Tuesday, May 24, 2005 | 11:06 a.m.
The total cost for Southern Nevada's lead water agency's ambitious plan to build huge new systems to bring more water to the Las Vegas Valley may be enough to startle even a jaded Las Vegas casino mogul: $7.6 billion.
The Southern Nevada Water Authority presented the number at an otherwise sleepy meeting of a new advisory committee charged with recommending ways to pay for the projects. The costs include projects to build wells through rural Nevada and pipelines to urban Clark County, new treatment facilities for that water, and other steps to guarantee Las Vegas a water future over the next three decades.
The program would double the amount of water now used by Las Vegas, adding 343,000 acre-feet to the 300,000 acre-feet the agency now takes from Lake Mead.
The $7.6 billion would cover the "bricks and mortar" of the Water Authority's efforts, said Cary Casey, Water Authority finance director, Monday evening. With potential financing charges on the bond issues, the ultimate price tag could be $12.8 billion and would not be paid off until 2059.
Agency officials said the price tag shouldn't surprise anybody.
The cost includes $2.1 billion that has already been spent over the last decade for expanding the existing water-delivery system and building new treatment facilities, Casey said.
He said the cost needed to be included in the new figures going to the advisory committee because they have yet to be fully paid off.
"So we're really talking about $5.5 billion," Casey said. "It's always been there, before it was just presented in different pieces. All those numbers have pretty much been there since day one, they've just been put together."
Still, he acknowledged that putting the numbers together means "We're talking big money here."
Casey emphasized that a multitude of uncertainties means the numbers, too, are uncertain. The quantity of water that would come from the planned or proposed projects, the number of customers, the extent of water shortages in the West and along the Colorado River are all factors in flux that will affect the ultimate costs for the projects and the customers, he said.
"Financial professionals do not like uncertainty. It is not nice to manage, but we have no choice here."
One thing is a clear policy direction for the Water Authority, however, and that is the drive to diversify the portfolio of resources used by the agency, now almost completely dependent on Lake Mead to supply Las Vegas' water needs. More than five years of drought have threatened that water supply and driven home the imperative to have alternative sources, Water Authority staffers have consistently said.
"The purpose is to build a water supply that we believe our customers are going to need in the future, to supply the water the community needs in a reliable and cost effective way," Casey said.
Among the costs detailed in the authority's documents Monday:
$3.1 billion for development of ground water wells and pipelines in Lincoln and White Pine counties, a project that could bring water to Las Vegas by 2015.
$650 million for a "third straw" to bring deeper, cleaner and more reliable water from Lake Mead.
$150 million for conservation programs.
$815 million for "raw water treatment and transmission," which like several other items may never be needed.
Casey said the raw-water costs refer to the potential need for more water treatment plants to cleanse used ground water that could be sent to the lake for credits against future use, similar to the "return-flow" credits that the Water Authority now uses to increase the amount of water it takes from Lake Mead.
For every gallon of water the agency treats and returns to the lake, it can take another gallon out, a practice that increases the actual yield from 300,000 acre-feet annually to more than 500,000 acre-feet. Agency officials hope that when the Water Authority uses more ground water, it can win support for the idea of getting similar credits for the treated, used ground water.
Casey said the $815 million also could pay for juggling different river and ground water supplies, for example by taking more Colorado River water out if the drought-affected lake returns to historical high levels.
The problem now is to devise a plan to pay for the multiple projects. Pat Mulroy, Water Authority general manager, said in an interview last week that she would not pre-judge the recommendations that should come from the finance subcommittee, a process that could take one or two months.
Already on the table for consideration, however, are the sources that have historically paid for the Water Authority's big projects: charges for new connections, a quarter-cent sales tax and relatively small commodity and reliability charges on every water customer's bill.
New connection fees that developers pay already fund about 72 percent of the Water Authority capital projects. The sales tax now provides about 21 percent of the funding, and commodity and reliability charges on all bills provide a total of about 7 percent.
The reliability and commodity charges add about $10 a year to the average residential water bill. The sales tax component adds about $30 per year to people's bills on a per-capita basis, or about $45.5 million this year.
Connection fees, which developers say are passed on to home buyers, generate more -- $133.5 million this year, according to Water Authority figures. Agency officials point out that the fees add less than 5 percent to the price of a typical new home.
In last week's regular board meeting of the Water Authority, agency officials said the connection fees that are now about $3,500 for a new home could be more than doubled, to $8,000. If that happens, connection fees -- which agency officials defend as growth paying for growth -- would continue to provide the lion's share of the capital and financing budget, with 72.5 percent.
Casey said the final numbers could change. Over the next two months, the advisory group and Water Authority staff will work to draft recommendations to go to the board on the capital budget.
He said the final connection fees, charges and other prices for consumers will be determined by how big Southern Nevada's growing population will ultimately grow, the costs for development of the new water supplies, and how much water those still speculative resources, such as the ground water projects, will bring.
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