By VERNON ROBISON
The Progress
The top three infrastructure needs on the Moapa Valley Water District (MVWD) priority list have long been outside of the budget for the small rural entity. But that may be about to change as a source of low-interest public funding has become available to help with completion of these urgent projects.
In a meeting held on Thursday, March 14, the MVWD board of directors discussed some particulars about special interest rate financing being offered by the Nevada Division of Environmental Protection (NDEP) on a priority basis to the MVWD.
Attractive funding source
In an introduction to the discussion, MVWD General Manager Joe Davis explained that the NDEP currently has $100 million in federal infrastructure funds that are being offered at an interest rate of only 1 percent for up to a 30 year term.
“It is a once in a lifetime opportunity for us to get these important projects done,” Davis told the board. “Those are extremely favorable conditions.”
Normally a small entity like MVWD would have little chance at this money, Davis said. That is because larger entities with much bigger projects to propose would step in and use “every ounce of the money that is there,” he said.
But an NDEP official, with a positive relationship with MVWD staff, had offered to make sure that the district had a priority chance at the program. This relationship was built on the fact that the district had always exercised fiscal responsibility in past dealings, Davis said.
In a presentation, Sunrise Engineering vice president Joe Phillips framed the need for the board. He reminded the board of a Capital Improvements Plan that Sunrise Engineering had done for the district in 2017. The plan had identified a number of projects that were needed to shore up the MVWD system, he said.
“You may remember, there were three projects at the top of that list that we recommended as prioritized improvements,” Phillips said. “These three were kind of the heavy lift-type projects that would need some additional funding to be able to implement them.”
Narrows tank project
The first of these was a 3.1 million gallon water tank proposed at a point near the Muddy River between Moapa and Logandale called the Narrows. This tank would provide emergency reserve capacity for the southern portion of the MVWD service area.
“We have long been concerned about the fact that the majority of the source water for MVWD is located north of the (Narrows) bottleneck,” Phillips said. “Meanwhile, 75 percent of the demand is south of the bottleneck.”
If anything happened to the bottleneck pipeline there would only be a portion of a day’s worth of storage to meet demand in the lower valley, he said.
To make matters worse, Davis explained that the district crews have been experiencing “massive corrosion failures” on a 24-inch main pipeline that runs from Moapa down through the Narrows.
“We have tried to mitigate it,” Davis said.
In fact, district crews have installed a smaller alternate line to maintain flow when the 24” line breaks. But it isn’t enough to meet downstream demand.
There are also plans in place to eventually replace the line altogether. But that is currently awaiting environmental approvals.
In the meantime, the district walks a tight wire in that area.
“When we have gone in to make repairs on that line – and it wasn’t even in in the heat of the summer – we got close. The tanks drop and we have come within a few feet of losing water in the system to the entire community.”
Phillips said that the 3.1 million gallon tank in the Narrows would provide enough storage capacity to feed the lower valley for up to two days while repair work, or eventual replacement of the line is complete.
Arrow Canyon #3 well
The second high priority capital project would be a new production well at the district’s Arrow Canyon facility just to the west of the Warm Springs area.
The proposal would be to drill a new Arrow Canyon #3 well with a capacity of at least 1,800 gallons per minute. This would provide a redundancy source in the event of the failure or required maintenance of Arrow Canyon #1, the district’s largest producing well.
In that case, the new well could be pumped in coordination with the existing Arrow Canyon #2 well to fully meet demand in the system.
Davis stated that Arrow Canyon #1 was drilled in 1990 using outdated materials. “It has met its useful life,” he said. “The hope would be that we would be able to do maintenance on one and still keep the other one going.”
Davis said that the Arrow Canyon wells are a source of anxiety for MVWD staff, in that if the #1 well went down for a time during high demand summer months the district would have difficulty supplying enough water into the system.
He said that the district had already filed applications for the project with BLM and the process has been slow.
“But we are at the point now that the process is moving quickly,” Davis added. “So we are needing to figure out whwat we are going to do for funding to move it forward.”
Warm Springs tank
The third project slated was the construction of a 500,000 tank also near the Arrow Canyon site.
A tank located there would improve service and public safety in the Moapa upper zone of the MVWD system, Phillips.
“The Warm Springs tank was identified because right now, if pumps aren’t running in Warm Springs, there is no pressure in Warm Springs,” Davis said. “So you have to keep the pumps running nonstop. That overlaps with the concerns we have about Arrow Canyon #1.”
However, Davis acknowledged that this project would face the most difficult environmental restrictions due to its location adjacent to the Arrow Canyon Wilderness Area.
For this reason, Phillips had provided two cost scenarios: one with all three projects included; and the other with the Warm Springs tank left out of the equation.
That way if the tank project faced long delays, the special interest rate NDEP financing could still be employed in a timely way. The funding program requires that the loan be closed within three years of execution.
Average cost to ratepayers
Unfortunately, the district is facing escalating costs in completing these important project, Phillips said. When the initial needs study took place in 2017, the aggregate cost to complete the three projects together was estimated at around $5 million.
Today, the estimate for the same three projects is at $16 milliondur to the COVID-19 pandemic and the supply line disruption and inflation on materials that had resulted in recent years, Phillips explained.
Under the 1 percent NDEP loan funding formula, this amount was estimated to spread out to add a little more than $13 per month per MVWD connection, Phillips reported.
In the alternative package which did not include the Warm Springs tank, the estimated cost would be $12.6 million. This cost would spread out to just under $10 per month per connection, he added.
“Given all of this the question is: Just how good is this opportunity?” Phillips said. “My answer is: I don’t think that you’ll see anything better.”
Davis said that the district is approaching a position where it will be retiring a significant portion of its existing debt. This would offset some of the costs to customers, he said.
Davis acknowledged concerns about the uncertainty of raising the needed revenue by simply raising water rates. They pointed out that in wet years, the district brings in less revenue on water sales. This could leave the district short in the capacity to make debt payments under those circumstances.
But Davis suggested that, rather than raising usage rates, the district could implement a new debt service fee as a separate line item on its water bills.
“When you set that portion that is itemized on the bill and the customer can see exactly what it is, then that is a direct revenue that doesn’t fluctuate up or down whether it is a wet year or not,” Davis said.
Board response
Board members were generally supportive of the idea, since it provided an uncommon low-cost funding opportunity to complete the projects.
“I think it sounds great,” said board member Ryan Wheeler. “I appreciate the staff and Sunrise Engineering doing the homework on this and working to set us up for capitalizing on opportunities, knowing that our budget is low.”
Board member Lindsey Dalley said that he was also on board to move forward. “My only question is: How does it affect the bigger financial picture,” he said. “Where is the money coming from? I know that is another discussion, but that is the question I have.”
Davis said that there was some time for the board to ask questions and get all of the details in their minds. The pre-application materials had already been submitted to NDEP. So the boardcould meet in April for additional discussion. If the proposal was approved then, all it would take is a phone call to the NDEP officials to formally submit the application and get things started, he said.
“Nobody wants to drag their feet and miss a good oppotunity on this,” said MVWD board chairman Kelby Robison. “But we have time to ask questions. So let’s take that time to work it out, review the materials and then next month we can propose some possible ways forward.”
