Board Views System Development Charge Options

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Looking to meet future water resource needs as the population of Virgin Valley increases, the Virgin Valley Water District(VVWD) Board of Directors viewed options presented by district financial manager Wes Smith at their meeting Tuesday, June 20. Using WaterWorth planning software, Smith laid out projected long term financial results that occur at various levels of district income derived through new development fees.

Smith explained that the district needs two cash reserves: the basic reserve that pays for ordinary operation and maintenance of the current system, and a second reserve to pay for water resource area expansion to meet population growth. The district recently adopted a Master Plan update that aims to maintain a 5 percent cash reserve that will pay for expanding future water resources, treatment, storage and transmission. Developer fees are earmarked to fund that cash reserve.

VVWD has charged builders the same $2,120 system development charge (“SDC,” formerly titled “impact fee”) per unit added to the VVWD water system for the past 20 years. Developers also pay VVWD’s Ordinance II fee of $3,300, a $250 meter installation fee, and $100 transfer charge, for a total of $5,770 to connect a new unit to the water system.

At the June 6 board meeting, Aaron Anderson of Bowen Collins & Associates, presented a study based on calculations in the VVWD Master Plan update and the FY2018 budget. The study was requested so the board could better determine fair allocation of system costs for new development. Anderson’s study concluded that the projected cost of water system development per new unit points to $7,165 per unit over the next 10 years. This is a difference of $1,395 between current system development charge (SDC) paid and system cost to add that unit.

Using historical figures, Smith pointed out that VVWD has paid $8 million more for its current infrastructure than raised through SDC fees. VVWD has received grants that have paid for treatment plants, and has other revenues from water share leases, as well as water user rates and developer fees. Smith also pointed out that St George charges a $7,000 SDC, compared to VVWD’s current fee of $2,120.

Board members, while voicing the need for fee increases, are wary of imposing steep immediate increases for builders who need to plan their costs. Board member Rich Bowler commented, “I prefer a modest raise to the fee.” Board member Barbara Ellestad suggested using a strategy similar to the stepped rate increase recently proposed for water users, in which no more than a 2 percent increase will be imposed per year over the next 10 years.

Member Ben Davis commented, “A reasonable increase in the SDC is necessary simply to move the (revenue) needle, so developers are aware that VVWD must raise fees to cover its costs. But we need to defeat the fatigue caused by huge increases.”

Travis Anderson, the newest VVWD board member, referenced the comments of a builder who attended the June 6 meeting. “He was okay with a reasonable increase of about $200 in the near future.” Anderson asked Smith to lay out several scenarios showing the impact of stepped periodic SDC increases, to be studied at the next meeting on July 18.

District manager Kevin Brown reminded all that even if a SDC increase were imposed, the process required in public hearing, developer notification, etc., would mean that the actual payment of any increase would likely not occur in FY2018.

 

In other business, the board accepted a proposal offered by Bill Mitchell Insurance Agency of Mesquite for renewal of the district’s liability insurance. The one-year renewal, to cost no more than $145,000 for Travelers Insurance coverage, was accepted by unanimous 5-0 vote. The current price includes a 3 percent increase over last year’s policy. Mitchell was awarded the insurance contract last year on his bid which reduced annual policy costs from $160,000 paid in previous years.

The board also unanimously approved a budget transfer of allocations in the FY2017 fiscal year ending June 30, 2017 to meet requirements of NRS 354. The allocation move does not increase the overall expenditure budget.

District hydrologist Aaron Bunker reported that seven of the district’s water wells are now functional, and five of the functional wells are in operation. Two additional wells have been drilled and still need to be equipped. District staff met with a senior Clark County planner on June 16 to review and submit the land use application for well 1A in Bunkerville. Further meetings are scheduled with Bunkerville Town Board on June 27 and Clark County on August 1. Final plans set for well 27A, located on Pioneer Boulevard will be submitted to Nevada Division of Environmental Protection, City of Mesquite, and the adjacent homeowners association for review and comments.

Brown reported that the new Virgin River 24-inch transmission line and 16-inch carrier line required a new easement from the city because the pipe alignment on the north side of the project has changed. The 16-inch Riverside Road pipe replacement was tied into Mesquite Boulevard on June 12, and is awaiting pressure testing and Bacti testing before the entire line can be placed in operation. Completion is expected by July 6.

Comments from Virgin Valley Water District to the BLM concerning the Gold Butte National Monument Proclamation were submitted on June 9. Those comments were invited by the Secretary of the Interior as part of a review of recent national monument designations. The board had unanimously approved comments concerning its interests in the monument area during its June 6 meeting, and the document was drawn up by VVWD staff.

In its comments, VVWD formally requested: First, that the current boundary designation of the monument be moved to remove VVWD’s water facilities from being located inside the monument. Second, if the boundary is not changed, VVWD requested a change to the Proclamation language to reflect specific language requested in the district’s May 2016 letter to then-Senator Reid. Adoption of that language would leave very little room for change of interpretation by current and future land use planning negotiators.

The VVWD comment letter, with clarifying maps, can be read in full on its website at www.vvh2o.com.

 

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