City agrees to lease groundwater for research facility

Robert Perea, The Fernley Reporter

The Fernley City Council approved a request at its Oct. 16 meeting to authorize staff to take the steps necessary to enter into a lease for two acre-feet of water per year to a private company for a research project in Hazen.

While the amount of water needed for the project and the revenue from the lease will be very small, the steps taken in order to execute the lease will be comparatively arduous, attorney David Rigdon told the council. Rigdon is the city’s outside attorney for water matters.

The request was made by Northern Nevada Research Co., LLC, a subsidiary of Tesla. Their facility is located in the hills north of Hazen.

However, because the use of the water is outside the city limits, Rigdon said all sorts of legal requirements must be met, both for the lease, and for the actual use of the water.

Rigdon said state law requires there be an appraisal of the value of the water rights, then the city must pass a resolution and hold an auction, and all those steps have to be publicly noticed.

Also, the city’s water rights are for municipal purposes within the city limits, so the city would need to file change applications with the Nevada Division of Water Resources to allow the water to be diverted and used at NNRC's site. Fernley owns approximately 8,900 acre-feet of groundwater rights in the Fernley Area basin.

Rigdon said any agreement would require that NNRC reimburse Fernley for all costs associated with the filing and approval of the change applications.

While the city routinely leases water for agricultural purposes, Rigdon said the city has only ever leased non-agricultural water rights twice, both to NV Energy. This, he said, would be the first time the city has ever leased water to a private company.

Rigdon said while the lease is not expected to generate significant revenue for Fernley, it will further Fernley's economic development goals by providing water for the retention and continued operation of a business that supports the local economy.