Interview Transcript
Bob Jones
Q: What is the reality on the water situation here?
A: In most cases, water is simply a management problem. The amount of water of course is a finite amount, and I would agree with anyone that it is, but you can import water from a lot of areas. There is an old saying that water follows money and the reality is, it probably will get more expensive and the people will ultimately pay more for the water to be delivered to their homes. But there is a way to get that water, it is a matter of how much it costs to deliver it.
Q: When we get down to it and there is a finite amount, do we need to slow down on the building?
A: Not really, it's conservation. I mean right now if you look at the amount of water we use per house, and you and I have talked a little about it, especially for outside irrigation and other ways, there is an extensive way to expand the use of the existing amount of water. In our community alone, I think if we initiate water meters throughout the community, we are going to find our demand on the same amount of water reduced by at least a third, maybe a half. That expands the water availability to twice as much as it was before. I am just saying there are a lot of ways that we are going to have to learn to use water more efficiently and when we do that we will expand the amount of water that is available.
Q: But do you think we can continue to build at the rate we have?
A: Exactly, and everybody talks about it and it's interesting because it seems to me that certain people have grabbed onto the water issue as a way they think they can control growth somehow, so that seems to be the easiest one for them to grab onto. The reality of the issue is that it doesn't have any relationship to it. If there is a demand by the people for housing, which is usually generated by business formation, which the community generally supports, all we are doing is housing those people that you are bringing to the community. If there is a demand for it, we'll find a way to solve it. Now, it may cost more to do that, you may have to import a few further distances and I would just like to bring your attention the larger urban centers in this country. Most urban centers in this country did not have the water in the local communities or those urban centers. However, they found importation projects, they found ways to build dams, storage facilities, to facilitate that community and its needs and every community operates that same way.
Q: So, you believe we should bring the water to the urban areas because they continue to grow -- which is what they are doing in Las Vegas?
A: Well, not only that, I think that most urban planners would tell you that is the most efficient. It's better to bring the water to a single site, call that a city, we think of it in terms of smaller normally but think of a city as a single site and we talk about urbanizing and bringing people to one area rather than having them spread out throughout the countryside which is not a very efficient use of large land masses. It is better to bring them to concentrated areas and supply it and that's what cities are, that's what systems are that supply infrastructure to cities -- they basically bring the people together for economic reasons, for jobs, for all kinds of reasons so that people can build shopping facilities, they can build entertainment facilities, they can build them all in one area instead of having them run long distances. That's what the development of urban centers is all about and the infrastructure delivery to those urban centers is just part of that process.
Q: But you don't see that we are going to have to slow down in any way?
A: In our community, I don't even know that people are even talking about a slowdown. In our community, we are growing under 3% a year. If the general economy of the United States is growing under 3% a year then you are flirting with a recession. So in northern Nevada, we have never been growing at [that] rate and I don't understand the use of building growth. Now, if you look at the state of Nevada, we've been one of the fastest growing states in the United States. That's predominantly because of southern Nevada, [which] is growing something in the neighborhood of about 10 to 15 times as fast as we are.
Q: If you take a look at just in general the water in the west -- there is a finite amount and we are growing like crazy . . .
A: Let's just use Las Vegas, let's just stick with that for just a second. Of all the communities that you can think of, they conceivably should have a water problem with a growing problem. Wouldn't it be Las Vegas? They basically have nothing. We have the Sierra Nevadas, which is one of the largest watersheds in the world sitting at our back door. Las Vegas is being supplied by a ribbon of water called the Colorado River. Actually the area does not have any water available to it, so they found a way to supply their needs by contracting with the water use from that river to supply the needs in that urban area for growth. That just happens to be the way they solved their problems. But if you look at it as just a "as it sits" situation, you would wonder, How in the world did Las Vegas grow at the rate they have given their water problems?
Q: But, Las Vegas has money . . .
A: They have money and that goes back to my question, water follow money, it does costs more, it costs more to do it, it costs lots to create those channels. I mean look at Los Angeles, it's running water from the northwest. It costs a lot of money to build those aqueducts and those delivery systems. Nevertheless they have a way to do it and as long as the demand is there, the economic demand and remember, the economic demand is brought about by people -- they move where they want to, this is still a free society. When they move where they want to, it's our job in the housing industry to simply supply them housing. We are an after-effect of growth. In fact, for most people housing is a manifestation of that growth in most cases, but the reality is growth occurs before we build the housing. Growth occurs when you bring those jobs to town. Housing occurs when you build the houses for those people who've already come. Those people don't build houses hoping they will come. Unlike Costner in his movie, we don't build houses and think then they will come, we'll go broke that way.
