ASSEMBLY COMMITTEE MINUTES

MINUTES OF THE meeting

of the

ASSEMBLY Committee on Government Affairs

Seventy-Second Session

April 21, 2003

The Committee on Government Affairswas called to order at 8:08 a.m., on Monday, April 21, 2003. Chairman Mark Manendo 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. Mark Manendo, Chairman

Mr. Wendell P. Williams, Vice Chairman

Mr. Kelvin Atkinson

Mr. Chad Christensen

Mr. Tom Collins

Mr. Pete Goicoechea

Mr. Tom Grady

Mr. Joe Hardy

Mr. Ron Knecht

Mrs. Ellen Koivisto

Mr. Bob McCleary

Ms. Peggy Pierce

Ms. Valerie Weber

COMMITTEE MEMBERS ABSENT:

None

GUEST LEGISLATORS PRESENT:

None

STAFF MEMBERS PRESENT:

Susan Scholley, Committee Policy Analyst

Eileen O'Grady, Committee Counsel

JoAnn Aldrich, Committee Secretary

OTHERS PRESENT:

Patricia Mulroy, General Manager, Southern Nevada Water Authority (SNWA)

Kay Brothers, Deputy General Manager, Engineering/Operations, SNWA

Richard J. Wimmer, Deputy General Manager, Administration, SNWA

Kurt Fritsch, Southern Nevada Regional Planning Coalition (SNRPC), and City Manager, City of North Las Vegas

Mary Kay Peck, AICP, Southern Nevada Regional Planning Coalition (SNRPC), and Community Development Director, City of Henderson

Chairman Manendo announced a presentation by the Southern Nevada Water Authority (SNWA).

Patricia Mulroy, General Manager, SNWA, introduced her colleagues, Dick Wimmer, Deputy General Manager of Administration, and Kay Brothers, Deputy General Manager of Engineering and Operations. Ms. Mulroy said she came to describe to the Committee the state of the water situation in southern Nevada and provide an overview of the challenges and opportunities in the next few years.

Ms. Mulroy said that the SNWA was born of necessity in the late 1980s and early 1990s, when southern Nevada was running out of water due to rapid growth. SNWA participants came together to address the water issues in spite of separate needs, separate funding, and competing interests. She listed the members of SNWA:

· City of Las Vegas

· City of North Las Vegas

· City of Henderson

· City of Boulder City

· Big Bend Water District

· The Clark County Reclamation District

· Las Vegas Valley Water District

She said the SNWA had a close partnership with the Colorado River Commission, and had expanded regional and interstate relationships over the years. She described Nevada’s strong relationships with other states, the federal government, and internationally. Ms. Mulroy believed that Nevada’s strength, in large measure, was due to the close relationship between the SNWA and the Colorado River Commission. She said that Nevada was unique because other states had a more difficult time being effective in an interstate forum because they were splintered and divided and spent most of their time arguing. Ms. Mulroy said that the SNWA had worked to strengthen their relationships with other states and made a real commitment to conservation. SNWA had also worked hard to develop stakeholder participation, developed new water resources, completed $2 billion in new facilities, and had embarked on an aggressive integrated-resource planning model which Ms. Brothers would address later.

Ms. Mulroy said that some of the news was not good. Southern Nevada was in the midst of the “ugliest drought” the Colorado River Basin had experienced in 1400 years. The consequences of the drought had been devastating to all communities within the Colorado River Basin. New challenges would need to be met in terms of water demands and identifying new water resources and water quality would be an issue in the years ahead. In the wake of the drought, water conservation had achieved a heightened sense of importance in southern Nevada.

The SNWA officials enhanced their presentation with a PowerPoint display and provided reports to the Committee entitled Southern Nevada Water Authority Presentation to the Assembly Committee on Government Affairs, April 21, 2003 (Exhibit C),which included photos, graphs, charts, history, statistics, plans, agreements, and other useful information. The SNWA notebook was divided into eight sections:

1. SNWA Presentation

2. Cooperative Agreement

3. Water Resource Plan

4. Drought Plan

5. Capital Improvements Plan

6. Groundwater Management Program Annual Report

7. PowerPoint Presentation

8. Legislative Counsel Bureau (LCB) Audit

Kay Brothers, Deputy General Manager of Engineering and Operations, SNWA, provided a technical overview of SNWA’s Water Resource Plan. She said that they updated the water resource plan annually. Population projections and water demand projections were turned into water needs, and then resources were identified to meet water needs in the future. Population projections, based on reports from the University of Las Vegas Center for Business and Economic Research, had increased annually since 1985. The population forecast for the 2002 Water Resource Plan was shown as the red line on the Resource Planning graph, page 9(Exhibit C).

Ms. Brothers described briefly the major influences on water resource planning in southern Nevada. Water resources were heavily influenced by Federal agencies and federal regulations. The Bureau of Reclamation was the water master on the Colorado River, and approved all Interstate Water Banking regulations. Ms. Brothers said that the water situation in southern Nevada was vulnerable to “the whims of other states,” such as California, but water resources were always dependent on weather and hydrology, as illustrated by the current drought. Ms. Brothers said she would discuss these subjects in more detail one by one.

Ms. Brothers said that the SNWA made a conscious decision in 1990 to make conservation part of the water resource picture. The goal was to achieve 25 percent conservation by 2010, with 1990 as a baseline. All the demand lines in the report’s graphs and charts included that conservation goal. In terms of progress towards meeting the goal, a chart on page 12 (Exhibit C), demonstrated that SNWA was on track to achieve their 2010 goal of 25 percent water conservation. Currently, conservation contributed about 20 percent towards meeting southern Nevada’s water demands.

Regarding the priority of other water resources, page 12 (Exhibit C), in the 2002 Water Resources Plan, Ms. Brothers said the blue area represented existing resources, which included rights to 300,000 acre feet (AF) of consumptive-use Colorado River Water, groundwater, and return-flow credits, which totaled about 520,000 AF.

