Truckee Meadows Water Authority’s (TMWA’s) accumulation of Orr Ditch Decree irrigation rights was begun by Sierra Pacific Power (Sierra) in the 1940’s. To date, TMWA has acquired directly or through lease agreements with Reno, Sparks and Washoe County, over 60,000 acre-feet of irrigation rights which have will-serve commitments against them.

Until August of 1979, water service to applicants for new development was possible using rights and resources Sierra had acquired by that date. In that year, as the result of an extensive study by Sierra, the Washoe Council of Governments was informed of water supply problems resulting from the inability of the community to acquire use of Stampede Reservoir for municipal and industrial purposes. The State Engineer subsequently ordered that will-serve commitments for subdivisions could not be issued until a water budget showed that sufficient water was available for new projects. At this same time, Reno, Sparks and Washoe County (RSW) were approving commercial projects whether or not a “will serve” letter had been issued.  To address this situation, Sierra sought approval of “Rule 17” with the Public Utilities Commission of Nevada (PUCN). After extensive hearings in late 1981, the PUCN issued its Opinion and Order on February 8, 1982. The order required that applicants for new water service either transfer sufficient water rights to the utility or be placed on a waiting list until the utility had acquired water rights to serve the project.

As a result of a 1984 hearing, the PUCN reviewed and reaffirmed the policies and procedures contained in its Rule 17. RSW subsequently enacted ordinances and/or resolutions requiring that all new developments deed water rights to the city or county prior to the issuance of a building permit. A Water Sale Agreement was then created between Sparks and Sierra that basically leased Sierra the use of the rights for the new will-serve commitments.

In 1986, the Federal Tax Act was changed that taxed contributions of water rights to taxable entities. However, since water rights acquired for new development were owned by the city it was determined a tax would not be required. A Treatment Agreement between Sparks and Sierra was later substituted for the Water Sale Agreement, which continued the lease arrangement between Sierra and Sparks.

In 1996, Federal tax laws were changed eliminating a tax contribution associated with the dedication of water facilities and water rights to private utilities. Sparks ordinance was accordingly changed so that Sierra was responsible for the acquisition and ownership of water rights within Sparks, therefore all water rights from that time on were dedicated to Sierra. When TMWA was formed in 2001, it acquired by deed all water owned by Sierra and became successor in interest to all Treatment Agreements and Water Sale Agreements.

Once TMWA was established as a legal entity pursuant to Chapter 277 of NRS, the necessity for Sparks to hold water rights and the usefulness of the Treatment Agreements and Water Sale Agreements ceased. By deeding these water rights to TMWA, the State Engineer’s process of filing applications to change the points of diversion, place of use, and manner of use is simplified for the State Engineer and TMWA, and removes any future personnel or other financial obligations by Sparks to be involved in the process. This is particularly true as TMWA prepares and manages numerous applications as part of TROA’s implementation.

TMWA’s records indicate that between 1983 and 1996, over 546 deeds dedicated 6,000 acre feet to Sparks, which rights were then made available to Sierra for will-serve commitments through Water Sale Agreements or Water Treatment Agreements.  No monies were expended by Sparks at the time of dedication to acquire these water rights. Sparks took title to the water rights at $0 book basis. The water rights will transfer and be carried on TMWA’s books at a $0 book basis as well. Since these water rights were committed to serve a project(s), they cannot be sold or re-issued by Sparks or TMWA. Even if a project does not use its full commitment in any given year, the unexercised portion of the water right goes into drought storage under TROA.

The transfer of these water rights is not absolutely necessary to accomplish their use.  Reasons to make this transfer are to eliminate Sparks staff time spent on tracking these water rights, reduce TMWA staff time in tracking Sparks rights, and eliminate State Engineer staff time and errors in processing transfer applications, extensions of time or filings of Proof of Beneficial Use. By deeding these water rights TMWA, the State Engineer’s process of filing applications to change the points of diversion, place of use, and manner of use is simplified for the State Engineer and removes any Sparks involvement in the process. This is particularly true as TMWA is preparing and managing hundreds of documents to perfect these water rights.

1.            City Council may choose to approve the Transfer Deed and Termination of Agreements as presented.

2.            City Council may choose to reject the Transfer Deed and Termination of Agreements and provide direction to the City Manager.

I move to approve a Water Rights Quitclaim Deed to Truckee Meadows Water Authority and move to approve a Termination of Water Agreements with Truckee Meadows Water Authority.