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Water district signs agreement to settle eminent domain case for industrial center pipeline

Daniel Rothberg
Daniel Rothberg
EnvironmentLocal Government

A public water district for the country’s largest industrial park has agreed to settle an eminent domain case weeks after a judge ruled that the state Constitution gave a nearby family the right to a jury trial in determining whether seizing their private land for a pipeline project was valid.

Approved by the water district's board on May 21, the agreement could remove a major hurdle to building a regional pipeline from the Tahoe Reno Industrial Center to a municipal sewer plant serving the Reno area roughly 30 miles away. Several conditions in the 20-page agreement still need to be satisfied for it to be final. But all three parties involved have signed the settlement.

The agreement between the Menezes family, the water district and the developer would reroute the pipeline alignment and provide $500,000 in compensation to the family, including attorney fees. It also addresses several access issues during and after the pipeline’s construction. 

Once built, the pipeline will deliver treated effluent to the industrial center, which has attracted investment from big tech companies, including Tesla, Google and Switch. Elected officials have generally supported the project, which would ease the burden on the municipal sewer plant and bring more water to an industrial park that has propelled economic growth in Northern Nevada. 

But it hit a roadblock when a family refused to let the pipeline pass through their hay baling and trucking business along the Truckee River. After the industrial park developer tried to negotiate with the landowner, the water district’s board voted to occupy the land through eminent domain action, a special power that allows governments to seize property if it is for “public use.” 

According to court records, the water district argued that just compensation for all the property that it wanted to condemn was $137,410.

The Menezes family responded in court. 

They wanted to know more about the pipeline, including who was building it, paying for it and benefiting from it. And much of their inquiry focused on the nature of the public water district. 

They asked: Was the water district taking private property to benefit private interests?

The Nevada Constitution excludes “the direct or indirect transfer of any interest in property taken in an eminent domain proceeding from one private party to another private party.”

Details that arose from the litigation and reporting by The Nevada Independent showed that the water district had, for years, blurred the lines between a public and private entity. The findings raised further questions about whether a public body, controlled by private interests, could wield the power of eminent domain, a power allowing governments to seize property for “public use.”

The reporting found that the public water district had ceded most operations to a private water utility owned by the developer’s of the industrial park that it served. What governmental actions that could not be delegated were voted on by a governing board that came to solely comprise employees of Storey County Commissioner Lance Gilman, the face of the industrial park. 

In April, a judge ruled that the Nevada Constitution, under a 2008 amendment, gave the family the right to a jury trial to determine whether or not the taking of property was for a “public use.”

During a hearing on the case, First Judicial District Court Judge James Russell said that he thought effluent was for public use, according to hearing audio requested from the court. 

“But it’s got to be a jury determination,” he said. 

Then in May, the parties reached a settlement.

Luke Busby, the lawyer for the family, declined to comment on the settlement agreement. Kris Thompson, the board president for the water district, also declined to comment for this story.

The settlement became public when it was presented at a water district board meeting on May 21. The water district board unanimously approved the settlement agreement. Even before the lawsuit began, the public water district had been taking steps to professionalize its operations and part ways with the private developer-controlled utility charged with operations.

Board members, which include workers for Gilman’s brothel, now read disclosure notices at meetings.

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