MINUTES OF THE meeting
of the
ASSEMBLY Committee on Government Affairs
Seventy-Second Session
April 28, 2003
The Committee on Government Affairswas called to order at 9:11 a.m., on Monday, April 28, 2003. Chairman Mark Manendo presided in Room 3143 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
Note: These minutes are compiled in the modified verbatim style. Bracketed material indicates language used to clarify and further describe testimony. Actions of the Committee are presented in the traditional legislative style.
COMMITTEE MEMBERS PRESENT:
Mr. Mark Manendo, Chairman
Mr. Wendell P. Williams, Vice Chairman
Mr. Kelvin Atkinson
Mr. Chad Christensen
Mr. Tom Collins
Mr. Pete Goicoechea
Mr. Tom Grady
Mr. Joe Hardy
Mr. Ron Knecht
Mrs. Ellen Koivisto
Mr. Bob McCleary
Ms. Peggy Pierce
Ms. Valerie Weber
COMMITTEE MEMBERS ABSENT:
None
GUEST LEGISLATORS PRESENT:
Senator Maurice Washington, Senate District No. 2, Washoe County
Mr. John Marvel, Assembly District No. 32, Humboldt County (part), Lander County (part), and Washoe County (part)
STAFF MEMBERS PRESENT:
Susan Scholley, Committee Policy Analyst
Eileen O'Grady, Committee Counsel
Pat Hughey, Committee Secretary
OTHERS PRESENT:
Allen Biaggi, Administrator, State of Nevada, Department of Conservation and Natural Resources, Division of Environmental Protection
Steve Bradhurst, Director, Washoe County Department of Water Resources
Leo Drozdoff, P.E., Bureau Chief, Bureau of Water Pollution Control
Vallea Rose, Citizen
Robert Curtis, Citizen, and member of the Spanish Springs Action Committee
Lois Avery, Chairman, Spanish Springs Citizen Advisory Board
Al Kramer, Carson City Treasurer
Robin Reedy, Deputy Treasurer of Debt Management, Nevada State Treasurer’s Office
Dotty Merrill, Ph.D., Senior Director, Public Policy, Accountability and Assessment, Washoe County School District
Dan Musgrove, Director, Intergovernmental Relations, Office of the County Manager, Clark County
Chairman Manendo:
Good morning. Welcome to the Assembly Government Affairs Committee. Madam Secretary, will you please take call the roll? [Roll taken.] Mr. Knecht, you have a Floor Statement today on Senate Bill 113.
Turning to Senate Bill 200. Senator Washington, good morning.
Senate Bill 200: Authorizes grants to pay certain costs associated with connections to community sewage disposal system. (BDR 30-889)
Senator Maurice Washington, Senate District No. 2, Washoe County:
[Introduced himself.] Assemblyman Marvel and I are the primary sponsors for Senate Bill 200. Senate Bill 200 adds connections to the municipal sewer system that is required by the state to the existing program for grants for local water systems. The need for the concept of Senate Bill 200 originally rose out of response to the groundwater pollution problem that we’re facing in Spanish Springs Valley, just north of Sparks. I understand there are also a number of other localities within the state that are facing the same and similar problem.
[Senator Washington continued.] As related to Spanish Springs, the administration of the Nevada Division of Environmental Protection [NDEP] has issued a directive that Washoe County expand its community sewer system to the area to address the groundwater pollution problem which is being caused by individual septic tanks. What has happened is that the nitrate levels had exceeded the recommendations from the Federal EPA [United Stated Environmental Protection Agency]. Washoe County and the residents have jointly developed a plan for hooking up these properties to the community system.
As you will hear in the next testimonies, Washoe County has been putting up provisions to require funding from federal assistance, and I might note that United States Senator Harry Reid has come forth and helped the community immensely concerning this situation. The residents themselves will be paying a portion of the connection costs. However, since it is a state directive that triggered this action, we have been seeking a reasonable mechanism to provide state participation.
After looking at several options, it has become clear that the best approach to modify the existing water system grant program is to include the sewer system. Trying to participate in the state grant program to provide a directive from the Nevada Division of Environmental Protection provides a direct link. Both Mr. Bradhurst from Washoe County and Mr. Biaggi, Nevada Division of Environmental Protection Administrator, can go into more specific details concerning S.B. 200.
I want you to know that this is a resolution that has finally come forth after many years of deliberation between the county, the state, and the residents of Spanish Springs. A quick resolve of this issue by passage of S.B. 200 would be greatly appreciated. With that, I’ll turn it over to Assemblyman Marvel.
Assemblyman John Marvel, District No. 32, Humboldt County (part) and Washoe County (part):
[Introduced himself.] I’m also here in support of S.B. 200. It has weathered two storms on the Senate side, and it is a very critical bill for the residents of Spanish Springs. Because of the septic tank problem that they have in that area, it is starting to pollute the groundwater. As Senator Washington stated, we have Mr. Biaggi and Mr. Bradhurst, both of whom have been working on this situation for a number of years, and I think there are residents in other areas who would like to testify. I would certainly appreciate any support you can give us on S.B. 200.
Assemblyman Williams:
In Section 2, S.B. 200 talks about how a person becomes eligible for the grant. Can you explain that?