Q: You have a plan in mind where you would be able to lease the water rights, because there is so much water going down the river because we only use 6 percent for our area.
A: There are probably a lot of ways, most of the people in our own community don't realize that our primary source of water here in the Truckee Meadows is the Truckee River. Of the water that flows down the Truckee River, this entire community, roughly 350,000 people, is supported by 6% of that flow of that river. The rest of it flows on through our community and it's used in farming, in irrigation and drains into a lake which is on one of our local Indian reservations, Pyramid Lake. But the reality is that we are using 6% of that to support this entire economic engine that drives northern Nevada. Now, the reality is what we have to do is find a way to find some of that other water that flows through us and use it and I suggested one of the ways might be to go downstream to the farmers and other people that are using it and simply strike a business deal with the them. Say you are growing produce or you are growing alfalfa, whatever your product is, how about we pay you for some of that product for you not to grow it and we'll use the water. Especially do that during the drought conditions when we have storage available because what most people don't realize is that our biggest problem in this community is storage. That is why there is currently a negotiated settlement underway which will allow us and grant us more storage in some of our reservoirs which takes the edge off of our needs.
Q: But doesn't that change the landscape quite a bit if we are not growing anymore, we are just building?
A: If we were the San Joaquin Valley and we were the lettuce-generating capital for the United States or something, that probably would be a legitimate question. And it is even for the farmers, don't misunderstand. The farmers downstream have every right to grow their alfalfa and whatever products they have with their water and I am simply saying you take willing buyers and willing sellers and you go down and explain the economics to them that if they get four cuttings of hay and that gets them x number of dollars for what they do, maybe we can make a deal where they take two cuttings of hay and we get the water that would take for them to do the other two cuttings and we put it upstream where we are getting more economic use for those dollars than they are because we can pay them for the water and still use that water and it's strictly an economic issue. And I wouldn't suggest that we do it to anyone. I say we do it as a willing buyer-willing seller and the price of water may rise before that occurs.
Q: The price of water is going to skyrocket I think as time goes by . . .
A: We thought that for a long time, but we've had pretty good control in the price of water in the area.
Q: Is the price stabilization of water rights because TMWA controls so much of it? I do know that they buy up a lot of these water rights and bank them. So when a developer comes in and wants to build something you have to have an allotment of water rights to build. Right?
A: Actually, a lot of our developers have already banked the water themselves as well. The utility actually does have a bank of water and they have ever since City Power did and now TMWA does but that bank of water is not a huge one. I think they have somewhere around 200 acre-feet and that's mainly for smaller users who don't have a way to go out on the open market and buy water. The developers who are developing and buying land, they know ahead of time that's one of the requirements, and they are out purchasing that water ahead of time for their land because their land isn't any good to them at all unless they have the water with it. So they are usually on the open market buying that water. It's not coming from the utilities, but sometimes it does.
Q: Even with those water rights we have fifteen or twenty years more . . . and then what we will do?
A: Right here in the valley, what's being used presently for irrigation and farming in the valley right here, we've probably got 20 years. There is the entire 94% that we were talking about earlier that is flowing through the city for other uses and what we need to do is reach agreement with those people who are using that water, whomever they might be downstream, farmers, ranchers maybe even the Indians and their use of water, who knows where that arrangement can go.
Q: But won't a lot of that be managed more or less not so much that you want to do it as a business deal, but won't a lot of that water have federal regulations on it?
A: Take my word for it, I am well aware of the regulatory problems we are facing, we've spent a lot of time dealing with those. But they are not insurmountable. Of course there are [regulations]; that will drive the price up candidly, the price will be driven by having to solve those problems before you will be able to use that water.
Q: The regulations will drive the prices up more than the idea that there is a dickering war over it and everybody needs it?
A: As much as the cost increase is going to come from the regulatory wrestling, if you will, as will come from the actual increase in the value of the water. It's all part of the cost and that cost is going to take time to manifest itself. So the task we have now is to get started in that process as early as we can to solve that need and it's going to take some time to do it.
