On October 10, 1996, the City of Sparks, the City of Reno, Washoe County, the U.S. Environmental Protection Agency, Nevada Division of Environmental Protection, the Pyramid Lake Paiute Tribe, the U.S. Department of Justice and U.S. Department of Interior entered into the Water Quality Settlement Agreement (WQSA) for the purpose of establishing a water rights purchase program to acquire $24,000,000 worth of Truckee River water rights to maintain instream flows and improve water quality in the Truckee River and Pyramid Lake. As a result of the agreement, the last two remaining lawsuits challenging the expansion of the Truckee Meadows Water Reclamation Facility were dismissed. The three local governments pledged to spend $12,000,000 for the purchase of water rights. The federal government appropriated $12,000,000 for the purchase of tribal water rights for the same program working through the Pyramid Lake Paiute Tribe (PLPT). The source of the local government’s funds to implement this agreement was sewer user fees and sewer connection fees.

To implement the local government’s part of the WQSA, Reno, Sparks and Washoe County signed an Interlocal Agreement (July 28, 1998 Amended and Restated Interlocal Agreement Regarding the Purchase of Water Rights Pursuant to the Truckee River Water Quality Settlement Agreement) creating the Local Government Oversight Committee (LGOC), which includes representatives of each jurisdiction. 

The third amendment to the Interlocal Agreement (April 22, 2013) provided that part of the remaining investment earnings could be used for the purpose of retaining outside legal counsel for representation pertaining to possible protests and hearings before the State Engineer along with any subsequent appeals in the court of law on the water right’s transfer applications. The need for outside legal counsel was minimal as no hearings were required before the State Engineer or a court of law; as of January 31, 2018, there is the approximate sum of $725,226.11 remaining in the account.

As a result of the water rights purchases for the WQSA, the entities were required to enter into an Agreement with Truckee-Carson Irrigation District (TCID) in 2002 to pay the assessments for operations and maintenance pursuant to Chapter 539 of the Nevada Revised Statutes. For the past four years, the annual assessment payments to TCID have been the amount of $20,595.07. The Agreement with TCID provides that the entities can make a one-time payment as full payment for all future assessments. The one-time payment assessment amount to conclude the Agreement is $682,231.48. This one-time payment assessment increases by five-percent (5%) annually per the agreement with TCID.

The TCID annual payment increases approximately 5% per year and will go on in perpetuity per the terms of the Agreement. Thus, the LGOC has determined it is in the best interest of the entities to amend the Interlocal Agreement for using the remaining investment earnings to:

1. Pay off the TCID obligation as provided for in the Agreement with TCID
2. Pay any remaining WSQA Program Costs
3. Disburse the remaining balance to the three entities in an equal amount 

Pursuant to the terms of the WQSA, the entities can use any remaining funds for costs associated with managing water rights. Payment of the one-time TCID payment will eliminate any future financial obligations to TCID.

1. City Council could approve the amendment to the Interlocal Agreement as outlined by Staff.
2. City Council could reject the amendment to the Interlocal Agreement and provide direction to the City Manager.

I move to approve the Fourth Amended Interlocal Agreement regarding the purchase of Water Rights pursuant to the Truckee River Water Quality Settlement Agreement between the City of Sparks, the City of Reno, and Washoe County which considers payment from the Water Quality Settlement Agreement fund, managed by Washoe County, to the Truckee-Carson Irrigation District of any final program costs and disbursement of remaining funds to City of Reno, City of Sparks, and Washoe County with a potential positive impact of approximately $14,300 to the sewer fund.