MINUTES OF MEETING

      ASSEMBLY COMMITTEE ON GOVERNMENT AFFAIRS

 

      Sixty-seventh Session

      June 10, 1993

 

 

 

The Assembly Committee on Government Affairs was called to order by Chairman Val Z. Garner at 8:10 a.m., Thursday, June 10, 1993, in Room 330 of the Legislative Building, Carson City, Nevada.  Exhibit A is the Meeting Agenda.  Exhibit B is the Attendance Roster.

 

 

COMMITTEE MEMBERS PRESENT:

 

      Mr. Val Z. Garner, Chairman

      Mr. Rick C. Bennett, Vice Chairman

      Mrs. Kathy M. Augustine

      Mr. Douglas A. Bache

      Mrs. Marcia de Braga

      Mr. Pete Ernaut

      Mrs. Vivian L. Freeman

      Mr. Lynn Hettrick

      Mrs. Erin Kenny

      Mrs. Joan A. Lambert

      Mr. James W. McGaughey

      Mr. Roy Neighbors

      Mrs. Gene W. Segerblom

      Mr. Wendell P. Williams

 

 

COMMITTEE MEMBERS ABSENT:

 

      None

 

GUEST LEGISLATORS PRESENT:

 

      Senator Ernie Adler, Capital Senatorial District

      Assemblyman Joe Dini, District 38

      Assemblyman Dean Heller, District 40

 

STAFF MEMBERS PRESENT:

 

      Dana Bennett, Research Analyst

 

OTHERS PRESENT:

 

      Marv Teixeira, Mayor, Carson City; Norman Williams, V&T Historical Railroads Society; Ron Allen, V&T Historical Railroads Society; Larry Prater, Vice Chairman, Storey County Commission; Kevin Honkomp, President, Carson City Chamber of Commerce; Karl Larson, Virginia City Chamber of Commerce; Chet Hillyard, Lyon County Commission; Carole Vilardo, Nevada Taxpayers Association; Don Schlesinger, Commissioner, Board of County Commissioners, Clark County; Richard Surface, Clark County Department of Comprehensive Planning; Karen Hayes, Commissioner, Board of County Commissioners, Clark County; Brain Cram, Superintendent of Schools, Clark County School District; Dan Newburn, Member Clark County Board of School Trustees; Randy Oaks, Captain, Las Vegas Metropolitan Police Department; Gloria Sturman, Trustee, Las Vegas-Clark County Library District; William Prezant, Prezant Mollath & Costello; Mark Doppe, President, Southern Nevada Homebuilders Association; Michael Niarchos, Senior Vice President and General Counsel, Summa Corporation; Renny Ashleman, Attorney, Southern Nevada Homebuilders Association; Dennis Stein, President, Nevada Development Authority; Carole Vilardo, Nevada Taxpayers Association; Mickie Johnson, Secretary/Treasurer, Nevada Homebuilders Association; Ron Ruthe, Nevada Association of Realtors; Mark Brown, Nevada State Apartment Association; Bruce Barton, President, Southern Nevada Chapter of NAIOP; and Bonnie James, Las Vegas Chamber of Commerce.

 

ASSEMBLY BILL 696 - Creates Tricounty Railway Commission.

 

Assemblyman Joe Dini, District 38, testified as a proponent of AB 696, indicating one of the best ways to attract tourists into western Nevada would be the development of the V&T railroad from Virginia City down through Lyon County into Carson City.  He felt it was a very significant project from the tourism standpoint.  Mr. Dini remarked Mr. Teixeira would have testimony regarding the number of estimated visitors.  He said this bill would allow Carson City, Storey County and Lyon County to come together to form the Tricounty Railway Commission.

 

Senator Ernie Adler, Capital Senatorial District, testified he was instrumental in much of the drafting of AB 696.  He reviewed AB 696 and the proposed amendments.

