Vol. 3, No. 21
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September 1, 2006
Nevada's Online State News Journal
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Feature Story:
Is Silver State Economy Beginning To Sag? Some Are Saying Yes
A Lack Of Water May Have Largest Impact On Economy
by Johnny Gunn
The latest unemployment figures from the state indicate that there are more looking for work than there have been recently, and although the number (4.5%) is low, it might be an indication of an economic slowdown in the state. While those at the Department of Employment, Training, and Rehabilitation are saying this is a summer thing with teachers and students looking for work, couple the figures with a slight fall-off in gaming revenue, and a definite slowdown in new home and existing home sales, one might conclude the economy as a whole is suffering the start of an economic fall off.
The 4.5 percent unemployment rate for July compares to June's rate of 4.2 percent and shows a significant change. Governor Kenny Guinn doesn't see it that way and said, "The economic growth in Nevada is maintaining its strong momentum, just at a slower pace than what we've become accustomed to over the last few years." Over the past year, that is July 2005 to July 2006, the labor force in Nevada increased by 5.1 percent, but unemployment has surged by 13 percent.
New home sales in northern and southern Nevada have fallen off considerably, but even so construction employment has increased over the year by slightly more than ten percent. Much of that has come from major building efforts in condominiums, hotels, and other projects not related to new home building. There have been efforts both in the north and south to expand and it may be too early to determine whether or not this slowdown will affect the potential expansion. Reno wants to extend its border some 30-miles north and Washoe County has been attempting to create a master plan that would allow for a doubling of the current population within 25 years.
In the south, lobbyist and developer Harvey Whittemore is looking to build an entire new city along the border between Clark and Lincoln Counties in an area called Coyote Springs. Whittemore, with help from his friend Nevada Senator Harry Reid had boundaries for endangered desert tortoises moved to accommodate his plans. Federal lawsuits are underway to have the changes annulled.
Two environmental groups have filed the lawsuits claiming the changed boundaries were done with what they called a lack of any environmental analysis. The court action was filed in Reno Federal Court and names Whittemore, BLM, and Whittemore's builder Pardee Homes of Nevada. The desert tortoise is an endangered species under the protection of federal wildlife agencies. Changes to their home range could have a detrimental affect on the wellbeing of the Nevada native tortoise.
Whittemore's plans call for almost 160,000 homes in the area, and a downturn in Nevada's economy could have a serious impact on the proposed development. Throughout the state, the determining factor in expansion and development has been water or the lack of it and a change in the state's economy has not been included in the discussions.
There have been increases in the state's population for several years in a row, mostly fueled by California and some of the laws, rules, and politics of Nevada's neighbor, and those newcomers are also affecting the way Nevada conducts business. A California influence was felt in the last election and is sure to be felt in the General Election come November. Often referred to as Carpetbaggers, those from outside the state and with no Nevada history to fall back on are demanding changes in the way Nevadans live, and it will be seen in Carson City following the opening of the 2007 legislative session. The old-guard Nevada politicians will not have the upper hand in the next legislature and many in the freshman class will not have Nevada heritage.
A look at the water picture in the south
For much of the past 20-years or so, Nevada's economy has been based on growth: Growth in tourism; Growth in population; Growth in taxes. To grow tourism takes people to work in the casinos. To grow a population that has an impact on taxes, one needs industry that pays top wages. To grow in Nevada takes just one thing: Water. And Nevada's growth gurus don't have the ability to grow water. One company recognized the growth potential in Nevada years ago and began a quest to be in a position to determine whether or not development would take place. The Vidler Water Company of Carson City purchased or acquired hundreds of thousands of acre-feet of ground and surface water rights in the state. It is estimated today that Vidler owns more water rights in Nevada than any other company or individual. The only land owner in Nevada larger than Vidler is the U.S. Government.
Vidler Water Company owns enough water rights in the state that they could literally paralyze the growth potential of any community or political entity in Nevada. That of course is not their plan, rather they want to make their water available to the distribution networks around the state for what they call a fair and equitable price. One of the water distribution companies or political entities that is dealing with Vidler Water Company is the Southern Nevada Water Authority (SNWA), which distributes water in the Las Vegas Valley, one of the areas looking to expand dramatically over the next few decades. Without a new and large source of water that expansion will not take place.
At the current population level, the Las Vegas Valley needs about 300,000 acre-feet of water annually, and Lake Mead is the primary source of that water. Contracts call for Lake Mead to provide 300,000 acre-feet, and what ground water is available is taken by the major hotel casinos for their monstrous waste of the precious liquid for their lakes, lagoons, and fountains. The Las Vegas Valley cannot grow without a new source of water, and Vidler Water Company believes that water should be piped to Las Vegas by way of a 300-mile pipeline from White Pine County. The political entity SNWA agrees completely, and so far, the only argument against the project is coming from White Pine County, and from the Mormon Church in Utah.
Three weeks of water rights hearings are scheduled to begin September 11 by new State Engineer Tracy Taylor for SNWA to have the right to export as much as 200,000 acre-feet of White Pine County water to Clark County. SNWA wants to begin with about 91,000 acre-feet. There is some conjecture that the SNWA General Manager Pat Mulroy may have threatened to have Taylor relieved of the Engineer's position if the vote didn't go SNWA's way. Mulroy has said the threat was never made, but those in White Pine County are livid over the prospect. According to published reports in the Las Vegas Sun, Mulroy made the comments during an interview at the Sun.
SNWA just completed the first part of a deal that will allow the political entity to actually own part of the water that will be transported if the pipeline is approved. The distributor purchased ranches in the Spring Valley area of White Pine County from Vidler Water Company. Although they paid far above the current appraised value of the ranch land, SNWA said their primary focus was on the water rights not the land. The Vidler Water Company has said on their web site that agriculture should always take a second seat to urban needs, particularly growth. In northern Nevada Vidler has promised to let a 10,000-acre alfalfa ranch go to seed in order for it to export water to Reno. Many in White Pine County are sure that is the plan of SNWA, to export the water from Spring Valley and allow the existing ranch land to return to its natural state without water. SNWA denies this, and White Pine officials want engineer Taylor to guarantee their position.
In all SNWA purchased the Robison Ranch, Harbecke Ranch, and the Spring Valley Ranch along with ground and surface water rights. SNWA said they plan to use the surface water to recharge the ground water aquifer. In the next valley to the east, Snake Valley, ranchers on both sides of the state line argue that the aquifer in question feeds their operations as well. One of the ranch owners is the Mormon Church of Utah. The church operates what they call welfare ranches and have water rights in the Spring Valley and Snake Valley. One ranch has at least 1500 head of cattle raised for meat for Mormon families in need. No water, no cattle, hungry kids.
Along with ranchers in both states and in both valleys, there are questions from county officials that hopefully will be discussed during the water rights hearings later this month. Federal lawsuits have been discussed by those on both sides of the Utah-Nevada state line. How many aquifers might be affected by such an exportation of water? How much current agriculture might be lost? Is it known what the recharge of the aquifers is during normal winters? Will the exporting of such a large amount of water have an affect on Great Basin National Park? And, will the loss of so much water have an affect on the proposed large coal fired energy plants being proposed in White Pine County?
It's estimated that SNWA is prepared to spend somewhere in the neighborhood of $2 billion to acquire the water rights, build the pipeline, and distribute as much as 290,000 acre-feet of water from the eastern county. Lincoln County was looking forward to being a secondary participant in the pipeline, and so was Harvey Whittemore and his Coyote Springs project. Vidler Water Company cannot sell water to anything other than a government distribution outlet such as SNWA, which put a monkey wrench in Whittemore's plan to connect to the long pipeline. He is contemplating creating a government to operate Coyote Springs as a city or town rather than a development. That would allow him to get his water from Vidler and from other sources that can only make water available to government agencies. Other than individual wells most of the water used in Lincoln County comes from Vidler Water Company through its vast holdings in the area.
While SNWA says most of the opposition to its pipeline project comes from environmental groups, it appears that most of the opposition comes from ranchers and water users in White Pine County and in nearby areas of Utah. There is an ongoing testing program conducted by the U.S. Geologic Survey and the BLM. Nevada and Utah state officials are also investigating the large aquifer that feeds the wells and ground systems in the bi-state area.
An acre-foot of water, that is one foot of water standing on one acre of land is slightly more than 325,000 gallons, enough for two families of four for about one year. SNWA officials taking a note from developer's handbooks said if the water hearings by the state engineer do not uphold SNWA's plans they will sue and White Pine County be damned.
A lack of water plagues the north as well
The numbers are different in the north, not quite as large as found in the south but the concept seems to be the same. Pave over the desert and hope that water can be found somewhere. Economic factors in the north are also considerably different with a far more diversified economy in Washoe County. Tourism plays a part in the economic life blood of the county but it is just a part of the picture not the leading indicator of how the economic picture looks. Washoe County is home to heavy and light manufacturing, huge distribution outlets, transportation companies, and a tourism base that extends past gaming into outdoor recreation centered on Lake Tahoe and the Sierra Nevada.
In studies conducted for the Economic Development Authority of Western Nevada (EDAWN) many of the companies that relocate to the area come for several reasons that include life style. It is one of the factors that unlimited growth can change in a big hurry. An example is the new distribution facility being built about 15 miles east of Reno, about half way between Reno and Fernley and located in Storey County along the banks of the Truckee River. An Intercontinental railroad runs right through the complex often described as the largest distribution center in the country, Interstate 80 is directly adjacent, and the Reno Tahoe International Airport is just a few miles away.
The largest company to move into the project so far is the western states distribution facility for Wal-Mart stores. Wal-Mart is telling its suppliers to move their warehouses adjacent to theirs. According to EDAWN officials operations like the distribution center bring high paying jobs to the area, and the companies look forward to being able to provide a life style not found in most of the country. World class skiing every winter, outdoor activities that center on the Sierra Nevada and the Great Basin, historical areas such as Virginia City, Fort Churchill, and Nevada's capital, Carson City all blend into a way of life for those that live in the north.
If the politicians and developers have their way, much of that can be lost, but it may just be a lack of water not common sense that will slow some of the projects. Pipelines are being discussed to bring water from northeast California and from some of the basins in western Nevada while Reno is looking to expand its borders some 30 miles to the north. Vidler Water Company has received the OK from the federal Interior Department to build a pipeline from Honey Lake in California to Lemon Valley in north Reno, a distance of about 28. The company announced the signing of a contract to begin construction immediately. The federal government got involved because the line would cross a state line.
For all intents and purposes the state of California is left out of the process despite the fact the water in question is pumped on land within the state. There is opposition to the project from adjacent ranchers and from those living in towns and cities nearby such as Susanville. At this time there are no federal lawsuits either planned or filed. From Vidler's point of view the pipeline is a done deal and water will be flowing to Reno's north valleys within months.
Vidler owns agricultural property at Honey Lake along with all the water rights on the property and has said numerous times that they will let the alfalfa ranch revert to desert brush in order to sell water from its rights. Water in northern Nevada has skyrocketed with rights for ground water selling for about $40,000 an acre-foot to Truckee River water rights selling for around $50,000 an acre-foot.
The project that has drawn the most scorn in the county is the proposal to incorporate the Winnemucca Ranch 30-miles north of Reno into the city. The owners want to build a minimum of 8,000 homes on the property and have existing taxpayers in the county pay to provide such services as water, sewer, schools, roads, and other infrastructure. The two members of the Reno City Council up for election in this current cycle are Mayor Bob Cashell and Councilperson Dwight Dortch both of whom received the bulk of their campaign contributions from the developers, builders, and construction unions in the area. They helped push through a major change in what has been called the "final over all plan" for Washoe County. That plan, according to Supreme Court Justice Hardesty, calls for the county's population to double in the next 25 years.
Hydrologists are adamant that the current water supply is so limited that it cannot provide enough for projects that have already been approved. Any new projects will overwhelm the supply. Creating a desert in an agricultural valley in order to bring water to a desert community is not something most forward thinking individuals would approve. Using pipelines to drain an aquifer that is providing agricultural water to one area in order to build homes in a desert doesn't qualify as an intellectually positive approach to modern life either.
At least it's an election year and it is possible that intelligence and maybe a little of Tom Paine's common sense will find a way to be heard. The current unemployment figures are not really good news in the middle of a hot summer. The Las Vegas unemployment rate for July was 4.6 percent, Reno's was 4.2 percent, and Carson City had an unemployment rate of 5.1 percent. In California, the unemployment rate stood at 4.9 percent and overall in the country, the rate was 4.8 percent.
Regardless of how much our leaders want Nevada to grow, to be economically sound, most areas of the state are unable to expand because of a lack of water. Nevada is a desert state, has always prided itself on its relationship to the desert and being able to scratch out a living from the desert. All the hyperbole in the world is not going to change that. Rainfall figures over the last 120 years attest to the fact that Nevada is a desert. Maybe some of our current crop of leaders needs to take a venture into the Great Basin and see just what that means. All the pipelines in the world are not going to change that one single fact.
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