MVWD Board paves way for major capital projects

By VERNON ROBISON

The Progress

The Moapa Valley Water District Board of Directors opened the possibility of the district obtaining a low interest loan that could fund $16 million in vital infrastructure projects during a meeting held on Tuesday, April 9.

In the meeting, the board approved a tentative budget document for fiscal year 2024-25 that left the door open for the district to receive the funding.

This regulatory step will allow MVWD staff to apply for the federal financing being offered through a Nevada Division of Environmental Protection (NDEP) program at a low 1 percent interest for up to a 30 year term.

This funding would pay for three major projects that have long been considered necessary by MVWD staff, but which have been far outside of the budget for the small district.

The first of these capital improvements is a new 3.1 million gallon water tank proposed in the Muddy River narrows between Moapa and Logandale. This tank would provide emergency reserve capacity needed in the southern portion of the MVWD service area.The cost of this project would come in at around $10 million.

The second proposed need would be drilling a new production well at the district’s Arrow Canyon facility just west of the Warm Springs area. This new water source would provide redundancy in the event of the failure or required maintenance of other MVWD water sources. Drilling the new well would cost a projected $2.5 million.

The third priority project would be the construction of a 500,000 gallon tank also near the Arrow Canyon site. This project would improve service and public safety in the Warm Springs area of the MVWD system. Its cost of construction was projected at about $3.5 million.

At the meeting, MVWD general manager Joe Davis talked to the board about the unique opportunity that the NDEP loan offered for the district.
“For perspective, if you take just the Warm Springs tank as an example, with the $3.5 million cost of that tank at 1 percent over a 30 year term, we would be paying back $500,000 in interest,” Davis said. “By contrast, the majority of our current bonds are around 4 percent interest. If you took that $3.5 million at the 4 percent rate, you pay back $2.5 million in interest. So you’re paying an extra $2 million going from 4 percent to 1 percent. That is what makes this loan a game changer.”

MVWD board member Ryan Wheeler said that this was a vital point in the consideration. “We have been saying we are trying to make the best decision and that we don’t want to go out for $3.5 million because we just can’t afford it,” he said. “But how often do we have an opportunity to go for 1 percent money? That is a big deal!”

Though no final rate decisions were made by the board, a preliminary discussion about how these projects would impact ratepayers did take place. MVWD staff had plugged in a couple of scenarios into their ratemaking software as possible ways to pay for the vital improvements and maintain healthy cash position targets for the district.

Davis suggested that a flat debt service charge could be instituted to ensure that the new debt would be covered. This would appear as a separate line item on the customer’s bill, Davis said.

Such a charge would provide transparency for the customer; but it would also be a reliable revenue source to cover the debt. More stable than raising costs of water usage which can fluctuate based on yearly climate conditions, Davis said.

Davis presented two scenarios employing such a fee. Each scenario also included a proposal for an annual rate increase.

The first scenario called for a $5 debt service fee to be added as a new line item on each water bill. Because the flat debt service fee was relatively low in this scenario, a recommended water rate increase of 8 percent was projected for both fiscal years 2025 and 2026. Then rate increases would recede to 5 percent per year for 2027 and 2028. Finally, the rate increases were projected to be only 2-3 percent per year after that.

Davis explained that under Scenario 1, the impact to the average ratepayer would be an additional $14.18 per month on their peak summer time water bills.

The second scenario would reduce the annual rate increase to 6 percent for fiscal years 2025 and 2026, and increase the flat debt service fee to $10 per month.

This scenario would increase the average ratepayer water bill by $16.89 per month during peak usage months.

Board action on this item during the meeting did not include a rate increase, nor was a rate increase on the agenda. Rather Wheeler made a motion to approve the tentative budget document submitted to the state to include a line item showing the possibility for $16 million in additional “unknown debt.” This way the conversation on the proposal could continue.

“We are trying to make our infrastructure resilient,” Wheeler said. “This is a lot of money, but it is a good oppotunity for good, low-interest money. It is hard to say no to that to improve aging infrastructure that will help provide security for the people.”

“I see no downside to going down this path,” said board chairman Kelby Robison. “There is really no reason not to. We know these projects need to be done. But this doesn’t lock us in at this point. We aren’t forced to do anything. This just allows us to continue gathering information and exploring opportunities.”

Wheeler’s motion was met with a unanimous approval of the board.
When asked about timeline, Davis said the NDEP board of finance wouldn’t announce the award of the project until August.

If the loan is approved, the board would be discussing rate actions by the end of this year for the next fiscal year.

Funding to begin the projects would likely not be lined up until late 2026 or early 2027, Davis said.