The Committee on Commerce and Labor was called to order at 3:45 p.m., on Wednesday, March 17, 1999. Chairman Barbara Buckley presided in Room 3142 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All Exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Ms. Barbara Buckley, Chairman

Mr. Richard Perkins, Vice Chairman

Mr. Morse Arberry, Jr.

Mr. Bob Beers

Ms. Merle Berman

Mr. Joe Dini, Jr.

Mrs. Jan Evans

Ms. Chris Giunchigliani

Mr. David Goldwater

Mr. Lynn Hettrick

Mr. David Humke

Mr. Dennis Nolan

Mr. David Parks

Mrs. Gene Segerblom

STAFF MEMBERS PRESENT:

OTHERS PRESENT:

Doug Bierman, Senior Research Associate, Intertech Services Corporation, introduced Leon Aberasturi, Deputy District Attorney, Lander County. Mr. Aberasturi offered testimony in support of A.B. 433 (Exhibit C) and explained A.B. 433 was an attempt by Lander County to clarify the phrase "authorized representative." The phrase first appeared in 1941, and in 1950 there was a request by the attorney general to draft an opinion as to what the term meant. He noted the attorney general opined the phrase did not include independent contractors (Exhibit C, page 3).

Many counties had not followed the attorney general’s opinion, which included Lander County. The county was small, under 10,000 people, and they did not have contractors who had most of the sublicenses the contractor’s board issued.

Mr. Aberasturi referenced Exhibit C, pages 9 and 10, and noted the exhibit showed the many licenses of the State Contractors Board. He stated Battle Mountain was a town of 6,700 individuals and noted there were probably 4 or 5 general contractors and a few contractors with subspecialties in the town. He explained the reason the issue came up in Lander County was because of their desire to privatize the maintenance department.

They had a one-person maintenance department who took care of every facility from Battle Mountain, Austin, or Kingston. The individual did not have the expertise nor the time to handle every job, and the county was hiring out for contractors.

Mr. Aberasturi explained the county faced situations where a water or sewer line would clog or break, and due to other commitments, locals could not handle the situation. Lander County would have to call Elko, which was 90 miles away or Winnemucca, which was 54 miles away in order to have a sewer line unclogged or fixed. Mr. Aberasturi referenced Exhibit C, page 2, which detailed the 1998 bid request by Lander County.

He asked the legislature to clarify the term authorized representative as broader than the term employee. He said if the legislature wanted to exempt county employees from having contractor’s licenses, they would have said county employees were exempt and would not have used the term authorized representative. The Attorney General Opinion (AGO) 904 based its conclusion on one case in the 1940’s, which dealt with the federal statute. During the past 50 years, other courts defined the phrase, authorized representative, as including independent contractors of the local government. Mr. Aberasturi stated the county would rather have the legislature decide the issue versus the district court.

Chairman Buckley clarified Lander County was suggesting there be a population cap put into the bill so it would apply to only counties under 10,000 individuals.

Mr. Aberasturi affirmed Ms. Buckley’s statement noting the county would like to avoid opposition. It was Lander County’s position the phrase already included independent contractors. In Clark County, it was not difficult to find someone with the proper license. The situation was different for the rural people who did not have the population base.

Chairman Buckley stated under the attorney general’s opinion, Lander County would have to use someone who was licensed and asked if the county was able to find people.

Mr. Aberasturi explained the county had a prime contractor who let out subcontracts based on the county’s contract. The situation got confusing, and it would be easier if the situation was clarified.

Chairman Buckley understood the difficulties faced by the county but noted there was a need for balance with consumer protection and quality control. Work needed to be done by competent individuals thus preventing hazardous situations. She asked Mr. Aberasturi how he would respond to the need for balance.

Mr. Aberasturi explained AGO 904 seized upon the issue. A local government was different from a "mom and pop" store or the average citizen. The county had a building inspector who could watch the performance of contractors in order to ensure work met with the code. The county also had a legal staff, which provided for protection for the county. He noted such was the reason for exemptions for local governments in Nevada Revised Statues (NRS) 624 and why AGO 904 made no sense. Mr. Aberasturi asked if local governments were removed from the picture, why put them back in by defining authorized representative narrowly.

