RGJ Investigates: Reno knew Lemmon Valley would flood, but it allowed development anyway

Editor's note June 2019: A year ago, the Reno Gazette Journal investigated the flooding problems in Lemmon Valley and found that the city of Reno knew the valley could flood and ignored recommendations to prevent it. A jury on June 26, 2019 found the city liable for the property damages caused by the 2017 flood. To help investigative journalism in Northern Nevada, please consider subscribing to the RGJ right here.

Linda Walls is a naturally cheerful person, quick to laugh with dancing blue eyes.

At 71, she bounces around her property on white tennis shoes, easily climbing the mountain of sandbags that for months stood as a precarious barrier between her home and the rising waters of Swan Lake in Lemmon Valley.

Her husband Mike Walls, 77 and breathing oxygen from a tank because of a lung disease he acquired in the 1990s, is equally cheerful, if not as spry.

But when they think of their acre property on Pompe Way being swallowed by floodwater from last winter, leaving them in a hopeless situation, it's difficult to keep a cheerful disposition.

In 1978, the couple bought the property in the sleepy valley eight miles north of Reno. They added a modest mobile home and garage and raised their daughter there. They paid their mortgage every month until the property was paid off.

"We were going to retire here, it was so peaceful and quiet," Linda Walls said, her eyes dropping as they filled with tears.

She looks at the wreckage of a collapsed porch at the side of her house. It had broken off her neighbor's house and floated into her yard last winter. A constant whine of pumps could be heard throughout the property when a reporter visited in September. The pumps worked around the clock to return the water leaking through the sandbags to the lake.

"It's a stinky mess and it used to be so pretty," Walls said, looking at the pots that once held her blooming flowers. "Now we're part of the lake."

It's been thirteen months since Swan Lake inundated the Walls' property. Water still surrounds their land even though the county finally built temporary gravel barriers to replaced the leaky sandbags. The couple has been living in a fifth-wheel trailer on a neighbor's property since February 2017.

The future looks bleak.

"We have nothing to look forward to," Linda Walls said. "I don't know what the future holds for my husband and I. We can't live in that fifth wheel on our friend's property forever."

A Reno Gazette Journal investigation found it may not be the sole fault of Mother Nature that the Walls and dozens of their neighbors had their homes irrevocably harmed by the flood.

Last winter yielded record precipitation. Strong early season storms left a significant snowpack on Peavine Mountain. Then, a series of nine atmospheric river rainstorms hammered Lemmon Valley, one after another.

The rain completely saturated the soil and the water poured into Swan Lake. In closed basins such as Lemmon Valley, Stead and Cold Springs, there is nowhere for the water to go but the lake and no way for the lake to empty but through the slow process of evaporation.

The RGJ's investigation, however, found the flood was not only predicted by studies paid for by the city of Reno and Washoe County, but that local government action — and inaction — also contributed to the amount of water in Swan Lake.

Update on June 26, 2019:: Jury finds City of Reno liable for property loss in Swan Lake flooding

For example, Washoe County and the city of Reno ignored recommendations to build up to $81 million in flood mitigation projects to prevent flooding at existing homes as new construction increased the volume of water in Swan Lake and neighboring Silver Lake in Stead. Any new construction both changes how water drains into the lake and reduces the amount of water that can soak into the ground.

The city of Reno also continues to pump more than 2 million gallons a day of effluent water from its sewage treatment plant into the flooded Swan Lake.

And while local governments opted not to invest in upfront costs to avoid flooding, they've spent more than $14 million in flood recovery efforts. That number could grow substantially depending on the outcome of a class action lawsuit filed by homeowners in Lemmon Valley.

As the rebounding economy fuels a boom in new construction — much of it slated for the North Valleys, including areas currently underwater, and in other flood zones — city officials are grappling with how much to restrict developers in the closed basins so as not to make the flooding situation worse.

The Walls aren't the only victims of the Swan Lake flood.

Their westerly neighbors saw their home destroyed by water. To their east, two neighbors remain surrounded by water. Homes in the neighborhood on the northwest side of the lake remain red-tagged — uninhabitable and unsafe to enter.

"I have foundation damage where the foundation actually sank," said Danny Cleous, who has ignored the red tag adhered to his front window and is still living in a home deemed by inspectors to be unsafe. "I have cracks all the way around the foundation. I have a 2.5-inch gap in the master bedroom wall. The floors all buckled. The walls are all moved."

In all, more than 60 homes were affected by the flood. Twenty-five homes and one church were red-tagged or yellow-tagged, which denotes moderate damage that limits how the building can be used. A dozen remain in an unsafe condition, Washoe County officials said last month.

Emergency officials knew water would be a problem for the North Valleys pretty early last winter.

In December 2016, Washoe County officials, who were keeping an eye on the mountain snowpack, began to notify some Lemmon Valley residents that Swan Lake may rise high enough to flood their properties.

In January 2017, the rain began and didn't let up. By the end of the month, homeowners were chased from their residences by the rising lake.

Washoe County officials activated a traditional emergency response to the flood, contacting property owners about the danger, helping with evacuations, building sandbagging stations and helping those displaced with living assistance.

But in a typical flood, the water rushes in and then recedes, leaving victims to begin the rebuilding process. In Lemmon Valley, the water couldn't recede.

"They told us we just had to wait for it to evaporate," Cleous said.

Even after water crossed Lemmon Drive, surrounded dozens of homes and inundated living spaces, it took Washoe County two weeks to bring in the Army Corps of Engineers to help them decide how to deal with a lake that had taken over neighborhoods in the valley.

It wasn't until mid-March that state of Nevada crews built temporary barriers—gravel and sand-filled walls—to block the water from Lemmon Drive and the homes on the east side of it.

Unfortunately for the Walls and their neighbors on Pompe Way, the emergency crews deemed it too dangerous to construct walls to block the water from their properties. They didn't receive walls until December.

"There was a lot of talk about putting in barriers and dykes," Washoe County Assistant Manager Dave Solaro said. "But there were also fears about unintended consequences. If we did it in this area, are we sacrificing (another) neighborhood? Are we causing a problem somewhere else? Around that time, state management came in."

Solaro also acknowledged county officials were pulled in multiple directions responding to emergencies across the county. Just before the storms hit, the Little Valley Fire destroyed 23 homes and left 2,300 acres of charred hillside in Washoe Valley primed for flooding. The storms in January and February flooded creeks and streams both north and south of Reno.

"The ability of Washoe County to focus simply on this with everything going on in the county…lots of places were seeing flooding and we had to get to rebuilding some of that infrastructure," Solaro said.

That left Lemmon Valley residents feeling as if they were living in a forgotten community.

"This has always been the bastard valley of Washoe County," Cleous said. "We are out here in the middle of nowhere.

"We're just a bunch of dumb rednecks. What do we know?"

The county didn't put up the gravel-filled barriers to dry out the Pompe Way homes until December—after months of organized pleading by a cadre of Lemmon Valley residents led by Tammy Holt-Still for officials to address the long-term needs of flood victims.

"We weren't getting any response so I started stomping my feet and being a pest to get somebody to start paying attention," Holt-Still said.

Holt-Still and other homeowners are now a regular presence at county and city public meetings.

"The water is still there, I'm still here," Holt-Still says at each meeting.

They homeowners had several adversarial encounters with elected officials.

In late December, for example, when Holt-Still stepped up to speak at a Washoe County Commission meeting, Commissioner Marsha Berkbigler muttered into an open microphone: "Oh good, I can't wait."

And although temporary walls instead of sandbags now stand between the lake water and the Walls' home, they aren't willing to return to a house that may need to be evacuated again.

"We're not going back there," Mike Walls said, shuddering at the thought of the elderly couple reacting to another rushed evacuation. "Never."

North Valleys residents are in a tough spot.

The total amount of damage sustained in Lemmon Valley and Stead—where a handful of homes and some distribution warehouses saw flooded property—did not reach a level that would trigger individual assistance from the Federal Emergency Management Agency. So, homeowners have received no federal money either for repairs or to find another place to live.

Washoe County and the state of Nevada have tried to fill that need. Washoe County assigned social workers to each displaced family and helped them buy new furniture and household items. The state of Nevada paid the rent for 14 families for the better part of a year.

The five residents who so far have been unable to return to their homes and remain on housing assistance are now paying a share of the cost, said Washoe County Human Service Director Amber Howell.

Others, like Cleous, are caught in an insurance nightmare.

Cleous carries flood insurance. But he said his claim was denied because water didn't actually enter his home. His regular homeowner's insurance company has denied his claim arguing the flood did the damage, he said.

He's stuck.

But Cleous and his neighbors also question whether the damage to their homes should have even happened in the first place.

In May, Cleous filed a lawsuit against the city of Reno. Last month, Washoe District Judge Barry Breslow certified the lawsuit as a class action. So far, four homeowners have joined.

The lawsuit alleges that the city of Reno engaged in an unlawful "taking" of property from Lemmon Valley residents by failing to follow the recommendations of their own 2007 study, which warned up to $81 million in flood control infrastructure was necessary, and by continuing to send treated wastewater into the flooded lake.

The Reno Stead Water Reclamation facility treats sewage from throughout the North Valleys and pumps the effluent directly into Swan Lake. The city of Reno, which operates the plant, is required to send a small amount of water into the lake to maintain wetlands at the southwest end of the playa.

During the flood, water poured from the plant in amounts that exceeded the city's environmental permit.

Jo Ann Kittrell, a spokeswoman for the Nevada Division of Environmental Protection, said no action was taken against the city for exceeding the permit. She said that during a flood, water infiltrates the sewer system, which isn't water tight, boosting the flows.

In 2017, the city of Reno put 1,573 acre-feet of water into the flooded 1,600 acre lake, according to data from NDEP. Under the permit, the city is allowed to pump up to 2,632 acre-feet a year into the lake.

Lemmon Valley residents are concerned about the city's plans to expand the sewage treatment plant to accommodate more development.

An expansion would increase the amount of effluent coming from the plant. Right now, the city can send an average of 2.35 million gallons a day into the lake, according to its permit.

Reno's Public Works Director John Flansberg, however, said the city is committed to finding other ways of disposing or using the additional effluent rather than sending the excess into Swan Lake. Some effluent, for example, is already being used for landscaping in the valley.

"One of the options was to look at raising that to 2.5 million gallons a day (into Swan Lake), but that's just not going to be sustainable," Flansberg said. "We always had a component of looking at Stead knowing we have to do something for a beneficial use of that effluent."

The class-action lawsuit also claims that the city of Reno pumped water out of Silver Lake in Stead into Swan Lake to protect the city's industrial parks from flooding. City officials deny any pumping took place.

Closed basins are essentially geographic bowls, in which runoff from surrounding mountains and hills pool in the low-lying lake. Silver Lake is one basin. Swan Lake is in a neighboring basin. Water doesn't naturally flow between the two basins.

But Cleous and Holt-Still are adamant water made it from the Silver Lake basin into Swan Lake. They point to a culvert on the western edge of the Swan Lake basin that was a raging torrent of water during the storm—too much water, they argue, to be coming just from their own basin.

In fact, a drainage study from 2000 indicates one of the city of Reno's storm drain trunk lines carries water north along Stead Boulevard and the east into Swan Lake. Channeling the water into Swan Lake can reduce water levels near the warehouses in the Silver Lake basin.

The lawsuit's argument that the government is responsible for the flooding relies heavily on a study commissioned in 2007 by the city of Reno as it pursued aggressive development in the North Valleys.

That study, performed by Roseville, Calif.-based Quad-Knopf, recommended the city build $81 million worth of flood mitigation projects in Stead and Lemmon Valley to protect existing property owners from increased flood dangers brought on by development.

Similar studies commissioned by Washoe County also recommended flood mitigation projects.

Nothing, however, has been built. No retention ponds have been dug. No plants to reinject water into the ground have been constructed. Neither Swan Lake nor Silver Lake have been deepened to handle additional runoff from development.

Developments have not been required to adhere to "low-impact" design standards recommended in the report to mitigate storm water flows.

Flood mitigation projects have proven to work in Stead. For example, before the Quad-Knopf study, a channel was built to connect Silver Lake to a series of holding ponds to the northeast. Those ponds saved Silver Lake from about 10 percent of the water flooding into the playa, Flansberg estimated.

Similar retention ponds could help Swan Lake, he said.

Solaro said the decision to so far forgo flood mitigation projects likely comes down to one thing: money.

"There's really nothing to prevent this (flood) from happening," Solaro said.

"My guess is it's something to do with cost," he said when asked why nothing exists to protect homeowners. "Everything always comes down to money."

If the county were to assess a fee on existing homeowners to cover the cost of flood mitigation projects, it likely would be prohibitively expensive for individual property owners, Assistant County Manager Christine Vuletich said.

The Quad-Knopf study, however, recommended impact fees be levied on developers of new projects. For example, developers could be charged a fee for every acre they cover with impervious surfaces, which increase runoff into the lake, to fund the mitigation projects, the report said.

So far, however, neither the Reno City Council nor the Washoe County Commission has seriously considered impact fees on new development recommended by the studies.

Solaro believes it's difficult to raise revenue for projects to guard against flooding that doesn't occur often.

"We could spend an awful lot of money every 10 years and reach the point where you're burdening these homeowners for something that may or may not occur in the time they own the home," he said.

Solaro said he wrestles with the question of how much responsibility government should bear to make flood victims whole.

"I don't want to sound callous, but I didn't make the choice to buy my property there," Solaro said. "I struggle with, does government come in to save everybody versus people's choices on where to live."

When the Walls selected their property in 1978, the knew they were building on the edge of a dry lake bed. They looked into getting flood insurance, but their parcel was not part of the federally designated flood zone.

In fact, those FEMA flood maps often were wrong in the 1970s, based on rudimentary elevation measurements compared to technology available now.

New flood maps were drawn in 1994, which included the Walls' property. When they received a new quote for the insurance, Linda Walls said it would have cost them $10,000 a year.

"We didn't even make that much money," she said. "We could never have afforded that."

Despite previously wet years, their property never flooded until 2017, they said.

Reno City Councilwoman Naomi Duerr, a geologist by training and former executive director of the Truckee River Flood Management Project, said Lemmon Valley homeowners shouldn't be to blame for buying homes in the 1970s when flood maps suffered from accuracy problems.

But it's probably time for the government to relocate homeowners out of the danger zone, she said.

"You have two choices," she said. "You can move the water away from the people or move the people away from the water. In this case, given that the people are living in a lake bed, the best solution is not to try to engineer your way around the problem."

In the end, that may be the best answer for the Walls and their neighbors.

Washoe County officials have applied for a $1.3 million federal grant to help the county buy flooded properties at market value and return the land to open space. The county would have to chip in about $500,000 to meet the matching requirement.

The Walls said they will participate in the voluntary buyout program but said it could take as long as two years before their property is actually sold.

While the buyout program could help those with homes they can't return to, it doesn't answer the larger issue of developing in a closed hydrologic basin.

The maximum number of homes and warehouses predicted in the 2007 Quad-Knopf study haven't been built yet. But both the housing market and the industrial real estate markets have surged back to life in the economic rebound.

Massive housing developments and industrial parks are in the planning stages in each of the three closed basins north of Reno. In Lemmon Valley alone, 3,850 housing units are in the works.

One of the largest proposed developments, Prado Ranch, is planned for an area that remains underwater today.

As city and county officials contemplate approving these projects, they have a legal responsibility to ensure they don't hurt existing property owners, said Ed Thomas, a Massachusetts-based lawyer and president of Natural Hazard Mitigation Association.

"It is the developers' responsibility to build in such a way that they aren't changing natural conditions and moving water onto somebody else's property," Thomas said. "If you develop in such a way that by moving water that naturally would go into an aquifer, or run off naturally, (onto someone else's property) you are indulging in a form of trespass.

"And when government gives you permission to do that without requiring you to build safely and properly, it's possible the government is putting themselves at some degree of legal liability."

Thomas said he understands how difficult it is to persuade local governments to do the work, which can be expensive, to ensure a development doesn't harm others.

"We as a species have a hard time dealing with high-consequence, low-frequency events," he said.

Determining design standards for development in flood zones is often a political exercise.

When Duerr managed the Truckee River Flood Management Project, she worked hard to convince the city to adopt a two-to-one ratio of removing a shovelful of dirt from the flood plain for every shovelful of dirt added to it by a developer.

But it was a hard fight and the current one-to-one ratio resulted as the compromised standard. The more dirt a developer has to remove from a floodplain, the more expensive the project becomes.

"I've always viewed one-to-one as a bare minimum," Duerr said.

In the closed basins, however, both Flansberg and Solaro agree the one-to-one ratio is not enough.

"We thought we had it," Solaro said. "We have a mitigation ratio of one-to-one. That's the standard of practice. In this basin we now know that's probably not accurate."

Duerr agreed.

"In the basins to the north, it's easy to dismiss a study—and there were studies," Duerr said. "It's easy to say it was a theory or a calculation. Now we know it is very real. It can happen and has happened and it is tragic for those people who have experienced this kind of flooding."

The Reno City Council and its planning commission have taken a careful approach recently to approving development in Lemmon Valley.

They have not acquiesced to homeowner demands for a complete moratorium on construction. But the council denied a request by Prado Ranch to build houses in the floodplain and the city's new master plan strongly discourages allowing developers to build in floodplains.

Most recently, however, the council approved a 5,000-unit housing development in the Cold Springs closed basin on the edge of White Lake. The Stonegate project will be building in floodways and floodplains. Developers said they will dig out the east end of White Lake to accommodate higher flows.

Aric Jensen, Reno's community development director, said the city is developing new standards that don't rely on a uniform ratio for removing dirt when building in a floodplain. Rather, developers will be required to produce studies showing they know how runoff will be affected by their development and prove it won't harm adjacent landowners.

That can put policymakers in the awkward position of trusting a private developer. But Jensen said the city can also hire its own experts.

"The big debate is on the ratios," he said. "Everybody acknowledges that volume mitigation can work and does work if you do it right. So that's the big debate.

"I suspect you will see more third-party reviews. More expert opinions."

Jensen, who worked in the Salt Lake City area before moving to Reno, noted expensive flood mitigation projects aren't always long-lived. Particularly when a region experiences prolonged drought or development places demand on water supplies that dry up rather than fill desert playas.

For example, in the 1980s, the state of Utah spent $60 million on a giant pumping station to prevent the Great Salt Lake, which also sits in a closed basin, from swallowing up Interstate 80 and flooding surrounding communities. The pump operated for only two years before weather conditions changed and the lake shrank.

Jensen said drought tops his list of worries as the city expands.

"My biggest concern is that we are going to have a shortage of water, not an abundance," he said.

He also noted that sometimes storms can be big enough to overwhelm whatever mitigation has been put in place.

City and county officials argue that's what happened in Lemmon Valley last winter.

"I know everybody likes to point to development and say that's the bad guy, that's what caused this," Solaro said. "But I go back to the fully saturated ground. It didn't matter if it was a building or asphalt or sagebrush. All that water ran to the basin."

In the case of the Swan Lake lawsuit, forensic hydrologists will likely work to determine whether the flood was solely the result of Mother Nature or if development and treated wastewater contributed to the damage. The lawsuit will be long and expensive.

But local government officials can avoid future litigation with careful planning and making the difficult decisions to put well-researched requirements on developers, Thomas said.

Such planning can also save heartache.

"From the perspective of these 20 people, a disaster that affects one person is a catastrophe to them," Thomas said. "Is it the scale of a Hurricane Harvey? No. But they were harmed just as much as any individual victim of Harvey.

"And if someone made a deliberate decision that resulted in them getting flooded because they were not willing to recognize a problem, that's worse."