Ms. Brothers then addressed what water resource options were available in the future. One future resource would be unused apportionment, which was not included because they were not able to forecast when the drought would end and the when water would be available. Return flows of non-Colorado River water, or reuse, were other sources that were based on expected surpluses in the future that were not now available.

Ms. Brothers then discussed the remaining water resources listed on the chart on page 12(Exhibit C), beginning with the convoluted background of the Interim Surplus, which they expected would last through 2016.

For years, Ms. Brothers began, California used more than their allocated 4.4 million AF of water. Even in 1965, California was using more water than they were allocated, which was not a problem until the lower basin states, Nevada, Arizona, and California, began to use more than their allocated 7.5 million AF, in the late 1990s. During most of the 1990s, however, all California’s needs above 4.4 million AF were met by surpluses and flood flows.

Ms. Brothers noted that the Colorado River water was divided between the upper basin states and the lower basin states. The four upper basin states shared 7.5 million AF, and the three lower basin states shared another 7.5 million AF. That was the primary division of the Colorado River water.

Before Interim Surplus Guidelines could be reinstated or go into effect, Ms. Brothers said there was a Quantification Settlement Agreement that had to be signed in California. The agricultural rights had to be quantified because the California system dedicated priorities 1 through 3b to agriculture, which totaled up to 3.85 million AF. It was possible for the main agricultural areas in California to use all of the 3.85 million AF, and leave the Coachella Valley little to nothing. However, in order for agricultural water to flow from the Imperial Irrigation District down to San Diego for metropolitan use, those water rights had to first be quantified. Even though it involved over 50 individual agreements, the main purpose of the Quantification Settlement Agreement was to quantify the agricultural water rights.

How to transfer agricultural water rights to municipalities would eventually involve canal linings, interstate water banking, water transfers, and land fallowing, which had become a very important part of the Quantification Settlement Agreement.

In the late 1990s and early 2000, the Bureau of Reclamation realized they needed a vehicle to allow California to overuse even when the system was not in surplus condition in order to give California farmers time to initiate conservation measures, which would reduce California water usage to the allocated 4.4 million AF of water. That vehicle, which was developed in conjunction with the other six Colorado River Basin states, became known as the Interim Surplus Guidelines. Those guidelines identified additional levels of surplus based on the current water level of Lake Mead.

Prior to the need for the Interim Surplus Guidelines, in years where the water hydrology was good, with no drought, and lots of water in the system, reservoirs often needed to make room for flood control or snowmelt water, so more water would be let go than officials expected would be coming in. During those years, all agriculture and all municipal needs were met, including sending an additional 200,000 AF to Mexico, because of the surplus.

Ms. Brothers explained that the Interim Surplus Guidelines established two additional surplus designations. Full-Domestic Surplus meant that when the depth of Lake Mead was between 1145 and 1198 feet additional water was still available for municipal use. Partial-Domestic Surplus meant when the depth of the lake was between 1125 and 1145 feet, they could use only one-half of what they needed over 300,000 AF. If Lake Mead’s depth sunk to 1125 feet or less, southern Nevada’s water allocation would be limited to 300,000 AF of Colorado River Water.

Ms. Mulroy said that many might have read in the newspapers, at the end of last year, that the Secretary of the Interior had suspended the Interim Surplus Guidelines, which would mean an instant water shortage in Nevada and in California.

Ms. Mulroy explained that, as part of the Interim Surplus Guidelines, other basin states demanded that the state of California should sign the Quantification Settlement Agreement. The reason was to force California to find a way to wean itself from continual overuse, which was the heart of all the sanctioned overuse, including allowing southern Nevada to take unused upper basin water from Lake Mead and Lake Powell. As populations increased in the upper basin states, and as Arizona began to take its full share of water, the Colorado River System would not be able to withstand any one of the states continuing to use more than its allotted share, as California had for years.

The Quantification Settlement Agreement created an environment for raw local politics. At the time that the Imperial Irrigation District said to San Diego that it was willing to lease 200,000 AF for 75 years, it did so with the assumption that the farmers would be able to conserve water. In other words, the Imperial Irrigation District assumed that canals would be lined, farmers would improve irrigation practices, and no land would be taken out of production. That might have happened if, as the Quantification Settlement Agreement was finalized and worked its way through the environmental process in California, it had not run up against the problem of the Salton Sea.

The Salton Sea was an artificial lake, originally created by accident, but which subsequently received a presidential declaration by President Calvin Coolidge that it should be the recipient of “tail water.” A problem may not have evolved if developers had not discovered it in the 1950s and decided they would create another Lake Tahoe in the Imperial Valley. They planned to build resorts, mobile home parks, and new homes around the Salton Sea.

The first mistake was that they stocked the lake with fish. Once the fish came, the birds came. The lake became a major stopover on the Pacific Flyway, and hundreds of species of birds became dependent on the Salton Sea. Because the Salton Sea received predominately agricultural runoff, the water was very salty. Furthermore, the lake had no exit. For those reasons, it was only a matter of time before the lake turned hypersaline, like the Great Salt Lake or the Dead Sea. However, no one knew how long that process would take.

The environmental community suggested various methods that might preserve portions of the Salton Sea and proposed to let other portions of the lake die. By the end of last year, there was still no collective vision of what to do with the Salton Sea. In order to protect the lake, California could not reduce the amount of agricultural runoff that went to the Salton Sea or it would speed up the rate at which the lake turned hypersaline.

California said that fallowing had to be part of the solution and made farmers quit growing crops on some of the land. The effect was that the same amount of runoff continued to go to the Salton Sea, and water that would have been used by crops went to San Diego. When fallowing became a part of the strategy, there was a revolt by the farmers. Many farmers in the Imperial Valley did not own the land but owned the water rights. Under the proposed fallowing regulations, they would not be reimbursed by the City of San Diego for the water, and they would lose their livelihood. They took back control of the Imperial Irrigation District Board and vetoed the Quantification Settlement Agreement.