Margie Grien, representing the Nevada State Board of Contractors spoke in opposition to A.B. 433. She noted the board understood the needs of individual contractors but stated there was an obligation to protect the public. It did not matter in which county an individual lived, their needs were the same, which was the purpose of NRS 624. An exemption for individual counties to include hiring independent contractors was a public safety issue and the reason for the board’s opposition.

Danny Thompson, representing Nevada State AFL-CIO, agreed with Ms. Grien’s statement and noted opposition to A.B. 433. He said the senate was considering a number of bills dealing with issues surrounding the contractors board and construction defect. Quality of work was paramount to public safety, and Mr. Thompson did not understand how some individuals could be exempted and have the statute remain intact.

Cheryl Blomstrom, representing the Nevada Chapter of Associated General Contractors and the Las Vegas Chapter of Associated General Contractors, spoke in opposition to A.B. 433. The organizations thought the public was best protected by using a licensed contractor. Contractor’s bonds and insurance protected the public’s interest when licensed contractors were hired. If there was a problem on the job and an unlicensed contractor was used, the public paid the price.

Chairman Buckley thanked everyone for their testimony and noted both sides adequately presented their positions. There was no further testimony, and Chairman Buckley closed the hearing on A.B. 433. She noted A.B. 387 was not going to be heard as it was not ready for presentation.

Chairman Buckley began the work session.

Vance Hughey, Committee Policy Analyst, referenced Exhibit D. According to testimony, the purpose of the bill was to ensure a real estate broker, broker-salesman, or salesman who received a commission from the closing process, held a Nevada real estate license or a certificate of cooperation issued pursuant to NRS 645.605. He noted there were no proposed amendments to the bill.

There being no discussion:

ASSEMBLYMAN GOLDWATER MOVED TO DO PASS A.B. 215.

ASSEMBLYWOMAN SEGERBLOM SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

Chairman Buckley introduced:

• BDR 54-1619 – Revised provisions regarding practice of interior design (A.B. 610).

ASSEMBLYMAN HUMKE MOVED FOR COMMITTEE INTRODUCTION OF BDR 54-1619.

ASSEMBLYMAN DINI SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

* * * * * * * *

• BDR 54-788 – Revises provisions governing certifications of registration (A.B. 609).

ASSEMBLYMAN GOLDWATER MOVED FOR COMMITTEE INTRODUCTION OF BDR 54-788.

ASSEMBLYMAN HETTRICK SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

Chairman Buckley opened the hearing on A.B. 397.

Assemblyman Goldwater, Assembly District 10, presented A.B. 397 stating it was the "Tenants Bill of Rights" (Exhibit E). He noted the concept within A.B. 397 was presented in both the 1995 and 1997 legislative sessions. In 1995, the legislation contained many provisions helping tenants and was defeated by one vote on the assembly floor. In 1997, A.B. 303 was passed by the assembly but never heard on the senate floor.

After discussions with a member of the industry, Mr. Goldwater better understood the burdensome nature of section 4, which was the requirement of water meters for apartment buildings for units of 10 or more. He further noted the burdensome nature of section 6, subsection 3, which was a provision that required a landlord refund a security deposit to a tenant who requested the refund. Mr. Goldwater explained if the above-mentioned items did fatal harm to the bill, he wanted them removed. Their removal did not hinder the essential issues of the bill.

A.B. 397 amended NRS 118A, did not apply to commercial or industrial leasing, and did not affect individual housing rentals. NRS 118A covered only apartment buildings with four or more units.

Mr. Goldwater explained each section of the bill and noted:

• Section 1 amended existing protection afforded to security and cleaning deposits.

• Section 3 required a landlord inform a tenant as to why they were being evicted.

• Section 4 considered water meters, as previously noted.

• Section 5 defined a security deposit.

• Section 6, subsection 1, limited the amount of a deposit a landlord could require for security and cleaning to no more than 3 months rent.

