At the City Council meeting of May 8, 2017, staff presented to the City Council a proposal from the Tahoe Reno Industrial General Improvement District (TRIGID).  In the proposal, TRIGID set forth a general framework to annually make use of up to 4,000 acre-feet of treated effluent from the Truckee Meadows Water Reclamation Facility (TMWRF) to meet the process water requirements of current and future customers of TRIGID located in the Tahoe Reno Industrial Center (TRIC).  Upon hearing the presentation and after discussion with staff and representatives of TRIGID and Switch, LTD. (SWITCH), the City Council unanimously voted to direct the Sparks City Manager to negotiate with TRIGID, the State of Nevada, the City of Reno and the Truckee Meadows Water Authority (TMWA) to prepare a treated effluent agreement for future consideration and possible approval by the Sparks City Council.

Under the direction of the Sparks City Manager, staff has meet with representatives of TRIGID, SWITCH, the City of Reno, the Governor’s Office of Economic Development (GOED) and TMWA. Using the general framework set forth in the TRIGID proposal as the basis for discussion and negotiation, the parties prepared a treated effluent agreement (“the agreement”) for consideration and possible approval by the Sparks and Reno City Councils.

On August 23, 2017 the agreement was presented to the Reno City Council for discussion and possible approval.  Upon hearing the presentation and after discussion with the Reno City Manager, City of Reno staff, TRIGID, SWITCH and GOED, the Reno City Council voted unanimously to direct the Reno City Manager to clarify certain terms and conditions in the agreement and to present the revised agreement to the Reno City Council for reconsideration on September 13^th, 2017.

Per the direction provided by the Reno City Manager, City of Reno staff, SWITCH and TRIGID proposed revisions to the agreement to provide the clarity requested by the Reno City Council.  Sparks staff have reviewed the revisions and, under the direction of the Sparks City Manager, have agreed to incorporate the revised language into the agreement.

As such, the agreement as presented to the Sparks City Council for consideration and possible approval includes the revisions requested by the City of Reno.

The agreement (attached) states the intentions, authorities, considerations, duties and commitments of each party, and the terms and conditions for the annual delivery of up to 4,000 acre-feet of treated effluent from TMWRF for use as process water by customers of TRIGID within the TRIC.   While the legal implications of the agreement are present throughout each of the 13 sections that embody the agreement, the following key points of the agreement are offered for the Council’s consideration:

Replacement Water and Return Flow Management Agreement

Section 7 of the agreement obligates the Cities, TRIGID, TMWA, and the State of Nevada to execute a return flow management agreement to ensure the provision of replacement water to the Truckee River in the annual amount of 4,000 acre-feet.  The sources of the replacement water include: 1,500 acre-feet of surface water rights from TRIGID; 1,500 to 2,200 acre-feet of surface water rights from the Nevada Department of Transportation (NDOT) via the State of Nevada; and 300 to 1,000 acre-feet of “community sources” water as determined by TMWA.   The return flow management agreement must be in compliance with the operational requirements set forth by the Truckee River Operating Agreement (TROA) administrator –the Federal Water Master- and the approval of any permits required by the State Engineer.

Should the return flow management agreement not be fully executed within 24 months of the effective date of the treated effluent agreement, the treated effluent agreement shall terminate and the parties will not have any liability to, or claims against, the other parties.  This portion of the agreement was specifically included in the agreement to limit the risk to the Cities of potentially violating the terms of the Truckee River Operating Agreement or any permit issued by the State Engineer with regard to effluent use, and is intended to act as a “poison pill” to the agreement.

Duties and Commitments of TRIGID

TRIGID agrees to plan, permit and construct a pipeline from the point of connection at TMWRF to the point of delivery at the TRIC at its sole cost (Section 3.1) and agrees to operate and maintain the pipeline at its sole cost (Section 3.4). 

TRIGID agrees to bid the contract for construction of the pipeline as a public works project pursuant to laws applicable to public works projects (Section 2.8)

TRIGID agrees to not allow for any discharge of TMWRF treated effluent to the Truckee River (Section 3.2).

TRIGID agrees to prioritize the use of TMWRF treated effluent above any other source of process water and not to whole sale TMWRF treated effluent without the approval of the Cities (Section 3.3A).

TRIGID agrees to take delivery of 4,000 acre-feet of TMWRF treated effluent within 8 years from the date of execution of the return flow management agreement (Section 3.3B).

TRIGID agrees to reimburse the Cities for any expenses for capital costs at TMWRF associated with improvements needed to supply TMWRF treated effluent to TRIGID (Section 5.1).

TRIGID agrees, when replacement water is available, to pay a “base rate” for the delivery of TMWRF treated effluent (Section 3.3C)

TRIGID agrees that, when replacement water is not available, to be considered a reuse customer and to pay a “shortage conditions” rate for the delivery of TMWRF treated effluent subject the conditions of the return flow management agreement (Section 3.3 D).

Duties and Commitments of the Cities

The Cities agree to reserve for delivery to TRIGID 4,000 acre-feet of TMWRF treated effluent, subject to Section 7 and the Return Flow Management agreement (Section 4.1).

The Cities agree to provide Category B treated effluent as defined in NAC 445A.276 (Section 4.5).

The Cities agree to grant TRIGID an easement for construction of the pipeline on the TMWRF property (Section 3.3).

The Cities agree to complete a rate study to establish the base rate and shortage rate fees (Section 8). 

Term of Agreement and Termination

Section 6 of the agreement defines the initial term of the agreement as 30 years, defines two extensions of 20 years each (by mutual agreement of each party) and allows for termination by either party with 10 years notification prior to termination.

1. The City Council may approve the agreement as submitted by the City Manager
2. The City Council may direct the City Manager to make certain amendments to the agreement and return for future consideration.
3. The City Council may reject the agreement outright.

I move to approve the agreement for treated effluent, as proposed by staff, between the City of Sparks, the City of Reno and the Tahoe Reno Industrial General Improvement District as submitted by the City Manager.