California Governor Gray Davis recently reworked the Quantification Settlement Agreement, brought representatives from the six states together, and kept them in Sacramento until they came to a new agreement. The new Imperial Irrigation District Board currently had a new Quantification Settlement Agreement on the table that included environmental mitigation money and economic mitigation money, which held out hope for an eventual solution.

Ms. Mulroy stated that SNWA expected the Quantification Settlement Agreement to be signed this year, which meant there was a good chance that the Interim Surplus Guidelines would be reinstated later this year. Yet, SNWA believed that it was almost impossible to hold California to 4.4 million AF this year, because of the accounting problem. Ms. Mulroy observed:

They will never be able to keep those agricultural users down where they needed to be. The realization exists that without the Quantification Settlement Agreement the Secretary cannot even enforce the rules he or she has.

Ms. Mulroy emphasized that this was a long-term problem and was not responsible for driving the current water emergency in southern Nevada: that emergency was driven by drought conditions.

Ms. Brothers pointed to the Interim Surplus Guidelines chart on page 16 (Exhibit C), which showed the levels for Partial Domestic Surplus conditions, Full Domestic Surplus conditions, and for Flood Control conditions. The Bureau of Reclamation operated the river based on January projections of Lake Mead’s water level. Looking at the Historical and Forecast Lake Mead Elevation chart on page 16(Exhibit C), the Committee observed that Lake Mead’s elevation projection [depth] for January 2004 was around 1140 feet, which triggered Partial Domestic Surplus conditions. Ms. Brothers said that when Interim Surplus Guidelines were reinstated later this year, southern Nevada would be operating under Partial Domestic Surplus restrictions in 2004, which would mean that they could only take one-half of what they needed above the allotted 300,000 AF annually. Hence, the drought and the level of Lake Mead had already affected the Interim Surplus Guidelines.

In addition, the January 2004 projection was that only about 8.23 million AF would be coming into Lake Powell, and demands for 9.5 million AF would be needed from Lake Mead. Any runoff from the Colorado River would need to fill up Lake Powell before flowing into Lake Mead. Consequently, Lake Mead water levels would continue to decline, and were expected to reach 1135 feet by the end of 2004.

Ms. Brothers turned the Committee’s attention to the U.S. Drought Monitor maps on pages 17-18 (Exhibit C), dated April 8, 2003. Looking at the upper third of the Colorado River watershed where most of the snow was generated that melted into Lake Mead, it was apparent that the area was in a state of extreme drought, with precipitation far below normal in years 2000 to 2002. In 2002, precipitation for the Colorado River watershed was 25 percent of normal. April 2003 conditions showed the snowpack was at 77 percent of normal, and expected runoff would be 62 percent of the normal 15 million AF usually flowing through the Colorado River.

Drought conditions had greatly affected the storage of water. Lake Powell was currently at 51 percent of capacity, and Lake Mead was at 63 percent of capacity. Only 8.23 million AF of runoff was expected to come into Lake Mead because that was what was allocated from the Colorado River. When Lake Powell’s water level was at a higher percentage than Lake Mead’s water level, there was no way to equalize the water levels between the two lakes. Ms. Brothers expected that southern Nevada might be receiving only 8.23 million AF of Colorado River water for a number of years, while demands on Lake Mead were expected to remain at about 9.5 million AF per year. Lake Mead water levels were expected to continue to decline, as shown in the lower chart, page 19 (Exhibit C). On pages 20-22 (Exhibit C) are photos of shoreline watermarks and aerial photos of declining lake levels at Lake Mead, including an entire marina that had to be moved because it was being inundated by sediment. Ms. Brothers said that the lake level had declined more than 60 feet in the last 3-4 years.

The level of the intake pipes for the SNWA meant that about 7.4 million AF of water were unavailable for any use, because they were below the intake pipes. Although the statistic was that Lake Mead was at 63 percent, only about 30 percent of Lake Mead water was currently available.

Ms. Brothers explained that there were serious water quality issues associated with drought. As lake levels dropped, the photic zone, the depth to which light could penetrate, moved closer to the intake pipes, meaning that there was more organic matter and algae to clog the filters, which affected water treatment procedures. Concentrations of perchlorate, a salt found in the waters of Lake Mead, increased at reduced water levels because of evaporation and the lack of freshening flows. Perchlorate concentrations were also a problem on the lower Colorado River. Not only were the Colorado River Basin and southern Nevada facing water supply problems, but also water quality problems.

The Interim Surplus could be affected by Lake Mead levels, which were caused mainly by drought. SNWA expected the Interim Surplus to be southern Nevada’s water supply through 2016. Some of those years, perhaps 2004, and even 2005, they would not be able to accept all the water available from the Interim Surplus because of Lake Mead levels. The next-in-line alternative water supplies would come from the Arizona Water Bank and the Southern Nevada Groundwater Bank. SNWA had about 116,000 AF banked in Arizona and about 240,000 AF banked in the Las Vegas Valley. Those water savings accounts were expected to provide water for southern Nevada throughout the drought years. If the drought continued for another 10 years, which was unlikely, SNWA anticipated they could still meet demands through 2010.

Ms. Brothers said that although the conservation plan goal was to conserve 25 percent by 2010, if they looked at water conservation by the City of Phoenix, it appeared that there was room for southern Nevada to improve in the area of conservation. Landscaping in Phoenix was less water-intensive than in southern Nevada, and, if adopted by southern Nevada, would save an additional 5 percent by 2010. If southern Nevadans utilized water-saving measures similar to Tucson, Arizona, the demand for water would drop to where they could live on existing resources. Furthermore, because of the outdoor conservation measures, southern Nevada would reap more return-flow credits, which would further extend existing water resources. Conservation was key to a sustainable future in southern Nevada.