• Subsection 2 stated the landlord was not required to refund the deposit for cleaning.
• Subsection 3 contained the deposit provision.
• Subsections 4, 5, 6, 7 and 8 clarified deposits as they related to the relationship with landlords.
• Subsection 9 clarified a landlord could not make a deposit nonrefundable.

• Sections 7 and 8 considered deposit clarification language.

• Section 9 clarified a landlord had not acted in good faith if he/she did not perform the basic tasks of repairs and maintenance.

• Section 10 stated a tenant could not terminate a "rental agreement for a condition caused by his own deliberate or negligent act or omission or that of a member of his household or other person on the premises with his consent."

• Section 11 was further clarification of deposit language.

• Section 12 noted if a landlord did not provide essential services, the tenant could withhold the rent penalty free until the problem was fixed. He noted essential services were defined as heat, air, water, electricity, gas, or other such services.

• Sections 13 and 14 were additional language clarifying deposits.

• Section 15 allowed a tenant to complain to a law enforcement agency if the landlord broke the law and the landlord retaliated.

Mr. Goldwater stated good landlords, who were properly conducting business, would not be affected by A.B. 397. Landlords who would be affected were those who turned away from tenant problems and simply collected rent; landlords who forced tenants to live in horrible conditions.

John Sasser, Statewide Advocacy Coordinator, Washoe Legal Services, offered testimony in favor of A.B. 397 (Exhibit F). Mr. Sasser reiterated Mr. Goldwater’s comments on the sections of the bill and stated because a landlord did not have to articulate their reasons for eviction, it was easier to hide improper motives, such as unlawful discrimination or retaliation. If a landlord had to provide grounds for eviction, it would be easier to distinguish legitimate reasons for eviction from pretextural reasons.

Mr. Goldwater referenced Exhibit G, which was an editorial from the Las Vegas Sun articulating the issues surrounding A.B. 397. He then noted Exhibit H, which was another article from the same paper about a ruling in district court regarding a rape case where an apartment complex under civil law was released from responsibility.

Mr. Humke referenced section 3, which dealt with eviction for cause and asked Mr. Sasser if he could provide case law information from other states regarding provisions found in the section. He asked if activity complained of by a landlord was found to be an unreasonable cause for eviction.

Mr. Sasser stated what was proposed in the section was unique in his experience. The law was not like eviction for cause that would be found in other states. He noted the law was mostly in cities and jurisdictions that had rent control where it was important for tenants to remain in a particular apartment at a low rent. A.B. 397 did not limit reasons for eviction so long as the reason was not illegal, which was unlike other laws.

Mr. Humke again inquired as to case law in other jurisdictions whereby Mr. Sasser explained the statute was unique and there would be no case law interpreting the statute in another jurisdiction.

Mr. Humke asked about jurisdictions where all the bench had to rely on was additional "judge made law."

Mr. Sasser explained there were two types of jurisdictions. One type had laws stating a landlord could only evict for cause, and the cause was named in the statute. The other type of jurisdiction involved no cause evictions, which only required proper notice and the notice be delivered on time with proper language. In such a case, the landlord did not have to put on the eviction notice what the cause was.

Ms. Giunchigliani noted appreciation for section 12 mentioning a community where residents lived long-term without heat, with cockroaches, and dirt floors.

Mr. Goldwater noted under A.B. 397, issues of cockroaches and no flooring would still be allowable. The bill dealt with heat, air conditioning, and other essential services.

Ms. Giunchigliani appreciated that the bill allowed for tenants to have the opportunity to withhold rent when a landlord did not fix a problem brought to their attention. She asked if the bill addressed the issue of language clarification in rental agreements.

Mr. Goldwater said the bill did not address clarification of language in rental agreements.

Ms. Giunchigliani stated individuals could be taken advantage of because documents were not clear. She asked about the coverage of senior citizens.

Mr. Goldwater explained under NRS 118A the issue was not covered and pointed out NRS 118B dealt with the issue, and NRS 118B was very different from the chapter addressed by A.B. 397.

Ms. Giunchigliani thought there was a different category applying to individuals who were 60 years or older noting under the provision, certain amenities had to be provided.