Senator Washington:
I think Mr. Bradhurst and Mr. Biaggi can explain that section of S.B. 200 and eligibility for the grant participation. They can explain to you how the grant program works, but the money that we’re requesting from the state is going to be used by the residents for the on-site costs to take it from their property to hook up to the community sewer system. It is a tremendous problem within the state, and there are isolated pockets within the state that are faced with the same situation with increased nitrate levels, and they can explain to you the cause and effect of these pollutants in the water and what it does to our drinking water.
Assemblyman Williams:
If the entity is going to apply to the federal government for the money for the grants, what’s the state fiscal note for?
Senator Washington:
Basically, the state fiscal note raises the bond cap several million dollars in order to graft these septic tanks into this program. Once again, Mr. Bradhurst and Mr. Biaggi can explain.
Assemblyman Collins:
About a month ago, we got some information telling about where we had spent $23 million or $24 million on water improvements around the state. Is this the same program you’re expanding into sewer? That’s the same program where I think about $14 million was spent in Clark County and the rest was spent over the rest of the state where they replaced the water tanks, and replaced some lines that were messed up throughout the state’s rural communities as well. This is expanding that into covering sewer? I wanted to clarify that with the program that we’re expanding.
Assemblyman Marvel:
This program has been in existence for a number of years, and it’s helped a lot of communities in the state of Nevada. This is just going to add some extra money to take care of this Spanish Springs/Washoe County problem. With your indulgence, I would like Mr. Bradhurst and Mr. Biaggi to come to the witness table.
Senator Washington:
We had the same problem a couple of sessions back with well water in the outlying communities of Clark County, and moving them or taking residents off their wells and hooking them up to your water system. We provided for them to do that as well, so this is not unusual.
Allen Biaggi, Administrator, State of Nevada, Department of Conservation and Natural Resources, Division of Environmental Protection:
[Introduced himself.] S.B. 200 would allow the State Board for Financing Water Projects to finance water projects and to issue general obligation bonds for the state of Nevada in the amount of not more than $73 million. This amount represents an increase of $4 million over what is presently authorized by statute. These funds would allow a local government to receive grants associated with the cost of abandoning an individual sewage disposal system and connecting to a community sewer system in response to an action by the Nevada Division of Environmental Protection.
Traditionally, the State Board for Financing Water Projects has provided grants to predominantly small, rural community water systems in order to ensure compliance with the Safe Drinking Water Act. This is what Assemblyman Collins was referring to a few minutes ago. The work necessary to administer these funds will require a different set of policies and regulations. The Nevada Division of Environmental Protection can implement these new requirements without additional staffing resources.
When it created the Nevada Division of Environmental Protection, the Legislature specifically called for the protection of Nevada’s groundwater. The purpose of Senate Bill 200 is to provide a mechanism to help protect our valuable groundwater resources from nitrate contamination. It would also diminish a public health threat and prevent a violation of the Safe Drinking Water Act.
In the early 1990s, the Nevada Division of Environmental Protection worked with Washoe County officials to understand the impacts to groundwater from septic systems. The Division and Washoe County realized the densities of septic systems exceeded safe levels prescribed by agency models. Efforts to require dry sewers in certain subdivisions were unsuccessful at the county commission level because nitrates in the groundwater had not yet become elevated. As time passed, more septic systems led to higher nitrate levels in the groundwater.
[Allen Biaggi continued.] In 1995, the Nevada Division of Environmental Protection informed Washoe County that any future subdivisions proposed to be served by septic systems in this area would be denied. However, the already existing inventory of approved systems continued to have an impact.
In 2000, after consultation with the Washoe County District Health Department, the Nevada Division of Environmental Protection did direct Washoe County to develop a regional approach to the problem associated with septic systems. While the Division has always worked well with Washoe County and other local governments, this legislation will allow NDEP [Nevada Division of Environmental Protection] to provide more assistance to communities whose drinking water is threatened by nitrate contamination. Therefore, we strongly support S.B. 200.
I would like to make the Committee aware of a related bill, Senate Bill 233. This bill calls for amending the previously mentioned statutes, NRS Section 349.980, to increase the bonding capacity by $17 million in order to continue to provide assistance to rural communities on the safe drinking water side. S.B. 200 and S.B. 233 are separate requests, but are related due to their modifications of the same statutes.
Some of the questions that have come up in the past have related to what nitrates do in groundwater in terms of the health of humans. The primary concern is a symptom known as methaemoglobinaemia, which prevents oxygen transfer in children and young infants. It’s essentially called the “blue baby syndrome.”
Because of this problem of the transfer of oxygen within their bloodstreams, when you have children that are drinking high nitrate water, they tend to begin to turn an odd shade of blue. This can result in serious health implications down the road. Nitrate contamination does represent a very real health threat to humans.
Steve Bradhurst, Director, Washoe County Department of Water Resources:
[Introduced himself.] My testimony [Exhibit C] is provided on behalf of the Washoe County Board of Commissioners. Washoe County appreciates the opportunity to testify in support of Senate Bill 200. Senate Bill 200 is an effort to respond to the question: What should a property owner and his local government do when confronted with a state directive to abandon the property owner’s septic system, also known as an Individual Sewage Disposal System or ISDS, and connect the property to a community sewer system?
Since April 7, 2000, Washoe County and many of its residents have spent considerable time and money trying to address that question. On April 7, 2000, the Nevada Division of Environmental Protection sent a letter to the Washoe County Department of Water Resources containing the following directive:
Because there is evidence linking ISDS or Individual Sewage Disposal Systems to elevated levels of nitrates in drinking water in the Spanish Springs area, and there is a potential public health threat to infants and the environment, the Nevada Division of Environmental Protection directs your agency to immediately begin planning to expand community sewer service to the area. A schedule must be submitted to our office for review and approval by August 1, 2000, and a plan in place 18 months following that.