Ms. Mulroy commented that, in addition to significantly extending southern Nevada’s water resources, conservation was also the key to having credibility with other states in the Colorado River Basin. Las Vegas was currently dependent on Arizona water banks, and the Arizona politics of their storing water for Nevada would continue to be difficult. Last summer, it was not helpful that the front page of the Denver Post displayed pictures of water running down the streets in Nevada. Concurrently, Denver residents were saying Colorado River water would help save Denver and was being wasted in Nevada. Southern Nevada had a responsibility to control water use.

Ms. Mulroy stated that it was important to address southern Nevada water use. She did not understand why people who moved to Phoenix embraced living in the desert and landscaped to reflect the desert climate, while people who moved to Las Vegas defied living in the desert. Las Vegans insisted on wall-to-wall grass and were not vigilant about water use. The “reality check” was now in progress in the entire lower Colorado River Basin. Ms. Mulroy stated, “We live in a desert. Southern Nevada sits in the driest desert. It [Las Vegas] is the largest metropolitan area in the driest desert of the United States. I think that’s a reality we need to appreciate.”

As the presentation continued, Ms. Mulroy added that the Committee would be thunderstruck by the enormous price tag of future resources needed to meet the current Las Vegas lifestyle. Ultimately, southern Nevada would have to bargain with California for desalted water. Now, Nevada paid 50 cents per AF of water to the federal government for Colorado River water. Desalted ocean water cost, at best, $800-$900 per AF. Southern Nevada needed to develop a more effective conservation ethic.

Ms. Mulroy said that there were some beneficial changes during development of the SNWA’s drought plan. They increased the amount they paid people to take out grass from 40 cents per square foot to $1 per square foot. Last year they converted a total of 3.5 million square feet of turf. This year they removed turf from over 10 million square feet because of increased drought awareness and public participation. Chairman Manendo agreed that turf removal was a very important program.

Chairman Manendo asked Ms. Mulroy what would happen if the Arizona State Legislature decided to change their laws on banking water for Nevada.

Ms. Mulroy said it would hurt prospectively, but they could not take the water away retroactively. Nevada had been sending checks for millions of dollars to the state of Arizona. She said they could still decide to end the program because it was a willing partnership.

Chairman Manendo asked how devastating that would be to southern Nevada.

The result, Ms. Mulroy said, would be that Nevada would more quickly reach the point where it would be forced to purchase water resources that were increasingly expensive. She said people would no longer be able to afford the volumes of water they were now putting into landscaping. Although many golf courses were upset, many were also participating. Several had removed 550,000 square feet of turf each, and one golf course had removed 850,000 square feet of turf. Golf courses in Nevada normally used from 5 AF per acre to 10 AF per acre; the average golf course in Arizona used 4.5 AF per acre. Ms. Mulroy said water conservation was controversial, but people did not stop going to Arizona to play golf simply because those golf courses had less turf. There were other opportunities to remove turf, from along streets and in medians. Parks and sports facilities were being reexamined for places to use Astroturf. Drought awareness had made enormous strides.

Ms. Mulroy said they had a SNWA Citizens’ Committee identify extreme drought measures, should they be necessary. In Santa Fe, they allotted each household a finite water budget. If the residence exceeded their water budget, they paid $50 per 1,000 gallons for water. For one month’s usage, $40,000 residential water bills were common. “Drought is serious,” she said. “If it’s not there, it’s not there, and things have to change.”

Assemblyman Collins said that Pyramid Lake and Walker Lake were both terminal lakes like the Salton Sea, and they would die due to hypersalinity some day. Assemblyman Collins said he had two additional questions. He asked if SNWA had a comment on the expansion of Mandalay Bay Hotel and Casino to include the new wavelake that used large amounts of water; and why, when they put the second straw in Lake Mead, it was put above instead of below the original outfall.

In answer to the second question, Ms. Mulroy said that the decision about where to locate the intake was made in the 1960s, mainly because of the cost: $2 billion would have become $4 billion. She did not think the water quality challenges would be any different if they had moved the second intake; and, if they had, they also would have had to move the first intake, which still delivered most of the water to southern Nevada, which would have increased the cost to $6 billion in total infrastructure costs.

Ms. Mulroy said that California had been adamant about the perchlorate issue. There was some removal of perchlorate due to a 70 percent reduction of inflow from the paleochannel. However, until there was enough snowmelt to flush through the lake, there would not be any significant difference in perchlorate concentrations.

To answer the first question, Ms. Mulroy acknowledged that water use at the hotels and casinos was often discussed and debated. She said that it was a very visible use, but the truth was that 70 to 80 percent of the resorts’ water use was from inside use.

Some hotels had built water reclamation facilities that used treated wastewater for fountains and other features. Every hotel that installed a water feature had to submit a conservation plan, where they had to save more water elsewhere or in the community, than what they used in their water feature. She said she could not complain about the level of partnership with the hotels. Their biggest use was the cooling towers, and it would be expensive for them to make changes. Banning of fountains would be the next step in Nevada, but only fountains with no economic benefit. She said a good case could be made that if you turned off the Bellagio fountain or the volcano in front of the Mirage, it could definitely affect tourism. It could send a message that there was a real crisis in Nevada, and tourists would stop coming.

Assemblyman Collins said they had turned off lights in the past, so why not fountains. He wondered if Las Vegas was being as aggressive and proactive in protecting their lifestyle in Nevada as they were in banking water in Arizona. He said he knew that Ms. Mulroy attended many hearings on behalf of the SNWA and wondered what her approach was to limiting growth in southern Nevada.

Ms. Mulroy said that growth was a land use issue, not a water issue. She said you could not plan growth by using water as a tool. It was a sure way to create a community crisis. Land use decisions drove growth. The growth in southern Nevada for the last 15 years had been driven by the amount of land the federal government put into private ownership. Once the land was in private hands, it began to develop. The only city that had successfully controlled growth was Boulder City because they owned every square inch of land there, and they only released a small amount of land for development.

Ms. Mulroy said that every place that had tried to use water resources to plan or control growth had failed miserably and cause a crisis. Finally, as the water agency, they had the responsibility by law to provide services as long as possible. Between conservation and future resources, and although desalinization would be very expensive, the SNWA would never be able to withstand a challenge in court by saying they did not have the resources to provide services. As long as SNWA had water resources, they were forced to serve the public.