Mrs. Segerbloom asked if under A.B. 397 a landlord would be able to ask for a first and last rent. She noted the last months rent must be returned if a tenant was evicted.

Mr. Goldwater affirmed her question and said the last months rent would be returned if certain circumstances were proved.

Mr. Arberry asked if there was a conflict with the issue of providing heat and air conditioning.

Mr. Sasser explained under current law, if there was a signed rental agreement in which air conditioning was included as an essential service, it was considered an essential service. If the air conditioning was not in the rental agreement, it was not considered an essential service.

Mr. Beers referenced Exhibit E page 2, section 3, which said, "My landlord can evict me because I wear loud ties or for any other business or personal reason." He said he had a difficult time understanding how such a reason strengthened the ability of one to "route out" abusers of at-will evictions.

Mr. Sasser stated, "I don’t like your tie" was a subjective state. He noted if a landlord told a tenant he/she had to leave because the landlord was taking the property off the market and then rented the property to another individual the next day, such a situation would be provable in demonstrating the landlord had another reason for the eviction other than what was articulated.

Mr. Beers thought there was a loophole in the bill.

Mr. Goldwater agreed there was a loophole but noted the language in the bill was a beginning.

Mr. Beers referenced section 12, which referred to "another essential service." He asked if the section was an "attorney full employment act."

Mr. Goldwater stated it was not. He referenced section 12, which said, "if a landlord is required by the rental agreement or this chapter."

Mr. Beers said the intent concerned issues not explicitly stated in the rental agreement, whereby Mr. Goldwater agreed.

Mr. Beers asked if he rented an apartment where he had to pay for the electricity, how would issues surrounding air conditioning be considered. He asked if the sponsor of the bill envisioned renters needing to ensure lease contracts included a working air conditioner. He also inquired as to the language change from electric to electricity in section 12.

Mr. Sasser said the language in section 12 was a technical change.

Chairman Buckley noted there had been a number of tenants rights bills sponsored by mobile home park tenants and bills sponsored by mobile home parks during past sessions. She noted the bills were diametrically opposed to each other. The tenants bills were fought by the park owners and the park owners fought the tenants bills. Almost all of the bills died at some point during the sessions. During the 69^th Session, a challenge was issued to park owners and tenants to come together during the interim and attempt to work out a consensus bill. There were numerous meetings attended by interested parties, and a consensus bill was developed. The bill worked through issues of tenants and landlords. The process was long and difficult with give and take on both sides. Situations arising out of A.B. 397 reminded Chairman Buckley of the mobile home bill.

Mr. Goldwater stated those in the industry and the tenants tried to work together in the creation of A.B. 397.

Ms. Giunchigliani explained telephone calls and letters she received did not come from the industry. She grew up in an apartment; it was her home, and apartments were the homes of many of her constituents. Apartments did not belong just to landlords; the tenants helped pay for them. Ms. Giunchigliani hoped there was a willingness on the part of all concerned parties to ensure no abuse occurred.

Robin Downs, a private citizen, explained her family lived in marginal housing that did not include heat. When she wrote the landlord and informed him she had no heat, the family was given a 30-day no cause eviction. Ms. Downs took the landlord to court, and the judge ruled against the family giving them 24 hours to leave the premises. Having no other place to go, she moved into another house. Many essential items needed fixing, and she was told they would be taken care of, which did not occur. The landlord refused to address the issues, even though the family paid the rent on time. She took the landlord to court, and the landlord filed a 30-day no cause eviction. If Ms. Downs had been quiet about the repairs, she could have remained in the house. She was tired of moving and could not afford to move every time something drastic occurred in the home she rented.

David Olshan, Directing Attorney, Nevada Legal Services, Inc., Las Vegas, introduced Ray Rodriguez, Directing Attorney, Nevada Legal Services, Inc., Reno and Carson City. He offered support for A.B. 397 (Exhibit I) and noted the law governing landlord-tenant relationships constituted one of the biggest inequities in Nevada’s legal system. A.B. 397 addressed the imbalance.

