Application by Las Vegas Valley Water District and Colorado River Commission of Nevada to the Administrator of General Services (Washington, D.C.) for transfer of certain water facilities, 1951

Joint Application of Las Vegas Valley Water District and the Colorado River Commission of Nevada for the Transfer of Certain Water Facilities, Plancor 201, Basic Magnesium Plant, Henderson, Nevada Administrator of General Services, General Services Administration, Washington, D. C. Dear Sir: 1 . This application is for the purpose of (1) perfecting the title of the State of Nevada to the water facilities constructed at or near Henderson, Nevada, by Defense Plant Corporation and (2) the transfer of such facilities with an indefeasible title to Las Vegas Valley Water District, all for the consideration and upon the terms herein set forth, 2. Such water facilities consist of a transmission line, terminal reservoirs, water distribution lines, and appurtenant works of miscellaneous sorts, conveying water from Lake Mead to Henderson, Nevada, and distributing said water to the Basic Magnesium Plant and various other properties in the Henderson town site. BACKGROUND OF APPLICATION 3. These water facilities were constructed during World War II by Defense Plant Corporation to supply and distribute water to the Basic Magnesium Plant and the townsite of Henderson. Such facilities were leased to the Colorado River Commission of Nevada under a letter of intent dated September 16, 1947, a copy of which is attached hereto, and were proposed to be sold to said Colorado River Commission under a letter of intent dated March 17, 1948, a copy of which is attached hereto, and were later conveyed to the State of Nevada by Reconstruction Finance Corporation, acting by and through War Assets Administration, by quitclaim deed dated June 3, 1949, a copy of which is attached hereto. 4. Under the letter of intent of March 17, 1948, and the quitclaim deed of June 3, 1949, title to Basic Magnesium Plant and the facilities provided therefor, exclusive of the electric transmission line and with some other minor exceptions, was conveyed to the State of Nevada for a consideration of not to exceed $24,000,000, to consist of $1.00 paid in cash and additional sums to be derived over a twenty year period from net revenues and other emoluments from the sale, lease or operation of the property conveyed. The grantor Reconstruction Finance Corporation retained a vendor's lien on the property. In the computation of the price of the property, the water facilities were valued at $1,500,000. #2 - Administrator of General Services 5. Apparently Reconstruction Finance Corporation never obtained title to the public lands of the United States underlying the water reservoirs and never obtained easements in public lands of the United States on which the transmission line is located. The description of land in the quitclaim deed by Reconstruction Finance Corporation, dated June 3, 1949, does not include the right of way for the transmission line. The title to the pipeline right of way and to the parcels of land on which the reservoirs are situated should be obtained from the Department of Interior. It may be that this will require legislation. 6. Las Vegas Valley Water District was formed under a special act of the Legislature of Nevada adopted in 1947 and amended in 1949. It is found in Nevada Compiled Laws, Section 8254.01 et. seq. The District is a public corporation and was formed to acquire and construct a waterworks system in the Las Vegas Valley to provide an adequate and dependable water supply for irrigation, municipal and domestic uses. 7. The underground water level in and around the City of Las Vegas has been seriously lowered and additional water must be provided from Lake Mead. WATER DISTRICT PLANS 8. The plans which the district generally expects to follow in supplying water within its boundaries are as follows: (a) Not to exceed two thirds of the capacity of the existing 40 inch water transmission line from Lake Mead to the Basic Magnes-ium Plant is required to serve that plant and the Henderson Townsite. If this application is approved the Water District proposes to utilize the unused capacity for the benefit of the balance of the district. The dis-trict would construct a water transmission line from the terminal reser-voirs at Henderson, Nevada, to the City of Las Vegas. Through this line additional water would be furnished to the area in and near Las Vegas. A further line would be constructed from Las Vegas to Nellis Air Base to supply additional water to the Air Base and housing project adjacent thereto. The district would also construct a third terminal reservoir at Henderson, Nevada, to increase storage capacity. (b) When future conditions warrant the district would construct a second water transmission line to Lake Mead. CONSIDERATIONS OF PUBLIC INTEREST AND BENEFIT 9. Many considerations justify the transfer of water facilities to the Las Vegas Valley Water District on the terms herein proposed. Fundamentally there are two basic reasons for the transfer. The first and narrower consideration is the improvement of public health; this is essentially a local reason, limited in its benefits to the inhabitants of the district. The second and broader consideration is that of public interest and more specifically that of national defense; this reason is national in scope, its benefits flowing to all inhabitants of the United States. The promotion of industry susceptible of conversion to war #3 - Administrator of General Services production is essential to national defense. Growth of such industry cannot be encouraged in the Las Vegas Valley until adequate water at reasonable rates is made available. Either of these considerations alone justifies the proposed transfer to the District. When both reasons are considered, there is a compelling basis for approval of the proposed transfer. More specific reasons for the transfer will be given. No attempt has been made to classify them under the two broad categories in view of their overlapping nature, i . e . , that which is conducive to public health also promotes public interest. These special considerations are: (a) Underground waters in Clark County, particularly in the vicinity of Las Vegas, at the present rate of increase in use will soon be seriously overdrawn. Except for the portion now served by the Basic Magnesium system the territory within the District is almost wholly dependent upon underground waters. At present such underground waters are pumped and distributed by a private company which has shown no desire to increase its facilities or water resources. It is imperative that underground waters be supplemented by water brought from outside the District. The only reasonable supply of new water is from Lake Mead, either through a new water transmission line or by the utilization of the excess capacity of the existing forty inch water line. It is estimated that not more than two-thirds of the capacity of the existing forty inch line is required to serve any industries now located or which may be lo-cated at Henderson within existing Basic Magnesium Plant facilities. The excess one-third can be readily used to supplement existing ground water supplies. In order to supplement the water supply of Las Vegas, the Water District intends to construct a transmission line from Henderson to Las Vegas. (b) Nellis Air Base, a few miles northeast of Las Vegas is increasing its housing facilities by the addition of a four hundred unit housing project, inadequate existing water sources can no longer serve the increased demands of the Air Base. After consultation with the military authorities and ascertain-ing their requirements, the Water District proposes to extend its lines from Las Vegas to the Nellis Air Base. To assure the supply of water at the Air Base, the Water District will guarantee a maximum of four million gallons of water per day, delivered to the boundary of the Base under an agreement made or to be made with the proper military authorities. The guarantee will greatly increase the value of the Air Base from a military and defense viewpoint. (c) Industry at Henderson has need for an assured and long term supply of water at reasonable cost . At present any purchaser or lessee of existing facilities at Basic Magnesium Plant must look to the Colorado River Commi-ssion for its water supply. In the event of default under the quitclaim deed and the letter of intent, control by said Commission would be summarily terminated. In such case the purchaser or lessee would have to make new arrangements for water supply, with no assurance that the new supply would be at a satisfactory rate. The Water District has sufficient funds and will obligate itself to assure a reliable supply of water at reasonable cost to any purchaser or lessee of exist-ing facilities at Basic Magnesium Plant. Thus, regardless of forfeiture, if any, #4 - Administrator of General Services by the Colorado River Commission under the quitclaim deed or letter of intent, purchasers and lessees at Henderson will have an assured water supply from the Water District. (d) Industries located in or near Las Vegas will have a better assurance of water by supplementing existing ground water supplies with waters from Lake Mead. (e) Increasing demand for water indicates that within a period of prob-ably ten years additional water will be required within the District. The long term plans of the Water District include the construction of an additional water transmission line to Lake Mead which will connect with the contemplated line between Las Vegas and Henderson. A pumping plant at the pipe junction will permit the reversing of the flow in the Henderson pipe line and the back fitting of the reservoirs of Henderson with water transmitted through the pro-posed new transmission line. This give further assurance that the industries at Henderson will have an ample supply of water at all times. (f) The Water District plans to increase water storage capacity at Henderson by the construction of a third reservoir of the same capacity as each of the two existing reservoirs, namely about sixteen million gallons. The construction of this additional reservoir will permit for better service to Henderson industries than can be had under present facilities. This increase in standby storage will serve as an additional protection during any emergency which may arise (g) Under existing agreements the State of Nevada has an annual allot-ment of 300,000 acre feet of water from the Colorado River, its tributaries and Lake Mead. The only practical location where this allotment can be bene-ficially used is the Las Vegas Valley. In view of the rapid depletion of under-ground water in the Las Vegas Valley it is important that this resource be utilized. Prudence requires the allotment to be put to beneficial use before it may be readjusted to the disadvantage of the State of Nevada and the Las Vegas Valley. (h) The Las Vegas Valley Water District is the most logical political subdivision of the State of Nevada to control, operate and maintain the Basic Magnesium water facility. Although other political subdivisions in the immed-iate area are authorized to supply and distribute water, they do not have the financial ability or the broad and flexible powers of the Las Vegas Valley Water District. The Water District is able to immediately assume the maintenance and operation of the Basic Magnesium water facilities. It is in a position to readily finance and expand the service to additional customers and industries. Assumption of the maintenance and operation of said facilities will not impair present service obligations of the Water District or any future service obligations which may arise with the expansion of the industries located at Henderson. #5 - Administrator of General Services Moreover, the letter of intent of March 17, 1948, contemplates the eventual liquidation of all the physical properties covered therein. It was not intended that service facilities should remain permanently in the operation and control of the Colorado River Commission. The sooner long term plans can be established for maintenance and operation of said water facilities the better will public interest be subserved. As presently constituted there is no assurance of continuity in the operation and maintenance of the water system. (i) In order to consummate the plans for the construction of additional works, it is necessary that bonds of the Water District be issued. Financial advisors and legal counsel for the District state that in order to market bonds of the District at a reasonable rate of interest it is essential that the Water District have sound and unencumbered title to all facilities necessary to the maintenance and operation of its water system. It is impractical for the Water District to lease the water facilities from the Colorado River Commission or to contract with said Commission for the wholesale purchase of water. Until payment of the minimum consideration or until the expiration of the twenty year period, as provided in the letter intent, the Colorado River Commission will be unable to make any firm leases or commitments concerning said water facilities. Prior to that time the Commission's rights are subject to termination. The only sound method for the financing of the proposed additional facilities will be by the issuance of bonds which will run for a term of at least thirty years. The life of such bonds would necessar-ily be in excess of the period during which the Colorado River Commission could make any firm commitments. Bonds issued under such circumstances would be difficult to market, if marketable at a l l . Consequently, it is essential that the Water District show prospective bond purchasers that it has ownership of all the water facilities from the intake structure at Lake Mead to delivery point at the consumers' property. Such ownership would enable the District to undertake its plans for future improvement and to market its bonds in a reasonable amount and at a reasonable rate of interest. TERMS AND CONDITIONS FOR THE TRANSFER OF THE WATER FACILITIES TO LAS VEGAS VALLEY WATER DISTRICT. If this application is approved and if the voters within said Water District authorize the issu-ance of bonds for the construction of the additional works herein described, then in that event it is agreed as follows: A. In consideration of the payment by the Water District of the fair value of the above described water facilities, less a credit, in public inter-est and benefit, the amount of said credit being a sum of one dollar less than said fair value, Reconstruction Finance Corporation, acting by and through General Services Administration, will quitclaim all its right, title and interest in said water facilities either to the State of Nevada, acting by and through its Colorado River Commission, or to the Las Vegas Valley Water District. #6 - Administrator of General Services As hereinbefore noted, certain possible defects in the patent obtained by Reconstruction Finance Corporation to Parcels 1, 2 and 3 and the failure to obtain a right of way over public lands of the United States may necessitate additional legislation. In any event, additional patents and rights of way must be obtained from the Department of Interior. These considerations may dictate which of the applicants is the appropriate grantee to be named in the proposed new quitclaim deed. Applicants, and each of them, are willing and consent that the grantee to be named in said proposed deed may be either the State of Nevada, acting by and through the Colorado River Commission, or the Las Vegas Valley Water District B. The State of Nevada, acting by and through the Nevada State Board of Control, will quitclaim all its right, title and interest in said water facilities to the Las Vegas Valley Water District. C. In consideration of the execution and delivery to the Water District of the respective quitclaim deeds conveying all right, title, and interest of the State of Nevada and the United States in and to said water facilities, the maximum consideration payable by the State of Nevada to the United States, Reconstruction Finance Corporation or General Services Administration under the letter of intent of March 17, 1948, or the quitclaim deed of June 3, 1949, shall be reduced in the amount of $1,500,000. Said sum of $1,500,000 repre-sents the fair value of the water facility as established in other official docu-ments existing at or prior to the execution of the letter of intent of March 17, 1948, and the execution and delivery of the quitclaim deed of June 3, 1949. D. Additional considerations to be furnished and obligations to be under-taken by the Water District only are as follows: (1) The construction of an additional storage reservoir at Henderson of at least 16,000,000 gallon capacity to augment storage of the two existing reservoirs of similar capacity. (2) The obligation to operate and maintain all of the water facilities quitclaimed (3) The obligation to serve water at reasonable rates to all consumers in the townsite of Henderson and to the purchasers or lessees of existing industrial facilities located at Basic Magnesium Plant. Said consumers shall have a prior right to water delivered by said existing 40 inch line to the extent of 2 / 3 of its capacity. (4) The construction of a water line from Henderson, Nevada, to Las Vegas, Nevada, to augment water resources in Las Vegas and to supply Nellis Air Base with water, as hereinafter provided. (5) The construction of a water line from Las Vegas, Nevada, to the boundary of Nellis Air Base to serve said Air Base. #7 - Administrator of General Services (6) The obligation to deliver to the boundary of Nellis Air Base a maxi-mum of 4,000,000 gallons of water per day from the reservoirs at Henderson at the price and under the terms agreed or to be agreed upon with the proper military authorities. E. If this application is approved General Services Administration is requested to place the Water District in possession of the water facilities on a date to be agreed upon by and between said Administration, the Water District and the Colorado River Commission. This joint application is executed in quadruplicate by the Chairman and Secretary of the Colorado River Commission located at Carson City, Nevada, and by the President and Secretary of the Las Vegas Valley Water District, located at 135 South Fourth Street, Las Vegas, Nevada. It is requested that one executed counterpart hereof be returned to each organization named at the above addresses. F. Applicants warrant that they, and neither of them, has employed any person to solicit or secure this proposed sale upon any agreement for a commission, percentage, brokerage or contingent fee. G. Applicants and each of them agree that in the performance of the terms of this proposed sale that it will comply with and give all stipulations and representations required by applicable federal laws, and that it will not discriminate against any em-ployee or agent for employment because of race, creed, color or national origin. No member or delegate to Congress or resident commissioner shall be admitted to any share or part of any of this proposed sale or any benefit that may arise therefrom. Sincerely yours, LAS VEGAS VALLEY WATER DISTRICT President Secretary COLORADO RIVER COMMISSION OF NEVADA Chairman Secretary ACCEPTED this day of APPROVED: , 1951. STATE BOARD OF CONTROL Chairman Administrator of Secretary General Services.