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September 23, 2014

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Small-business owners complain they’re drowning under Water Authority’s new surcharge

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Steve Marcus

Jim Meservey, a principal of Storage One, points to the total of his current monthly water bills after surcharges Wednesday, May 30, 2012. The figure at left was the total bill for the prior month without the surcharge. Although the business is a low water consumer, the company has seen its water bills double or triple depending on the size of the water meters. In 2016, the surcharges are scheduled to double, he said.

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Jim Meservey, a principal of Storage One, is shown in the fire control room at the Storage One facility on South Durango Drive on Wednesday, May 30, 2012. Although the business is a low water consumer, the company has seen its water bills double or triple depending on the size of the water meters.

As chairman of the Metro Police Fiscal Affairs Committee, businessman Jim Hammer has earned a reputation as someone who is not a rubber-stamper. He questions motives for budget increases and has proven far from a Metro brass pushover.

Now he’s wondering just how much questioning the Southern Nevada Water Authority did when it voted to add a hefty new surcharge to water bills that customers began to see in May.

Hammer is one of the principals of more than 20 Storage One self-storage unit facilities throughout the Las Vegas Valley. He’s seen water bills for those facilities recently increase from $11,500 to $26,000 per month, an amount Hammer says decreased the value of the business by $2 million. It’s frustrating to him that the increase is not even due to increased water use. At those mini-storage facilities, little water is used beyond landscaping and a single on-site apartment.

The Southern Nevada Water Authority’s new “reliability” fee, however, isn’t based on water use. It is generally based on the size of water meters going into a home or business. A local consulting firm came up with the idea after the Water Authority saw hook-up fees dwindle from a high of $188 million in 2005-06 to $10.8 million last year. Meanwhile, the agency spent money on infrastructure, including a costly third intake pipeline into Lake Mead. The pipe is considered insurance in case lake levels fall below two other intakes closer to the lake’s surface.

In other words, the money has been spent; what remains is paying off bondholders who helped finance Water Authority expenses. Outstanding debt stands around $3.3 billion.

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A rig of explosives is lowered into Lake Mead during construction of the Southern Nevada Water Authority's third straw, May 10, 2011. The Vegas Tunnel Constructors crew was blasting a 60-foot shaft in the bottom of the lake for the straw's intake structure.

The Water Authority board voted to add the new charge to customer bills in February. Given three options, the board chose the one that affected homeowners least. On average, homes connected to the system with 3/4-inch water meters saw an additional monthly fee of $5. Casinos and golf courses saw a fee increase that came to about a 2 to 6 percent hike in their overall water bill.

But other businesses like Hammer’s were expected to see increases of up to 300 percent.

One of the Storage One sites saw an increase from $900 to $3,100 per month; another went from $600 to $2,000. The increases come mostly from the business’ fire meters, which are typically much larger than regular-use meters.

“On any given day, not a drop of water flows through them,” Hammer said. “It’s pretty horrible.”

Other business owners are in just as much or more shock.

Before the question about his water bill is fully asked, Peter Michelin launches into emotional disbelief at the $1,000-per-month increase, about 180 percent, in his water costs. Michelin owns a small office building on West Sunset Road with about 13-14 units; about half are occupied. Even before the new water hike, he had to reduce some rents because the tenant “wasn’t making it.” So there’s no way, he said, that he can pass this additional $1,000 onto his tenants.

“I knew the (third intake) had to be built; I just had no idea I’d be taking such an active role in the financing,” Michelin said.

Janine Meredith owns a contracting business in North Las Vegas. When she received her bill a few days ago, she said, “my heart sank.” Water costs at her business went from $80 to $336 per month. In a year, that’s an increase from about $1,000 to more than $4,000. Most of the increase covers the boost in the cost for fire meters.

She tried to get the fire meters unhooked, “but they said no way, it’s mandatory.”

“Honestly, I can’t afford this,” Meredith said. “It’s a warehouse where we have vehicles. It’s not a storefront where people are there all day.”

Meredith is seriously considering closing her business, even though three and sometimes four employees rely upon her for work. She is loath to pass more costs onto customers because she has to compete against some contractors who “operate out of the back of their truck” and are able to offer cut rates.

“I’m toeing the line, paying insurance and all those things, so I can’t compete with people who are unlicensed,” she said. “I haven’t made a profit in six years, and this has definitely sent me over the edge. I just don’t know how they figure they’re going to get this kind of money from someone barely hanging on.”

The Water Authority board is made up of representatives from the various water districts in Southern Nevada. Board members voted unanimously for the new fee. Before the vote, Clark County Commissioner Steve Sisolak, who sits on the Water Authority board, argued for and won a reduction in the fire-meter increase. He also recommended a losing proposition to increase the average household fee from $5 to $6.

