Analysis of Water & Wastewater Utilities Provision in Elko County

Analysis of Water & Analysis of Water & Wastewater Utilities Provision Wastewater Utilities Provision 1

Consultant Introductions Consultant Introductions Catherine Hansford More than 25 years of experience in municipal finance Specialize in water & wastewater utilities public finance Completed the governance analysis for SCA in 2017 Mark Foree Owned a private water system near Winnemucca for many years Former General Manager of Truckee Meadows Water Authority Working with water systems throughout the state 2

Purpose of the Analysis Purpose of the Analysis Primarily, to answer these questions: 1. Is it possible to make the utility systems public assets with public governance? Would public ownerships benefit SCA owners by reducing their water rates? 2. Also, to: Examine the ability to serve projected growth Effect that water rates might be having on property values 3

Acquiring the Utilities for Public Ownership Acquiring the Utilities for Public Ownership Great Basin Water Company (GBWC) does not want to sell If eminent domain can be pursued, it would have to be by Elko County, not SCA Certain legal findings would be needed, such as not consistently providing adequate service and safe drinking water appears difficult considering regulatory bodies require conformance with standards If eminent domain is possible, the likely lender (SRF program) to finance the acquisition requires managerial consolidation for a loan that can be supported by rates similar to those of GBWC Managerial consolidation requires cooperation between Elko County and the City of Elko, SCA not party to the decision making 4

Estimated Cost of Utilities Public Ownership Estimated Cost of Utilities Public Ownership Public ownership could be Elko County, or a General Improvement District Must pay Fair Market Value Utilities systems value: Estimated at least $27 Million With estimated soft costs and capital improvement costs for the next 3 years included, estimated loan to acquire: $35 Million Some costs not included in the loan: debt service reserve (about $1.7 million) and start-up capital ($1 million) who provides this? Customers would be paying debt service for many years (30 years with SRF) 5

Costs: Private vs Public Costs: Private vs Public Operations Estimated to decrease about $500,000 / year under public ownership Negated by new debt service about $1.7 million / year for next 30 years plus repayment of start-up capital about $250,000 / year for first 4 years Capital (Infrastructure) PUCN approved $6.9 million of $7.3 million ask for next 3 years Per GBWC 2024 IRP, the systems need about $2.7 million investment each year for the following 17 years Both NDEP and PUCN acknowledge the need for system improvements; these are needed regardless of ownership of the systems 6

Water Supply and System Capacity Water Supply and System Capacity Basin 048 is a designated basin Over-appropriated (more water rights granted than the basin can support) NOT over-pumped Only portions of basin in stream capture zone to the Humboldt River might be denied new well location (changing point of diversion of existing water right) Sufficient water rights held by GBWC to serve all SCA; new developments must bring their own water rights System capacity Sufficient for buildout of lots with water rights Pipeline rehabilitation and/or extension for new development might be very expensive for new development 7

Public Ownership Impact on Water Rates & Bills Public Ownership Impact on Water Rates & Bills No significant change to rates over next 6-10 years expected; bills in next 5-6 years expected to be slightly higher under public ownership Long-run: better access to grant-funding, local control, potential to use ad valorem revenue (latter unlikely to come to fruition due to the tax cap and need to spend revenue on other services) 8

Comparison Water Bills at Different Use Levels Comparison Water Bills at Different Use Levels Consumption Level 2024 2025 1 2026 2 2027 3 2028 4 2029 5 2030 6 GBWC planned increases vs. hypothetical municipally- owned water system increases GWBC Anticipated Increase Hypothetical Municipal Increase 0.00% 5.50% 16.00% 5.50% 0.00% 5.50% 0.00% 4.75% 15.00% 4.75% 0.00% 4.75% Bill @ 15,000 Gallons GBWC Municipal Monthly Water Bill for 3/4-inch Meter $105.25 $105.25 $111.04 $122.09 $117.15 $122.09 $123.59 $122.09 $129.46 $140.40 $135.61 $140.40 $142.05 Bill @ 30,000 Gallons GBWC Municipal $199.45 $199.45 $210.42 $231.36 $221.99 $231.36 $234.20 $231.36 $245.33 $266.07 $256.98 $266.07 $269.19 Bill @ 60,000 Gallons GBWC Municipal $419.05 $419.05 $442.10 $486.10 $466.41 $486.10 $492.07 $486.10 $515.44 $559.01 $539.92 $559.01 $565.57 Bill @ 120,000 Gallons GBWC Municipal $858.25 $858.25 $905.45 $995.57 $955.25 $995.57 $1,007.79 $995.57 $1,055.66 $1,144.91 $1,105.81 $1,144.91 $1,158.33 9

Water Bill Water Bill - -Inch Meter @ 15,000 Gallons Inch Meter @ 15,000 Gallons Monthly Water Bill for a Customer with 3/4-inch Meter $120 $114 $105 $99 Base Charge Use Charge $100 $90 $93 $85 $74 $78 $80 $65 $67 $68 $57 $59 $61 $60 $32 $32 $35 $37 $38 $39 $43 $44 $44 $46 $47 $47 $49 $40 $20 $0 10

Water Bill Water Bill - -Inch Meter @ 90,000 Gallons Inch Meter @ 90,000 Gallons Monthly Water Bill for a Customer with 3/4-inch Meter $643 $639 $600 $500 $515 $430 $400 $418 $408 $401 $400 $348 $345 $336 $300 $307 $280 $277 $262 $256 $200 $211 $203 $202 $195 $184 $161 $145 $144 $127 $100 $124 $119 $0 11

Water Bill Affordability Water Bill Affordability Water bills are considered affordable, as measured by state and federal funding programs Item Current Median Household Income (MHI) Statewide Nevada [1] Estimated Spring Creek CDP [1] MHI as % of the State MHI [2] $71,646 $109,952 153.5% Monthly Water Bill Monthly Water MHI Avg. Monthly Water Bill Avg. Monthly Bill as % of MHI [3] @ 15,000 galls $9,163 $105.25 1.15% Source: HEC, and US Census Bureau. [1] 2022 5-year American Community Survey table S1901. [2] Per the Drinking Water State Revolving Fund program, a community with an MHI <80% of the Statewide MHI is Disadvantaged. [3] Generally, water bills <2.0% of MHI are considered reasonable. 12

Water Bills Effect on Property Values Water Bills Effect on Property Values Living in Spring Creek is a lifestyle choice (larger lot, more landscaping) Water bills might be a consideration, but property values are more likely to be affected by regional housing supply, employment/unemployment, wages, and the interest rate 13

Conclusion Conclusion SCA could petition for a GID but otherwise not in control of the process Eminent Domain appears to be difficult Expensive cost to residents to acquire systems IF eminent domain is possible To keep rates as low as possible requires managerial consolidation with City of Elko; requires their willingness and agreements between the City and County/GID Potential for lower rates under public ownership after at least 10 years if benefit from grants Due to high MHI of the community, unlikely to get grants unless as part of economic stimulus (such as ARPA) 14