 

Senator Adler said what the county entities were trying to accomplish with the bill was to purchase the right of way between Carson City and Storey County going through Lyon County along the historic V&T right of way.  In conjunction with that, they would rebuild the entire railway.  The counties would probably have a concessionaire who would run the train between the two locations (Virginia City and Carson City), they would have at least two stations and possibly three, one in each county.  Senator Adler indicated, in conjunction with the stations, there would possibly be pull-off areas for picnicking, regional park areas, hiking and bicycling.  It would be a railway but it would also be a linear park along with the railway.  In addition, Senator Adler said the provision contained language to disallow the railway from falling under the jurisdiction of the Public Service Commission, an agency which had no interest in regulating a historic railroad.  He described how the three counties might fund the project and purchase the right of way, saying it was believed the project would be able to pay back the taxpayers in the future by levying back to the county one dollar per ride.  In conclusion, Senator Adler said the project had been enthusiastically supported by the local people and the counties, as it was seen to be the equivalent to Clark County's theme or amusement parks and Washoe County's bowling center and Hot August Nights, turning the rural part of Nevada into a year round attraction for tourists.

 

Mrs. Segerblom asked Senator Adler how long the trip would be.  Marv Teixeira, Mayor, Carson City, answered the ride would start around Deer Run Road in Carson City.  It would follow the Carson River to Brunswick Canyon and cross the grade into Lyon County, approximately at Moundhouse.  It would then skirt around Moundhouse, pick up the original route and go into downtown Virginia City.  The total length would be approximately 34 miles.  Continuing, the Mayor said there currently was a business operated by Bob Gray with the name V&T Railroad.  He would probably do the concession and be the franchise needed to operate under steam.  The Mayor then described the current mode of operation and said this would be the biggest single attraction in the area.  He said, "It's called build it and they will come."  He concluded his testimony by outlining the funding mechanisms which would be used.

 

Assemblyman Dean Heller, District 40, testified the group appearing in support of AB 696 was a solid group in favor of the program.  He agreed the project was a strong, valid attraction which would bring many tourist dollars to the area and was one of the best ideas to come forth in this area in a long time.

 

Mrs. Segerblom queried if the proposed railroad would be connected to the state museum and railroad.  Senator Adler replied it would not be possible without substantial structural reinforcement of the street, which would be more expensive than the entire project.  When asked if it would be under the state museum, Senator Adler responded it would be under the tricounty authority.

 

Assemblyman Joe Dini, District 38, added, "I think the final structure of that board....there will be 3 county commissioners and the majority of that board will be county commissioners."

It would be comprised of elected officials rather than a private body.  Additionally, Mayor Teixeira said the reason it had to be done that way was because of federal funding.

 

Mrs. Augustine referenced a rail system in Hebrew City which was now defunct and asked if anyone had studied what had happened with that tourist attraction.  Mayor Teixeira replied, "This is probably one of the most famous shortline railroads in the world....When in fact we lost the shops, the V&T roundhouse in Carson City, that echoed clear through.  I got wires as far as Europe.  This....has an historic connotation to it.  I believe it has the ability to stand the test of time and be more like the Durango Railroad from Durango to Overton in Colorado.  That is one where you have to book in advance through a reservation system.  I see the same potential for this one, in fact, even greater."  Further discussion ensued.

 

Mrs. Freeman questioned what Section 10 did.  Senator Adler replied it was a catch-all clause which did not invalidate other provisions if any portion of AB 696 was unconstitutional.

 

Norman Williams, V&T Historical Railroads Society, said, in order to save time, the majority of people listed on Exhibit B were members of the society and supporters from various counties who supported the passage of AB 696.

 

Ron Allen, V&T Historical Railroads Society, agreed with Mr. Williams statement.

 

Larry Prater, Vice Chairman, Storey County Commission, testified Storey County strongly supported the project.

 

Kevin Honkomp, President, Carson City Chamber of Commerce, stated he had never seen such unanimous support for anything within the Carson City business community, therefore, he strongly supported AB 696 and urged its passage.