Mr. Olshan explained two major problems Nevada Legal Services contended with were no cause evictions and habitability problems. A no cause eviction could lead to situations surrounding unbridled power and abuse of power. He noted the absence of a reason for eviction casts a shadow on an eviction. A simple explanation of the reason for eviction would erase the doubt from a tenant’s mind and perhaps convince the tenant to move voluntarily.

Substandard housing created a major problem for tenants and withholding rent after proper notice was a viable solution that did not involve the court system. The practical solution equally distributed the burden of substandard housing on both the landlord and tenant.

Chairman Buckley stated a criticism used by landlords who desired to continue to use a 30-day no cause eviction involved situations such as drug activity where a landlord could not prove such activity existed and desired to protect the names of other individuals who were complaining. Ms. Buckley referenced NRS 118.510, which set forth reasons why an individual could not issue a 30-day no cause eviction. Such reasons included retaliation, complaints about building and safety, tenant’s unions, racial discrimination, or other illegal reasons. Ms. Buckley asked if there were additional protections that should be added prohibiting an eviction for improper reasons.

Mr. Olshan said complaints about crime in an apartment complex was the foremost area necessitating coverage. Evictions for exhibiting political signs, flags, or issues dealing with discrimination were other areas NRS 118.510 could address.

Chairman Buckley pointed out discrimination would be prohibited by the Federal Fair Housing Act, but because it was not in NRS 118A, others might not be aware of it.

Mr. Rodriguez noted since the 69^th Session, his office handled about 900 landlord tenant cases, which included cases dealing with warranty of habitability.

The problem was not limited to Las Vegas. Remedies were not adequate for individuals with low incomes or for individuals who lived in rural Nevada. A remedy for involved parties was often to move to a different location, but for some who lived in rural areas, there was no place to go. Current Nevada law did not require a landlord fix the habitability problem.

A.B. 397 provided incentive for a landlord to fix a structure. If a tenant gave notice to a landlord to fix certain conditions and the landlord did not act accordingly, the tenant could stop paying rent. His experience in practicing landlord-tenant law for 17 years told him a landlord would fix the dwelling.

Ernie Nielsen, Attorney, Washoe County Senior Law Project, noted testimony written by Katherine K. Copeland, Executive Director, Truckee Meadows Fair Housing (Exhibit J). Exhibit J explained fair housing centers continued to receive complaints about discriminatory treatment of home seekers even though it was illegal to discriminate in the provision of housing services based on race, color, religion, sex, national origin, familial status, or disability.

A powerful discriminatory tool used by some landlords was the no cause eviction, which allowed a landlord to rent to individuals they did not desire in their rental and then evict the same people in a month or two without having to provide a reason.

Mr. Nielsen noted Exhibit K, which was a letter from Marilyn Horn. Exhibit K expressed Ms. Horn’s concern for older individuals who were forced from their homes and were especially vulnerable to threats of eviction from landlords.

Mr. Nielsen introduced Louise Broody who was represented by the Senior Law Project in a no cause eviction. The project was unsuccessful in preventing the eviction.

Ms. Broody, a private citizen, noted she lived in southwest Reno in a beautiful home and took care of her husband who had Alzheimer’s disease until such time as their finances were depleted. She then sold her home and moved into an apartment. Ms. Broody turned the apartment into a comfortable home and then received a 30-day no cause eviction notice. She attempted to fight the eviction, but the fight was unsuccessful.

Trina Fierro, Certified Property Manager, IREM Chapter 99 from Las Vegas and the Nevada Apartment Association, noted her membership included about 200 individuals who were certified property managers and accredited resident managers. The association represented 60,000 multifamily units and about 50 million square feet of commercial space. Ms. Fierro offered written testimony in opposition to A.B. 397 (Exhibit L) and noted those she represented respected Assemblyman Goldwater’s position. Ms. Fierro said those who functioned under current laws and did not break the laws did not want to change the way they did business.

David Bauman, Past President, Nevada Apartment Association, Southern Nevada Chapter, said they had a current membership of about 300 members representing about 31,000 multi-housing units in Southern Nevada. Mr. Bauman noted opposition to A.B. 397, especially section 3, which was the elimination of the no cause notice.