Assemblyman Collins argued that if the artesian basin was being overpumped, “Besides conservation and raising my water bill, what are you doing?” Ms. Brothers answered, “There is additional water out there, but it takes time to plan and develop additional facilities to bring the water on-line.”

Ms. Mulroy said they had recharged 250,000 AF into the groundwater basin. She said that the groundwater basin was overpumped because of activities in the 1950s and 1960s, when the community refused to build a southern Nevada water system. It was not until 1971, when Colorado River water began flowing into southern Nevada, that the basin began to recharge. She said:

Southern Nevada is no different than any other metropolitan area; and, in fact, metropolitan areas are better equipped to survive droughts like this than rural areas. The most ravaged communities in droughts are small rural communities in Arizona and Colorado, because they have a single source, no flexibility, and no investment in other options. They have to shut down. Denver is in the same boat. They have dry reservoirs. Flat dry. They have shut down 12 golf courses. They are closing municipal pools and have browned-out all the lawns in Denver. They are feeling it because they never built some of the facilities they needed in the 1970s.

Assemblywoman Pierce asked what communities had let water determine growth and what had happened in those communities. Ms. Mulroy replied that Santa Barbara was such a community.

Ms. Mulroy said that Santa Barbara could not control their growth. She said because private land ownership in America offered real protections in federal law and in most state laws, what you could stop people from doing with their land was limited. Santa Barbara City Council deliberately made a decision not to build a state water facility in order to limit growth in Santa Barbara. During drought conditions, they were not able to control the growth entirely, and they ended up with 600 homes burning to the ground because they did not have enough water for fire protection. It was such a tremendous crisis that the City of Santa Barbara declared an emergency and quickly built a mobile desalinizer to augment their supply.

Ms. Mulroy said the SNWA was “growth neutral.”

Those who make land use decisions and master plan decision are the drivers of growth. Growth is not driven by resources. However resources are getting more expensive, and the larger you get, the larger investment in water resources you make. That’s a given. We’re in a drought. Water rates are not going up because we need more money. Water rates are going up because we live in an upside-down economic world. We price our product to prevent people from buying it.

Assemblywoman Pierce said she understood that SNWA did not set the policy, and she was not blaming them. However, as a southern Nevadan and policymaker, she felt that Las Vegas was not like other metropolitan areas.

We live in the middle of the driest desert, and water should determine growth here. I think it is unethical to be looking outside of Clark County for water. We need to live within our means. If that means that at some point the growth has to slow, or stop, that’s how it is. We live in a desert.

Ms. Pierce said she had read that this could be a 10-year drought and that it would not get better soon.

Assemblyman Knecht asked the SNWA team if they priced water at marginal or incremental cost.

Richard J. Wimmer, Deputy General Manager of Administration, SNWA, said that the policy for water rates was to have a uniform rate across the service areas the water purveyors served. The rates were not marginal or incremental. They were uniform across the valley. Ms. Mulroy added that the rates were tiered.

Assemblyman Knecht asked again if they included the selling cost in the marginal or incremental cost for the water resource, and if they set their prices above that figure.

Ms. Mulroy said the rates were set above the cost of the water resources. Mr. Wimmer added that water rates were set well above cost, and there were currently four tiers. The price of water increased three times above the initial rate, depending on the amount of water used. There was a significant penalty, over and above marginal cost, for high-volume water use. Ms. Mulroy said that large users, like hotels or golf courses, would pay a greater price per 1,000 gallons because they moved into the fourth tier more quickly, and they paid for most of their water at the fourth tier rate. The high-volume users paid significantly more for water than did residential water users.

Mr. Knecht asked if many residential users were paying fourth-tier rates. Ms. Mulroy answered yes. She said that the average family of four used about 300,000 gallons per year, while some customers used 17 million gallons per year.

Ms. Brothers continued the presentation addressing the Clark County groundwater situation. She said that SNWA had purchased water in Coyote Springs Valley, and she recently attended a public hearing there regarding their plans. SNWA believed that between 25,000 AF and 40,000 AF per year were potentially available from that Coyote Springs Valley. SNWA was in the process of installing monitor wells and initiating a feasibility study to price what would be needed for the required infrastructure, to bring water in from Coyote Springs Valley as well as from the Virgin River.

In addition, they were working on agreements with other counties to address water applications that had been filed in eastern and central Nevada in 1989. An agreement between Lincoln County, Las Vegas Valley Water District (LVVWD), and SNWA had been signed. The agreement designated three categories of basins. [Colors refer to the map on page 29.]

· Category I basins: LVVWD maintained rights and title (red)

· Category 2 basins: water applications assigned to Lincoln County (teal)

· Category 3 basins: shared between Lincoln County, LVVWD, and SNWA (yellow)

From category 3 basins, which were shared between all three entities, Lincoln County would receive the first 3,000 AF per year of any permits, and 15 percent from any permits granted to the SNWA or to the LVVWD that yielded in excess of 30,000 AF annually. Lincoln County could lease water on a temporary basis from the SNWA or from the LVVWD through 2030. Ms. Brothers said that the State Engineer usually provided some water for the basin of origin. In this agreement, Lincoln County was responsible for providing water for the basin of origin from their share of the water.

The Muddy River and Virgin River were very important to the SNWA’s water resource plan. SNWA had already purchased over 8,000 AF annually of Muddy River water. In 1994, at a hearing with the State Engineer, SNWA was granted 113,000 AF of Virgin River water annually. Several feasibility studies were in progress to look at the price of infrastructure construction for

· Bringing water down Hwy 95 to the northwest part of Las Vegas Valley.

· Bringing water into the northeast part of the valley from Coyote Springs Valley.

· Diverting some of the Virgin River water, treating the water, and bringing it into the northern part of the valley.