As you are aware, nitrates are considered a pollutant, and continued release to the groundwater via ISDS is not allowable where the water supply is impacted. Because continued use of ISDS in the area of Spanish Springs will further degrade the groundwater supply, relocating the drinking water supply wells will not be an option. The area must be sewered to remove the public health and environmental threat that has emerged.
[Steve Bradhurst continued.] That directive affects approximately 2,000 homeowners in the Spanish Springs Valley, immediately north of the City of Sparks. The estimated cost to comply with that directive is approximately $20,000 per home or $40 million. To date, Washoe County has spent a little over $500,000 to address the directive.
The Nevada Division of Environmental Protection feels there are a number of places, and I think this is important, in Nevada where septic systems are causing elevated levels of nitrates in groundwater. Groundwater is an important source of drinking water in Nevada. Nationally, groundwater accounts for the drinking water supply of about half of the United States population, providing 35 percent of the drinking water supply in urban areas and 95 percent of the drinking water supply in rural areas.
In 1995, groundwater provided 25 percent of Nevada’s public drinking water supply. My sense is that that 25 percent of Nevada’s public water supply is going to increase over time, given the fact that the surface water supply is adjudicated and allocated, and there will be a desire to obtain additional water, and that additional water will have to come from the ground in the future. So that 25 percent will increase in Nevada.
The purpose of Senate Bill 200 is to provide a partial solution protecting Nevada’s priceless groundwater resource from nitrate contamination, and in doing so, remove a public health threat and prevent a violation of the Safe Drinking Water Act and the Clean Water Act. The question that begs an answer is whether or not the solution to a state directive that homeowners abandon their septic systems and connect to a community sewer system is reasonable and economically feasible without government assistance, particularly financial assistance.
In Spanish Springs Valley, it is clear that the cost of the solution is not financially feasible for the property owner and/or the local government. The Spanish Springs Valley case shows that the solution requires a partnership involving the property owner and the different levels of government, local, state and federal. Washoe County has worked very hard over the last two years to secure federal funds to help cover a portion of the cost to convert homes with septic systems to a community sewer system. Thanks to the excellent work of Nevada’s Congressional delegation of Senators Ensign and Reid, as well as Congressman Gibbons, federal funds will be available starting this year to help address the problem.
The bill [S.B. 200] is a step in the right direction since it has the state of Nevada participating with the property owners and other levels of government in the solution. Senate Bill 200 amends specific provisions of Nevada law that provides grants for water conservation and capital improvements to certain water systems. The main elements of the bill do the following:
In conclusion, S.B. 200 will have a direct and positive impact on Nevadans. It will help protect Nevada’s priceless groundwater resource and also the health of current and future Nevadans.
Leo Drozdoff, P.E., Bureau Chief, Bureau of Water Pollution Control:
[Introduced himself.] I’m going to limit my testimony to just answering questions.
Assemblyman Williams:
I wanted to go back to the questions we were trying to discuss with Assemblyman Marvel and Senator Washington. The first one is the eligibility. What does it take for a person to be eligible for the grant? Then the fiscal note question.
Allen Biaggi:
The first eligibility requirement is that there must be a directive from the Nevada Division of Environmental Protection that there is a nitrate problem in the area, and that a collection and treatment system needs to be put into place. With that in place, the homeowners within that jurisdictional area would be eligible for the grants that are being made. The grants would pay for, number one, the connection fees, and number two, the local wastewater treatment system, and also any capital improvements that need to be made in order to establish the infrastructure necessary to take that wastewater to the treatment facility. With regard to the fiscal note, I’ll let Mr. Drozdoff give you an overview of the bonding issues.
Leo Drozdoff:
The rationale behind the fiscal note is that this authorization is not included in the proposed budget capital improvement plan or suggested bonding authorization. What that essentially means is this doesn’t compete with General Funds, but when the Treasurer’s Office put together their list of improvement projects over the next two years, this wasn’t factored in. We’ve worked with the Treasurer’s Office to explain the timing of the project associated with S.B. 200, or the project associated with this bill, and because the project duration is so far out into the future, the actual impacts to the CIP [Capital Improvement Project] plan are small. That’s the basis for the fiscal note.
Chairman Manendo:
I think this has a dual referral anyway.
Assemblyman Knecht:
I have one very small question about the wording of S.B. 200, just to be sure I understand it. On page 3, line 22, the sentence is, “If the Division of Environmental Protection requires the individual sewage disposal system to be abandoned and the property upon which the individual sewage disposal system was located to be connected to a community sewage disposal system. . .” So, the situation is that the property where the system is being abandoned wouldn’t already have to be connected to the community system, but in fact, the Nevada Division of Environmental Protection would be ordering that property to be connected. Is that the correct understanding of that language?
Steve Bradhurst:
That’s my understanding. That’s essentially how it works in Washoe County with the directive that we received for this specific area in Spanish Springs, and that is that the property owners with septic systems in that area were directed by NDEP [Nevada Division of Environmental Protection] to abandon their septic systems and tie into a community sewer system that doesn’t exist in their neighborhood at this point in time, so the task at hand for Washoe County was to develop a plan of action working with the community, as well as with the NDEP and others to try to accomplish that objective.