Mr. Bauman stated the term eviction was used often during previous testimony, and the eviction right was the same right the statutes allowed for tenants. A tenant could vacate a unit without reason with a 30-day notice.

Ms. Giunchigliani asked what were the reasons for giving a 30-day notice. She also asked about the right of a landlord to terminate a tenancy.

Mr. Bauman said it was a right of the landlord to regain possession of property owned just as it was the right of a resident to no longer reside at a specific location.

Ms. Giunchigliani asked if the only reason someone should be able to use a 30-day no cause was to regain property.

Mr. Bauman answered affirmatively emphasizing their position was to allow for a landlord to regain property for any reason they desired.

Ms. Giunchigliani asked Mr. Bauman if reasons listed in A.B 397 were not justifiable as to why a landlord was attempting to regain their property.

Mr. Bauman noted the issue of discrimination and said there were fair housing laws and discrimination laws that could be posted in the courts if the tenant felt they were wrongfully treated.

Ms. Giunchigliani asserted there were individuals who did not have enough money to go to court. She noted section 3 did not speak to such an issue and asked Mr. Bauman what his objection was to having to list a rational reason in compliance with section 3. She said the bill did not eliminate the 30-day eviction.

Mr. Bauman explained a resident was not forced to provide a reason for terminating a tenancy. His position was landlords should not have to provide cause.

Ms. Fierro explained landlords who worked as professional managers used a 5-day notice "to pay or quit" or a 3-day notice for nuisance. They typically did not use a 30-day notice for termination of a tenancy unless it was at the end of a lease term. Professional property managers and landlords utilized rental agreements. They could not give a 30-day notice within the middle of a rental agreement. If at the end of a tenancy a tenant was holding over or holding the property and the landlord chose to not have the tenant holdover, a landlord could utilize a 30-day notice for no cause.

Chairman Buckley asked why it would be difficult to list a reason for eviction. With a listed reason, tenants could not later claim discrimination or that an eviction was for no reason.

Ms. Fierro said if there was no reason on a 30-day no cause, a tenant had the right to answer the notice and ask for "his day in justice court." Landlords or property managers would then go to justice court and answer the tenants concern. Because the provision was not abused, she did not believe the law needed to have a remedy or a justification. Such would cause added time in court and additional dollars on attorney’s fees.

Mr. Beers stated he understood witnesses to say they objected to having to provide cause on a 30-day notice, but did not object to providing cause on a 5- or 10-day notice.

Ms. Fierro said such was the current law. There was always a reason stated for any type of nonpayment of rent action taken on a 5-day, 3-day, or nuisance notice.

Mr. Beers noted A.B. 397 would tighten up the 30-day notice.

Chairman Buckley said the statute provided for different types of termination notices for different reasons. There was a 5-day notice for nonpayment of rent, a 3-day notice followed by a 5-day unlawful detainer notice if someone was a nuisance, a 5-day lease violation could be served followed by a 5-day notice, and the final notice set forth in current law was a 30-day notice.

Scott Brenneke noted he was a Certified Property Manager with over 25 years experience. He taught landlord tenant law as a layman. Mr. Brenneke explained as professionals, he and others in the industry were not opposed to the intent of A.B. 397, but there was concern as to how it would affect the industry. He noted the majority of problems resulted from complications with owners of one to four units, and the changes brought forth by the bill would not affect those individuals because they were exempt from the law. The changes would affect multifamily properties, which were mostly handled by professional property managers. Most professional property managers did not evict without cause, did not retain security deposits without justification, and would be affected adversely by the law.

In the leases Mr. Brenneke used and in the way the law was set up, as soon as the initial term of a lease was over, the law and the lease allowed a tenant to hold over on a month to month justification based on the existing lease. If the law was changed to require cause to evict, immediately he would amend all of his leases to be "fixed term leases" and only on the renegotiation and signed new written lease would he continue an individual in a property. He noted such would be the case because there would be no way to evict a person other than for cause at the end of a time period.

A no cause eviction was used rarely in his office, but when it was used, it was because there was an activity going on by a renter that other renters complained about but refused to provide written statements regarding. Without the written statements, Mr. Brenneke could not take troublesome renters to court for a cause eviction. He noted gang activity was a problem and other renters were fearful of their wellbeing. If a method of evicting was presented, which dealt with situations where no one was willing to step forward with a complaint, Mr. Brenneke would have no problem supporting and recommending the idea to others in his organizations.

Mr. Brenneke was also concerned with the issue of splitting a security deposit. Currently security deposits could be used for three specific items, one of which was the payment of default in rent. He said it would be impossible to maintain an individual trust and bank account for each individual single family unit. Under current state law, he was allowed to place all security deposits into one trust account or a multitude of trust accounts with a very limited number of signatories.

He stated on the 5^th of the month all rent was due, and on the 10^th of the month, all expense checks were paid. Nevada law enabled Mr. Brenneke to maintain the security deposit in a trust account as a buffer to be used in case of default of rent payment, thus preventing the problem of conversion. Conversion was the utilization of money from another individual’s portion of the trust account. If the deposit was broken into a security deposit and cleaning fee, he would be required to increase everybody’s security deposit to a full months rent. A renter would be required to pay the cleaning deposit and an increased security deposit. Mr. Brenneke thought the situation would create additional problems and added expense for average renters. If a way could be developed to protect the owner of the property, he would have no problem with making some of the changes.

Wanda Sweazy, Past President, Northern Nevada Apartment Association, stated the issue of the security deposit would be detrimental for renters. She noted she managed single family properties, and the deposit required was equal to a months rent. If the provision in A.B. 397 was to go into effect, she would charge a security and a cleaning deposit thus increasing renters’ costs. Ms. Sweazy noted 92.4 percent of landlords who responded to a survey conducted by the association did not currently charge a last month’s rent, and 71.2 percent said they would start changing the last month’s rent if the current form of the bill passed. Most landlords currently required a first month’s rent and a security deposit. Ms. Sweazy stated 69 percent of landlords would charge the same security deposit and charge for cleaning, thus increasing expenses for the renter. The law allowed for a landlord to collect a deposit that was three times the rent. Most landlords in the association did not collect even one times the month’s rent.

Chairman Buckley stated Mr. Goldwater just indicated to her he would not be requiring the return of the security deposit, and he would be willing to remove the provision. She asked a small group of interested parties to get together and attempt to solve some of the problems.

Ms. Sweazy explained with a cause eviction, the law required a landlord send a notice and inform the tenant what they were doing wrong. Most landlords sent two or three notices and by such time, if the violation was not remedied, the parties had to go to court. She noted judges often gave the renter another opportunity to remedy a problem.

Mr. Humke asked Mr. Brenneke if he knew how many apartment units in the state were under property management control as opposed to individual owners.

Mr. Brenneke did not know the number for the state, but in the Reno area, about 20 to 25 percent of rentals containing one to seven units were individually owned.

Mr. Humke asked Mr. Brenneke if he wanted the bill to apply to owners of one to four units.

Mr. Brenneke affirmed Mr. Humke’s question. He thought a renter had the right to feel they were fairly handled no matter if they rented from someone who owned one unit or many units.

Dolores Bell, a real estate broker, offered testimony in opposition to A.B. 397. Ms. Bell stated a landlord could not have those involved in criminal activity removed on a 5-day eviction because those in criminal activity had money and always paid their rent. She had no problem with the 30-day no cause eviction but was concerned about the issue of drug dealers. Utilization of the 30-day no cause allowed her to clean up criminal activity in her apartment complex. They did not evict people for a capricious reason.

Chairman Buckley noted Mr. Goldwater did not want to eliminate the ability to use a 30-day no cause eviction but desired a reason be listed. She stated Ms. Bell’s concerns would be balanced against the concerns of others.

Ms. Giunchigliani noted there was a nuisance notice that could be utilized; the 30-day was not the only opportunity for a landlord to evict a tenant.

There being no further testimony, Chairman Buckley closed the hearing on A.B. 397 and adjourned the meeting at 5:55 p.m.

RESPECTFULLY SUBMITTED:

Jane Baughman,

Committee Secretary

APPROVED BY:

Assemblywoman Barbara Buckley, Chairman

DATE: