Water Rights FAQ

What are the available water rights in the UGA, and how do they impact the City's water rights demand?

Water rights within the UGA are subject to cataloging, but their predictability and usefulness are uncertain. This unpredictability arises from the challenge of forecasting the volume of water rights that will be transferred, as these transfers might not align with development timelines if rights are sold separately from the land. Additionally, each transfer is evaluated by Ecology to determine the actual available volume through a Record of Examination. Unutilized rights risk partial forfeiture during transfer. The estimated need for water rights did not initially account for the potential transfers within the UGA, leading to inaccuracies in water rights projections. 

What happens if developers do not transfer the required water rights?

Under the Pasco Municipal Code, developers must transfer sufficient water rights to meet the demand of their proposed developments. If developers lack existing water rights, they must pay an in-lieu fee. Properties that had water rights within the last decade but no longer do must pay this fee plus a surcharge, based on the projected demand of their development.

Can I sell excess water rights from my land without penalties?

Yes, you can. However, it's important to consider that the required amount of water rights for transfer depends on the proposed development's type and density. Selling rights prematurely might result in a shortage at the time of transfer. The City prefers to have the first right of refusal to purchase any excess rights at market value as established in the Pasco Municipal Code.

What are the carrying costs of buying water rights?

For every million dollars spent on water rights, water rates for Pasco households increase by approximately $4 per month. Purchasing water rights involves upfront costs, and if insufficient funds are available, the City may need to issue debt to buy the necessary rights. This approach differs from funding large infrastructure projects since the benefits of purchased water rights primarily extend to new customers, without adding capacity or longevity to the overall system.

Why can't water rights be easily purchased?

Water rights are scarce, and their acquisition is subject to specific conditions, such as place of use and whether they have been beneficially used. The city collects funds in a restricted account until enough is accumulated for a purchase, or to pay debt service for rights bought in anticipation of development.

Why is the City cautious in purchasing offered water rights?

What happens if the City exceeds its water rights?

Pasco manages a portfolio of approximately 27,402 acre-feet for municipal uses, with a separate 8,229.80 acre-feet for the PWRF operation. In 2023, the city reached its capacity of water rights. Exceeding water rights requires careful management and potential acquisition of additional rights to meet demand. The PWRF operation cannot be considered for offsetting the needs associated with domestic or irrigation demands within City limits or the UGA.  

Where do the water rights fees go?

All proceeds from Water Rights in lieu fees are allocated for water right acquisition purposes, encompassing both the base fee and the surcharge. This funding is restricted and can only be utilized for water rights acquisition only. 

What is the purpose of the surcharge on water rights? 

The surcharge is implemented to prevent the premature removal of water rights from land awaiting development. It serves as a deterrent against the banking or selling of these rights to third parties before the land is developed. This policy aims to make the prospect of selling water rights less appealing to landowners planning to develop their property in the near to medium term. It ensures that essential water rights remain attached to the land, allowing the city to meet the water demands of new developments.  Developers are obligated to transfer the necessary water rights to cover the water needs for domestic use and irrigation, as determined by the intended use of the land. The city is prepared to purchase any surplus water rights at a price set by the In-Lieu fee schedule. Developers who comply with these requirements by transferring the appropriate amount of water rights for their project will not be subject to the in-lieu fee or the surcharge.  

Why is the term set to 10 years for water rights considerations?

A 10-year period accounts for the full timeline of development, from planning to completion, ensuring water rights are appropriately managed and transferred as required.

What if prior owners sold the rights of the land I purchased for development? 

This is a due diligence issue. Developers should evaluate the water rights status of land before purchasing, as lands with intact water rights are more valuable.  

Why not lease water rights instead?  

Pasco is exploring leasing water rights as an alternative to purchases. In 2023, the City issued a Request for Proposal (RFP) for water rights leases, receiving three proposals. The highlighted offer involved an annual $1.24 million payment over 20 years for access to about 4,000 acre-feet of water rights, translating to a capital cost of $4,150 per acre-foot. However, the parties were not interested in selling the rights, meaning after 20 years, the City would have spent $24.8 million without owning any rights. Additionally, at the end of the 20 years, City would have to either continue leasing the water rights at uncertain cost or find new water rights to buy to serve the existing development, creating a highly uncertain and expensive scenario for ratepayers.  

A consultant recommended a longer, 40-year lease to reduce upfront costs and spread payments over an extended period. This option would lower immediate capital obligations but introduce uncertainties about the rights' status after the lease ends, warranting careful consideration.

How affordable is leasing from Ecology? 

Ecology offers a leasing rate of $35 per acre-foot per year, providing a comparatively affordable option for acquiring additional water rights temporarily.

What about the PWRF water? 

The PWRF Land Application System operates separately from Pasco's main municipal water rights. It uses both well water and pretreated wastewater for agricultural purposes. This system does not treat or apply sewage but rather "process water" from the industrial processing of fruits and vegetables. For in-depth details on its operation, the PWRF Engineering report is available. 

How will commercial and industrial water rights fees be determined? 

Final industrial and commercial water rights will be determined during the permitting process due to significant variations in water usage. Our staff will support stakeholders by providing estimates of water rights costs prior to permitting, as required. Additionally, based on public feedback, we are currently addressing situations where the intended use of certain facilities is unclear at the permitting stage. Collaboration with industry experts is underway to ensure clarity in the application or request Council approval for potential revision of relevant codes.

Ensuring the sustainability of Pasco's water system relies on the adequate transfer of water rights at the time of development and strategic acquisition by the City to address any shortfall, guaranteeing continued service to residents and businesses.