Assemblywoman Weber:
I was looking at a letter that I got this morning on Division of Environmental Protection letterhead from the year 2000, and the letter talks about the density of the sewer system is probably contributory to the amount of nitrate concentration. In order to avoid a next generation of this happening, because of the exceeding of the concentration levels of how many septic systems you can have per square mile, are there other areas identified that could be problems in the future, and is that part of a master plan to look back at that because monies may also be involved with that as well?
Allen Biaggi:
Septic systems are interesting. They are recognized as a valid means of wastewater disposal, but there is a carrying or assimilative capacity that is associated with any one particular area. When densities exceed that carrying capacity, groundwater impacts can occur.
Since the early 1990s, the Nevada Division of Environmental Protection has used mathematical models and other tools to identify what that assimilative capacity is, and to ensure that we don’t go over those densities and impact groundwater. I don’t think that we’re going to see some of the problems that we’ve seen so far. But we are living with some of those legacy issues from the past, and there are other areas of the state where we do see nitrate contamination occurring and these types of problems may reoccur.
One of those is in Humboldt County in the Grass Valley area, potentially. There are also some areas, potentially, of Clark County and other areas of the state. S.B. 200 would ultimately allow those areas to also benefit through financial assistance from this program and address the problem in a similar way.
Assemblywoman Weber:
Is that additional $4 million going to be enough to cover those additional areas should they need to also be addressed because their nitrate levels are increasing and we’re going to have to shift to a municipal-type system?
Allen Biaggi:
My response to that is no. We will probably have to come before this body in future legislative sessions to secure additional increases to the bonding capacity.
Assemblywoman Weber:
Is there some sort of a placement of wells versus septic systems, such as do they have to be 500 feet apart? If it’s an old problem versus what the current recommendation would be, is that why we’re seeing the collision of the waste and the drinking water?
Allen Biaggi:
Yes, there are setbacks and distances for residential systems. It’s never a good idea to place your drinking water well in close proximity to your sewage disposal system. There are setbacks that have been in place for many, many years. Our office also operates a wellhead protection program that works with the larger municipal operators of systems to ensure that the systems and wells that they put in for their municipal use are well away from pollution sources, be they industrial sources, gas stations, or septic systems.
Assemblyman Grady:
Mr. Bradhurst, we know that this is a very fast growing area of Washoe County. Can you tell us approximately how many homes are in this area and whether this is included in the new development area that is going on? Could you explain to us where we are?
Steve Bradhurst:
The homes that were approved with septic systems were approved back in the 1990s. Since 1995, the state changed its density requirements as they relate to septic systems, and also indicated it would not approve subdivisions with septic systems in this area. What we’re looking at is a legacy, not only in Spanish Springs Valley, but across the state.
There are approximately 2,000 homes in the central Spanish Springs Valley that were built in the 1980s and 1990s that have septic systems. The last subdivision with septic systems was approved by the Washoe County in 1991, but the fact of the matter is you have subdivisions out there that have lots that weren’t built on in 1991, and over those years, those lots and those subdivisions that were not built on continue to be developed, and septic systems were put in place. There are about 2,000 septic systems in that area. Since 1995, there has been significant development and that development is sewered, so they have been tied into a community sewer system.
The job here is to take that community sewer system that is relatively near these homes with septic systems, and have these homes tied into that system. We’re fortunate in Spanish Springs Valley to have the community sewer system in the neighborhood that we can tie into. I’ve talked to Mr. Biaggi and Mr. Drozdoff about this, and I don’t know what would occur if you were out in rural Nevada far removed from a community sewer system and you receive a directive like this to tie into to a community sewer system. It will be quite a challenge. In this situation in Spanish Springs Valley, we do have the infrastructure. We just have to tie into it.
Assemblyman Collins:
Obviously, this is a local issue where local governments, city or county, didn’t follow guidelines on minimum of two acres. I think in Clark County it’s 10,000‑square-foot lot minimums. Different localities have not followed this, nor did they check the percolation of the soil.
I can remember when I was a volunteer planning commissioner in North Las Vegas, the EPA [U.S. Environmental Protection Agency] was visiting local governments about the contamination of water over 15 or 20 years ago.
This is an issue that’s all over the state that we as a state need to address to protect our constituents, because our local governments failed to or didn’t see the long-range harm versus the economic effect of the tax shift that caused us all to grow. We have changed state law to correct that local governments will not, in the future, develop lot size. What’s the lot size average of Spanish Springs?
Steve Bradhurst:
Average lot size in Spanish Springs is probably one-half acre. They’re relatively small and they go up to five acres in size. It has varied from place to place, but we get down to one-third acre lot size. The subdivisions that have septic systems would not be there without approval of various agencies as it relates to septic systems, and it’s a learning lesson.
The state has changed their density requirements for septic systems, and when they change the density requirements, the local governments are forced to follow those density requirements. If the density was one septic tank for a half‑acre parcel, that’s what folks probably had on their maps in many instances, and they were approved by the Nevada Division of Environmental Protection. The local governments do not approve the method of sewage disposal. That’s a function and responsibility of the state.
Assemblyman Collins:
Where there’s a water system rather than well-provided water, then the septic systems and sewer systems are not as much of a problem. I bring that up because the subdivision where I live was developed in the early 1970s with city water but septic systems. We have not had to convert them because we don’t have the wells in that proximity, but other areas nearby have had that problem in southern Nevada.
There’s a variation in the law that, if you’re on a well system, you’ve got to be a larger parcel and prove the percolation to allow a septic system to be approved. Or do you have to go to a public water system to have more density in those septic systems? Are we up-to-date and ahead of the curve on that?