Q: What have you seen happen on the price of water over the last 20 years?
A: Since the time Rule 17 came into place, I think it was about in 1987, the price of water has gone up from about $1400 to $1500, just today, its about $3800, but I will tell you that one of the biggest cost in that was the regulation passed by the federal government for a tax on delivery of utilities which was called CIAK, which is Contributions in Aid of Construction, which is a federal tax put on utilities that the development community has to pay to make the utility whole. So it didn't have anything to do with the cost of the resource itself, it had to do with the cost of taxation on that utility. So it's a very complicated process as to the way we have to do numbers, but the price of water has not grown that much. I bring to your attention yet again -- in our own community, we aren't even metered. The reality is if we simply charge people for what they use -- I'm amazed that we've gone this long without metering such a finite resource. Once we do the metering and people pay for what they use, which I think is equitable, once they do that, you will find an extension of our life expectancy of our water, that 20 years may suddenly become 40 years, that the existing supply will work for us because the consumption will come down. It's proven over and over that once people have to pay for it, it does reduce the amount of usage. So there are a lot of factors out there yet to be played out as to how long our existing water supply will last and I keep bringing you back to that fact. Even with that, we are only talking about 6% of our own water delivered naturally to our community through the river.
Q: So we can take more from the river or pipe more in?
A: Absolutely, there is a lot of answers to these. There are many solutions that simply take willing people to sit down and talk about it and come up with solutions that meet the people's needs. I am talking about all the people, I am talking about the people who have the water. Right now I think there is a better use for it, and we have to convince them that there is a financial benefit to them to put that to other use. And we in the community have to come to understand that water is the lifeblood of the community and the economic engine that drives us. Last time I checked, when you talk about the quality of life, it all starts with the paycheck and people gloss over that pretty quickly. If people don't have jobs and a way to make money for their families, that's a serious problem. So we have to understand that keeping the community healthy, and this infrastructure delivery including water is an important part of that, and we have to keep it healthy by keeping that alive so that you have a healthy, vibrant community. I promise you 2.5%-3% growth in the community is not a rapid growth, that is a very comfortable growth. I have been in this for 21 years and the beauty of this community has been that we have a very steady increase in the growth of our community which keeps the value of our real estate up, which keeps our people working, we don't run into the cycles that some communities have where we have runaway growth and slowdowns and runaway growths, those are really hard on communities tax-wise, they are hard on the human toll in the sense of people being employed and unemployed and all the problems that go with that. We've had a very, very healthy community and I would hope that we continue with these rates. I would hope that the people who try to use water as some sort of control over [growth] will start to understand the economic importance of our people, our children, maybe their children, having jobs and a place to live. Last time I checked, they are none of them living in teepees or anything like that, they all want to live in a house when they are all done and that's why we are proud of the work we do because we build housing for people and last time I checked, that's what people want.
Q: When you look at the bigger picture of say Las Vegas and their rampant growth I mean overall in the West -- we may be doing okay in this community but overall in the West, some communities do hoard the water.
A: I would think there are different communities who have different needs and each of these communities probably have separate resolutions to their particular problems and some of them may have more finite problems than we do in the sense of water availability but they will find a way to solve those. If there is a demand for that community to grow, for the economic vitality of that community, for those people to find jobs, they will find it but it will manifest itself in the cost. It will raise the cost of housing because the reality is that you don't tax or charge developers anything for increases in cost. Ultimately that [cost] goes to the consumer.
Q: But, the increased costs to consumers is already happening isn't it -- because you have to buy the water rights for them?
A: If we pay more for the water, people will pay more for their houses because we have to buy the water rights for them. This community has a really good handle on this process because the reality is we can't go out right now and build a house unless we supply them the water, so we've got a good handle on that. Now whether we have the water in the future is another problem to solve, but this community has solved the problem of the comfort zone for the public of understanding, Are we paying for what we need? Absolutely, we have to get it ahead of time and if we don't deliver it we can't build.
Q: So now we have to get people to pay for what they use with water meters?
A: It is a natural tendency for people to not pay anymore than they have to, I mean I can understand that. Are we going to take electrical meters off houses and let people use any amount of electricity? Are we going to take gas meters off houses and let them use whatever amount of gas they want? Of course not. We charge them for what they use and water should be the same way. Now, those prices will rise and fall with the availability of the product, just like gas, just like electricity. That's what we are facing. The West is growing and our infrastructure is expanding and that infrastructure is costing. We have to build those pipelines to go long distances.
Q: For instance when you go out to Spanish Springs and they are having a problem with the groundwater being contaminated and the wells and all the problems out there. How do you overcome that -- are you just going to pipe in water?
A: Just as they're doing it. Basically what happened out there is they saturated the groundwater table and they are now getting some cross-contamination between the septic systems and the wells, so they simply have to take that effluent in the septic systems, pump it all out, and put it into the sewage plants. The new construction is all done with sewers so it doesn't have the same problem. In hindsight it's one of those things that in a perfect world, we will all be able to see those things ahead of time and solve them all and we don't. Once you have the problem, you find a solution and you fix them all and right now the people out there are struggling with the cost to deliver those sewer lines out there and then take them to each house and pick the effluent from those houses as opposed to putting it in the septic systems and it's a very costly process. We know it is because we put it in the new housing. So we know how expensive it is. But it is particularly expensive to retrofit it and take it in there afterward and do it and that's what the folks out there are struggling with and I really sympathize with them because it is a cost they didn't anticipate on their housing. When they bought their housing, they thought they had all their costs done. All of a sudden they've got maybe another $60000 - $70000 to pay for a certain connection and a line and it's something new for them. But if it means the health of the whole community -- what's the price on that? are we going to allow the wells to become contaminated? I don't think so. We have to solve it and we have to work out a way in order to do that.
Q: So you think the overall health, growth and development here is good?
A: I think that rate of growth here is exceptional. We are growing at less than 3%, we did that analysis. About half of that 3% is taken by our children who graduate from high school. In other words, we are importing somewhere in the neighborhood of 1.5% of our growth from outside the community and that's from new businesses coming to town. I've said forever and will continue to say that rather than concentrate on the quantity of growth, we should all concentrate on the quality because if we bring the right kind of businesses to town, the right employers that hire the right people who pay the right wages, all of the rest of these problems are very solvable. They simply take the money that you are generating and the tax bases and you fix them. And if you think that isn't true, I mean I've always asked the question and I don't know why others don't, if growth is such a bad thing then why are all the communities fighting over annexation for more land? Take my word for it, growth is a cash register. The problem growth has, and it is a very legitimate one that has to be solved, is that the early stages of growth are costly because you are building new [infrastructure]. You've got to have fire stations, police protection and all those things before it is completely built out. So your front-loading is expensive. After it's built out over a period of time and it becomes part of the tax rolls, it generates far more than it costs. That's the issue with growth. Growth is heavy upfront, but in the very long run, it's a cash generator.
Q: But for space, and for environment like you said the quality of life?
A: That's a different question and you are right. If people suddenly are uncomfortable with the size our communities have grown then you are right, that becomes an uncomfortable thing for them. If they get to a certain level of discomfort then they go to a different area. I was born in a little town in eastern Nevada and you know what, they would like to have a bunch of folks live over there. But people don't want to live there, they want to live here. I think when they reach that point where this is such a problem, our task in the building community is not to allow those problems to occur. Our job is to make sure we put enough money in our transportation systems so that people are not crowded on the roads, make sure they have enough water so that when they turn their taps on they have it, make sure we have enough infrastructure with electrical systems and gas systems, that we deliver the infrastructure necessary to be comfortable. When those things start getting strained, then the population gets uncomfortable. Some people are simply uncomfortable because they remember the way it was. I mean I am one of those. When I came over here for college, Reno had only 50,000 people and today we have more than 50000 people. Yeah, I remember a time when there were fewer people here. Was it better? I don't know, ask different people. I like going to the movies now, I have a big choice of movies, I have a great choice in shopping centers, I have great choice in restaurants, great entertainment, I mean I have all those things, I have great proximity to urban centers like San Francisco to go down and enjoy what they offer and great freeways and stuff. So you just change with the times and accept what it is and if you don't, there are probably other places you can live if urbanization is really a problem. Some of the farming communities in the West are growing because some people really want to live in a different environment and they can do that.
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