 

Karl Larson, Virginia City Chamber of Commerce, testified he had a mailing list of thousands of people from all over the world who had expressed interest in the expansion of the V&T and wanted to be notified when it happened, therefore, he said it was not only the local business support but the tourists who were really interested.

 

Chet Hillyard, Lyon County Commission, stated the Lyon County Board of Commissioners supported the legislation 100 percent.

 

Carole Vilardo, Nevada Taxpayers Association, testified she was not in opposition to what the bill did but suggested amendments to Section 9, the funding mechanisms, in order to conform to the Local Government Budget Act.  She also stated she would be remiss if she did not oppose the levy of up to two cents property tax and a half cent sales tax without going to the vote of the people.  Although phone calls to her office in support of the concept would indicate people would not oppose it, she said it was incumbent to follow the consistent, accepted pattern with those two taxes.  The only time the pattern had not been followed was in the fair share make-up revenues of the previous session.  At no time in history had the legislature enacted two people taxes which the people could not vote on.  Another concern was relative to the imposition of the tax on retail sales.  Ms. Vilardo described a quarter of a percent tax found in Nevada Revised Statute (NRS) 374 which was currently used by local governments as an option for construction of roads or mass transit.  She suggested the sales tax be held at the quarter of a percent level and expand NRS 374 to handle the proposed project.  She further discussed transient lodging and asked the committee to put a finite cap on it for .01, .02 or .03 cents.  In conclusion, she asked the committee to keep the public informed, approve the property and sales tax by going to a vote, and relative to the other funding mechanisms, where possible, work them into existing law in order to be consistent.

 

Mrs. de Braga asked if a cap already existed for room taxes.  Mrs. Vilardo answered there might be in NRS 244 but she had not been able to check on it prior to appearing to testify.

 

Senator Adler responded it was always the intent of the counties to seek the vote of the people regarding the sales and property tax.  As to whether the legislation should be within the rapid transit tax, Senator Adler disagreed.  He said the railroad project was more like the downtown redevelopment projects in Reno, and therefore, should be split off other traditional type funding sources.  He did agree, though, with the usual checks and balances, and controls on how the taxes should be implemented.  He then described the safeguards which would be followed and which were outlined in AB 696.

 

Mayor Teixeira concurred with Senator Adler's comments and added only counties above 250,000 were capped in the area of room tax, explaining the room tax was used to perform different projects within the community and was an avenue which could be taken for bonding with concurrence from the people.

 

Mr. Neighbors said he had the same concerns and wanted to see language in the bill to clear them up because he was not comfortable with the bill as it was.

 

Chairman Garner asked Senator Adler to work out the concerns and bring the bill back to the committee.  The hearing on AB 696 was closed with no action taken.

 

ASSEMBLY BILL NO. 573 -Establishes monetary cap for certain impact fees and expands uses of impact fees.

 

Don Schlesinger, Commissioner, Board of County Commissioners, Clark County, testified in support of Clark County's recommendations to AB 573.  He said, "A government study was conducted for Las Vegas Valley.  The government study came up with four conclusions: one, local government revenues generated by each unit of growth do not, under current policies, meet the local government cost incurred; two, the growth projected for the Las Vegas Valley magnifies the impact of the short-fall associated with each unit of growth.  In a more static community the fact that growth does not pay its way would not be a major concern; three, the projected short-falls could affect existing residents in each Las Vegas Valley jurisdiction; and four, the cause of the projected short-fall is neither the magnitude nor the rate of growth but the policies under which growth occurs.  The question is not whether growth is desirable or not but whether, under current growth policies, they should be modified."  Mr. Schlesinger proceeded to summarize the study further for the edification of the committee and concluded by saying the study had been done eleven years ago.  He next questioned what had happened since then, giving the answer in statistics, public demands and the public's refusal to support bond issues.  He then introduced Exhibit C, amendments to AB 573, and suggested the amendments were another way to pay for future growth.

 

Mr. Neighbors asked if the Clark County Board of Commissioners supported AB 573 unanimously.  Mr. Schlesinger replied the commission had voted 4 to 3 to support the legislation, explaining there was rarely unanimous support from the board anymore.

 

Mr. Neighbors then asked if everyone paid the same fee regardless of the price of home or apartment.  Mr. Schlesinger answered no, there would be a set fee for a single family development and a lower fee for a multifamily development.  The legislation proposed absolute caps, the highest amounts which could be assessed.  Richard Surface, Clark County Department of Comprehensive Planning, responded multifamilies would be less but there was no differentiation for a single family home's value as shown in the fee chart in Exhibit C.

 

When asked by Mr. Neighbors if this would be done at the county level, Mr. Surface said yes.  Mr. Neighbors then pointed out it was not spelled out in the bill, to which Mr. Schlesinger replied the legislation was purely enabling and did not contain all the provisions incumbent in the ordinance.

 

Mr. Ernaut explored Section 8 of the amendment with Mr. Schlesinger and questioned the logic of the $2,300 cap upon single family development versus a billion dollar resort with 5,000 rooms.  Mr. Schlesinger replied the logic was law, the United States Supreme Court had ruled there needed to be a substantial nexus to assess an impact fee between the demand created and the cost being assessed.  It had been adjudicated commercial development could only be assessed a fee for police and fire; not schools, parks and libraries.  Karen Hayes, Commissioner, Board of County Commissioners, Clark County, added the people coming to a hotel did not impact schools and probably not parks.

 

Mr. Bache queried what the mechanism was on residential rates and the constitutionality of the cap.  Mr. Surface again deferred to Exhibit C, the fees, explaining what it was hoped they would achieve in meeting service standards.  All units, therefore, would be assessed by the number of people in a home using services, not the size of the home.

 

When asked how apartments and mobile homes were defined in the legislation, Mr. Surface replied they were defined as multifamily units and were assessed at a lower rate.  Further discussion followed regarding what was or was not defined in the legislation.

 

Karen Hayes told the committee how she became involved in the impact fee issue.  People in older communities were complaining their property tax dollars were being spent to build new areas while the areas they lived in were decaying.  She said impact fees would allow growth to pay for growth and older communities would benefit from their own tax dollars.

 

Brain Cram, Superintendent of Schools, Clark County School District, testified the Clark County School District was labeled as the fastest growing school district in the United States.  Forty one schools had been built in the last four years, thirteen opening in September.  Within the next ten years one hundred schools would have to be constructed.  He said, "The equation is this, I am a Nevada resident so I think this is simple for me as I watch what happens, we have low taxes which attract lots of people.  Lots of people come who demand lots of services that can't be paid for because we have low taxes.  As my father from Caliente would say, 'That's like beating yourself with a stick because it feels so good when you stop.'  We all know what the problem is.  I think we now have to try and find the solution to that.  We, in the school district will need impact fees, bond issues, help from the private sector and lots of prayers to get 100 schools up in the next 10 years.  Nothing will do it alone.  We need every bit of help we can get and we need it as quickly as possible.  What I don't understand in this, besides all the political ramifications which I have no understanding at all, why would we want to delay?  We know what the problem is, we know what is causing the problem, why don't we get about solving the problem?  It will not go away....I'm not the brightest person in the room, I know what the problem is and I know it needs to be solved right now."

 

Dan Newburn, Member Clark County Board of School Trustees, testified in the past, promises by the builders at the hearing had been made to the school district to assist them in getting schools built.  He said, "Unfortunately, that check still hasn't arrived."  He said the board was very concerned about providing facilities to educate today's children as well as tomorrow's.  He urged the committee to support AB 573.

 

Randy Oaks, Captain, representing Sheriff John Moran and the Las Vegas Metropolitan Police Department, referenced the resounding defeat of recent legislation dealing with property taxes and bond issues to fund additional police officers, additional stations and expansion of the jail.  He said the problem did not go away just because the voters rejected the measures and hoped AB 573 was an avenue which could also be used by the police department to bring relief to the problems mentioned.

 

Gloria Sturman, Trustee, Las Vegas-Clark County Library District, presented the committee with Exhibit D, a resolution passed unanimously by the library district in support of AB 573.

 

William Prezant, Prezant Mollath & Costello, representing the Nevada Resort Association, provided the committee with a letter (Exhibit E) from the Chairman of the Board, David Belding, in support of AB 573.  He then explained what the legal implication of the legislation would be, section by section, and said it was good legislation.  In conclusion, Mr. Prezant urged the committee to endorse AB 573.

 

Mrs. Lambert said her understanding was AB 573 was only to fund capital improvement projects, not maintenance, not police officers.  Mr. Surface responded yes.  Continuing, Mrs. Lambert said any existing efficiencies in the service area had to be funded by existing residents.  She now asked how that funding would be provided, bringing the existing up to par.  Mr. Surface said a fee was only being proposed to meet the existing service level of police.  The amount would have to be lowered for parks to coincide with the current service standard.  Further discussion ensued pertaining to raising service levels and paying for police officers with impact fees.

 

Mrs. Augustine asked Mr. Cram if the 100 new schools was based on the current growth rate.  Mr. Cram replied it was based on a modest 4.7 percent growth.  It had run as high as 10 percent in the last couple of years.  Alluding to the growth in Orange County, California in the 1960's, she said Orange County was now shutting down schools because there was no student population to support them.  Mr. Cram said Las Vegas had a partial solution to that because the schools were overcrowded by 30 percent.  He added, "Even if we had new buildings, we would bring down schools to reasonable sizes....We are overcrowding the buildings we have and we are still not keeping up.  The schools we have built thus far have not gotten us even.  What they did was by overcrowding everything we can survive....We have to supply a seat for every student that shows up in Clark County and they are coming in droves."

 

Mrs. Augustine next turned her attention to Commissioners Hayes and Schlesinger and asked what fees had previously been collected from builders.  Mr. Surface explained what the fees were and how they were used.  When asked why the cap of $1,000 was not being used first, Mr. Surface replied it was an option which could be used by local government.  Mr. Schlesinger added the residential construction tax could have been increased twofold on park and moving impact fees but discussions with developers indicated the impact fees were preferable.  AB 573 would override the residential construction tax.  Further discussion followed.

 

Mrs. Segerblom asked Mr. Prezant if the resort tax would affect MGM, which was currently being built.  Mr. Prezant said it would not.

 

Mark Doppe, President, Southern Nevada Homebuilders Association, showed the committee 1,500 petitions which had been signed in opposition to AB 573.  For the record Mr. Doppe said, "The homebuilders and the members of the business community in southern Nevada relied on growth.  We rely on a steady supply of new people coming to our community and being able to stake their claim and make a success of themselves.  As a result we are not very enamored of short sighted solutions or Band-Aids to long term problems.  We have long supported the notion of impact fees....We helped craft the language which led to the existing Nevada Revised Statute (NRS) 278.B.  We continue to support that legislation.  Turning to AB 573, Mr. Doppe said his organization never agreed to numbers, only to the study of impact fees which did not originally include schools or caps to NRS 278.  He next equated AB 573 to a seven legged dog with wings and said, "It is too confused to walk and it was never going to fly.  All it does is sit there and snap at people as they walk by."  Mr. Doppe further elaborated on the confusion of AB 573.

 

Michael Niarchos, Senior Vice President and General Counsel, Summa Corporation, testified Summa Corporation did oppose impact fees if they were part of a fair and comprehensive approach to infrastructure finance.  He then described the approach utilized in California, Proposition 13, which he said was not fair and comprehensive and made it next to impossible to raise taxes or pass bond issues.  The result was only movie stars and pro athletes could afford a home in California, businesses were leaving in droves and public infrastructure could not be financed despite the collection of a multitude of development fees.  Mr. Niarchos then discussed the legal use of impact fees and countered the arguments in favor of AB 573.

 

Renny Ashleman, Attorney for the Southern Nevada Homebuilders Association, presented a rebuttal to the proposed amendments.

 

Dennis Stein, President, Nevada Development Authority, said infrastructure development was important to the authority's mission because of the businesses they were trying to attract in order to diversify Nevada's economy.  He said he believed in long term solutions but did not think impact fees were the long term solution.  Continuing, Mr. Stein said he supported ACR 38, a mechanism to form a task force to study the issue of infrastructure finance more systematically.

 

Carole Vilardo, Nevada Taxpayers Association, testified her organization did not support impact fees nor the proposed amendments because of Exhibit F, a matrix of how infrastructure was funded in Nevada.  She suggested Nevada needed to create consistency so residents and businesses coming into the state would know what to expect.  Mrs. Vilardo said there was nothing wrong with infrastructure financing or capital improvement districts, what was wrong was, in the last couple of sessions, things had been done piecemeal.  She urged the committee not to pass AB 573 but to support both the infrastructure and taxing district studies.

 

Mickie Johnson, Secretary/Treasurer, Nevada Homebuilders Association, shared the results of a survey with the committee.  She stated a key finding of the poll was 73.9 percent of the people surveyed stated they had a lack of confidence in local government's abilities to use the funds for their intended purpose.  In conclusion, Ms. Johnson urged the committee to look at ACR 38 as the study alternative.

 

Ron Ruthe, President Elect, Nevada Association of Realtors, spoke in opposition to AB 573 utilizing Exhibit G.

 

Mrs. Kenny asked if most of the homebuilders in the state were making money now, a profit.  Mr. Ruthe said he could not answer as he had no idea.  Mrs. Kenny next questioned if this was the homebuilders number one issue.  Ms. Johnson suggested referring the question back to Mark Doppe after the testifiers had finished.  Lastly, Mrs. Kenny asked if there was any chance of overbuilding in the state.  Ms. Johnson said from her standpoint as a title executive, she did not see a lot of standing inventory.  More discussion followed.

 

Mark Brown, Nevada State Apartment Association, discussed the multifamily housing industry in Nevada and said new apartment construction looked bleak, even though the current inventory continued to experience an 85 to 90 percent occupancy rate, proving the demand was still there for entry level rental housing.  He said, "By opposing an undetermined impact fee on new multifamily starts, you will effectively slam the door shut on any new financing whatsoever in the apartment industry."  He then said, "Rents will, thereafter, go up dramatically....I submit to you AB 573 is yet another Band-Aid approach to a much larger problem.  I would ask that we vote this bill down, support ACR 38 and come up with a comprehensive approach to our tax problems."

 

Bruce Barton, President, Southern Nevada Chapter of NAIOP, the Association for Commercial Real Estate, spoke in opposition to AB 573 and urged support for ACR 38 utilizing Exhibit H.

 

Bonnie James, Las Vegas Chamber of Commerce, said the chamber wanted to be included in opposing AB 573.  It was a major piece of legislation and needed to be looked at very carefully.  In closing, she supported the study as proposed in ACR 38.

 

Chairman Garner asked what the opposition was to giving local governments enabling legislation.  He said it would involve everyone in coming up with the solution.  Bonnie James replied there was nothing wrong with enabling legislation, the problem was when public input was permitted, most hearings were not well supported if they occurred in the daytime, therefore, most decisions were made by very few people.

 

Mr. Schlesinger and Mr. Cram presented closing statements in support of AB 573.

 

Mrs. Lambert commented on enabling legislation, giving an example of what happened last session and for which the legislators were responsible.

 

The hearing on AB 573 was closed with no action taken.

 

Chairman Garner told the committee, due to a lack of time, AB 703 would be rescheduled.

 

There being no further business to come before committee, the meeting was adjourned at 10:45 a.m.

 

 

      RESPECTFULLY SUBMITTED:

 

 

                             

      BETTY WILLS

      Committee Secretary

 

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Assembly Committee on Government Affairs

June 10, 1993

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