MINUTES OF MEETING
ASSEMBLY COMMITTEE ON JUDICIARY
Sixty-seventh Session
January 29, 1993
The Assembly Committee on Judiciary was called to order by Chairman Robert M. Sader at 8:00 a.m., January 29, 1993, in Room 332 of the Legislative Building, Carson City, Nevada. Exhibit A is the Meeting Agenda, Exhibit B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Mr. Robert M. Sader, Chairman
Mr. Gene T. Porter, Vice Chairman
Mr. Bernie Anderson
Mr John C. Bonaventura
Mr. John C. Carpenter
Mr. Tom Collins, Jr.
Mr. James A. Gibbons
Mr. William D. Gregory
Mr. William A. Petrak
Mr. John B. Regan
Mr. Scott Scherer
Ms. Stephanie Smith
Mr. Louis A. Toomin
COMMITTEE MEMBERS ABSENT:
Mr. Ken L. Haller, absent/excused
GUEST LEGISLATORS PRESENT:
None
STAFF MEMBERS PRESENT:
Ms. Denice Miller, Legislative Counsel Bureau Research Analyst
OTHERS PRESENT:
Please refer to Exhibit B, Attendance Roster
Assembly Committee on Judiciary
January 29, 1993
Page: 2
Following the roll call, Chairman Sader opened the meeting on A.B. 70.
ASSEMBLY BILL NO. 70 Makes various changes regarding investment of estates by public administrator or public guardian.
Mr. Jared Shafer, Clark County Public Administrator, testified in favor of A. B. 70. This bill would allow public administrators and public guardians to commingle funds to obtain a greater rate of interest. It would allow payment of the rate of interest which an individually invested account would generate. Any extra interest would be transferred to the county general fund.
Donald L. Cavallo, Washoe County Public Administrator and Public Guardian, testified in support of A.B. 70. The passage of this bill would assist the Public Administrator in obtaining additional assistance from the banking institutions. The total assets of funds in Washoe County was over $7 million, as was the case with Clark County.
Mr. Cavallo stated funds were presently deposited in interest-bearing accounts or money market accounts and earned 2.5 to 3.0 percent interest. The larger accounts earned higher rates of interest. According to Mr. Cavallo the larger accounts would be negotiated most efficiently by commingling them into one large account. At any time, the commingled accounts could be prorated back down into the independent accounts. According to Mr. Shafer, at present, no incentive existed to do anything more than deposit the funds into checking accounts. Public administrators were elected to the office which gave them the ability to commingle funds provided they had the ability to break down the individual accounts. Mr. Shafer felt it was only appropriate for the county to withhold a portion of each account in that the public administrators executed the administrative work and negotiated the highest rate of interest on these accounts.
Mr. Shafer explained FDIC regulations allowed for a commingled account to be greater than $100,000 provided the commingler could provide a breakdown of each account. On a daily basis, public administrators printed out computerized lists of assets in each account that exceeded $100,000. The computer printouts were sent to the attending banks and Federal Treasury notes were purchased. The public administrator\public guardian deposited the funds into respective accounts. A specific cash backup was available for accounts over $80,000.
Mr. Anderson requested clarification of the language "other income" used in A.B. 70, Section 2, line 12. Mr. Shafer explained Nevada Revised Statutes limited the types of government-guaranteed investments. Mr. Shafer stated the Office of the Public Administrator was funded through the county general fund. All revenues earned were deposited back into the general fund through the Treasurer's Office. To clarify the issue, Mr. Shafer explained the Public Administrator's Office did not operate on monies earned. The Public Administrator's Office budget was 50 percent more than what was earned through the administration of the ward's accounts. There was no correlation between the monies earned and the budgeted operating funds.
