional $14,640.40 in fees that would be incurred.

Mr. Perock explained that the fee increase from $10 to $27 per acre-foot would add $14,640.40 to the costs of operating the park. The park used 841 acre-feet annually. A base amount of $8,612 was included in the park’s budget for the next biennium. When Assembly Bill 436 of the 69^th Legislative Session was passed, the Division of State Parks was unaware of the financial impacts. Since water fees were not included in the budget, it became necessary for the division to go to the Interim Finance Committee to request a supplemental appropriation. Mr. Perock emphasized again the need for additional funding.

Assemblywoman Segerblom asked, "You mean the state parks are going to have to pay a share of this?" Mr. Perock responded affirmatively. Ms. Segerblom replied, "As poor as the state parks are, I don’t approve of that."

Assemblyman Mortenson inquired if the Division of State Parks was requesting an exemption for Floyd Lamb Park’s water fees. Mr. Perock said an exemption would be acceptable but reiterated the need for a fiscal note with A.B. 347.

Mr. Mortenson loved state parks and felt they should proliferate and benefit, but increased water fees were going to hurt a lot of people other than the state parks. He said he would like to see an exemption for Floyd Lamb Park, but there were other water users to consider as well.

Chairman Bache asked Mr. Perock when he signed the guest sheet (Exhibit B) in favor of A.B. 347, had it been his intent to support the bill or to ask for the additional appropriation of funds.

Mr. Perock totally supported the conservation and education measures in the bill. "But I need money," he said. "Desperately."

"Everyone loves the recharge, the education, and loves everything this bill is doing except the cost," Assemblyman Mortenson remarked. Mr. Perock agreed, and reminded Mr. Mortenson if a fiscal note was not added to the bill and it passed in its present form, reduction in services would occur in all state parks. Mr. Mortenson agreed. "As far as other people are concerned it’s a total reduction in their quality of life when they have to pay this kind of bill," he said.

Assemblywoman Von Tobel was pleased the Division of State Parks supported A.B. 347 and reminded Mr. Perock of a situation where a developer wanted to take all the water rights from Floyd Lamb Park. "We had to go to the table to protect those water rights," she said. She asked for verification of the very large water bill for Floyd Lamb Park.

The fees were based on 861 acre-feet per year, Mr. Perock replied.

Julie Wilcox explained further. In situations of one domestic well and one home, the flat fee would be $27. A permitted right would be charged $27 per acre-foot. The largest holders of water rights were the municipal, industrial and commercial interests.

Ms. Wilcox went on to reiterate the Las Vegas Valley Water Authority was willing to work with the state parks to find ways to help with financing and budgeting. She recognized that state agencies had to develop budgets a long time before legislation was in place. The water authority felt financial assistance to the state parks could be forthcoming

.

Assemblyman Humke asked if there were other large well owners who were public agencies and might be in a similar financial situation. Ms. Wilcox was not aware of any. She indicated there were six or eight municipal government-related entities with permanent water rights. First year billings were already sent out.

Chairman Bache asked for testimony in opposition to A.B. 347.

John Bonaventura of the Nevada Well Owners Association was accompanied by Jim Donohue and Bruce Hamilton, both members of the Board of Directors of the association.

Bruce Hamilton commented that in the 7 years he had monitored the water level in his well it had dropped steadily. He had not actually seen a recovery in his well level despite the recharge efforts but did support the effort. The water authority, he said, was totally unaware of the objections the well owners had to A.B. 347. Solutions and suggestions had neither been solicited nor received by the Las Vegas Valley Water authority.

Mr. Hamilton read from a prepared statement (Exhibit H). Well owners in Clark County and the Las Vegas Valley had, for the most part, no water rights. He spoke in behalf of homeowners in the county who had been granted temporary revocable permits to appropriate groundwater until such time as municipal water became available. Under a carefully crafted legislative scheme in combination with the lawful policies and practices of the state engineer, he said, a class of persons was created that was absolutely without rights or protections of any kind, nor had the access to the water necessary to sustain life and home.

Persons with municipal water service, Mr. Hamilton continued, were buying from an entity with a perfected water right, which exceeded the capacity of the Las Vegas Basin. Those persons owned a small share of the water rights. However, Clark County domestic well owners had no such rights.

Historically the groundwater in the basin that served the Las Vegas Valley was over-appropriated by approximately double its capacity, Mr. Hamilton told the committee. More water was used than could be recharged naturally. Until another water source became available, persons who wished to sink residential wells were granted temporary revocable permits to appropriate groundwater. When that source became available, permits were revoked and homeowners were either required to connect to the municipal water system, deepen the existing well, or redrill a new well. The costs could run from $20,000 to $40,000.

A.B. 347 was actually an effort to correct bad legislation by piling on more bad legislation, Mr. Hamilton opined. The lowest estimated figure to connect to municipal water was $17,000. The highest, including the plugging of a well, was $55,000. Nothing in the bill reduced costs to the water user. Instead, a low-interest loan was offered, not for the entire cost, simply from the water main to the property line. An additional $3,000 for a water line from the main to the house would not be unusual.

The net effect of the so-called loan resulted in a priority lien placed against the property until it was paid off. Mr. Hamilton cited the case of the Rebecca Manor Water Users Association (detailed in Exhibit I). Eight homes were involved. The amount of the lien exceeded the equity in seven of the eight homes. The eighth homeowner, whose property equity was sufficient to support the lien, was a pensioner with insufficient income to pay on the resulting loan.