That study, which would provide those cost estimates, was about 90 percent complete, and would be delivered to SNWA in about a month. Ms. Brothers said they expected those projects to be very expensive propositions.

Ms. Brothers said that the infrastructure was in place to continue to bank water. When surpluses were again available, they had wells to store water from the Colorado River and bank it for the future. SNWA already had about 240,000 AF stored. The interstate banking agreement in Arizona allowed SNWA to bank up to 1.2 million AF, and SNWA had already banked about 116,000 AF there. Other alternatives were desalinated seawater, Colorado River water transfers from upper basin to lower basin, and cooperative water projects with other counties.

Mr. Wimmer said that SNWA spent a great deal of time on planning how to build the infrastructure and facilities needed to deliver water, and planning how to fund those projects. The Capital Improvements Program (CIP) included a $2 billion project that was discussed in the 1997 Legislative Session, and had been amended many times since then. Over $1.5 billion had been spent on that project to date. The project was based on a phased CIP illustrated on page 35, which had allowed facilities to be built just in time to meet the demands.

The pie chart on page 38 described the various sources of funding for the CIP projects. Over 50 percent of the costs were paid for from regional connection charges. The underlying concept was that new users should pay for the growth that was necessary to provide them with water service. The balance was paid for by regional water rates, sales tax, and reliability surcharges, which charged everyone for improved systems, reliability, and improved water quality. Two charts on pages 38 and 39 demonstrated the estimated revenue versus actual revenue in 1997 and the monthly actual revenue received. The volatility of the monthly revenue was part of the reason they worked under a flexible, balanced plan, which would stabilize revenue in the end.

In terms of overall financial stability, SNWA currently had cash reserves to pay for over two years of debt service, and it had a high bond rating. The interest on the total CIP project debt was expected to be 5.66 percent in 1997, but through creative refinancing and maintaining high bond ratings, SNWA was able to reduce the interest to 4.74 percent, which SNWA estimated would save about $350 million over the life of the project.

Sales tax was approved in 1997 by 72 percent of the voters, and they began collection in 1999. As of January 2003, $200 million had been collected. The sales tax would sunset in either 2025 or when SNWA had collected $2.3 million.

Assemblyman Knecht said he understood that the sales tax was imposed as a matter of law and that voters approved it. As a policy matter, however, he wanted to know what the justification was for tax-based versus commodity-based or connection charge-based revenue to fund the water system.

Mr. Wimmer said that when you look at the funding plan for the SNWA, you were only seeing part of the picture. The regional facilities were only one part of the big picture. Each local water purveyor, like the LVVWD, also had many facilities that were mostly funded through water rate charges. The whole picture was actually a well-balanced funding plan. The sales tax was used mainly to level out the volatility of the revenue and to pursue a multiple funding approach, so there would never come a time when radically raising water rates would be necessary. Mr. Wimmer said that the plan was working well, as designed.

Ms. Mulroy said that while the SNWA was installing almost $2 billion worth of facilities, the LVVWD put in over $1 billion worth of facilities. Ratepayers in the LVVWD service area were hit with $3 billion in costs.

Mr. Knecht said he was aware that the water districts passed on the cost of the infrastructure to their users, but, as policy, he was not persuaded that sales tax was a good policy when strong price signals were needed, in addition to conservation programs, for users.

Assemblyman Hardy asked who owned the water in Lincoln County, and if there were any secret deals, nondisclosure agreements, or gag orders between any public or private entities of any kind that the Committee should know about, or that they would want to know about.

Ms. Mulroy stated that all the water in Nevada belonged to the people of the state of Nevada. No one owned the water, but everyone had a right to use water. She said it was very different from riparian water rights that existed on the east coast. The state of Nevada decided early in its history that it would retain ownership of all its water and only grant residents the right to use it. Residents were also subject to losing the right to use water through nonuse. The water that SNWA filed for in other counties was water that was not being used by anyone and water that had never been developed.

Ms. Mulroy said that the only public-private agreement she was aware of was the relationship between Vidler Water Company and Lincoln County.

Assemblyman Hardy asked if she was going to elaborate on that.

Chairman Manendo said she did not have to do that, and Ms. Mulroy thanked the Chairman.

Assemblyman Hardy said that that answered his question.

Assemblyman Collins asked, for purposes of disclosure, if Ms. Mulroy would admit that the LVVWD was privately owned from the inception until about 1954. Ms. Mulroy answered that the Union Pacific Railroad owned the LVVWD and then in the early 1950s the LVVWD Act was implemented, when southern Nevada bought out the private interest.

Assemblyman Goicoechea asked if there was an estimate as to what it would cost SNWA to treat the 113,000 AF of Virgin River water.

Ms. Brothers replied that the study should be out in about a month and would include treatment costs. The preliminary draft report stated that the reverse osmosis facility would cost around $2 million to $3 million. She said they were finalizing costs for pipelines and diversion facilities, as well. She said she would make sure the Committee was supplied with copies of the final report.

Mr. Goicoechea said it was obvious how he felt about taking water from the rural counties.

Assemblywoman Koivisto asked what the status was of the LVVWD offer to purchase Nevada Power.

Ms. Mulroy answered that their offer to purchase Nevada Power was still on the table. Since their last communication, where they restated the offer, they had not heard from Nevada Power Company.

Chairman Manendo thanked the SNWA officials for their presentation, and said he was sorry to cut it short. He complimented Ms. Mulroy on the SNWA lobbying team. Chairman Manendo said they were wonderful resources for legislators, and she should be proud of them.

Kurt Fritsch, Southern Nevada Regional Planning Coalition (SNRPC), and City Manager, City of North Las Vegas, stated that the Las Vegas Valley was currently the fastest growing part of the United States. Current population was over 1.5 million, and the population was close to 3 million in the entire area. He observed that rapid growth, while it caused economic prosperity, also put additional pressure on streets and roads, sewer and water systems, schools, and the environment. The SNRPC was working on all those issues, and the challenge was to sustain growth, while maintaining quality of life for residents.