Mr. Sader addressed the section of A.B. 70 which aggregated accounts. He questioned the section of the bill which allocated portions of the interest to the county rather than to the wards. Mr. Schafer explained the duty of the public administrator was to maximize the assets held by the wards. The Nevada Revised Statutes did not require the public administrators to obtain the highest rate of return on every account but did require the public administrators to act as "prudent men." Mr. Sader asked how this affected the public administrator's duty to maximize the profits. Mr. Shafer noted in A.B. 70 a government agency could recapture funds at no cost to the client. Because the public administrators administered the work, Mr. Shafer argued the county had the right to recapture a portion of the costs from the wards.
Ms. Smith concurred with Mr. Shafer's statements and noted taxpayers paid for the services rendered by the public administrators. The clients who received benefits were not charged for the services of managing their accounts. Ms. Smith saw no problem with the county recapturing administrative costs.
Mr. Carpenter focused on the basic premises of the duties of the public administrators. He queried where the funding came from that covered 50 percent of the budget. Mr. Cavallero explained operating revenues came from fees charged for the administration of probate estates and the administration of guardianship matters. Fees charged under estate proceedings were set by statute and were based on percentage fees amounting to an estimated 50 cents per hour was made, therefore, this was not a profitable issue. In reference to guardianship cases, no money was obtained as these cases involved lower income individuals. Mr. Carpenter addressed the fact the taxpayer incurred approximately 75 percent of the costs in these matters. He noted the funds earned and transferred to the county would offset part of the budgetary expenses.
Mr. Shafer explained, in reference to probate cases, the public administrator was allowed to charge 4 percent of the first $15,000 administered, 3 percent on $85,000, and 2 percent over that amount, plus fees based on the sale of real properties. In guardianship cases, Clark County charged hourly fees based on the services provided. Mr. Scherer noted this was a fee but inquired as to the direct reimbursements or the specific costs incurred.
Mr. Scherer addressed the uncovered expenditures. He asked, in the event the excess interests earned were used to reimburse the incurred costs, what monies would be left over to return to the wards. Mr. Scherer disputed the fact the public administrator needed some incentive to operate. Mr. Shafer addressed this concern and stated, of the 800 accounts he handled, it would be impossible to determine individual interest gains and to prorate the accounts.
Mr. Petrak assumed most of the accounts were held by seniors who were more concerned with what monies were on hand than what interest would be incurred. Mr. Petrak felt the guardianship accounts were good ones from the standpoint of seniors. According to Mr. Petrak, the honesty and security of the public administrators were the primary concern of seniors.
Chairman Sader closed the hearing on A.B. 70 after no further discussion came before the committee.
ASSEMBLY BILL NO. 86 Expands circumstances under which murderer is prohibited from succeeding to property of victim.
Mr. Jared E. Shafer, Clark County Public Administrator, said he had asked that A.B. 86 be drafted as an issue of fairness. He used the example when one spouse murdered the other spouse, then committed suicide, the murderer would not be convicted of murder. The Nevada Revised Statutes stated one could not inherit if convicted of murder. Therefore, in this instance, the family of the murderer inherited as the murderer was not convicted. Mr. Shafer noted in many of the cases, the marriages are second marriages with children on both sides of the family.
Mr. Sader confirmed the circumstances under which A.B. 86 was drafted. These cases were murder/suicide matters which left a loophole in that a deceased person could not be tried and convicted of murder. Mr. Sader suggested an amendment that would address a person acquitted or who was alive and not tried. Mr. Shafer acknowledged the necessity and added the primary concern from the standpoint of the murder/suicide cases was the devastation caused to the families directly involved.
Mr. Shafer explained, in the cases that involved murder/suicides where the husbands and wives had no offspring, the murderers' families inherited the estates of the victim. The problems that arose involved the stepchildren. Mr. Carpenter asked why the families of the murderers were not entitled to the estates? Mr. Shafer stated A.B. 86 needed to be amended to support the existing law that stated an individual's family could not inherit the victim's estate if the individual committed murder, whether convicted of murder or not. The family on the side of the murderer should not benefit because of the illegal actions of the perpetrator.
Donald L. Cavallo, Washoe County Public Administrator and Public Guardian, testifying in support of A.B. 86, stated some family members should not profit by a heinous act of another family member. As the bill is drafted at the present time, Mr. Cavallo noted the issue would come back to face the legislature.
In a case where two individuals were married and had children from previous marriages, one spouse killed the other, then committed suicide, Mr. Gregory stated the perpetrator's children should not benefit from the inheritance. Mr. Shafer confirmed. Mr. Gregory asked, in the case where a married couple did not have children, the victim's family would be in line to inherit whereas the perpetrator's family would not inherit? In the instance where one spouse killed the other and committed suicide, the natural children of the couple inherited the estate. Mr. Shafer confirmed.
Mr. Shafer noted, in a community property state, if convicted of murder, one could not inherit from the other spouse's estate.
Having no further questions or testimony to come before the committee, Chairman Sader closed the hearing on A.B. 86.
ASSEMBLY BILL NO. 80. Revises definition of value as it relates to eminent domain.
Mr. Ben Graham, Legislative Representative, Clark County District Attorney's Office, testified on behalf of A.B. 80. Mr. Graham voiced concern that the interest of the landowner and the public be protected. His main focus was to protect the landowner from the consequences of public improvement. Mr. Graham asked also that the taxpayer be protected so as not to pay inflated property values artificially created by the public improvement.
Mr. Sader framed the context in which the issues arose. Eminent domain was a legal phrase used to describe the process of taking an individual's land when he did not want to sell or could not agree on the value of it. In a court proceeding, according to Mr. Sader, it was the power of the state to say, even though an individual owned a parcel of land, there was a public need to have that land. The land would be taken from the landowner at fair market value. The court made the determination if no agreement had been met. According to Mr. Sader, eminent domain rules, procedures and statutes determine fair market values. Most acquisitions made by the state or local governments were determined, informally, through an agreed process before proceeding to court. The rules of eminent domain dominate those determinations. The rules became important to protect the public and private individual. Some controversy existed in that a landowner could suggest what the value of the property should be after public improvements were contemplated, Mr. Sader concluded.
Mr. Brian Hutchins, Chief Deputy Attorney General representing the Nevada State Transportation Division, as well as the Attorney General's Office, noted the opposite could also be the case where a public project diminished the value of an individual's land and a concern for fair market value arose. The object would be to make a fair market value assessment without undue considerations of either situations.
Mr. George F. McNally, President of the Nevada Trial Lawyers Association, testified against A.B. 80. The concern surfaced in reference to pre-condemnation blight which was addressed by John J. Gezelin, member of the Nevada Trial Lawyers Association.
Mr. Gezelin noted in the event a public project had been announced, no action had been taken, and a substantial lag time of several years had passed, the property might go down in value. According to Mr. Gezelin, when the condemnation went into effect, the effect of the project had already occurred on the landowner. The intent was to disregard the effect of that decrease or increase by the announcement of the project. Prior to that, the actual announcement of the condemnation should be ignored. The true value should be taken outside the affected area as the fair market value without regard to the project.
Mr. Hutchins addressed two amendments to A.B.80. The first amendment, Exhibit C, amended Section 1, lines 3 through 9, by substituting the following language: "If the property is subject to condemnation as a result of a public work or improvement, any decrease or increase in the fair market value of the property before the date of valuation which is caused by the public work or improvement for which such property is acquired, or by the likelihood that the property would be acquired for such improvement, other than that due to physical deterioration within the reasonable control of the owner, must be disregarded in determining the compensation for the property pursuant to NRS 37.110." Mr. Hutchins explained the amendment changed the words "public work or improvement" to the word "condemnation." Mr. Hutchins stated consideration would not be given to an increase or decrease in the value of the property if it was caused by the public work or improvement. It was the public work or improvement that was going to cause the problem, not the condemnation. This was already in effect by federal law and should be placed in the statute.
Mr. McNally and Mr. John Gezelin were placed in the record as in support of the proposed amendments.
Mr. Collins understood the amendments would support the value of the property and would maintain the highest level when condemnation was instituted. Mr. Gezelin confirmed the statement and stated the value would be determined according to the highest and best use, which took into consideration severance damages paid by the agency, if needed.
Mr. Gibbons used as an example the process of building a freeway in which a change in the design was made and the course of the freeway moved over a period of time. When the freeway was first designed and announced, property that would normally not have been affected a year down the road because the freeway was changed 1,000 feet, was now affected. Mr. Gibbons asked at what point in time did the public works intercede and say no development prior to this, or after this date, was going to have an impact on the effect of the evaluation of the property. How did the public works judge whether or not the improvements made by that person were as the direct result of the announcement of the freeway or the improvement? Did the public works stop at some time and require that person to stop any improvements?
Mr. Stephen R. Johnson, a real estate appraiser and president of the Nevada Appraisal Board, addressed Mr. Gibbons questions. Relative to the point in time when the value of the property would be addressed, or confiscated, at what point is the property affected by the announcement of the public work improvement? Mr. Johnson stated as the freeway alignment moves, the concern was with the impact on the property that was under appraisal or was going to be acquired. The condemning agency could not interfere with the progress of a development until such time as they came in and filed the condemnation action and deposited money in the court for that landowner.
Mr. Sader addressed a portion of Mr. Gibbons question in a different way. Presented as an example, a freeway was built through town; ten years later a new intersection was built on the freeway. In the example, the freeway had existed for ten years. Some property was condemned. At that point the property owner decided the property value was "X", and would include whatever the value of the property was because the freeway had been there for ten years, whereas ten years before it was just an open field. As understood, there might have been some confusion as to what the term public work or improvement might mean. Mr. Sader asked, "Couldn't the state go back and say we can't take into consideration the freeway was there, therefore, we have to value your property as it was an open field ten years ago."
Mr. Johnson addressed Mr. Sader's concern. According to Mr. Johnson, different public improvement projects were done. The intent of the legislation was not to interpret the phrase "public improvement" to be any public improvement. A freeway, for example, installed through an area would be considered one project. In addition to this, another project was made which interchanged with the previous project. Once the project had been announced and was in place, as an appraiser, Mr. Johnson would take into consideration the influence of that improvement, but not the subsequent improvement or design. For example, in the instance of a new cross street or a new interchange, consideration would be taken as part of the appraisal of the freeway accessibility exposure from the first project. The enhancement of value as the result of a freeway interchange created by the now new project design would not be taken into consideration.
Sader asked if the attending public institution testifiers agreed with Mr. Johnson's assessment of the amendments. Unanimous confirmation was made by Mr. Graham and Mr. Hutchins.
Mr. Johnson stated there had been instances wherein the department had gone with the public announcement where a freeway was to be built and later deviated from the original route. The property value as of the date of value still had to be assessed and the elimination of any project influences had to be adhered to.
Mr. Gezelin noted the date of valuation was the date in which the property was actually taken. It would be limited to the latest public work, in his opinion.
Mr. Hutchins introduced the second amendment to A.B. 80, Exhibit D which would amend Section 2, lines 20 through 24 by substituting the word "value" which meant the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price was not affected by undue stimulus. The second amendment changed the definition of "value" in A.B. 80, which was the language used by the Nevada Supreme Court, with the exception of line 20 where the Nevada Supreme Court had said "value" meant the highest price estimated in terms of the money. The effort was to make the determination as to what fair market value was or what the property would bring on the open market.
Mr. Carpenter disagreed with the preceding testimony and used an example of a situation in which an individual had planned to build a development on a major highway. The building of the railroad consumed the land the development would have been built on. In the example provided, the land had been appraised at the lowest value, although the highest use value would have been the development. According to Mr. Carpenter, the court decided the highest and best use was the development value. He asked if the probable price meant the same as the highest price in this case?
Mr. Johnson addressed Mr. Carpenter's question and stated the issue in the exemplified case was market value. The focus was the determination of the highest and best use of that property. Mr. Johnson explained when making an appraisal and estimate of market value, one must appraise the value of that property to the highest and best use. In the referenced case, there was a difference of opinion as to what the highest and best use of that property would be. It had nothing to do with the definition of market value. Two different concepts were addressed here. In conclusion, Mr. Johnson stated the judge and jury had determined an alternate highest and best use.
Mr. Hutchins explained the difference between the phrase "highest and best use" and the market value. According to Mr. Hutchins, the highest and best use referred to zoning determinations. Once the determination of highest and best use was made, the determination of market value was made. With the value of the property determined, the most probable price was determined.
Mr. Carpenter disputed the definition of market value. He claimed the public entities were interested in purchasing land as inexpensively as possible, rather than in giving the landowner what the land was worth. For example, a landowner might decide to hold a piece of property until such time as it was economically feasible for development. According to Mr. Carpenter, the value of the property would be defined by the appraisers as vacant land. The problem was with altering the definition of fair market value as determined by the Supreme Court ruling. Mr. Johnson stated, with few exceptions, the governmental agencies that condemned properties were almost always interested in the fair market values although some differences in interpretation of the issues might be evidenced. The word "highest price" induced a wide disparity and sometimes lead to misuse, abuse and misinterpretation.
Mr. Toomin directed concern toward the example of two properties of equal size and value wherein one property was condemned and the adjoining developed property was valued at $100,000. In the event the planned public improvement project was one that would decrease property value, would the developed property appraisal be devaluated. Then, for example, five years later the developed property was to be condemned and the appraised value was determined to be $25,000. What would happen in this instance? Mr. Johnson explained if a public improvement had been installed which devalued property nearby, and subsequently another project was built, the appraiser would take into consideration the negative impact of the second public improvement as this was a separate project, therefore, a different set of issues.
Chairman Sader noted there was substantial concern on the part of the committee as to what A.B. 80 addressed and what the bill was intended to do. The bill would be amended and brought back for further work and consideration. No further testimony was heard on A.B. 80.
ASSEMBLYMAN ANDERSON MOVED TO AMEND A.B. 80 TO INCLUDE THE LANGUAGE PROPOSED IN EXHIBIT C AND EXHIBIT D.
ASSEMBLYMAN PETRAK SECONDED THE MOTION.
Chairman Sader clarified, once amended, A.B. 80 would be brought back to committee for further action. The language in A.B. 80 would not be amended.
THE MOTION CARRIED. (ASSEMBLYMAN CARPENTER VOTED AGAINST, ASSEMBLYMAN HALLER WAS ABSENT, ALL OTHERS VOTED IN FAVOR)
A.B. 80 was scheduled for review before a work session on Friday, February 5, 1993.
Exhibit E was submitted by Michael W. Land, Clark County Department of Public Works, in support of A.B. 80. Exhibit E addressed the subject of eminent domain procedures and was drafted by Robert T. Schell, Department of Public Works. Mr. Land did not testify before the committee.
Mr. Anderson presented a telephone statement made by Electra Larsen who wished to be on record in opposition to the use of eminent domain by groups not a part of the public work projects, Exhibit F.
Mr. Sader asked for the committee consideration of the previous bills presented by the public administrator, A.B. 70 and A.B. 86.
ASSEMBLYMAN SCHERER MOVED TO AMEND AND DO PASS A.B. 70
WITH THE AMENDMENT TO READ "THE COUNTY GENERAL FUND TO RECEIVE PERCENT OF THE EXCESS INCOME AND THE REMAINING 50 PERCENT TO BE DISTRIBUTED PRORATA TO THE ACCOUNTS INVESTED.
ASSEMBLYMAN COLLINS SECONDED THE MOTION.
Mr. Scherer stated, in the event the counties were to attain a profit on the monies invested, the investors should receive compensation for the use of their money. Mr. Scherer argued it was only fair for the counties to make some profit on the administration of the monies invested. Mr. Shafer noted it would be counterproductive to have to account for each transaction and appear for approval of the courts on each transaction. A compromise between the wards of the estates and the counties would be a fair solution.
Mr. Sader opposed the motion on A.B. 70 as it would create extra administrative burdens on the public administratosr to have to account for every transaction and allocate funds. Mr. Sader was concerned with the concept of the profits not being allocated to the wards, although, in effect, the counties that received the profits were contribution from those wards who used the services of the public administrators, which partically relieved the taxpayer's burden. Mr. Sader felt, as the motion was currently worded, the bill would require extra administrative procedures and allocations which would be difficult to administer.
Mr. Collins agreed with the motion as the computer systems could be programmed to withdraw funds, compute daily interest, and prorate the interest into each account. The profits could be determined on each ward on a quarterly or annual basis. Mr. Collins felt the public administrator could use the computerized technology to better serve the public by enhancing profit on the ward accounts.
Mr. Gregory was concerned with the added administrative requirements and asked if Mr. Shafer would still consider the bill with the amendment as stated. Mr. Shafer stated he did not want the bill as amended.
Mr. Scherer brought attention to the unknown factor of how much profit would be made as no data had been provided. It might be an insignificant contribution or might become a significant amount. The very act of aggregating the accounts, calculating profits made, distributing interest to each independent account would be an administrative burden. Mr. Scherer argued that to split the profits was not going to add additional administrative burden than already evidenced. He felt it was fair to the wards they benefit profitably to some extent. If the public administrators did not feel enough profit was involved to benefit the county, the bill did not compel them to adhere to the law, but allowed them to abide by it.
Chairman Sader closed discussion on A.B. 70. He asked for a vote on the motion to amend and do pass with Mr. Scherer's amendment as stated.
THE MOTION FAILED. (ASSEMBLYMEN ANDERSON, COLLINS AND SCHERER VOTED IN FAVOR, ALL OTHERS PRESENT VOTED AGAINST)
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ASSEMBLYMAN BONAVENTURA MOTIONED DO PASS ON A.B. 70.
ASSEMBLYMAN GREGORY SECONDED THE MOTION.
Ms. Smith asked, if in the event all administrative costs were to be met and any profits redistributed, would there be an administrative problem. Mr. Shafer stated it would not be a problem. Ms. Smith noted the taxpayers would benefit in that the county would be reimbursed for expenditures. The public administrators would not have to deal with the problem unless profits exceed operating costs.
Mr. Gregory supported the motion as he contended the banking institutions would benefit. Under this motion the investments with the Public Administrator were administered well and the county should receive some benefit for the administrative expenditures.
THE MOTION PASSED. (ASSEMBLYMEN ANDERSON, COLLINS AND SCHERER VOTED AGAINST, ALL OTHERS PRESENT VOTED IN FAVOR)
Mr. Bonaventura was assigned the bill for presentation before the Assembly. Chairman Sader asked for consideration of A.B. 86 which proposed an amendment applicable to situations where the person accused of murder was deceased. The bill drafter would decide the language of the bill. In reference to A.B. 86, Section 1, Line 4 which stated "no person who is...(deceased and) determined by the court" would pertain to a person who was accused of murder and was deceased.
ASSEMBLYMAN REGAN MOVED TO AMEND AND DO PASS A.B. 86 IN A MURDER/SUICIDE SITUATION.
ASSEMBLYMAN COLLINS SECONDED THE MOTION.
THE MOTION CARRIED. (ASSEMBLYMEN PORTER, CARPENTER AND ANDERSON VOTED AGAINST)
There being no further business that came before the committee, Chairman Sader adjourned the meeting at 10:55 a.m.
RESPECTFULLY SUBMITTED,
Jessie A. Caple
Committee Secretary
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Assembly Committee on Judiciary
January 29, 1993
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