Some water rights to go on auction block

Monday, April 10, 2000 | 10:55 a.m.

In the desert of Southern Nevada, water is life. Some of that lifeblood will go on the auction block later this month.

Robert Deiro and Associates will auction off 613 acre-feet of water on April 29 in one of the largest sales in recent memory. The sale will be in small increments of one-, two-, five- or 10-acre-foot portions, said Guy Deiro, a real estate broker and company owner.

The owners of the water rights to be sold are the Las Vegas Country Club, with about 238 acre-feet on the block, and Gordon Gaming, owner of the land that was home to the old El Rancho Vegas resort, with the remaining 375, Deiro said.

An acre-foot of water is equal to 325,851 gallons -- or just about the water needs for a family for one year.

Observers expect that most or all of the buyers at the auction will be homeowners or developers of small projects, people who have found connecting to municipal water systems difficult or expensive.

The option of buying irrevocable water rights will be especially attractive to people living in or building a home a mile or more from existing water systems.

Changes in state law have made drilling a new well -- or keeping an old well functioning -- difficult or impossible, Deiro said. But water rights essentially allow people to drill and keep wells operating forever, he said.

The price for a single acre-foot of water in the valley has climbed to $10,000 or more -- nearly double what it cost two years ago, Deiro said -- as people seek to drill and hold onto their wells.

Hugh Ricci, deputy state engineer, said people can still get permits allowing temporary wells, but he agreed that the one way to keep a well would be to buy water rights.

The rights for sale April 29 were originally granted before the law in 1955 made all new wells temporary, after Lake Mead water became available, Ricci said.

Greg Walch, an attorney who has worked on water-rights issues in the area, said this is one of the largest sales of water rights in years.

"That's a very big number," Walch said. "There aren't very many (sales) that have 600 acre-feet."

People living on the outer edges of the developed area have for years faced the loss of well privileges as state laws required them to hook up to municipal water systems. The law now requires people with property 185 feet or less from a system to hook up to the system if their well fails.

"It was really putting a hardship on a lot of cases," said Ray Preston, president of the Nevada Well Owners Association. The association is only a few years old and was created to lobby to ease pressure on people with wells.

In a change made in the last legislative session, the state now pays for up to 85 percent of the cost to hook up to a municipal system. Hookups start at $10,000, and putting in lines to a property and a house can cost tens of thousands more.

Preston said the old laws were hardest on people on fixed incomes, such as retired people. The genesis of the association came in the valley's northwest, and Preston believes that is where the likely buyers of the water rights will be.

The water rights now are good at Las Vegas Boulevard and Sahara Avenue, site of the old El Rancho, and at the Las Vegas Country Club on Joe W. Brown Drive, across the street from the Las Vegas Hilton.

But Deiro said water rights are transferable throughout most of the Las Vegas Valley. Only rights at Gilcrease Ranch, Mount Charleston and the Calico Basin area of Red Rock Canyon are restricted.

But the state can still deny the right to move the water from the source, Ricci said. An individual buying the rights may not be allowed to drill a well in another location.

The state can deny the water-use permit if a new well will affect existing water use or if the new well is proved to be "detrimental to the public interest," he said.

As an example of the "public interest" clause, Ricci pointed to the state's recent denial of the Department of Energy's application to use underground water to build a nuclear waste repository at Yucca Mountain.

Ricci warned that potential buyers still would have other hurdles to clear before turning on the spigot.

Applications for using the water include a $150 charge to file, then $100 plus a fee of $2 per acre-foot. Then the application, complete with a map showing the new water-use location, gets reviewed by the state engineer's office and is posted in the newspaper.

Anybody can protest the transfer, Ricci said. In the case of a protest, the bills can run up fast for court recorders, lawyers and other needs, he warned.

Ricci allowed that state or private challengers to a buyer of one acre-foot wouldn't be as likely as challenges to a purchase of larger amounts, say 100 or 500 acre-feet.

People using wells also are charged $30 per year, which helps support the effort to recharge the ground water aquifer in the Las Vegas Valley, Ricci said. People who buy water rights can't sit on them, he said. Water rights that are not used for five years or more can be forfeited to the state.

All 613 acre-feet to be auctioned represent a small fraction of the estimated 70,000 acre-feet drawn from the ground for private use or by municipal water systems in the valley, Ricci said.

The fact that the sale is in smaller portions is unusual, Deiro said.

"Most of the time with these water rights, the general public never gets a shot at this kind of deal," he said.

Launce Rake covers growth issues for the Sun. He can be reached at (702) 259-4127 or by e-mail at lrake@lasvegassun.com.