Mr. Fritsch explained that the SNRPC was created by state legislation in 1999, and included 10 elected officials from Las Vegas (2), North Las Vegas (2), Henderson (2), Boulder City (1), Clark County (2), and the Clark County School District (1). The costs of the SNRPC were prorated among the members. The SNRPC was mandated to produce a regional plan by the state that included the following plan elements:

· Conservation, open space and natural resources

· Population forecasts

· Land use and community coordination

· Transportation issues

· Public Facilities

· Air Quality

· Infill

Mary Kay Peck, AICP, Southern Nevada Regional Planning Coalition, and Community Development Director, City of Henderson, said that when the SNRPC was created, the Legislature required that they establish a time line that plotted deadlines and project completion dates. The contents of the plan were plotted on the time line that included a deadline for completing the regional plan by March 1, 2001. As a fledgling organization, the SNRPC decided to bring in outside experts, and the experts’ first decision was to build on the work done by the previous planning group, the Southern Nevada Strategic Planning Authority (SNSPA). The experts then interviewed people and, from those interviews, established guiding principles of what the plan should look like.

The first guiding principle was that the region wanted to accommodate growth and mitigate the impacts. They wanted to build on the SNSPA’s successes, because there was already a great deal of regional cooperation in southern Nevada: regional water authority, regional flood control, regional transportation, regional health district, and regional school district. The missing link was a regional planning authority. The SNRPC began to work with all existing regional organizations, while respecting local autonomy. Local governments did not want to give up the right to make land use decisions.

They wanted to focus more on policies and goals, and to make the SNRPC a problem-solving forum that would work in a collaborative manner. They wanted regional and state authorities and agencies to be in conformance with the regional plan.

Mr. Fritsch said that the policy committee hired Clarion Associates from Denver, Colorado, and compared southern Nevada with other communities: Denver, San Diego, Salt Lake City, Phoenix, and Reno. They compared population, housing, transportation, parks and trails, water quality, and planning practices, which resulted in a focused planning effort. The results showed that the population was denser in southern Nevada than in most other communities that were subject to “urban sprawl.” Other comparisons where southern Nevada came out ahead were: small number of local governments, the amount of regional planning that had already been accomplished, the density of development, housing affordability, transit ridership, employment growth, low infrastructure financing backlog, and air quality. Areas that southern Nevada ranked lower in were: acres of parks and miles of trails, vehicle miles traveled, regional land use coordination, school site coordination, and watershed quality.

Ms. Peck stated that they met the legislative deadline for completion of the regional plan. The Regional Policy Plan was adopted by the SNRPC on February 22, 2001. It was accepted by the Legislature in March 2001. All the local jurisdictions and the school district adopted the Southern Nevada Regional Policy Plan, and those groups, as well as state and local governments, were required to be in conformance with the Regional Policy Plan. All agencies that conformed to and cooperated with the SNRPC were listed on page 11 of the SNRPC handout (Exhibit D). Mr. Fritsch added that private corporations, such as Southwest Gas and Nevada Power, also participated in the process. He then listed each organization and described their current level of participation and related projects:

· Regional Flood Control District amended its design manual to include a multi-use facilities policy.

· Nevada Power encouraged trail use within utility corridors, aiding trail linkage.

· Clark County School District created a prototype 2-story design for elementary schools that was applicable to infill sites.

· Clark County Park was built on an infill site in an at-need neighborhood.

· North Las Vegas established a process of blight removal on infill projects.

· Boulder City was developing a new master plan that conformed to the Regional Policy Plan.

· The City of Las Vegas had established a trails plan by interlocal agreement with Clark County.

· Henderson’s comprehensive plan update would promote regional plan policies.

Ms. Peck said that the SNRPC had to establish priorities for each plan element, and they did not include a sunset provision, nor an opt-out provision, in the plan. They adopted a review process that required written agreements that were reviewed each year. The projects they planned to address next year would be to create coordinated transportation, land use, and air quality plans, to improve school sites, and to address infill development issues.

Ms. Peck said that another stipulation in the legislation was that they had to look at “projects of regional significance,” and how they would impact each other’s jurisdictions and populations. As part of the process, they defined projects of regional significance as projects that would include the bigger projects that would impact more than one community. They required that any project of regional significance located within a half mile of another jurisdiction’s border must notify the other jurisdiction of conditional use permit hearings in advance.

The SNRPC took specific leadership and responsibility for implementation of the regional plan and structuring a multi-jurisdictional approach. Specific projects they had supported and encouraged were listed in the handout (Exhibit D).

The SNRPC had also recently hosted a series of growth summits, the first one was held on March 24, 2003, on the subject “How Do We Grow?” The next two growth summits would be held on April 28 and April 29, 2003 on the subjects “Open Space,” “Inter-jurisdictional Impacts,” and“Making it Happen.”

In conclusion, Ms. Peck said that it had made a real difference having the Regional Planning Coalition. She said they spent the first few years trying to do what the Legislature had mandated. As they matured, the organization had grown into a collegial group that provided a unique forum for addressing land use issues.

Chairman Manendo asked how the homeless project was progressing. He had heard there was some squabbling over how to handle the issue. Mr. Fritsch said that people were not necessarily arguing that it was not their problem, but it was more that people disagreed what the right solution might be. They had not yet identified resources or arrived at answers for those sets of problems.

Assemblyman Grady asked why the airport authorities were not included in the list of conforming agencies.

Ms. Peck answered that only the agencies specifically included in the state legislation were included. Mr. Fritsch said they did not have the authority to go to federal agencies, and, for that reason, the Bureau of Land Management (BLM) was not included either. She said they were working with the airport on inter-local agreements, but they were not listed in the state legislation.

Assemblywoman Pierce said that two of their goals were to sustain growth and to maintain quality of life. She asked if, when they talked about “sustaining growth,” they meant sustaining the level of growth of the 1990s.