Steve Bradhurst:
In the situation in Spanish Springs, we have folks receiving water from municipal wells, and that’s a primary concern that, as the effluent from the septic tanks starts to move towards the municipal wells, we see the nitrate level going up. We haven’t exceeded the drinking water standards of 10 parts per million, but we see a couple of our wells trending in that direction. I believe that was the primary reason the Nevada Division of Environmental Protection stepped in and said, “You really need to do something about that.” In the directive, it also says that even if you move your wells and secure a source of water from someplace else for these folks, there’s still pollution of the groundwater system itself, and Washoe County, you’re responsible to clean that up. So, even if we had another source of water, the issue is still the pollution of the groundwater system.
Allan Biaggi:
Mr. Bradhurst is correct. The issue in Spanish Springs was brought to the forefront by the potential public health concern with the nitrate levels in municipal wells going up, as well as the septic systems. The situation you’re speaking of, Assemblyman Collins, would also be of concern, but there’s not the public health component to it. There’s still a potential impact to the groundwater resource.
We want to preserve that resource for future generations, but because there’s not a public health component to it, it doesn’t rank quite as high as some of these others. If we find out in the future that groundwater levels of nitrates are being increased, we may need to address it for the future, but right now it’s not of immediate concern.
I’d also like to point out another concern that we have with regard to the approval process. That is that the Nevada Division of Environmental Protection approves subdivisions and septic tank densities within those subdivisions, but we don’t have control over the parcel map process. Those don’t come to us for approval, and oftentimes, those can exceed the septic tank densities that we would recommend. There is a bit of a hole in the law there.
Assemblyman Collins:
This and the companion bills will fix it for the state. I don’t like to just do special legislation for Spanish Springs, because that’s a local issue, but for a state issue, if we’re ahead of the curve and we’ve addressed it now, then I think this is a great idea.
Allen Biaggi:
I think S.B. 200 goes a long way in addressing the ability for partnerships between local governments, the state, and federal entities to address these issues for the future, wherever they occur. This is not unique to Spanish Springs and does not address only Spanish Springs.
Assemblyman Hardy:
I’m going to ask a lot of questions, so if you can remember them, because I may not. Having grown up in that area, it would be safe for me to postulate that it is a swamp. The groundwater is on the surface.
Those are my questions for the moment.
Chairman Manendo:
Do you have one or two specifics that you want answered right now? Other than that, I think you folks need to meet with Mr. Hardy at another time to discuss all that, because we just don’t have the time to do all that, if we want to see this bill proceed.
Assemblyman Hardy:
I would appreciate that.
Chairman Manendo:
Do you have one or two that you want?
Assemblyman Hardy:
I have so many on this list.
Assemblyman Goicoechea:
These are in response to Assemblyman Collins. I represent a number of districts that have wellhead protection programs and, in fact, most of rural Nevada does. We’re very aware of the nitrate problem in rural Nevada. County ordinance, and it is a local issue, can address it.
In our parcel map process, we require 2½ acres, rather than the 1¼ acres. Especially in the rural areas, we have addressed it. Yes, we’ve got problem areas where we have exceeded the septic tank density. It’s out there. Crescent Valley is at 108. That was subdivided in the 1950s and there definitely could be a density there that’s well in excess of the 108 that is allowed by state law.
I guess my question would be, it was Mr. Bradhurst’s response that if you deemed that you did have nitrate levels that were unacceptable in a community like Beowawe or Crescent Valley and did, in fact, require that they go to a sewer system, could we access this funding for a primary treatment facility?
Steve Bradhurst:
The way I read this is it is open to going after funds for capital improvements that, I assume, would also include a primary treatment facility. The way we’ve approached this in Spanish Springs, given the fact that we’ve been successful in securing some funds from the federal government, is to try to have this partnership of having the county pay into it, and the federal government provide some funds, as well as the state, through this grant program.
As Senator Washington pointed out, the thinking is then that the funds would be used, at least in Spanish Springs, to cover some of the on-site costs. The off-site costs were going after federal funds to try to cover a portion of that. We’re not looking at building a primary treatment facility at this point in time in Spanish Springs. We’re investigating it, but the area that is sewered now in Spanish Springs Valley, is sewered into the Truckee Meadows Water Reclamation Facility down by the river and the Vista area down by Sparks.
Chairman Manendo:
Thank you, and please make sure you get with Mr. Hardy.
Vallea Rose, Citizen:
[Introduced herself.] I am a member of the citizens’ advisory board in Spanish Spring; however, today, I speak on my own behalf. I trust you had plenty of time to read through the packet [Exhibit D] this morning. I’m just here to see if you had any questions on what I handed out to you. Assemblyman Grady, there was a map in here that shows where the 2,000 houses are.
I think the issue is what people have to do on their property is pump their septic tank clean, fill it, crush it, reroute their plumbing underneath their home, and dig a lateral out to the street to connect to the main line. Some people are going to be digging through their driveways and through their landscaping. The lot sizes vary between 1/3 acre to 1½ acres.
That’s where the cost variable comes from. Those tentative maps were approved on septic, requiring the developer to put dry lines in the streets. I guess at that point, it wasn’t an option. I think that’s basically it for me unless you have any questions.
Robert Curtis, Citizen, and member of the Spanish Springs Action Committee:
[Introduced himself.] [A copy of Mr. Curtis’ testimony is attached as Exhibit E.] I’d like to thank you for letting me speak today in support of S.B. 200. I would like to take the opportunity to explain why this bill is not only important to me as a homeowner in the affected area, but as a representative of 1,723 other homeowners who signed a petition in opposition to the original proposed cost of the Spanish Springs Valley Nitrate Remediation Project.
We were told that the cost of the homeowners would escalate to over $20,000 per parcel because of this directive issued by the Nevada Department of Environmental Protection for a mandatory sewer in certain areas of Spanish Springs due to the rising nitrate levels in our wells and because of the possible health risk.
As a direct result of this directive, our land values were depreciated by the Washoe County Assessor’s Office until the sewering is completed. This has caused realtors to suppress their enthusiasm about selling homes in the Spanish Springs area, thus making it difficult for homeowners to obtain a fair market value for their homes. The proposed costs of this project have caused elderly homeowners on fixed incomes, single parents, and those of us living paycheck‑to-paycheck to fear losing their homes.
In simple terms, $20,000 is a down payment on a house, a college education for a child, or the cost for a new automobile that provides transportation back and forth to work, as we do not have rapid transit in our area.
Over the past five years, the residents of Spanish Springs and Washoe County have endured huge water rate increases, increases in gas and power utilities, and this has caused burdens on many of the homeowners throughout the nation, not just in our community. We have been taxed for a PCB [Polychlorinated Biphenyls] cleanup project in downtown Reno, and a flood control project throughout the county. We are paying for schools, libraries, and parks, to be erected and then be maintained. I could go on, but you get the ideas of burdens.
As homeowners, we are concerned about the quality of our water and do realize that we are equally responsible for protecting it. Once the directive was issued, we expected that we would have to pay our fair share and find no argument there. What we did not expect was a financial burden that would lower our property values, strip away all of our equity that we had amassed in our homes, and cause a stigma in the resale of our homes. Our situation was extraordinary.
We have been directed by the state in a directive to sewer. The infrastructure was not in place like it is in other areas where the homeowners could just tie in to existing lines when those lines became 200 to 400 feet from their property lines. The infrastructure has to be built at a significant costs to the state, federal, and local governments. The homeowners are being told that they would have to pay for their infrastructure to be built in order to tie into it. Without funding, the homeowners’ costs were unrealistic.
At this point in time, we as homeowners who bought homes in Spanish Springs still have state and county health department approved septic systems. It is extremely important that legislation be passed that holds developers and landowners accountable for abiding by current codes. It is unrealistic that, because the property was bought before 1990, that they do not have to be in compliance with current codes. It should not matter whether the property was bought before 1990 not. The law makes it possible to still build subdivisions on lots under five acres and install septic systems. This is what happened in the Spanish Springs Valley and it is happening in other areas yet today.
The Washoe County Health Department permitted 499 septic systems in a four‑mile radius. Later the acceptable number became 99. The homeowners had no knowledge of the fact that years down the road, they would be directed to financially remedy this error in judgment. We feel that the partnership between the federal, state, and local governments and homeowners is the only realistic approach to addressing the state’s directive of compliance.
We as homeowners want to comply with the Clean Water Act and the Safe Drinking Water Act. We want to know that our drinking water supply is safe for all of us to drink. We also want the state and federal government to acknowledge that our septic systems were approved at the time of the sale and now, through this directive by the NDEP [Nevada Division of Environmental Protection], are deemed unacceptable. This equates to great financial burden for the homeowners.
As homeowners in the affected area, we feel that the state; the NDEP [Nevada Division of Environmental Protection]; the Washoe County Health Department, which originally approved the septic systems; and the federal government, which slated the guidelines, share equal responsibility with the homeowners to improve our water quality and to adhere to the regulations set forth in the Clean Water Act and the Safe Drinking Water Act. We come before you today in unanimous support of Senator Washington’s bill [S.B. 200] and the great relief it provides to homeowners. It is a fair and equitable solution to comply with the state directives.
This is not just a Band-Aid for the Spanish Springs, but S.B. 200 encompasses a community, a county, and a state. We look favorably to working together with the county, the state of Nevada, the federal government. We feel that this is a landmark bill with teeth to really help people from facing financial ruin.
We would like to thank Senator Reid, Senator Ensign, Congressman Jim Gibbons, Mr. Bradhurst, his staff, Mr. Biaggi, our county commissioners, and the citizens advisory board for taking the time to understand just how important this issue is to homeowners all over the state of Nevada. We would also like to thank Senator Washington for proposing such a bill on our behalf and fulfilling his promise to his constituents. We are grateful for the opportunity to participate in the process and for the great support we received from all the entities involved, and we thank you for your time, and what seems to be a real solution to a once very unpleasant situation. Thank you all for your time in listening to me.
Lois Avery, Chairman, Spanish Springs Citizen Advisory Board:
[Introduced herself.] [A copy of Ms. Avery’s testimony is attached at Exhibit F.] Speaking from experience on the numerous meetings on this issue, I can say that no community should have to endure the upset and expense that this project has brought to Spanish Springs. However, we all agree that it is absolutely crucial to protect the quality of water in our precious aquifers.
I have two points to make. One is, to summarize, if the Nevada Division of Environmental Protection requires parcels in an area to switch from septic to sewer for health reasons, then funding from general obligation bonds should be made available to help finance the part on the individual’s property. Why? Because the original system was installed according to both state and county rules. The rules proved to be inadequate through no fault of the property owners.
My second point has already been addressed by this Committee. My concern is that we look into why this is happening and how to avoid it in the future. I was very pleased with your good questions on this issue. Assemblywoman Weber’s and Assemblyman Collins’ questions especially went to the heart of the issue.
One point is that if you do the number of septic systems that are recommended currently by the state, it works out to a 5-acre minimum. Unfortunately, it wasn’t until just recently that Washoe County actually passed the law requiring it. It’s amazing how long it takes, and I think we ought to make sure that this is done throughout the entire state and that it’s a 5-acre minimum.
From all the meetings, I now know much more about septic systems than I ever wanted to know. The key issue is that it takes several years for the septics to percolate down to the water table. So, when you first begin to notice an increase in contaminates, if you stop immediately, the contaminates will still increase because there’s this backlog where it’s working its way through. That’s why it’s so important that when you first start noticing it, you do something about it, because it can just be hopeless. You can stop and still get dangerous levels.
I don’t know if it was clear, but the federal funding cannot be used for the part on individual property. It can only be used for the general infrastructure under the roads and going to the sewer system. That is why we need the state bonding funding that’s provided through S.B. 200, because this will help the part that’s on the individual’s own property. It will not be covered by the federal funds.
Senator Washington:
I would like Mr. Hardy to know that this is just not an isolated incident in Washoe County. There are several communities within our state, Pahrump, Elko, some other rural communities as well, that are faced with this same situation, so if the directive comes from Nevada Division of Environmental Protection, then we need to address the issue. It’s been a long, hard fight for these residents that live in Spanish Springs, and I’m sure there are others that are waiting to see what kind of result this bill will bring before they make their plight as well. It’s unfortunate, but it’s the state we live in, and it’s a grand old state, but I want you to understand that it’s not an isolated incident in Washoe County. I think Clark County is affected by it as well.
Assemblyman Hardy:
The last paragraph of Lois Avery’s typed-out comments [Exhibit F] was relating to developments that have been approved when the state sent a letter in the mid-1990s. One developer immediately stopped using septic and switched to sewer. However, other developers continued to build what they already had permits for. I think that is the issue and, at minimum, they should be required to put in piping for future sewer hookups. Does S.B. 200 address the reality that prior permits were pulled and done, but then put in after a directive took effect, and therefore, are we still going to get more developers putting in individual, disposable septic tanks, whereas do we need to address that in this bill? I don’t see it in the bill.
Senator Washington:
S.B. 200 does not address that issue, per se. It addresses the issue that has taken place after the density levels had increased in that particular area. You are correct in your assessment. I live in the Sparks area, and the Spanish Springs area does kind of sit upon a swamp until you start making your elevations towards Pyramid Lake.
Maddie Shipman is sitting in the back. She works with the Washoe County Commissioners, and that issue has been addressed through the county commission to make sure that developers, as they develop that area, provide for an infrastructure to a community sewer system. The issue has been addressed. Even though we don’t have time to go into it, Mr. Bradhurst has a three-phase approach to the groundwater issue and the pollutants to make sure that, not only do they address the issue now, but in the future as well so that we don’t have this same problem 5, 10, or 15 years down the road. I hope other communities will take a look at his plan because it is very innovative and very creative and on the cutting edge.
Chairman Manendo:
We’ll close the hearing on S.B. 200 and open the hearing on Senate Bill 141.
Senate Bill 141 (1st Reprint): Revises provisions relating to certain investments made by local governments. (BDR 31-458)
Al Kramer, Carson City Treasurer:
[Introduced himself.] [Exhibit G was distributed.] Essentially S.B. 141 does two things. It allows counties with populations of over 100,000 and portfolios of over $100 million to do securities lending, and this bill changes some of the rules on securities lending as far as the maturity, changing the language from “these securities lending must mature in less than 90 days,” to say that the maturity must have an average of no more than 90 days, average maturity rather than straight maturity.
The second thing it does concerns guaranteed investment contracts that are enabled now to be counties over 50,000. Currently the law says that they can be in amounts of $40 million or more. The way this bill was presented the first time and passed by the Senate was to have the amount lowered to $10 million. Our State Treasurer, Brian Krolicki, was more comfortable with it at $25 million rather than $10 million. The language I submitted to the Senate Government Affairs Committee requested an amendment changing that $25 million to $10 million.
A guaranteed investment contract is a fairly sophisticated instrument that allows the bond proceeds to be invested between the time of the bond issuance and when the funds are needed to be invested at a guaranteed rate. Therefore, it was thought that it be limited to a particular dollar amount, thus insuring that the county doing this would have the technical staff on hand to make sure it’s done right and that, perhaps, $10 million was too low, but still $25 million allowed, for example, the Washoe County School District to do one.
Robin Reedy, Deputy Treasurer of Debt Management, Nevada State Treasurer’s Office:
[Introduced herself.] Brian Krolicki, Nevada State Treasurer, wanted to be here but he’s in Las Vegas. Section 2 of S.B. 141 notes a change of the principal of the original issuance of $40 million to $10 million. I have with me copies, and they’ve been distributed [Exhibit G], of correspondence indicating that the proponents of this bill [S.B. 141] agreed with the State Treasurer to amend this to the $25 million figure. We really don’t know what happened and why it didn’t get amended on the Senate side, but we’re trying to fix it now. The State Treasurer would be in support of this bill should the minimum amount allowed for a guaranteed investment contact be changed to read $25 million.
Chairman Manendo:
What happened on the Senate side?
Al Kramer:
It happened on a day when the Committee meeting was moved up in time, and there really wasn’t anyone there to speak to this issue, and even though the paperwork had been presented, there was no one there to testify, and it passed without comment, as far as I know.
Assemblyman Grady:
Why can the State Treasurer not live with the $10 million? I don’t see any cities or counties rushing up here to say they can’t live with the $10 million.
Robin Reedy:
It’s a concern for the complexity of the instrument. It’s not so much counties and cities wouldn’t rush out because it gives them expanded abilities. We would like to make sure that they have the level of expertise and have the access to bond counsel to make sure all the legal requirements are there. It’s just a concern that people might not be able to understand the contract, certainly not the ones currently, but in the future as well. It’s just immunizing the actions of future people.
Assemblyman Knecht:
I have a variation of that question, just so I’m sure I understood the answer. Are there any counties that would be able to take advantage of the $10 million in GICs [guaranteed investment contracts] that would not be able to take advantage of the $25 million in GICs [guaranteed investment contracts] restriction?
Al Kramer:
I know this restriction is for counties or municipalities with populations of 50,000 or more, and I guess when Clark County does a school bond, they’re at $2 billion or something like that. It’s an incredible amount of money. Washoe County did one. I don’t know what the dollar was on it, but I know their GIC [guaranteed investment contract] that they looked at was $25 million which brought this into play. Frankly, Carson City’s last school bond was $10 million to $15 million, and I’m not sure we’d be able to do the $10 million. Again, at 50,000 population, I think the only ones that are 50,000 are Clark County and the cities there, and Sparks, Reno, Washoe County, Carson City, and I think soon Douglas and Elko Counties, and I don’t see us doing a $10 million as a size in dollars.
Assemblyman Knecht:
Mr. Kramer, what you’re saying is it’s theoretically applicable to Carson City agencies, but not practically going to be applicable to them. I don’t foresee it, but again, theoretically, what you use one of these for is when you borrowed money in a bond, and between the time you sell the bonds and the time you use them, you put the money out and get some use from it, which means that if you have gone towards a structure you’re building, quite often, there’s some engineering and some cost before the bond is levied and sold that you’re paying back, so even if you had a fairly sizable bond issue, some of that money is not even available day one. It’s a question. You could argue it either way.
Robin Reedy:
If I might add to that. When they issue the bonds they’re always looking for securities to put that money in to earn interest, so this does not limit anyone from seeking other types of investments to put that money in. This is just a more sophisticated contractual investment and that’s why we wanted the dollar limit.
Assemblywoman Pierce:
What does it mean about lending securities on page 1, line 4, “may lend securities from its investment portfolio.” Is that different from what we’re talking about here?
Robin Reedy:
Yes, that’s a completely different issue.
Assemblywoman Pierce:
And that has no effect on what we’re talking about here?
Robin Reedy:
No, it does not.
Assemblywoman Pierce:
In ten words or less, what exactly does that mean, to lend securities?
Robin Reedy:
On the securities lending, you literally can lend out your securities. People need it to use for collateral, and you can get money back for it. It’s just another way of making money on a portfolio you’re holding.
Dotty Merrill, Ph.D., Senior Director, Public Policy, Accountability and Assessment, Washoe County School District:
[Introduced herself.] I am here on behalf of the Washoe County School District Board of Trustees and Superintendent to speak in favor of Senate Bill 141, specifically with regard to Section 2 on page 3 of the bill, and the amount that is shown. Our school district did have its chief financial officer at the hearing that was held on the Senate side, and we did provide testimony in support of this bill.
We have done two of these collateralized investment agreements in our school district, so we have the technical support staff to be able to handle the complexity of this instrument as it was described to you before. With a rollover bond, the amounts that we would be seeking to use in this regard are less than $40 million. We can certainly support going down to $10 million and we can support the amendment for $25 million.
Our goal is to be able to issue this kind of instrument below $40 million because with a rollover bond, we’re looking at smaller amounts, rather than huge colossal amounts to deal with various purposes over the course of the rollover bond. This kind of tool, according to our financial officers, has saved staff many, many hours, and the flexible nature of the investment tool has benefited the school district greatly.
Again, we are here in support of this. We certainly appreciate the fact that the language in S.B. 141 in Section 3 on page 4 makes the act effective upon passage and approval, which would be very helpful to us as we look to issue some of these instruments in the very near future.
Dan Musgrove, Director, Intergovernmental Relations, Office of the County Manager, Clark County, Nevada:
[Introduced himself.] I am representing our Treasurer’s Office. We were obviously in support of S.B. 141 as originally drafted with the $10 million because we feel that we do have the sophistication and the expertise able to do this in a proper manner, but we also understand the State Treasurer’s concerns and, in an effort to make sure that they’re on board with this legislation, then we are fine with the limit being put back at least to $25 million. So, we are in support of the bill as amended in the suggested amendment.
Chairman Manendo:
Dr. Merrill, did you say that you do support the change for the $25 million? I believe you did.
Dotty Merrill:
Yes.
Chairman Manendo:
We’re going to close the hearing on Senate Bill 141. Is there anything else to come before the Committee? There have been some agenda changes for Thursday and Friday. They have been sent to you and your staff. We are adjourned. [10:31 a.m.]
RESPECTFULLY SUBMITTED:
Pat Hughey
Committee Secretary
APPROVED BY:
Assemblyman Mark Manendo, Chairman
DATE: