In a complete reversal, the city of Fernley has decided to pursue purchasing additional water rights since the real estate market has cooled and prices have dropped.

"We've been operating under a policy that we're not in the water-buying business," said Paul Taggart, Fernley's city attorney.

At Wednesday's city council meeting, Taggart told the council that now was the time to buy water rights on the Truckee Division of the Newlands Project because there are people willing to sell their water rights for less money for what than they acquired them.

He urged the council to consider revising its policy and creating a less cumbersome process for the city to take ownership of those water rights.

"We've had an opportunity to look at some of the potential importation projects, and more water is available in Fernley from people deciding not to build," said Lowell Patton, public works director.

Prior to 2004, the city didn't want to negatively or positively impact the water rights market, Patton said, and did not actively pursue purchasing water rights to add to its bank of existing rights.

"Now, with the rate things are progressing in (real estate) development, we'll probably have less of an impact," Patton said.

Money to purchase additional water rights would come from the water utility enterprise fund, but some councilmen questioned the necessity of a resolution allowing the purchases if there was not money available.

"Is there enough money in the pot to even bother discussing it?" asked Councilman Curt Chaffin.

"If we had the money now, we don't have a policy," said Mayor Todd Cutler.

Newly seated Councilman Cal Eilrich, a real estate developer, said he thought the city could act as a bank or clearing house for buyers and sellers of water rights.

The reason the city is interested in obtaining additional water rights is to continue its service of offering commercial properties the option to pay for in-lieu fees instead of dedicating water rights for their service.

Patton said during fiscal year 2006-2007, the city sold 91 connections, totaling 102 acre-feet.

"We're (basically)selling connections and not buying water," Patton said.

Fernley Town Utilities was granted several thousand acre-feet by the state engineer in the 1980s. Patton said the bank of water rights was augmented by 2,000 acre-feet in the early 1990s, bringing the total amount of water rights the city owns to about 20,000 acre-feet. Thgis includes both ground water and surface water rights.

The council decided to draft a resolution allowing the city to actively purchase water rights.

In a related matter, the council also chose to change the fee structure for in-lieu payments and to limit the amount purchased.

The new fee will be based on the market rate for water rights plus an added percentage, with a maximum of 25 acre-feet available to one buyer.