His office has received numerous complaints as customers received bills this month.

“At every event I speak at, they ask this question: How did this happen?” Sisolak said. “The truth is, we had these discussions. It was in the newspapers. The Water Authority had public meetings, and they were not very well attended.”

It’s not as though the Water Authority is blind to complaints. It has received about 20 complaints, spokesman J.C. Davis said. Some are from businesses, he said, but most are from homeowners who have 1-inch water meters instead of 3/4-inch meters. For those with the larger meter, their bill increased about $19 per month instead of $5 for the smaller meter.

The Las Vegas Valley Water District will convert for free a 1-inch meter to a 3/4-inch, Davis noted. But that doesn’t always mean a lower bill. Water at the same tier (water is tiered, so it costs more to use more water) costs a homeowner with a 3/4-inch meter about twice as much as someone with a 1-inch meter. (The Water Authority is the water wholesaler to seven water districts. The free meter-exchange offer currently only applies to the Las Vegas Valley Water District.)

Davis added that the Water Authority has established an advisory committee whose members will represent a wide array of people and businesses. That committee will work on potential changes to the billing system when the current structure ends in three years. Also, on June 5, the Las Vegas Valley Water District will discuss a separate committee it wants to establish to look at the fee structure.

Hammer hopes something will happen soon. He wants to get as many business owners as possible to the next Water Authority meeting on June 21.

“They just picked on some businesses disproportionally,” he said. “Is it fair that hotels have a minor impact and we pay almost three times as much? It seems to be punishing some small businesses.”

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  1. Water bills should be based on water usage, not the size of meters. This type of treachery is waiting to engulf the public next and set financial recovery back another decade.

  2. Come on, Becker. You are one of those who call for bigger government and this is exactly what you get: out of control little Napoleons! So, be careful for what you wish for. BTW, how much of the increase is due to the Springs Preserve fiasco? That's cost the water authority millions and, now, they're passing it on to us. Is any one watching the store? I think not. The goofy Clark County Commissioners heap praise on Mulroy and do nothing to stop her from enlarging her fiefdom. With commissioners like them, who needs enemies?

  3. Absolutely without reason. Up the per 1,000 gallon usage charges especially for residents and businesses with lawns--make it cost effective to switch to desert landscaping and drought-tolerant vegetation.

  4. Since the County Commissioners have No Clue about Smart Growth and Planning, maybe the Water Authority can take care of the Growth Problem for them. And Yes, after a very low rate for water needed for Basic Survival, Rates should be based on Usage - without any of the Volume Discounts so many Businesses and Mobile Home Parks receive by Single Metering.

  5. The important thing, though, is that we spared the golf courses and casinos any pain. Can you imagine? Some people wanted them to pay more than their customary 2 or 3 percent increase? The nerve!

  6. What's also irritating is that the builders already had to pay thousands of dollars for the connection fees when the structures were being built. The water distict made tens of millions off the connection fees alone each year. But then the economy tanked and the building stopped.

    This is all because the water district went into heavy debt thinking the good times were going to last forever.

  7. As someone who owns several rental properties I can attest that these notions of homes with lawns are the big users are wrong. Homes with swimming pools are the biggest users. Just evaporation is around 100-200 gallons per day (depends how often the pool is used with kids splashing water out). My homes with desert landscaping are the lowest users, BUT they are the hardest to rent. My homes with lawns use on average 6,000 gallons more than the desert landscaped. The pool homes (with no lawns) use 20,000++ more than the desert landscaped.

  8. "Homes with swimming pools are the biggest users. Just evaporation is around 100-200 gallons per day"

    I own a pool and I completely reject that statement. That would mean evaporation would average 150 gallons a day or 4,500 gallons per month.

  9. I forget that in commenting sections you have to talk like a legal expert. The figures I used were annualized (20,000 more per year for pools, 6,000 more per year for lawns).

    Reject the statement all you want, I include water in the rent and receive the bills for each house.

  10. "The Las Vegas Valley Water District will convert for free a 1-inch meter to a 3/4-inch, Davis noted. But that doesn't always mean a lower bill. Water at the same tier (water is tiered, so it costs more to use more water) costs a homeowner with a 3/4-inch meter about twice as much as someone with a 1-inch meter. "

    Ive read this three times and still I dont get this one; Whats the meter size got to do with the amount of water used in a month? I don't know what meter size I have but my house consistently goes through about 6K gallons a month, assuming I have a 1' meter and go to a 3/4 meter, unless my three kids decide to move back in with mom and dad, I expect to still go through 6K gallons a month! Please enlighten me.

  11. Bill_Gordon, now your comment makes complete sense. Please don't take offense to my rebuttal. A few people spew a lot of nonsense on here and they need to be called on it when they do.

