By Mark Waite
TONOPAH — Nye County commissioners Tuesday adopted a suggestion by County Manager Pam Webster and decided to hire the same firm to do an appraisal of Pahrump Utility Company that did an earlier engineering evaluation of the utility.
Farr West Engineering will be doing the appraisal. Commissioner Joni Eastley cast the sole vote against the item; she has voted against the acquisition because she doesn’t feel the county has any business operating a water system, especially in sluggish economic times.
Webster said Farr West had sufficient funding remaining on their original contract. The latest action was to assign the scope of work; a contract will be brought back later for signing.
“Brent did the engineering evaluation of the assets and as we talk through this, he can also follow up with the appraisal of the assets and that’s what we’re looking forward to, to wrap it up,” Webster told commissioners.
The results of the Farr West engineering evaluation were reviewed by the Nye County Water District board but only superficially by county commissioners.
Among engineer Brent Farr’s recommendations were that the county purchase 40 acres leased for the Jane Road sewer plant, expand the Supervisory Control and Data Acquisition SCADA system, and seek out legal assistance in understanding water rights, development agreements and other contracts. Farr said some infrastructure that is not being used needs to be maintained in good condition.
Only 7.5 percent of the capacity of the water system and 18.14 percent of the sewer system is being used.
Farr suggested the utility company operate the system for the first three to five years after any county takeover to give officials time to prepare to manage it.
Commissioners recently hired attorney Sev Carlson, of the firm Kaempfer, Crowell, Renshaw, Grounauer and Fiorentino, to do legal research on the acquisition.
Commissioner Butch Borasky thought county auditor Dan McArthur already did the appraisal. Webster said McArthur merely performed a cash flow analysis.
McArthur didn’t render an opinion on whether it would be prudent to take over the utility in his audit presented in August 2011.
McArthur said the utility company had capital assets worth $28.6 million, according to replacement costs provided by the Hafen family. The utility company received $855,700 in revenues, McArthur reported in his audit and had $192,300 in administrative costs, leaving $308,400 to pay debt service.
McArthur said Nye County could borrow money from the U.S. Department of Agriculture at 3.76 percent interest over 40 years for funding to acquire the utility, but he said the USDA won’t allow the use of standby fees as revenues to fund debt obligations, which account for one-third of the gross water and sewer revenues. County officials have since discussed purchasing the system using Payment Equal to Taxes PETT funds.
Schinhofen said members of the public mentioned the assessor’s office already appraised the property. Eastley said that would be the assessor’s value, not necessarily the sale value, a comment Schinhofen wanted put on the record.
The Nye County Assessor’s Office appraised the value of the Pahrump Utility Company property and personal property at $15.98 million.
The most valuable parcel of the 19 owned by the company was at 7371 E. Manse Rd., where the 2.7-millon gallon water tank is located. It is valued at $5.5 million. The assessor’s office appraised a parcel at 6521 S. Centennial Rd. at $3.2 million, where a water tank, well and booster station for the Pleasant Valley subdivision is located, while a parcel at 6591 S. Jane Ave. that holds the sewer treatment plant was appraised at $2.03 million.
Personal property equipment was valued at $935,410, land values totaled $217,964.
By comparison, Utilities Inc. paid $5.5 million to acquire Central Nevada Utility Company in April 2002 following the bankruptcy of Preferred Equities Corporation.
Pahrump Utility Company Inc. provides water service to 470 metered customers, including 464 residences. It services two commercial customers, the Artesia clubhouse and the Jesus Christ of Latter Day Saints Church, as well as Floyd and Hafen elementary schools and three irrigation customers. It provides sewer service to 645 customers, including Lakeside Casino, the Artesia clubhouse and the two elementary schools.
Besides the Hafen family subdivisions of Artesia and Cottonwoods, the utility company services residential customers in the Pleasant Valley subdivision begun by Concordia Homes of Southern Nevada and Burson Ranch, a project begun by Beazer Homes.
The utility company has will-serve commitments to supply water and sewer for subdivisions where developers are paying standby fees but haven’t submitted final maps for development. With full buildout, Farr estimated the utility company service area could include the equivalent of 12,197 single family homes for water and 10,447 for sewer.
Amargosa Valley resident John Bosta tried to persuade the board to delay the contract. He said the county acquisition would include the entire Pahrump Utility Company service territory, which includes undeveloped property owned by Adaven, developers of a proposed Mountain Falls South development south of Manse Road. Bosta said Adaven used water rights to secure a loan, which was involved a bankruptcy proceeding.
Bosta added that he believed eight parcels listed didn’t exist in assessor’s office records.
Greg Hafen II, representing the Hafen family, said Bosta’s accusations were false.
“There is no land in litigation or in bankruptcy that I’m aware of and the APNs he’s referring to that are not on the assessor’s tax roll I’m not aware of that. As far as the acreage that’s been stripped of water, I have no idea what he’s talking about,” Hafen said.
Bosta was prevented from making a rebuttal by commission Chairman Lorinda Wichman.
In a follow-up interview, Tim Hafen said the issue of the Adaven water rights is irrelevant.
“When they develop the 4,400 lots they have to give the utility company water rights in exchange for service,” he said.