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February 23, 2012

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J. Patrick Coolican:

Addiction to growth has left water authority in financial straits

Image

Steve Marcus

Pat Mulroy, general manager of the Southern Nevada Water Authority, is shown during an editorial board meeting at the Las Vegas Sun offices in Henderson, Jan. 18, 2012.

By (contact)

Monday, Jan. 23, 2012 | 2 a.m.

J. Patrick Coolican

J. Patrick Coolican

Sun archives

Breaking news! There is no free lunch!

OK, this is actually not news to most of you. But that’s the take-away from the Southern Nevada Water Authority’s troubled finances and need to raise water rates to pay its significant obligations.

In fiscal year 2005-06, the water authority had revenue of $371 million. In fiscal year 2010-11, revenue dropped to $210 million, a loss of 43 percent, or $160 million.

How did this happen?

It’s simple: The water authority took in $188 million in regional connection charges — what everyone paid to hook up to the pipe — in 2005-06 but just $10.8 million last year.

That connection revenue has collapsed because growth has stopped.

Of course, you might say, why were we relying so heavily on such a volatile revenue stream? After all, did we really think the growth would continue forever?

There are two answers. The first is that, yes, we did believe the growth would continue forever. Although there were voices of reason — most of them elsewhere — there was a common, fanciful belief that Southern Nevada would continue its red-hot, recession-proof growth.

More important, as Patricia Mulroy, general manager of the water authority, told the Sun’s editorial board this week, “Growth was to pay for growth.”

The idea was that people who live here shouldn’t have to pay for the immense costs of building water infrastructure for the onset of new residents.

So, new investors paid for the original investors. Oops. I mean, new residents paid for the original residents. Like a Ponzi scheme.

This wasn’t just the policy when it came to paying for water infrastructure, however. Much of our community became addicted to growth in this way. Lucrative Bureau of Land Management land auctions helped pay for schools, parks and environmental programs. We needed new residents because they helped push up real estate transfer taxes as well as huge sales tax receipts on construction materials.

Growth would pay for growth. Pure folly.

If someone else — some newbie — was going to pay the enormous capital costs of building a city, what incentive was there to think hard about how to build a real economy? Or whether unfettered sprawl was really the best option?

Now the bill has come due and there are no new investor/residents on the horizon to pay it. We all have a little Bernie Madoff and his victims in us.

Discussion: 11 comments so far…

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  1. By wedo (richard belcher)
    Jan. 23, 2012
    6:29 a.m.
    Flag

    Mulroy needs to be fired along with the rest of the administrative cronies .Their management is criminal . We need a smaller more efficient water co. The citizens should demand it .

  2. By dantanna88 (charles harrington)
    Jan. 23, 2012
    8:02 a.m.
    Flag

    OMG!!!!-an actual "news" story in the Sun that deals with a real problem for the Las Vegas Valley?!!! How did this happen? You guys run out of porn stars to interview?

  3. By lbfromlv (Larry Bee)
    Jan. 23, 2012
    8:15 a.m.
    Flag

    God save Queen Mulroy!! Stanford science professors should have taught, for example, that water taken from Lake Mead to Steve Wynn's Bellagio fountains would evaporate during hot days and be gone forever. I only have a GED but I understand that there were consequences mounting as the water level dropped in Lake Mead for the last 22 years. She's been paid top dollar to "manage", not to facilitate for the construction and casino industries.

  4. By BChap (Bradley Chapline)
    Jan. 23, 2012
    8:52 a.m.
    Flag

    Superb article Patrick Coolican. You put it all out on the table where it belongs!!!

    "Larry Bee". MGM owns Bellagio, not Steve Wynn. Secondly, the water used for this lake and fountain is what is called, "Gray Water". Cannot be consumed by humans.

    However, gray water can be used for purposes where human consumption does not take place. But, there would have to be new plumbing systems installed within the water authorities jurisdiction in order to make this work. Can't do this anymore, we are apparently out of ponzi schemes!!!

  5. By RobM
    Jan. 23, 2012
    9:31 a.m.
    Flag

    I've always said the real problem behind the water issues is not Mulroy or the SNWA, but rather weak and ineffective elected officials who refuse to lead and acknowledge there need to be limits to growth in a city in the driest desert on the continent.

  6. By Malous (Dennis Hill)
    Jan. 23, 2012
    9:36 a.m.
    Flag

    Hmm, as if this is some sort of surprise to ANYONE who has lived here over the last 50 years.

    The Politicians probably knew it would come to this BUT they also surely knew that failure to silently go along would result in an end to their careers. Anyway when one is supposedly getting well paid for each suicidal vote it seemed the right thing to do, eh?

    In the early 60s we still had small streams and ponds in some parts of the valley. They were the last gasp of the dying aquifer that had stored up water for millenia. They are gone. Their passing is a symptom of the disease of insane growth.

    The supposed scientists of the Water District looked at normal Great Basin weather and made the inane excuse, "Hmm, this lack of rain is caused by a drought." This of course, was a fantasy engineered to stop criticism of short sighted behaviors. Then when a heavier than normal rain and snow year came along they proclaimed it a "possible end to the (non-existent) drought". If a REAL region wide drought actually occurs the Colorado will dry up for real and Vegas and Phoenix will be ghost towns overnight.

    The Meadows has been killed by moronic behavior.

  7. By The-Socratic-Inkwell
    Jan. 23, 2012
    10:51 a.m.
    Flag

    AS FOR PAT MULROY and the Water Department's fiscal deficits -- does this "grow more to grow more" mentality sound like the SPENDING problem that we have in the FEDERAL GOVWERNMENT in Washington, DC?

    This is the SAME mentality advocated by the Las Vegas Chamber of Commerce, most Casino owners, and almost all politicians since the 1990's who said: "Build it and they will come." Well as this article reports they have stopped coming. In fact, they are leaving.

    And it is the POOR PLANNING, MIS-MANAGEMENT of GROWTH, and ZEAL for Las Vegas to a "BIGGER CITY" - that CAUSED this potentially "fatal" - water shortage, and RESULTANT fiscal demise of the ability of Las Vegas to pay its bills.

    Well folks, "THE PIPER" HAS ARRIVED. This fiscal shortfall was PREDICTED by many people years ago - each with varying, but equally valid (and NOW PROVEN) rationale as to why the onset of massive growth influx - beginning in the 1990's - (of 5,000 people per month) would cause water shortages, and fiscal deficits.

    Most people in Las Vegas have known for the past 15 years, about new "Straws" going into Lake Mead to increase the abilityk to draw water to accomodate GROWTH. And the incredulous $Billion-dollar-construction-plans for "stealing" water from other areas in Nevada -- such as from Mesquite, or Northern Nevada -- where life-giving water is essential to ranchers and Nevada towns.

    The bizarre IDEA of building a pipeline from one end of Nevada to the other, WOULD ALSO DEPLETE UTAH's share of the underground LAKE that runs under both Utah and Nevada.

    If you look at the furious growth Las Vegas has ENCOURAGED, and the misguided methods used to accomodate such GROWTH -- including the development of WATER-SEEKING PROJECTS which Pat Mulroy has fought to get over the years -- you would think the MOB was still in charge of things in Nevada.

    Yet maybe this "depression" we are in has actually SAVED LAS VEGAS from self-imposed extinction - BEFORE "the powers that be" could foster its unrecoverable destruction.

    Will we learn from our ambitious growth mistakes? Will we forget the past, or are we doomed to repeat it?
    What will we do when things get better?. THAT is up to the PEOPLE of LAS VEGAS; to make their opinions known by challenging the need for uknplanned growth in Town Hall Meetings, the legislature, and the "Voting Booth" - NOW, and next November.

    A NOTE ABOUT THE WATER in BELLIGAO'S 9 ACRE LAKE. This LAKE is NOT filled with treated greywater from the hotel. The lake is actually serviced by a freshwater WELL that was drilled decades prior to irrigate the GOLF COURSE for the (then) DUNES HOTEL which existed on this site until 1993.

    Lake Belliago and it's fountains actually use LESS WATER(only 10%) of the water that was used to irrigate THE DUNES HOTEL golf course. Reference: http://en.wikipedia.org/wiki/Bellagio_(h...

  8. By ressince73 (Gary Lind)
    Jan. 23, 2012
    3:42 p.m.
    Flag

    Good comment "Darthfrodo". There is a bloated payroll at the water district, and it is time for Mulroy and company to move on. Conservation at the household level is finite. My house has only drought tolerant trees, no grass and no water features, such as a pool/spa. What landscape I do have is watered very sparingly (10 minutes every other day on a bubbler system). Short of letting what little vegetation there is on my property die completely, where should I cut water usage? I'm not going to stop bathing, washing clothes, or using the toilet, nor should anyone have to, so that Mulroy and Co. can reap 6 figure salaries. No new hook ups is a good thing for the valley. Their revenue is down also due to vacant homes/businesses, but the water to these has been shut off. As a retiree my wife and I conserve wherever we can. Between NVenergy and the water district it's getting harder all the time.

  9. By lericgoodman (Leric Goodman)
    Jan. 23, 2012
    8:35 p.m.
    Flag

    So, Cooligan, how are we going to pay back the bonds that we must sell to bring who knows how much or how little water down from NE Nevada?

  10. By The-Socratic-Inkwell
    Jan. 23, 2012
    10:52 p.m.
    Flag

    @ By Bob635 -- -- I have no idea what the price of water is in Chicago, but I do know that Las Vegas is running out of water!

    That "white chalk" area above the Lake Mead water line shows where the lake water level USED TO BE.

    Now, projections indicate that the water level will go down significantly, within the next 5 years. IF THIS IS TRUE, Las Vegas will become a potential Ghost Town in subsequent years.

    You cannot live in the desert without water.

    And Lake Powell - which FEEDS Lake Mead with water via the Colorado River - gets its water from the snow-melt of the mountains of Colorado, and other States north of Lake Powell.

    HOWEVER, Lake Powell's water level is going down too.

    And when the water level in Lake Powell gets down a bit more, it will soon not have enough water to contribute to the Colorado River FLOW - and thus the water level in Lake Powell will not be able to move high enough over the mountains to deposit Lake Powell river water into Lake Mead.

    So, as you can see - COST is not an issue; AVAILABILITY IS. The irresponsible and rampant GROWTH in Las Vegas has produced a situation where (for at least 10 years) we have used more water than is available. That is the reason why Pat Mulroy is chasing "rainbows" - to find water for Las Vegas. She knows that unless we find more sources of water, "the end" of Las Vegas, as we know it, will arrive.

    BOTTOM LINE - unless Las Vegas (the people and politicians, et al) decide what SIZE town Las Vegas can successfully sustain with its available resources (including water) - Las Vegas may otherwise just become a "dead man, walking."

    And this is not just me talking - or painting a doomsday scenario that "might" happen - but it is now an unrefutable fact, which is rather obvious. And, which has been documented in the media, and by the U.S. Government (which manages water allocations among the 9 States that take water from the Colorado River).

    So doomsday scenario or not - if Las Vegas doesn't change its GROWTH mentality - "the end" may be near.

    Besides, we do not need 2 million people LIVING in Las Vegas in order to have a vibrant town. Our economy is driven by Casinos (our bread and butter) who depend on the 34 million tourists that USED to come here. Now, since we only have about 18 million tourists coming to Las Vegas each year, the economy is down, but the effect on people who live here is in the lack of services and support the County can provide. The result is, and has been, higher taxes - due to lost revenue.

    SO, if there are fewer tourists, Casinos do not need as many employees. And if there is not enough work, residents will suffer, and the economy will fail. We have seen this happen as a result of closed construction projects, less business in casinos, home foreclosures, higher welfare rolls, etc., etc.

    And in the end, we will have done all this GROWTH for nothing.

  11. By staralioflundnv (Star Ali Mistriel-Kogan)
    Jan. 24, 2012
    10:17 p.m.
    Flag

    All the County Planning Commissioners, those involved in Clark County's Public Utilities, should be held accountable, liable, and put to trial for their betrayal of the public's trust!

    Now we are witnessing the "public systems" collapsing due to corrupt, greed-ridden, lust for control and power possessed individuals. They all knew full and well that Southern Nevada is a DESERT, and yet, they, without regard, violated the public's trust, and encouraged UNSUSTAINABLE GROWTH in Clark County, with the taxpayer/citizens left paying the bills!

    These folks swung contracts and favors to their associations/cronnies/relatives/church friends, without regard for the millions of lives who looked to them to PROTECT the interests of the Citizens.
    SHAME SHAME SHAME

    It is a crime, and they are the criminals. Las Vegas deserves to have people who care about it serve instead of these traitors of public trust. I pray good, responsible people will take over and lead.

    Blessings and Peace,
    Star

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