    Cheers!

  12. Mr. Gordon: if we pay for usage, the pool owners will pay their due. Pools may be worth the expense to some people. Lawns? You live in the desert, landscape like the desert. No pain way to "conserve".

  13. Don't any of you get it? Since construction activity has largely disappeared, the Water District has to raise revenue somehow to cover its' expenditures. Either it raises rates on water usage or finds some other way. In this case, the other way was "meter size". By selecting "meter size", the District inflicted big pain on a few rather than some pain on everyone, which was impossible politically.

  14. I suspect one could find a bloated payroll and a lot of ongoing spending waste at the Water Authority. Deal with those issues as well.

  15. Fink: read my comments again and tell me what I said. You have severe problems in understanding an English sentence. Were you born here or did you attempt to learn the language after climbing off the boat from Kenya?

  16. I completely agree with Roslenda on this issue. Water bills should be or do two things: They should encourage conservation and they should be fair. On both counts, actual use, rather than the flat fees preferred by the agency, should dictate the cost. And on both counts, the SNWA/LVVWD billing system completely fails.
    About 80 percent of my monthly bill is fixed. It doesn't matter how much I conserve. And I pay far more per gallon of water than the big institutional users. Then Mrs. Mulroy talks about how the casinos are subsidizing my residential water use? Please. It's the other way round.

  17. Pat Mulroy, the Southern Nevada Water Authority, Clark County Commissioners - ALL OF THEM are POLITICANS. Further, to get elected, or appointed, to anything in Clark County (or the rest of Nevada), you have to KNOW SOMEONE, and/or be "SOMEONE OF INTEREST to the "power brokers.

    People are elected by the Clark County(or Carson City) "political machine" - which is neither Republican or Democrat, because it is all about POWER, INFLUENCE, CONTRACTS, and MONEY.

    The reason many politicians run for office in Nevada (and elsewhere) is NOT for some ALTRUISTIC motivation - but to improve their lot in life; not necessarily to do something good for the general public.

    And as for the "third straw" in Lake Mead, that was a knee-jerk reaction by the Pat Mulroy, the head of the Las Vegas Water Authority.

    GROWTH in Las Vegas was eagerly sought after by all businesses - including the Chamber of Commerce who said back in the late 1990's: "BUILD IT AND THEY WILL COME." Well, they did - 5,000 a month for many years. But now they have STOPPED COMING, and thus, we have the WATER METERS to capture more money to pay for the "third Straw" - and other things that WERE NOT WELL PLANNED, NOR FINANCED in FUTURE PlANNING.

    Pay Mulroy gave an interview to the Las Vegas Sun around 1996 during which a reporter asked: "How do you plan to provide water and infrastructure for the rapid growth we are experiencing?" The Sun reported that Pat Mulroy said, "we don't do the any planning; we just accept what the DEVELOPERS tell us they are doing, including their infrastructure needs, and growth projections."

    SO, the proverbial fox was in the "Chicken House." As for Commissioner Steve Sisolak's comment that people did not take time to attend the meetings, the Commissioners will do what THEY want to do no matter how many citizens show up. And this is no excuse for Commissioners not doing their homework.

    But what is most important, the POLITICANS we elect or appoint to positions of TRUST, to run the County for the people and to have their best interests at heart - SHOULD DO THEIR JOB, and not just follow-along, or agree, to accept some CONSULTANT'S OPINION as to how to CAPTURE MONIES from the populace - without learning how it will IMPACT ALL PEOPLE in the County.

    So now, once again, the Las Vegas "playing field" has NOT been defined in an equitable manner, and people in business are getting nailed with excessive WATER BILLS - even though many of them DO NOT USE WATER to any level approaching typical use (such as a restaurant). And to say that the Water Authority WILL NOT CHANGE a meter size, is pure negligence of office.

    If there is any conscience in Clark County politics, this matter should be reviewed, and corrected NOW - not in 3 years (as seems planned).

  18. Uh, Jon, you must have me confused with your hero, Osama Obama, as being Kenyan.

  19. As bad as this increase is, consider that to build the proposed ground water pipeline from Central NV it will cost about 5 times the amount for the 3rd straw - and that's before legal costs and other cost overruns.

    Las Vegas, are you sure you want to pony up for that? If not, call your local elected officials and tell them NO to the pipeline and its $15.5+++ pricetag!

  20. As long as the CRC is filled with crooks the charges and high fees wiil continue. Pools schmmools , lawns schmawns, stop the down stream flow by half a million acre feet ( which is what Mexico ends up with for free), and you'll see the Lake water rise to where it belongs amd there wont be a need for more intakes. This whole thing stinks so bad that the power players should wear black suits with a white stripe. The public will never know the truth because Pat Mulroy won't disclose it.