Mr. Fritsch answered that they were, since that was the direction of the electorates and of the community in southern Nevada, that that was the level of growth for which they were planning. He said that the growth rates would be less, but that the same numbers of people would be coming into southern Nevada: 5,000 people plus per month. He would plan to maintain that kind of growth rate.

Assemblywoman Pierce asked if the SNRPC had any sense that the vast majority of southern Nevadans did not want to sustain that level of growth, would that make any difference in the policies they would recommend.

Mr. Fritsch said it would have more impact at the local government level, as opposed to the regional policy level. He said that those issues would be discussed, but the coalition would not force the subject of growth on the local communities. He said growth was not just population, but it was industrial and commercial, and that those elements within an economy that actually make it grow, pay for growth and development, and bring revenue back to the state.

Assemblywoman Pierce asked about water. She asked if Mr. Fritsch was of the opinion that southern Nevada should continue to grow and that the growth should be determined by the business community and the LVVWD should just continue to catch up to demands by finding water any place they could find a teaspoonful. She wondered if he thought they should continue to run along like a train that had lost its brakes.

Mr. Fritsch was not sure the train had lost its brakes. He said although it was a very demanding growth rate, there were many challenges. He believed that there was water in the system. Aside from the drought conditions, there was water in the Colorado River that Nevada could tap, but the negotiated laws prohibited Nevada from doing that. The Virgin River clearly flowed into the Colorado, and yet they were not able to take the 100,000 AF that belonged to Nevada from the Colorado River because the Colorado River waters were distributed by the system. Piping the water from the Virgin River would not make much sense. There were other approaches besides negotiating for water from the Colorado River, which also involved six other states and their needs.

Mr. Fritsch said he was not trying to avoid Ms. Pierce’s question, but he felt there were resources “out there” that southern Nevada could use. He also felt that landscaping practices needed to change because outside water accounted for most of the overuse, and that was where they could generate water savings. He also said that there was a reluctance of the population, as well as of elected officials, to changing those practices and to changing how water was used.

Assemblywoman Pierce said it was her personal opinion, from talking to her constituents and friends, that the vast majority of southern Nevadans did not share the goal of sustaining the growth of the 1990s. She asked what the overall vision for mass transit was in the area.

Ms. Peck replied that the overall vision was to have more mass transit, more light rail systems, more busses, and more mass transits options available in the Valley. Mr. Fritsch added that it was hard to get people out of their cars, so they were going to emphasize making the mass transit options more attractive and more convenient, not just necessary. Ms. Peck added that the opportunity the SNRPC had was that mass transit affected development patterns. Because they had the SNRPC forum and were working with the regional Transportation Commission, they were working on a transit-oriented development ordinance that they could all plan together. They would be considering the development impacts of mass transit, along with other considerations.

Chairman Manendo asked if the SNRPC was discussing carpool lanes on the interstate, as in California. Mr. Fritsch said that was included in the SNRPC’s taxation plan that passed last fall. It was in the mix, although they were encouraging carpooling now, without the special lanes.

Assemblyman Collins asked if they had thought about proposing legislation to the Committee to change the formulas that the Legislature passed several years ago, which now provided tax money based on population to fund southern Nevada’s growth. He wanted to know if the SNRPC had thought of returning to the Legislature and asking them to change those formulas.

Mr. Fritsch said that the SNRPC had not been involved in that. He said there were some tax shifts at the last legislative session, but he did not want to suggest there would be additional shifts. He thought they needed to look at that, but he did not think the SNRPC would be the entity to do that. He said that that effort would be regional and would require representatives from all groups to sit at the table, perhaps at a staff-to-staff level. He thought it should be negotiated locally, before asking the Legislature to solve their issues.

Assemblywoman Pierce asked Mr. Fritsch about trails. He replied that they were receiving some funding from the Southern Nevada Lands Management Act, and he offered to send her a map of the proposed regional trail system that would link to a regional system.

Ms. Pierce asked for a copy of the map and a time line. Chairman Manendo asked that copies go to all Committee members.

Chairman Manendo announced that members of the SNWA had agreed to spend several hours with the Committee doing an in-depth review of their plans during the interim. The Chairman said the Committee would be more than happy to meet with them as a group to study and understand the water issues.

Chairman Manendo, Mr. Collins, and Mr. Goicoechea began to question the status of A.B. 484.

Assemblyman Collins said when he sent Committee members a note recently it was because, several years ago when he was dealing with incomplete construction projects causing water runoff and pollution collection problems, he attended some health district meetings. At that time, the health district was the chief enforcement agency in the county. Since then, he recently discovered that the Clark County had reorganized, and the health district was no longer the chief enforcement agency. His note acknowledged to the Committee members that during the hearing he had based his opinion on outdated information. He wanted to apologize to everyone on the Committee.

Assemblyman Goicoechea asked who the current chief enforcement agency was for Clark County.

Assemblyman Collins replied that the responsibilities were scattered after the reorganization. Until Mr. Collins had all the information, he did not want to talk about it, so that he would not have to make another correction if the information were not correct. He said he would report to the Committee when he had solid information.

Susan Scholley, Committee Policy Analyst, said that because of the new information, a correction to the amendment to A.B. 484 had been made. The new amendment went back to making the board of county commissioners or a city council responsible for adopting an ordinance setting forth the type of system that must be used by mobile vehicle washing vendors or nonpermanent vehicle wash vendors, for the continuous recovery of wastewater during the process of washing vehicles. She reminded the Committee that they deleted lines 1-9, on page 2, which also deleted b, c, and d, which provided three more components that were required to be in the ordinance. Those items remained deleted, as directed by the Committee in its amend and do pass action. The original amendment was intact with one exception: it had reverted to mandatory language, which read, “the board of county commissioners and the city council shall.”

Chairman Manendo adjourned the meeting at 9:52 a.m.

RESPECTFULLY SUBMITTED:

JoAnn Aldrich

Committee Secretary

APPROVED BY:

Assemblyman Mark Manendo, Chairman

DATE: