MINUTES OF THE
SENATE COMMITTEE ON FINANCE
Sixty-seventh Session
May 25, 1993
The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:00 a.m., on Tuesday, May 25, 1993, in Room 223 of the Legislative Building, Carson City, Nevada. Exhibit A is the Meeting Agenda. Exhibit B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Senator William J. Raggio, Chairman
Senator Raymond D. Rawson, Vice Chairman
Senator Lawrence E. Jacobsen
Senator Bob Coffin
Senator Diana M. Glomb
Senator William R. O'Donnell
Senator Matthew Q. Callister
GUEST LEGISLATORS PRESENT:
Senator R. Hal Smith, Clark County Senatorial District No. 1
Dean A. Heller, Assembly District No. 40
STAFF MEMBERS PRESENT:
Daniel G. Miles, Fiscal Analyst
Robert Guernsey, Principal Deputy Fiscal Analyst
Judy Jacobs, Committee Secretary
OTHERS PRESENT:
Lorne J. Malkiewich, Legislative Counsel
Sharon G. Brandsness, Las Vegas, Commissioner/Executive Director, Nevada Racing Commission
Mimi Rodden, Nevada Preservation Group
Kristin Belko, Nevada Preservation Group
Pamela B. Wilcox, Administrator and State Land Registrar, Division of State Lands, State Department of Conservation and Natural Resources
Tom Stephens, P.E., Manager, State Public Works Board
Judy Matteucci, Director, Department of Administration
John Swendseid, Swendseid and Stern, Legal Counsel, State Board of Examiners
Ronald M. James, Administrator, Division of Historic Preservation and Archeology, State Department of Conservation and Natural Resources
Senator Raggio opened the hearing on Senate Bill (S.B.) 464.
SENATE BILL 464: Authorizes state to contract for restoration of old state library building.
Lorne J. Malkiewich, Legislative Counsel, described the provisions of S.B. 464. He said it would allow the State Board of Examiners to enter into a contract for the restoration of the Old State Library Building and it specifies the components of the contract and the requirements for the restoration of the building. He added there are some restrictions on the building and the bill requires removal of those restrictions before entering into a $5 million contract. He indicated the restrictions pertained to the usage of
the building when the building was deeded to the state by the federal government.
Mr. Malkiewich explained the bill sets forth provisions in the contract that would allow the building to be leased for not more than 30 years and would allow the state to lease back all or part of the building once the restoration is complete. It sets requirements for fees and for lease to other parties. It also provides that a portion of the rent may be used to defray the cost of the restoration and sets out the manner of repayment for the project.
Mr. Malkiewich said S.B. 464 also refers to conditions for supervision of the restoration project and gives the State Board of Examiners some flexibility. Finally the bill provides for an alternative. He said, "Rather than directly entering into this contract under subsections 1 to 5, the [State] Board of Examiners could enter into a contract for the preparation or preliminary plans...." He explained that would allow the state to do the construction or keep the option open. If the latter alternative is chosen the state would be obligated to either purchase the plans or direct the execution of the contract for the restoration of the building. He pointed out the bill specifies the expenditures for plans or for restoration.
Senator Raggio asked Mr. Malkiewich to explain the provisions for expenditure. Mr. Malkiewich replied if a private party did the restoration the state's obligation to repay would be limited to $5 million, payable in accordance with the contract terms but not to exceed 30 years. He added the bill would not impact the debt limit of the state.
Senator Raggio inquired if there was a provision to allow the state to buy the property back at any time. Mr. Malkiewich said no such provision was included in the bill but it could be included in the contract, and that there was no actual transfer of ownership contemplated. The building would be leased to the entity making the restoration and then would be leased back by the state. He explained the state could include a provision to buy back the remaining years on the original lease.
Senator Jacobsen expressed his concern over the requirement to obtain approval of the federal government. He asked how those restrictions could be released. Mr. Malkiewich voiced his understanding the state could buy any federal interest or make an agreement with the federal government.
Senator O'Donnell perceived the lease contracts would only run for 2 years at a time. He asked if the leasehold improvements would be the property of the state or of the tenants after the 30-year period. Mr. Malkiewich acknowledged the lease term would probably be in 2-year increments with options for the state, but it could be a longer term to a third-party tenant. He suggested the leasehold improvements would fall under landlord-tenant law and real property law to the extent that removable property would belong to the tenant and permanent improvements would belong to the landlord.
In response to a query by Senator Glomb, Mr. Malkiewich said he understood there are still some deed restrictions imposed upon the building by the federal government regarding usage even though the building does belong to the state.
Senator Raggio interrupted the hearing on S.B. 464 to hear a proposal for a bill draft request (BDR).
Sharon G. Brandsness, Las Vegas, Commissioner/Executive Director, Nevada Racing Commission, explained the law mandates the Nevada Racing Commission to appear before the legislature each session to request funds in order to regulate racing. She presented a draft for a proposed bill (Exhibit C).
Ms. Brandsness said at the previous session the senate had approved the funds, but the Assembly Committee on Ways and Means had removed them. She indicated the only funds generated for operation of the commission come from licensing, fines and 1 percent of pari-mutuel bets placed on three races.
Ms. Brandsness reported the staff that is employed by the commission has not been paid for 2 years, including out-of-pocket expenses for travel, food and housing for a period of approximately 7 weeks. She said the total outstanding debt is $63,413, primarily for staff expenses. She said it includes board members, veterinarians, the racing secretary, and other expenses.
Ms. Brandsness stated $4,500 is owed to Racing Commissioners International, which she called vital to the Nevada Racing Commission. They provide services worth approximately $200,000 per year in return for dues of $3,000 to the State of Nevada. California pays them $100,000 per year. She said she was successful in recruiting their international convention to be held in Las Vegas next April. About 650 people will attend from England, Ireland, Mexico, Hong Kong and other places.
Senator Raggio asked how much she was requesting. Ms. Brandsness responded she was requesting a bill to appropriate $63,413 for the payment of incurred bills.
SENATOR COFFIN MOVED FOR COMMITTEE INTRODUCTION OF A BILL DRAFT REQUEST IN THE AMOUNT OF $63,413.
SENATOR JACOBSEN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR CALLISTER WAS ABSENT FOR THE VOTE.)
* * * * *
Senator Raggio resumed the hearing on S.B. 464.
Mimi Rodden, Nevada Preservation Group, introduced Kristin Belko, Nevada Preservation Group, who Mrs. Rodden said was the principal in a group offering the proposal to restore the Old State Library.
Mrs. Rodden explained the group was attempting to provide a means for the state to enter into an agreement whereby the building could be retained for use of the people within the state with no out-of-pocket costs for the state at this time. She acknowledged the financial crises being faced by the state.
Ms. Belko stated her development group was making a proposal from which, after payment of operating expenses and after establishment of a maintenance and reserve fund for the building, all the net income would be applied toward construction costs. She estimated the point at which the restoration costs would be paid off through the income generated by the building would come in 1996 if the cost is $3 million. If the cost was higher the break-even point would come later.
Ms. Belko provided the committee with an exhibit (Exhibit D. Original is on file in the Research Library.) in which a chart demonstrates the break-even point at different construction costs.
Ms. Belko responded to questions about the federal restrictions. She explained:
In 1972, when the building was transferred from the federal government to the State of Nevada, it was subject to an obligation contained in the deed...that the building be used for educational purposes. The federal government, acting through the Secretary of the Interior, must approve any use of the building unless the federal government is bought out. If we buy...out the federal government we don't need to contend with them. But at the present time, and regardless of whether the state enters into this lease or doesn't, every year the state is obligated to file a report with the Secretary of the Interior specifying not only its use but also that the maintenance of the building has been done.
Ms. Belko speculated the building would not meet the federal requirements for maintenance in its present condition. She said her group would assume the responsibility of presenting the proposal for restoration to the federal government if they receive the contract. She avowed approval will be obtained with the kind of "sensitive" restoration her group intends. She said S.B. 464 includes that obligation for the private developer.
Ms. Belko said the purpose of a 30-year lease for the private developer is to allow her group to take advantage of tax credits that are available for proper restoration of historic monuments. She pointed out those tax credits are only available to private investors, that the state could not use those credits. She averred that provides financial incentive for a private entity to do the restoration. In order for a leasehold interest to obtain the tax credits the lease must be at least 27 1/2 years. She suggested the 30-year period for the sake of convenience.
Ms. Belko anticipated the leasehold improvements will have a useful life of 35 to 50 years. She said those improvements will revert to the state at the end of the lease period. She stated, "Things such as the seismic upgrading of the building are things that will last with that building forever." She declared a substantial portion of the construction costs will be encompassed in the fabric of the building and will be retained by the state at the end of the lease period.
Ms. Belko stated her group intended to provide substantial public access.
Senator Raggio inquired how much Ms. Belko believed it would cost to buy out the federal involvement if it became necessary. Ms. Belko estimated it would cost under $300,000. She said it would depend upon the buy-out period.
Senator Raggio asked, "Who would pay the $300,000 if it had to be paid." Ms. Belko replied:
Under the proposal that my group has made, we will pay all costs of construction. We're looking at $3 to $5 million and my group is prepared, at this time, to advance money. If this building didn't ever rent, the maximum the state would pay, and this was in the material that was originally given to you, [would be] between $24,000 and $40,000 a month.
Ms. Belko pointed out the state has proposed large sums to repair the building over the years, including Senate Bill 306, which asks for $488,000.
SENATE BILL 306: Makes appropriation to state public works board for certain capital improvement projects.
She said:
If we spent $3 million fixing the building, that $488,000 would more than double make up any rent shortfall under my proposal because this building becomes a profit center. If the state chooses to rent, then the state rents it at a cheap price and gets the advantage of the cheap space. If the state chooses not to rent it, we've got a dozen people who are eager to rent it because it's such gorgeous space.
Senator Raggio asked what guarantee there would be that the property could be rented to the private sector at an amount sufficient to ensure that the state would not be required to put up more money for the restoration costs if the state chooses not to rent the building. Ms. Belko replied, "There's no guarantee."
Ms. Belko stated her group had made market surveys for building space in Carson City that showed "a strong need for quality...office space."
Senator Raggio asked what kind of assurance she could provide that rent would be received in an amount that would pay for the restoration. Ms. Belko responded:
The best my group or any group can do...is to suggest that, because we would give all of the rent to the state we would not have incentive to hold out for some unrealistic rent. We have spoken with Carson City...which has expressed a great deal of interest in occupying the [building]. They would require use of the whole building, and I don't know if the state would like to give up state occupancy.
By being willing to commit 100 percent of the rent to the repayment, if...the construction cost was...$3 million, the repayment of that would be about $24,000 a month. We could get that by renting the space for $1 a foot. Rents in Carson City now, or when this building comes on-line, which is going to be in the very beginning of 1995, the end of 1994, rents are projected to be in excess of $1.25 at that time.
Even if we just broke even on this building, it looks like this will be competitive with other buildings that are available in Carson City. And this will certainly be the finest building....
Senator Raggio asked if the proposal included interest payments. Ms. Belko replied it did, "with a two-fold proposal." She explained her group intends to advance a minimum of 25 percent of the construction cost. If the cost were $4 million, she indicated her group would have $1 million in cash and the remaining $3 million secured with outside financing as a mortgage.
Ms. Belko stated:
We intend that the construction cost will include whatever we're charged by the bank, which I expect will be at 8 percent, and a reasonable rate of return on our $1 million invested, which I think in today's market is 12 percent.
So that's how I came up with the numbers before, $4 million costs $32,000 a month. It's a simple mortgage repayment.
Senator Raggio asked if a mortgage would be involved. Ms. Belko replied:
My group would get outside financing. It will be a 30-year loan of 75 percent of the construction cost which we will be obliged to repay. I have contacted banks....
Senator Raggio asked her what kind of collateral would be involved. Ms. Belko replied the flow of payments from the lease would constitute the collateral. The building could not be pledged, only the security interest in the revenue could be pledged. She said the state would not have to guarantee the revenue. She explained, "The 30-year lease would be the only obligation, there would be no separate state guarantee."
Senator Raggio stated, "You understand that the lease would be conditioned upon appropriations to be made by the legislature. Any lease the state signs would be limited in some fashion." Ms. Belko responded:
Lease is a confusing term here.... This bill authorizes the 30-year commitment that I'm referring to as a lease. I'm talking about the occupancy on a 2-year biennium. This bill, in fact, is the authority for the state to enter into the 30-year commitment.
Ms. Belko reiterated there is a tax credit for appropriate restoration at this time and one reason she was urging a complete commitment was her concern that the tax credit may be revoked due to the revenue shortfall. Senator Raggio concurred there may be a short time in which a group could take advantage of the credit, after which time the incentive may disappear.
Ms. Belko responded one of the incentives works to the state's advantage. She explained:
In order for this project to make sense to my investment group, we need to get the building on-line by the end of 1994 so that we can take advantage of the tax credits in 1994. There is a very short time frame the federal government allows once construction starts....
Senator Raggio noted the argument in favor of S.B. 464 is that it would allow the full reconstruction of the building to desirable standards, whereas the state had advance a proposal to expend a minimum for just some minor restoration of the building. He pointed out S.B. 464 would allow any group to restore the building and Ms. Belko's group would be in competition to do the work. He asked for information on her group.
Ms. Belko responded the resumes of the three main principals are included in her packet (Exhibit D). She emphasized her group, or any group, should come to the state with 100 percent of the financing in place, backed by completion bonds, before any money
was spent. She said her group consists of the three individuals whose resumes are included plus "many investors who have invested in other tax-credit projects I've done both in California and in Massachusetts."
Ms. Belko stated:
...we do a separate corporation for each project...so there's no commingling of funds. The investors are in place and we're prepared to move forward.
Noting that the committee is already familiar with Mrs. Rodden's work, Ms. Belko related the architect and structural engineer, Melvyn Green, was responsible for the seismic upgrade of the old United States Mint building and other Nevada projects.
Ms. Belko acknowledged this would be her first project in Nevada, but she avowed her commitment to the state and said she had moved her offices to Nevada.
Senator Coffin asked if tours would be available on weekends such as those that are provided through older buildings in Washington, D.C. Ms. Belko replied she was committed to public access to the building, and it would be one basis upon which federal approval would be obtained. She suggested the building should be available not only for public access but also for museum displays and the types of things for which the building is appropriate.
Senator Coffin explained he did not want to request something that would make it difficult to rent the building, because tenants might be unhappy with streams of visitors during business hours. He suggested there might be agreed-upon dates when there would be public access to the entire building under some sort of tour arrangement.
Ms. Belko assured him the Old State Library building is already on the "blue line," the tour through the historic district of Carson City, and she intended that the main floor and courtroom would be open for public access. She recommended that public access not be made part of the bill but instead be incorporated into the 30-year lease which would be subject to review.
Ms. Belko suggested the contract should include performance criteria, including assurances to the state. Those would include an ongoing maintenance schedule, a public access schedule, and compliance with changes in the law such as the Americans with Disabilities Act (ADA). She declared there should be periodic state review.
Senator Coffin asked what would prevent the state from hiring Ms. Belko as a consultant and doing the restoration with state funds. Ms. Belko reminded him the state could not take advantage of the 20 percent federal tax credits. She pointed out there would be $1 million worth of tax credits if her group spent $5 million on the restoration. If the state spent $5 million she charged it would be essentially giving away $1 million.
Senator Glomb asked if this process had been used for other such projects. Mrs. Rodden replied it had been done for most of the larger preservation centers across the country. She listed the Quincy Market, the Baltimore, Maryland, area, Galveston, Texas, and many others. She asserted, "It is successful, it can work, it's good for the state, and the state does not have $5 million at this time to do anything with that building."
Mrs. Rodden declared three buildings had been lost last year because they were unoccupied and neglected. She voiced the intention to make the endeavor worthwhile for everyone included.
Senator Glomb asked if any of the projects were older, having been done 10 or 15 years ago. Ms. Rodden said the tax credits have been around for some time and such projects have been done for many years.
Senator Rawson asked if the Old State Library building was accessible for the handicapped. Ms. Belko replied it is partially accessible and does have an elevator. She asserted the bathrooms do not meet ADA requirements and she felt the elevator probably did not meet them either.
Mrs. Rodden said:
The important thing is that those things that are done to the building, because of the significance, have to be well-designed to meet the law, but they are not generally designed as we have been treating buildings in the past. We're suggesting that we can do...a better job.
Senator O'Donnell asked what kind of market analysis had been done regarding the demand for office space. Ms. Belko indicated she had made a study of the commercial space available in Carson City, the requested rents and the long-term commitment. She said she contacted approximately 25 buildings with space available for both public or private entities and also several realtors.
Senator O'Donnell asked how much space was presently available in the area. Ms. Belko replied there is approximately 96,000 square feet of space available that is under short-term lease, not under long-term commitment. She could not supply a figure of vacant space available, but she estimated it was less than 7 percent.
Senator O'Donnell asked if Ms. Belko had obtained any letters of intent from the people who had indicated they would be interested in renting space in the Old State Library building. Ms. Belko replied she had not, but she admitted that would be the next step. She said, "We don't have a commodity to sell to them."
Senator O'Donnell indicated to Ms. Belko prospects would provide the letters of intent. Ms. Belko said she was confident she could obtain the letters, saying she had entered into discussions with the mayor of Carson City and various judges. She pointed out the state would have the first option to occupy the space and the state should indicate how much space it would want to use.
Ms. Belko noted the most interesting space to be rented would be the courtrooms, which would be used most efficiently by an entity such as the city. Senator O'Donnell suggested a letter of intent could be crafted in such a way that it would provide protection for Ms. Belko's group. He stated it would make him more comfortable to have those intentions set out.
Senator Raggio asked how much rentable space there would be upon completion of the project. Ms. Belko replied it would be determined by the plans but she estimated it at about 25,000 square feet. She said that would include the foyer and the courtroom but not any of the basement which will be marketable for storage space. She had not included it in her figure because it is considered substandard space.
Senator Raggio asked how parking could be accommodated for the building. Ms. Belko conceded there is little available at the present time. She said she would negotiate with the city to find space through the redevelopment agency. She proposed making agreements with the Carson Nugget and other entities. She said her group has considered construction of a multi-storied parking structure with commercial use of the ground floor.
Pamela B. Wilcox, Administrator and State Land Registrar, Division of State Lands, State Department of Conservation and Natural Resources, provided the committee with a copy of the quitclaim deed (Exhibit E. Original is on file in the Research Library.) and offered to answer questions about it.
Ms. Wilcox said the deed was executed in 1971 when the state acquired the building for use as a library under a special federal program that allowed discounts for educational uses. Ms. Wilcox pointed out "education" is defined very narrowly to include classroom and library use. She said the restriction for educational use is incorporated on the second page for a 30-year period from the date of the deed.
Ms. Wilcox called attention to a provision on the third page that says the state cannot lease, sell, mortgage or encumber the property without the written approval of the Secretary of Education. Senator Raggio interjected the bill is conditioned upon those items. Ms. Wilcox opined S.B. 464 is not written correctly to comply with section 2 on page 3 of the deed.
Ms. Wilcox turned to page 4 where she pointed out a provision that a breach could result in a reversion to the federal government at the option of the grantor. On page 5 she noted a clause providing that the state could abrogate the conditions with the consent of the Secretary of Education by making a payment to the United States.
Referring to the section to abrogate the conditions regarding reversion, she said the clause sets forth the provisions for the payment. She explained:
The provision basically [says] payment shall be based upon the current fair market value as of the date of the requested abrogation, less the amortized credit at the rate of 3 1/3 percent of the public benefit allowance granted.
She noted the property was valued at $235,000 at the time of acquisition. She calculated, "We are getting a credit of $7,755 per year for every year in which we have used it." She said the accumulated credit was something less than $200,000.
Senator Coffin asked how much the payment to the federal government would be. Ms. Wilcox answered it would depend upon the value of the building. She said an appraisal had been made of the building last year. The appraiser offered the opinion the building had a value of "zero dollars" because of the historic restrictions and the difficulties of remodeling.
Ms. Wilcox said she had discussed the problem with the property manager of the United States Department of Education for the west coast. She declared, "He was upset. He said that they would fight that all the way, that they would not accept that any building had a zero value."
Senator Coffin asked if there was a definition of "educational purposes." Ms. Wilcox replied:
There really is not, but when you read the regulations the federal government promulgated...to define this program, it is clear that it is really intended to be classroom education, although libraries are also specifically mentioned.
Senator Coffin asked if tours of the building by classes of students would qualify as educational use. Ms. Wilcox responded tours would be no problem but they would not be a primary use of the building. She repeated she had held extensive negotiations with the federal government to determine usage ever since the new library was approved. She alleged negotiations with the federal government were difficult.
Ms. Wilcox said the initial request to use the building for the Nevada Magazine was denied. She said they yielded only after intercession by the Nevada congressional delegation.
Senator Coffin asked if it would be necessary to get a special bill through congress to change the usage of the building. Ms. Wilcox replied she was not sure. She pointed out the restriction was made for a period of 30 years and will end in 2001. She said she was satisfied with the written permission to house Nevada Magazine in the building and she had verbal permission to add to the Nevada Magazine "such other state agencies as may be necessary to support the Nevada Magazine." She stated that would include tourism. She pointed out if the Division of Tourism is combined with the Division of Economic Development the entire division could use the building.
Ms. Wilcox said any other use would require approval on a case-by-case basis. The alternative would be to abrogate the restrictions.
Senator O'Donnell asked if the federal government had given an indication of the value of the building after being informed of the zero appraisal. Ms. Wilcox responded they had not because they had not done an appraisal. She explained, "They have to be concerned about the precedent." She reported the federal government has never lost a case in which other recipients of such grants have maintained that a building had been totally depreciated.
Senator O'Donnell suggested she should ask the federal government for an estimate of the value of the building. Ms. Wilcox replied it would be an option if the state did not find it sufficient to use the building for the Nevada Magazine and supporting agencies and might consider other uses.
Ms. Wilcox continued with her review of the quitclaim deed, calling attention to the provisions on page 7 regarding lease of the building. It states any receipts or benefits would be considered "to have been received and held in trust by the grantee for the grantor." She explained the federal government would construe any money made from the building to be theirs.
Senator Raggio interjected any action would have to have the consent of the Secretary of Education. Ms. Wilcox concurred.
Commenting on S.B. 464 in which it declares that the State Board of Examiners would enter into the contract, Ms. Wilcox pointed out leasing state property is currently done at the discretion of the Division of State Lands with the approval of the State Board of Examiners and the Interim Finance Committee (IFC). She asserted it was unclear what role her agency would have under the wording of the bill. She suggested clarification.
Senator R. Hal Smith, Clark County Senatorial District No. 1, testified in favor of the funding mechanism in S.B. 464 He offered the opinion it would work in favor for the state and for the preservation of the Old State Library building.
Dean A. Heller, Assembly District No. 40, offered his support for the methodology outlined in the bill. He acknowledged it could be considered "creative finance" but said it was not unusual and that he knew of cities and counties that had entered into public-private relationships to accomplish similar actions. He voiced concern for the future of the library, and he felt S.B. 464 could provide the mechanism to resolve the problem.
Senator Raggio informed Mr. Heller of the discussion regarding the requirement for the private contractor to be repaid up to $5 million for construction costs over a period of 30 years to be repaid from tenants through amortization. He asked if Mr. Heller had an opinion on what the likelihood was that the building could be fully leased to private or other public sector groups if the state should elect not to lease any portion of it.
Mr. Heller responded he had talked with the mayor and other individuals in Carson City, and he believed there is an appetite for Carson City to get involved in the lease-back proposal. He indicated there had been a number of private companies that were interested. He opined the only disadvantage would be parking.
Senator Raggio asked who might lease the courtroom on the third floor. Mr. Heller replied there was a possibility the judicial court in Carson City might be interested.
Tom Stephens, P.E., Manager, State Public Works Board, declared he shared sentiments to preserve the Old State Library building. He said the administration had also proposed a program to remodel the building. He referred the senators to the proposal designated Project No. 93-G2 (Exhibit F. Original is on file in the Research Library.).
Mr. Stephens described the provisions of the project. The elevator would be replaced and rest rooms would be upgraded to comply with ADA. He said it would not be a complete restoration, but it would provide for all current requirements to protect the building and to make it useable for state agencies.
Senator Raggio asked Mr. Stephens what agencies were being considered as tenants for the building. Mr. Stephens responded the agencies would be economic development, tourism and the Nevada Magazine. He explained the Division of Economic Development was associated with the Division of Tourism and the Nevada Magazine.
Senator Raggio asked Ms. Wilcox if those projected uses had been approved by the Secretary of Education. Ms. Wilcox replied:
We have written approval to put the Nevada Magazine in there. We have verbal approval to add to them agencies they need to support their activities. When I was given that verbal approval, it was understood that by that we meant the tourism commission. The question of economic development was not discussed.
Senator Raggio said:
I want this on record in case we don't do this and we go ahead with your proposal. I don't want to hear 6 months
from now that we can't utilize the building for what purposes...being suggested. How strong a statement are you willing to make here?
Ms. Wilcox offered a copy of the letter. She reiterated:
The Nevada Magazine is approved in writing; tourism has verbal approval...from Mr. Hoops. George Hoops. He's the property manager, western region, Department of Education.
Senator Raggio asked if that included the Division of Economic Development. Ms. Wilcox replied, "No, it does not. Economic development did not come up."
Senator Raggio asked, "Aren't you proposing to use the building for economic development?" Mr. Stephens replied, "Yes, as a combined agency with tourism and the Nevada Magazine."
Senator Rawson asked if the rental costs would be less even with the upgrades. Mr. Stephens answered it would go into the state pool at a rate of 63 cents per square foot which all state agencies pay.
Addressing rental costs, Mr. Stephens pointed out the Nevada Preservation Group was planning to spend $4 million. He reported he had heard the recovery would average 9 percent, including 12 percent return on $1 million for the investors and 8 percent on $3 million to be borrowed. He calculated that it would cost $360,000 per year if no principal was repaid, which would amount to $1.50 per square foot per month if the building provides 20,000 square feet of rentable space. He questioned the figures provided.
Senator Raggio stated he would like a response to that query. Mr. Stephens added the state bonding would be 5 percent, which would amount to a lesser repayment.
Ms. Belko stated:
There are two points. Certainly, if we borrow money at 8 percent, that's 3 percent more expensive than...the state bonds at 5 percent, although we have to take into consideration the bonding costs and the time involved in doing it. Also, while this proposal does not count against the debt limit, there are practical limits to the amount of bond money the state can do.
Certainly, if the state wanted to tell any private developer...okay, you don't have to get a mortgage, we'll lend you the money or we'll assume the 5 percent costs, there is a savings there. The discussion here overlooks two important points.
One of them is [if] the private developers do it there is the 20 percent tax credit. If it costs $4 million, then that's $800,000 savings that the federal government underwrites.
Similarly, if we say that there are 20,000 square feet, then that space goes down. However, the different proposals--this project cost that has been provided this morning dated February '93 says that there's a building area of 19,000. But in December of '92 Nevada public works said the building area was 27,000. Naturally, if
you divide $4 million by 20 versus 27,000 you get different per-square-foot cost figures.
Mr. Stephens interjected that did not include the basement or the fourth floor. He said, "That's more of a net than a gross in the figures that are there." He added there are notes on the exhibit showing the square footage for the basement and the fourth floor. He indicated the figures included the three floors he considered rentable. He acknowledged the basement would be useable for storage only. He also said the lobby was excluded from the net space.
Mr. Stephens declared:
Even subtracting that I think you'd find that your costs are higher on $3,200,000 times 9 percent versus $4 million times 5 percent. And the 9 percent is the composite of their 12 percent return plus their 8 percent.
Senator Raggio acknowledged the problem stems from the desire to have the building preserved as fully as possible and the state is not in the position to do it at this time. He said the proposal from the state is limited and it might not help preserve the building for complete restoration. He indicated he had heard concerns expressed that the state proposal might destroy some of the ability for a complete restoration in the future.
Mr. Stephens responded the basic assumption is that it would not encumber the state bond limit. He offered the opinion that might be questionable. Senator Raggio interjected the committee understood that it would be outside the constitutional limit because it is preservation of property. He admitted it would add to the total debt and would have some impact on the bond rating.
Mr. Stephens opined, "If you're going to impact the bond rating there's no difference between doing it this way or selling the bonds."
Mr. Stephens suggested that the total exclusion of the State Public Works Board would not provide necessary protection because state agencies are not required to abide by building codes, rules, requirements or regulations of any local entity. He said the only requirements for the state is to comply with those set by the State Public Works Board.
Senator Raggio pointed out the state must comply with the ADA. He suggested Mr. Stephens should attempt to comply with local codes. Mr. Stephens said the state adopts most of the codes of the local governments and state agencies must follow those codes. He worried that S.B. 464 would exclude them from that law. He theorized the group would not have to adhere to either local codes or state codes.
Mr. Stephens admitted the State Board of Examiners might put in necessary protections. He pointed out the board normally examines contracts and the actions of the Division of State Lands, the State Public Works Board and other agencies. He said the State Board of Examiners does not have a staff or any formal organization to negotiate or ensure restrictions are put into effect.
Senator Raggio asked what the outlook was for the state to restore the building. Mr. Stephens agreed the building does not comply with current earthquake codes, but he did not feel the building was "ready to fall down" as alleged. He said the exterior had been restored. He said there were no plans to tear out any of the historic elements of the interior. The plans would bring the building up to ADA standards and preserve what is already there. He had no plans to add interior walls, only mobile partitions. He admitted it would not be restoration, but none of the historical elements would be removed.
Senator Jacobsen referred to a 1990 study that indicated the mechanical, electric, plumbing and heating systems were inadequate for modern use. He asked if that should be the first priority. Mr. Stephens declared $75,000 had been earmarked to resolve those problems. He admitted no new air conditioning was contemplated.
Senator Jacobsen suggested it would be helpful for the committee to make a physical examination of the building. Senator Raggio announced a visit to the building would be planned for the committee.
Mr. Stephens asserted he was not against restoration of the library building. He suggested that the state should go ahead with a 5 percent bond issue if the intention was to restore the building. He wondered if passage of S.B. 464 would preclude the state from going forward with other plans if the project failed to materialize. He noted the cost to keep the building closed would amount to approximately $12,000 to $13,000.
Judy Matteucci, Director, Department of Administration, declared the administration was not against preservation of the building. She agreed with the concerns voiced by Mr. Stephens. However, she said, the proposal in S.B. 464 would constitute debt.
Ms. Matteucci suggested that the state should go forward with the 5 percent bond if the decision was made to preserve the building. She claimed the proposal under S.B. 464 would cost the state higher interest and rental rates than those built into the budget. She said other bonding projects could be excluded if the legislature decided to give the Old State Library priority.
Ms. Matteucci voiced her concern that no bidding requirements and State Public Works Board requirements were included in the bill. She called the proposal a "heavy load" for the State Board of Examiners. She added her apprehension over the time line. She anticipated having the building ready by September or October for occupancy for the state agencies mentioned.
Ms. Matteucci agreed with Mr. Stephens that the rental would be higher than anticipated at $1.50 or even $1.00 per square foot, which she said was significantly higher than the state rate of 63 cents.
Ms. Matteucci pointed out the amount of rentable space will depend upon the amount of work done on the building. She said she could not think of any state agency that might want to rent a restored courtroom. She felt that would restrict the amount of space that could be rented to the state.
John Swendseid, Swendseid and Stern, Legal Counsel, State Board of Examiners, stated S.B. 464 does not mention the payment of interest. He declared it should because the interest component will become more than the principal. He noted the payment for 30 years on a $5 million project would amount to approximately $14 million which would be mostly interest. He said the payback for a 5 percent bond issue would be $9.7 million.
Mr. Swendseid asked if the state would benefit from the 20 percent tax credit to be attained by the preservation group. He suggested even that would not result in a savings to the state because it would not amount to the savings to be attained from a state bond issue at 5 percent.
Ms. Belko offered to make available a report from the DC West architectural firm prepared for the State Public Works Board in 1990. She said the report found that none of the mechanical systems were proper for modern use. She said the $4 million would include complete mechanical replacement, all new plumbing and one or two new elevators. She asked the committee to consider the different numbers projected. She said:
The December 1992 public works estimate said that the cost of asbestos abatement was $232,000 in 1992, $243,000 in 1994. The amount in the proposal that Mr. Stephens prepared was $18,000. Perhaps a modest modification can be done for $18,000, but the State Public Works Department [Board] indicates that over a quarter of a million dollars needs to be spent on that work. So we need to look carefully at how limited the repairs [would be].
Mr. Stephens countered:
Unless you're going to disturb the asbestos you don't have to remove it. ...We are not doing a complete restoration, we're not tearing everything out and redoing all the pipes and everything else in the entire building. But we are bringing the mechanical system up so that we feel it will be a reliable system and that it will work fine. And we haven't had an unusual number of service calls or anything over the last few years there. It is not up to modern office-day standards. We're not planning to gut the place like we did the state capitol 20 years ago.
Senator Raggio asked Ms. Belko to explain the advantage to the State of Nevada to approve her proposal in view of what had been stated that the cost would still be chargeable against the bond rating.
Ms. Belko replied:
The interest is cheaper. I do not believe that it's been established by any means that the cost of the work is cheaper, and I don't think the statistics from other parts of the country would support that position. I think it is a philosophical issue ultimately that the state enters into a partnership with the private sector, the private sector fronts the money, the private sector has a fixed-price guaranteed contract....
Senator Raggio asked if she meant the private group could contract cheaper than the state. Ms. Belko replied in the affirmative. She asserted that had been established in other states. She pointed out the state would no longer have responsibility for the ongoing expense of public work involvement. She asked how realistic the state rental rate at 63 cents would be in terms of what was included.
Ms. Belko said:
Right now we have a building that needs $3, $4 or $5 million of work because the state has not put into it restoration funds for what is needed to maintain the building. That isn't how the private sector operates. There are ongoing costs and expenses, but the state, because it does it line by line, articulates those expenses as avoided. We don't have, for example, the funds to bring it up to ADA compliance.
Ms. Belko said the state fire marshal had indicated the sprinklering and life-safety systems in the building were inadequate. She suggested that could be avoided by declaring that the state would not have to comply with fire codes.
Senator Raggio asked if the life-safety systems would pose a problem if the state did the work. Mr. Stephens replied he did not believe so. He said the state fire marshal had indicated that every building in the state over 5,000 square feet should have sprinklers. When Senator Raggio pointed out the private sector is required to comply with life systems but the state is exempt, Mr. Stephens replied, "We can't afford to do it."
Mr. Stephens explained:
That's why we're doing some exit hardware and other things...to make sure the exiting is good, the fire alarm system is good, and we can get out of the building.
Senator Raggio asked if the fire marshal had signed off on his proposal. Mr. Stephens answered, "It hasn't been designed. He wouldn't sign off on it until he saw the design." Senator Raggio suggested Mr. Stephens do some preliminary work with the fire marshal.
Ms. Belko stated the private sector ultimately pays a higher interest rate, so her proposal includes that factor. She said her group is prepared to give the net rental income back to the state to meet that. She admitted there will be disputes over what that may be. She stated her belief that she could prove with market studies that income will be sufficient to pay the expenses.
Ms. Belko said, "It all depends if the State of Nevada wants to be in the business of renting out office space." She suggested that may not be what the state wants to do. She opined the private sector should be the entity managing, maintaining and renting buildings.
Mr. Stephens said the $1.50 figure he had estimated it would cost the Nevada Preservation Group did not include any maintenance. He declared that only included the interest on a $4 million debt at 9 percent.
Senator Coffin noted there were items in the Capital Improvement Project (CIP) budget that Mr. Stephens had not recommended but which the Governor included. He said one project was the Old State Library and one was the remodel of the old Fremont School. He recalled Ms. Matteucci had suggested some of the CIP projects could be replaced and mentioned the Fremont School could be removed from the list. Mr. Stephens responded one $1 million project for the culinary unit at the Nevada State Prison had already been withdrawn.
Senator Coffin said he did not believe remodeling the Fremont School at $100 per square foot for a total of $2 million was worthwhile. He asked Mr. Stephens if that project should be given up. Mr. Stephens replied the Fremont School was a long-term plan.
Ms. Matteucci interjected part of the problem is that neither the legislative nor executive branch has made a determination how to use their bonding authority. She said:
The Fremont School was obtained by the 1991 legislature. It sits in the middle of the capitol complex, and unless you want to have a vacant building sitting in the middle of the capitol complex, you've got to use that...useable square footage. We strongly recommended that you do not delete that particular remodel job. It is built into the useable square footage that the state is using. I think you're asking for trouble if you have a vacant building sitting in the middle of the capitol complex.
Ms. Matteucci stated the remodeling will make the school very useable.
Mrs. Rodden reminded the committee of the importance of the Old State Library to the history of the state. She suggested it might be "band-aided" together, which has been done in other buildings. She recalled the cost to renovate the Mint had been far less than first suggested. She said:
Had we not taken a position that that building was important to...tourism and to...educational purposes and to our quality of life here, that would not have been remedied last session. And that building would have been closed, and I suggest ultimately you would have lost the Nevada State Museum....
Ms. Rodden asked for support.
Senator Raggio set up a time at 7:30 the next morning for the committee to tour the building. He then closed the hearing on S.B. 464 until after the committee had an opportunity to view the building.
Senator Coffin asked for an update on the new state office building proposed for Las Vegas. Mr. Stephens responded the low bid was $25,036,000 and the next low bid was $25,840,000. He said the State Public Works Board had estimated the cost at $24,750,000. He stated the bid was "comfortable" for the board and he felt he could negotiate up to 10 percent. He said the low bidder had informed him there might be an error in his calculations. He said a meeting was being tentatively set for June 3 with the State Public Works Board to come to a decision.
Mr. Stephens reported a decision would have to be made whether to rebid the project with a revised design or negotiate with the next low bidder. He said the low bidder had given him several options which were being reviewed by counsel and staff. He did not feel it would be appropriate to make further comments at this time.
Senator Coffin asked what plans had been made for an archeological study of the site. Mr. Stephens responded the site had been reviewed and studies had been made. He said, "They don't believe it's of a historic nature. It's across the street where the historic site is." He acknowledged construction would stop if evidence of archeological significance was found. He admitted that had not been included in the contract because nothing of an archeological nature had been identified from any soil analysis or site review on that particular site. He voiced his understanding that the site had previously been used for a swimming pool and for an agricultural operation.
Mr. Stephens pointed out the old Mormon Fort had been across the street from the proposed site. He said no evidence had been found of any structure prior to the turn of the century.
Senator Coffin inquired if there had been any indication that there could be Indian remains in the area. Mr. Stephens replied there has been no evidence or record of any Indian remains at the site. He acknowledged there could be Indian remains anywhere in the State of Nevada.
Ronald M. James, Administrator, Division of Historic Preservation and Archeology, State Department of Conservation and Natural Resources, said the public works staff had contacted his office about a year ago regarding the area. He pointed out that since it was part of the Las Vegas wash area prehistoric and historic archeological remains could conceivably be found there. He admitted he was not familiar with the particular site.
Senator Coffin asked if the statutes provide for the division to play a role in the development of state buildings. Mr. James said there is an ambiguous reference in chapter 383 of Nevada Revised Statutes that calls upon state agencies to consult with the division.
Senator Coffin asked how one could identify an archeological "show stopper." Mr. James said it would be up to the contractor to define and make a determination of a "show stopper."
Mr. Stephens said he had been assured that the site had been investigated. He said only a portion of the site would be developed, and he acknowledged there is a graveyard near the back of the site.
Senator Rawson asked what obligation the state had since the low bid was over the proposal. He wanted to know if the building could be redesigned and put out for bid again. Mr. Stephens replied it would be possible to negotiate as would a redesign. He recalled the state library bids were far over budget when first received, so the building was redesigned and rebid.
Mr. Stephens pointed out the bid was only about 2 percent high. He said the normal procedure for a bid only slightly over projections could probably be handled.
Senator Rawson reported people had questioned whether or not the building was going to be adequate even before the bids came in. He wondered if it there was a legal obligation to continue because the building had already gone to bid but had come in high.
Senator Raggio asked if the bonds had been sold. Mr. Stephens said all the bonds had been sold, and he had been directed to go forward with the project.
Senator Rawson asked what the penalty would be if the bonds were not used. Ms. Matteucci responded at the moment she could not calculate the penalty or take a guess. She said it would determine how long the bonds were held and on the interest rate. She indicated the funds could be reallocated to another project as long as the necessary adjustments are made to the statutes to redirect the use of the bonds.
Ms. Matteucci recommended against redirecting the funds for the Las Vegas office building. She pointed out it is a large project with much support. She acknowledged several million has already been spent on the project.
Senator Rawson reported some concern has been expressed as to whether the building is really needed in that area. He suggested a better project might be done instead. He questioned if this was an appropriate time to build an office building when the state faces significant fiscal problems.
Ms. Matteucci responded there had been numerous hearings regarding the building which she believed was approved by the Interim Finance Committee (IFC). She suggested a bigger problem would be with rating agencies. She said:
One of them is that we have too much debt per capita. The second is that we have no plan, that we...sell bonds and then we change our mind.... That is becoming a more significant problem...as we have now attempted in this particular bonding program to limit the debt.... They have repeatedly urged us to develop a long-term capital improvement plan that plans for the future that we stick with. I think if you take a large project off of the board such as the state office building you run the risk of seriously damaging our reputation with the rating agencies.
Senator Rawson pointed out the interest in the building had developed before the state had developed budget deficits. He said it would be prudent to consider the matter before jumping into the program and no damage could come from closer scrutiny. He indicated it might take a week to 10 days to set up a public hearing.
Mr. Stephens interjected the time was running on the bids and a final decision should be made soon. He said he needed to continue negotiation and have time to execute all the bonds, agreements and contracts. Senator Rawson requested that Mr. Stephens not make any further obligations for the next 10 days.
Mr. Stephens said he would not sign a contract but further discussions could be viewed by attorneys as some sort of obligation. He admitted he had the right to reject bids.
Ms. Matteucci interjected delaying action on the bids could cause significant problems. She said:
You run the risk if we don't get these contracts signed, and we reject them that the bids next time will be much higher if you do decide to go forward.
...The entire budget is predicated on that building opening in January of 1995. If you decide not to go forward with that building that means you have to go back in, redo the buildings and grounds budget, and put everybody back in leased space at significantly higher costs than what we were anticipating.
Senator Raggio agreed that Senator Rawson's request was reasonable. He said the committee would request that no final determination be made during a 10-day period.
Senator Rawson suggested that Ms. Matteucci indicate any persons she felt should report to the committee.
Mr. Stephens said there was going to be a hearing before the State Public Works Board on the matter on June 3 at 11:00 a.m. He conjectured that might be the time at which action would be required. Senator Rawson responded the Senate Committee on Finance should be able to make a recommendation prior to that time.
Senator Raggio asked Senator Rawson and Senator Coffin to work with Mr. Stephens on the matter.
Senator Jacobsen reported the fencing project at the prison at Jean had not started. He said he had been informed that the honor camp there would not be able to erect the fence if the project did not start soon due to the possibility the honor camp may be closed.
Senator Raggio asked the committee to consider a BDR regarding medical care for indigents and revising the provider tax.
BILL DRAFT REQUEST 38-1805: Makes various changes relating to provision of medical care to indigent persons.
Senator Raggio explained the budgets are built upon the proposal and the chairmen of the Senate Committee on Human Resources and the Senate Committee on Taxation concur that it should be heard in the Senate Committee on Finance.
SENATOR RAWSON MOVED FOR COMMITTEE INTRODUCTION OF BDR 38-1805.
SENATOR O'DONNELL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.)
* * * * *
Senator Raggio turned to budget closings.
Southern Nevada MH/MR Food Services - Page 730
Robert Guernsey, Principal Deputy Fiscal Analyst, stated there had been several concerns raised by the subcommittee in reference to the initial bids for delivery of food services. At the request of the committee new bids were solicited. He explained the Assembly Committee on Ways and Means had closed the budget according to the Governor's recommendation. He provided the committee with a copy of their recommendation (Exhibit G). He noted the senate finance subcommittee probably would have made the same recommendation earlier with a provision that the agencies be allowed to return to IFC once the final bids and costs are determined.
Mr. Guernsey said the Mental Hygiene and Mental Retardation Division anticipates the bids will come in lower than the initial offering. He said the budget before the committee was significantly different than the earlier budget they had reviewed.
Mr. Guernsey opined it would be highly unlikely that the bids would come back within the amount proposed in the budget. He explained there are three agencies, the third being part of the Division of Child and Family Services, which may have difficulty achieving savings within their budgets. It has been suggested that the money committees propose a letter of intent that they return to the IFC because the final food budget proposals may not be ready before adjournment of the session.
Mr. Guernsey reminded the committee the kitchens may be closed for 3 months and food preparation will take place off-site. He recommended that the budget be closed as submitted but with provision for them to return for additional funding from IFC if necessary.
SENATOR RAWSON MOVED TO APPROVE THE BUDGET ACCORDING TO THE RECOMMENDATION OF THE GOVERNOR WITH AN APPROPRIATE LETTER OF INTENT TO APPROACH THE INTERIM FINANCE COMMITTEE WHEN THE AMOUNT OF FUNDING REQUIRED FOR THE OPERATION OF THE FOOD CENTER IS DETERMINED.
SENATOR GLOMB SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Communicable Disease Control - Page 832
Senator Raggio said his notes indicated the budget had already been closed on May 4. Senator Rawson recalled there had been some discussion over providing $25,000 to $28,000 per year for a management assistant. Daniel G. Miles, Fiscal Analyst, said it had been anticipated that a federally funded position would no longer be funded but a letter had been received that the funding will be available for one more year in the amount of $26,450. He said the Health Division had made a request to restore the position since the funding will be available.
Senator Glomb voiced concern that funding would not be made available for indigent tuberculosis patients. She asked if that cost had been shifted to the counties. Senator Raggio recalled that she was correct.
Senator Glomb asked if tuberculosis medications were also being excluded from state funding. She pointed out residential care might be reduced if the drugs were funded adequately. She asserted the budget was underfunded.
Ms. Matteucci responded the agency is normally allowed to transfer the funds between the first and second years of the biennium. In the past they have had to go to IFC for additional funds. She had no information regarding the medications.
Senator Glomb pointed out the agency was requesting from $250,000 to $400,000 more than was being proposed by the Governor.
SENATOR RAWSON MOVED TO CLOSE THE BUDGET WITH THE ADDITION OF THE FEDERALLY FUNDED POSITION.
Senator Raggio reiterated his notation that action had been taken on May 4. He requested that any previous action be rescinded.
SENATOR O'DONNELL WITHDREW HIS SECOND TO THE MOTION MADE ON MAY 4.
SENATOR RAWSON MOVED TO RESCIND THE PREVIOUS ACTION AND REOPEN THE BUDGET AND THAT THE BUDGET BE CLOSED WITH THE ADDITION OF THE FEDERALLY FUNDED POSITION FOR ONE YEAR.
SENATOR JACOBSEN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS O'DONNELL AND GLOMB VOTED NO.)
* * * * *
Indian Commission - Page 1013
Mr. Miles indicated the Executive Budget had recommended the agency be transferred from Reno to Carson City, but the committee had received correspondence that most of the commission's business is conducted in Reno. It was being suggested that the agency remain in Reno but be moved to another area in the same location with a resulting reduction of office space.
Mr. Miles pointed out the Governor had also recommended that the position for an executive director be retained but left unfilled to attain vacancy savings for the coming biennium.
SENATOR O'DONNELL MOVED TO AMEND THE BUDGET IN ACCORDANCE WITH A STAFF MEMORANDUM THAT THE COMMISSION REMAIN IN NONSTATE OFFICE SPACE IN RENO AND NOT RELOCATE TO CARSON CITY.
SENATOR GLOMB SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Committee to Hire Handicapped - Page 1116
Mr. Miles called attention to a letter from the Governor's Committee on Employment of People with Disabilities (Exhibit H). He explained there was a new revenue item for Gifts and Donations that included $31,000 in the first year and $41,000 in the second year. Concern had been expressed that the agency might have difficulty meeting those revenue projections so a proposal had been made to charge for training sessions. The committee had determined that would not be a viable option.
SENATOR RAWSON MOVED TO CLOSE THE BUDGET IN ACCORDANCE WITH THE GOVERNOR'S RECOMMENDATION.
SENATOR O'DONNELL SECONDED THE MOTION.
Senator Glomb inquired where the legal authority was to impose a fee on the companies as described. Ms. Matteucci responded:
The executive order that established them prohibited them from charging fees.... This would require us then to just change that executive order. The employers that they deal with, they would have to tell them that they are going to provide this and this is what they are going to charge.
Ms. Matteucci said there was no way to mandate that employers pay for services unless they avail themselves of the services. She explained the Governor had established the committee by executive order. She suggested the issue was whether or not employers would want to participate.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Historic Preservation - Page 1147
Mr. Miles called attention to the technical adjustments set out on Exhibit I. He noted the adjustments to the General Fund would only amount to $352 in the first year and a negative $293 in the second year. He recalled that the committee had some question about the historic marker fund.
Senator Rawson said he had a notation from April 27 that "we did adjust this. It was Governor Recommends plus the adjustment of $10,000 for historic markers." Senator Raggio indicated he had the same notation.
SENATOR RAWSON MOVED TO RESCIND ANY PREVIOUS ACTION, TO REOPEN THE BUDGET AND THE BUDGET BE CLOSED IN ACCORDANCE WITH THE GOVERNOR'S RECOMMENDATION AND BE ADJUSTED WITH $10,000 FOR HISTORIC MARKERS AND WITH THE OTHER ADJUSTMENTS FOR RENT AS RECOMMENDED BY STAFF.
Senator Raggio asked where the funding was coming from. Senator Rawson replied he had noted it would come from the Division on Tourism and the Department of Transportation (DOT).
Senator Raggio repeated the motion "to amend the budget with the adjustments suggested by staff for rent...and...to add the $10,000 for the historic marker program...." Discussion ensued over the legality of using highway funds for the project. Mr. Miles indicated either room tax or volunteer groups could be used for the historic markers.
Ms. Matteucci said:
Before you vote on that I've got to get on the record. I think the tourism commission is going to have some real problems with you taking some of that money.
SENATOR RAWSON WITHDREW HIS MOTION.
* * * * *
SENATOR O'DONNELL MOVED TO CLOSE THE BUDGET BY ADJUSTING IT IN ACCORDANCE WITH RECOMMENDATIONS MADE BY THE STAFF.
SENATOR GLOMB SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Glomb commented:
In these budget times with such difficulties, I wonder if there are some guidelines that we could follow. There's a possibility here where we almost allocated $10,000 for historical markers, but we couldn't find $10,000 for tuberculosis medicine. We need some principals or some guidelines....
Senator Raggio interjected that all fell within the discussions of each budget. Senator Glomb remarked that if the budget had come up on a day when no health budget had been proposed "we could have easily all agreed that we need historic markers."
Fort Mohave Development Fund - Page 1503
Senator Callister recalled some questions regarding funds spent on litigation but he had since reconciled the question. He explained the amount was less than had been characterized because some of that money had been used for services other than litigation.
SENATOR CALLISTER MOVED TO APPROVE THE BUDGET AS RECOMMENDED BY THE GOVERNOR.
SENATOR COFFIN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Mining Cooperative Fund - Page 1633
SENATOR RAWSON MOVED TO CLOSE THE BUDGET AS RECOMMENDED BY THE GOVERNOR.
SENATOR COFFIN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
There being no further business before the committee, Senator Raggio adjourned the meeting at 10:50 a.m.
RESPECTFULLY SUBMITTED:
Judy Jacobs,
Committee Secretary
APPROVED BY:
Senator William J. Raggio, Chairman
DATE:
??
Senate Committee on Finance
May 25, 1993
Page 1