Water District Begins New Rate Process

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The board of the Virgin Valley Water District (VVWD) heard a staff presentation on the district finances at their June 12 special board meeting.  According to district manager Kevin Brown, the need for new revenue is acute.

“Our infrastructure is falling apart,” said Brown, and the districts bond debt “is crushing us.”

Brown noted that in the last year there have been several line breaks and well pump failures that have caused the district to “spend more money than we are bringing in.”

One thing that is not causing a financial drain on the district is the recent high litigation costs according to Brown.  “Our financial issues related to litigation are simply going to go away,” over the next year Brown told the board.  Brown noted that as a result of the settlements in recent legal actions the district expects to receive over $5 million in additional revenue in the 2015 budget year.

According to staff projections, the district, even with the legal settlement funds, can expect a budget deficit averaging $2.9 million each year over the next six years when necessary infrastructure spending is included.

The district is in this position in large part due to the heavy debt the district incurred by selling bonds between 2003 and 2011.  Currently the annual payment on district bonds exceeds $3.2 million annually, the largest cost the district has.

According to the National League of Cities and other municipal organizations a city or district should have only about 5 percent of general fund budgets in debt payments.  VVWD pays 31 percent of the budget for debt service.

As a result, Brown told the board, the district is spending their funds on operations or debt and the district has “No future growth account,” or adequate funding for needed improvements.

Brown then listed the infrastructure improvements the district needs to plan for in the next six years.  New projects include two new wells, a new storage tank near the Sun City area, three new transmission lines and multiple projects on the districts distribution system.  The total estimated cost for these projects is $22.9 million.

To raise the needed funds, Brown presented several rate options prepared by the districts engineering consultants Brown, Collins and Associates.

According to the report water rates are based on meter size and volume.  Meter size rates are currently $18.09 for a three-quarter inch or smaller meter per month, and increase up to over $12,000 per month for 12 inch meters.  Over 96 percent of meters in the district are residential and three-quarter inch in size.

The second basis for monthly water bills is volume or “block” rates which are based on actual water usage.

Currently, water rates for a typical single-family residence average $29 a month in January and $67 per month in July, the low and high usage months.

Under the preferred staff option base rates would increase to $25 per month, and the block rates would increase.  The proposed rates are estimated for a typical home to be $37 in January and $88 in July.

The proposal would also create a new rate schedule for commercial properties, which currently pay the residential rate.  While commercial rates would be new “We don’t want to be the ones that price out a new business,” said Brown.

Other options for the district to raise revenue would be to sell property that the district owns or to investigate selling water shares to resorts that currently lease them.  “Selling some of those assets will help us with the capital facility needs,” said Brown.  The district will also pursue federal and state grants but those are “Few and far between.” Brown told the board.

In public comments John Mannetta and Mark Haas on behalf of the Ventana HOA told the board they were concerned the HOA would be penalized as they have four meters that serve over 60 homes.  Under the proposed rates individual homeowners would be paying much higher rates than homes that each have a separate meter.

Director Rich Bowler suggested that staff to look at changing the rate structure so that places with single meters serving several dwelling units are not penalized.  “It can’t be rocket science,” said Bowler.

Bowler also told the board that “We need a lot more public input,” to avoid problems such as those raised by the HOA.

Mesquite resident Barbara Ellestad asked if “There is consideration to take all or part of the settlement fund and put it into capital improvements?”

Director Kenyon Leavitt told Ellestad that in looking at the budget “A big chunk of that money is going into capitol improvements at least in 2015.”  Ellestad suggested that the district break out the settlement monies and get a “Concrete list” of where that money is going.

Ellestad also asked the board to research how the designation of Gold Butte as a national monument might affect the district’s proposed well on Nickel Creek. “Now you are really talking about a lot of restrictions if that is ever dedicated as a national monument,” said Ellestad.

The board decided to direct staff to have briefings on the rate issue on the second meeting of each month in order to get more public input and to make additional changes. Board chair Ted Miller said he favored “Having as many public meetings as needed,” in order to get as many public comments as possible.

The next public discussion on the rate proposal will be at the July 15 meeting.

Comments

  1. L Cunningham says:

    It is unconceivable to me to think that VVWD has the gall to increase water rates by no less than 20.00 a month. Even a city the as big as Las Vegas has proposed an increase of 1.04in 2014 to 4.97 by 2017, which is reasonable. There is a huge difference in 60.00 and 240.00 per year.
    If memory serves me correctly Mr. Brown makes over 300,000.00 annually, so it is understandable why a minimal 20.00 per month would seem like “a drop in the bucket” to him. For those of us on fixed incomes, who are already juggling and struggling to make ends meet, this should out rage you, not to mention draw concern as to how you are going to fit in an increase in your water bill of no less than 240.00 per year. Maybe we should begin the process of creating more monies by means of down-sizing wage in the VVWD. Perhaps we should consider sizable increases to those who are using the largest quantities of water, such as golf course and hotels. I am pretty sure they will complain, for they have in the past. I am also pretty sure that they will stay and continue to rake in mass money, as green fees are not cheap, nor are nightly rates for hotels. I write this to light a fire under people like myself who do their best to conserve water in a state that is the most arid in all 50 of the United States. It is high time that those who can, but do no, do their part and pay their fair share. Quit leaning on those who make up the backbone of American cities to pick up the tabs for law breakers and those who are huge water users.

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