There was nothing in the bill that required the homeowner to take advantage of the proposed state financing. However, Mr. Hamilton continued, the right of a domestic well owner in Clark county to appropriate groundwater was very precious. He felt the legislature should recognize that the Clark County well owners were a class of persons without rights or protections relative to their water usage. Domestic well owners outside of Clark County had a protectable property right to that well and had a right to compensation if the well was ruined or taken away. Forced connections to municipal water systems were enforced only if the costs were $200 or less. He felt the citizens of Clark County could be placed in a disadvantaged position should A.B. 347 pass.

In closing, Mr. Hamilton reiterated he and his colleagues had no quarrel with the aquifer recharge provisions of A.B. 347, and he urged the financial provisions be struck from the bill.

Assemblywoman Berman, having read Mr. Hamilton’s letter on the internet, asked for specifics as to solutions or an amendment.

Specifically, Mr. Hamilton replied, if domestic well owners were going to continue to be involuntarily removed from domestic wells and incur substantial fees to reconnect to a municipal water system, the state should assist them with financial aid. The loan structure needed to be such that it was subordinate to other loans against the property. Instead of removing any available equities the property owner already had, the owner needed to retain access to the equity.

Ms. Berman felt Mr. Hamilton was confusing "loan" with "lien". Mr. Hamilton disagreed. The bill proposed that the money be loaned at a low interest rate to the property owner. Along with the loan a lien was created. Ms. Berman’s answer was not on the microphone. Mr. Hamilton elaborated. It stated within the bill a lien would be placed against the property and that lien was payable upon sale of the property. If the loan was retired before the property was sold, the lien would evaporate by its own inertia.

However, he said, both provisions were stated in the bill: (1) the water authority would loan the money, and (2) in exchange for the loan a lien, the same as a tax lien, would be placed against the property. A tax lien was a priority lien, a lien which was not subordinate and which would cause it to be impossible for the homeowner to refinance his property. In the instance of the Rebecca Manor Water Users’ Association (Exhibit I), seven of the eight homeowners did not have sufficient equity in their properties to compensate for the loans for hookup fees.

Ms. Berman asked if the lien would be more than the value of the home. Mr. Hamilton explained the lien would be more than the equity in the home. If a homeowner already had a mortgage against his home for 80 to 90 percent of its value, and if a lien for the cost of hookup fees was added to the mortgage, the cumulative value of the two liens then exceeded the total value of the home.

Ms. Berman did not agree. She did not feel it was a correct assumption that the homeowner could not refinance his mortgage.

Mr. Hamilton’s experience with banks was not pleasant. If existing liens on a home were greater than the value of the property, the ability to refinance was severely impaired. Ms. Berman guessed that Mr. Hamilton had never heard of 125 percent loans. Mr. Hamilton replied that he had heard about them, but the rates were unbelievable.

Assemblywoman Von Tobel had a question for John Bonaventura. She was concerned about homeowners whose wells failed and could not be drilled deeper. If the bill language did not offer low interest loans to help those homeowners, they would be forced to go to a bank or credit union and take out a second mortgage on the property. She could not understand why the Well Owners’ Association objected to the bill’s provisions of 5 percent loans when a second mortgage would be much higher.

Mr. Bonaventura did not object to the loan program itself, only the fact that it was a forced loan. His association would like to see the loan subordinate to all future loans. They wanted a no-call date with a due on sale clause.

Ms. Von Tobel asked Mr. Bonaventura if he was aware of the fact if his well failed and he had to dig a new one, it was his own expense, should he not choose to use the loan provisions in the bill. Mr. Bonaventura said it would cost less than mandated connection to the municipal water system.

Ms. Von Tobel indicated some work could be done on cost control. Mr. Bonaventura preferred that the Las Vegas Valley Water District not be the exclusive contractor for connection services. Ms. Von Tobel agreed the water district should have no problem with the requirement, and asked for comments and suggestions in writing. She reiterated the legislature was not forcing people off wells. There were two options as she saw it. If a well ran dry, a deeper well could be dug, or one could connect to available water.

Mr. Bonaventura referred to the plight of the Rebecca Manor Water Users’ Association (Exhibit I). The letter was addressed to Michael Turnipseed. The association had applied for a permit to redrill a quasi-municipal well that had been damaged by nearby blasting. The permit was denied on the premise that municipal water was available within 180 feet of the homes in question. Only two of the eight homes served by the quasi-municipal well were within 180 feet of municipal water. Two of the homes were at least 500 feet away. The water lines which were nearest to the homes of the association were served at less than 40 psi (pounds per square inch) which was unacceptable water pressure. The cost for each homeowner to access the municipal water would be over $18,000 apiece. If the redrilling permit had been approved, Mr. Bonaventura concluded, the cost to each member would have been about $1,000 apiece. He asked Jim Donohue to continue the discussion.

Jim Donohue, member of the Board of Directors of the Nevada Well Owners’ Association, although in complete agreement the aquifer needed stabilization, felt there was a deliberate program underway by the Southern Nevada Water Authority and the State Engineer to eliminate domestic and multi-domestic wells, otherwise known as quasi-municipal wells. Overpumping of the aquifer was a big problem, caused mainly by permitted, nonrevocable users. At one point, Mr. Donohue said, it was the policy of the state water engineer to lower the water table in order to wipe out surface vegetation [for wildfire control].

He believed the small wells, the domestic wells, and the quasi-municipal wells were the smaller part of the problem. He was not enthusiastic about the enabling legislation for forced connection to a municipal water system when it was economically unfeasible for the well owner. He felt the money could better be used for well maintenance and repairs.

Chairman Bache, noting that the Assembly was ready to convene, closed the hearing on A.B. 347. He proposed rescheduling the remaining bills on the agenda, A.B. 295 and A.B. 425.

RESPECTFULLY SUBMITTED:

Charlotte Tucker,

Committee Secretary

APPROVED BY:

Assemblyman Douglas Bache, Chairman

DATE: