Mulroy: Time for businesses to start sharing costs for water infrastructure

It's time for businesses to start sharing the cost for building water infrastructure in Las Vegas, Southern Nevada Water Authority general manager Pat Mulroy said Friday.

Developers are going to have to pay for something they got for free for 20 years, she added.

Mulroy said the authority had to develop a funding formula to pay for $2.5 billion in regional infrastructure such as the third intake at Lake Mead, a second water treatment plant and 8-inch fire lines. It was determined that more than half of that cost would have to come from connection fees.

"It was finally a duel between gaming and commercial on one side and residential on the other," Mulroy said at a real estate symposium presented by Commercial Alliance Las Vegas. "The only reason the (Wall) Street bought our bonds is because we have a debt service fund, and the only reason the rate increase didn't occur in 2008 is because money was sitting in that debt service fund."

The water authority had to dig into that $280 million fund to pay debt between 2008 and 2011 when connection charges went from $188 million a year to $3 million, Mulroy said.

The purpose of the reserve was to get through the economic downturn, she said. Las Vegas Valley Water District customers have had only two small rate increases during that time.

"We looked at our debt portfolio and did a lot of refinancing and restructuring," she said. "Your commodity charge went up a dime each year and unfortunately that wasn't enough. This has gone on so long those measures were not sufficient."

Mulroy has tightened the budget at the water authority, stopping $400 million in capital projects and laying off 25 percent of the work force.

All of the pieces are "on the table," and the community has to decided how to pay for it and meet the reserve, she said. Las Vegas residents are still paying 30 percent less for water than their California neighbors, Mulroy said.

At the same meeting, Tony Sanchez, senior vice president for NV Energy, said the utility's main challenge is meeting renewable energy goals. By 2025, the utility must meet renewable energy standards for 25 percent of its energy.

About 70 percent of Southern Nevada's power comes from natural gas plants, 14 percent from coal plants and 16 percent from renewable energy. In Reno, renewable energy is 24 percent.

The utility closed its coal plant in Ely, and now the biggest issue is the coal plant near Moapa, which has operated since 1965. NV Energy has invested $100 million since 2005 to make it the cleanest coal plant in the nation, Sanchez said.

"The PUC (Public Utilities Commission) told us to take a breather from renewables. I bring this up because there are cost implications to tearing down a plant that's paid for and producing energy," he said. "If we shut down a plant, we have to go on the open market to buy electricity. We're proud to say power rates are where they were five years ago."

Bob Coyle, vice president of government affairs for Republic Services, said 53,000 homes in North Las Vegas have converted from the red, white and blue recycling bins to 96-gallon roller carts, increasing recyclable materials from 3 percent to 30 percent of trash collection in the area. Henderson is looking at converting to roller carts next year.

That's allowed Republic to go from twice-a-week trash pickup to once a week, while recycling pickup increases from once every two weeks to once a week.

The current rate for Republic customers in Las Vegas is $13.61 a month, compared with $20 in Dallas and $26 in Phoenix, both of which have once-a-week collection. Portland residents pay $48 a month to have trash collected once every two weeks, he said.

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.