The Committee on Government Affairs was called to order at 8:05 a.m., on Friday, February 12, 1999. Chairman Douglas Bache presided in Room 3143 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:

Mr. Douglas Bache, Chairman

Mr. John Jay Lee, Vice Chairman

Ms. Merle Berman

Mrs. Vivian Freeman

Ms. Dawn Gibbons

Mr. David Humke

Mr. Harry Mortenson

Mr. Roy Neighbors

Ms. Bonnie Parnell

Mr. Kelly Thomas

Ms. Sandra Tiffany

Ms. Kathy Von Tobel

Mr. Wendell Williams

COMMITTEE MEMBERS EXCUSED:

Ms. Gene Segerblom

STAFF MEMBERS PRESENT:

OTHERS PRESENT:

After calling the meeting to order, Chairman Bache opened testimony on A.B. 93.

Brett Kandt, Deputy Attorney General, State of Nevada, read from a prepared statement (Exhibit C). The intent of A.B. 93 would repeal both Nevada Revised Statutes (NRS) 239.040 and NRS 225.070, which collectively require all contracts and agreements entered into by the state be reduced to writing, forwarded to the Secretary of State, and compiled in a book to be known as the agreement and contract book. That requirement, he said, was no longer compatible with existing state contracting procedures.

Enacted in 1879, NRS 239.040 had remained on the books unchanged. Given the complexity, volume and variety of contracts and agreements entered into by the state, the compilation and retention methods required by NRS 239.040 were both impractical and burdensome.

NRS 225.070 required those records be carefully preserved in the State Library and Archives.

Jeff M. Kintop, State Archives Manager, State Library and Archives, emphasized the impracticality of the existing statutes by showing the committee a large, rather tattered binder which contained retained records. The binder, he said, contained the state’s contracts from 1969 through 1977, which, by that time, were either pasted or stapled onto the pages. Prior to the invention of the copy machine, he said, records were handwritten, much like deeds recorded in a county recorder’s office.

Robert Van Stratten, State Records Manager, State Library and Archives, assured the committee records would still be retained for the period of time prescribed by law. Most contracts, he said, were kept for 6 years from the date of termination of the contract. It was proposed to transfer documents to the State Library and Archives, have archive personnel go through them one by one, and destroy those with no historical value, citing as an example a contract dealing with the purchase of staples and copy paper.

Scott W. Anderson, Deputy Secretary of State for Commercial Recordings, indicated the Secretary of State had no objection to A.B. 93 and passage of the bill would repeal impractical statutory provisions (Exhibit D).

Assemblywoman Tiffany referred to a Business Process Re-engineering (BPR) effort done several years ago when document scanners were considered. Mr. Anderson replied while a document management system was still under study, it was not yet ready for implementation. Questioned about electronic retrieval of documents, he said at some time in the future internet access to records and digitally scanned documents would, hopefully, be available.

Chairman Bache closed the hearing on A.B. 93 and opened the hearing on A.B. 95.

Marvin A. Leavitt, representing the City of Las Vegas, introduced John O. Swenseid of the legal firm of Swenseid & Stern, Las Vegas. A.B. 95 had been requested by the City of Las Vegas, Mr. Leavitt said, and he invited Mr. Swenseid to explain the bill’s provisions.

The purpose of A.B. 95, Mr. Swenseid said, was to allow local assessments, following a public hearing, for the maintenance of street beautification projects. Existing law allowed cities and counties to create assessment districts for capital improvements, requiring a two-step hearing process, notification of all property owners who would be assessed, and a hearing whether to create a district. The assessment would generally be payable over a 10-year period.

The legislation in A.B. 95, Mr. Swenseid continued, would allow assessments for maintaining improvements after their installation. Present law allowed those types of assessments only in narrowly-defined areas: For example, transportation projects or in redevelopment areas, or in cities with populations between 100,000 and 300,000. In other words, current legislation permitted street beautification maintenance assessments in counties but not in downtown Reno. He discussed a current Clark County project of street beautification near the Las Vegas Strip. The current project ended at Sahara Avenue, the boundary between Clark County and the City of Las Vegas. Passage of A.B. 95 would allow continuation of the project toward the city. It would enable cities to charge the cost of maintaining expensive beautification projects to the adjacent property owners rather than to all the taxpayers in the county.

The procedure for creating maintenance districts, Mr. Swenseid continued, would be the same as with the capital projects. A notice would be sent to all property owners, detailing the expected annual assessment for maintenance. Should half the property owners protest, the maintenance district could not continue. Should the project move ahead, the governing body would set a maintenance budget and assess the cost annually against the property owners. The governing body would not be allowed to levy an assessment above the original estimate.

Assemblywoman Freeman inquired if cities other than Las Vegas had requested A.B. 95. Responding to Ms. Freeman’s question, Mr. Leavitt said he understood several other entities were interested in the bill. He said while no particular projects were in mind at the moment, it was the intent that property owners themselves initiate beautification projects.

Assemblyman Mortenson questioned why southern Nevada did not do street beautification without assessing property owners on either side.

"We would love to be able to do that," Mr. Leavitt said. However there was a reluctance to ask for additional tax revenues to pay for those projects. If people wanted beautification in neighborhoods, A.B. 95 would provide the mechanism to accomplish it.

Chairman Bache had a concern on the language in section 7, subsection 3 of the bill. If a proposal originated from the city or from an individual area resident, and after putting the proposal to a vote, if 50 percent did not protest, would the project go forward even in response to what he felt was a negative vote, he asked.

A district could be initiated either by petition signed by 50 percent of property owners, or by members of the city council, Mr. Leavitt replied. Addressing Chairman Bache’s question, he agreed the language in section 7, subsection 3 was negative, but since existing law allowed a city to create an assessment district with a protest vote of 50 percent if certain exceptions were met, the new language in subsection 3 specified there would be absolutely no exceptions to the rule. "Fifty percent and you’re done," he said.

The Chairman recognized Warren B. Hardy II, representing the City of North Las Vegas, who introduced a suggested amendment to section 3, subsection 1 (Exhibit E). By adding "or park project," after "street beautification project," (line 13), he said he hoped the amended bill would address the concerns of North Las Vegas. The city’s parks needed to be upgraded, particularly those in the older areas.

Assemblyman Mortenson stated emphatically he would vote against the amendment proposed by Mr. Hardy. His concerns were in setting precedents that could become burdensome. By specifically targeting the park projects, he continued, one could conceivably expand the amendment to include libraries, water facilities, or the obligation of building anything that would be an advantage to citizens. "I think this is a terrible precedent," he said.

Assemblyman Lee concurred somewhat with Mr. Mortenson. He said when he served on the Parks and Recreation Board of Las Vegas, a portion of the money derived from building permits went to park district areas. He asked Mr. Hardy if the City of North Las Vegas did not have a mechanism in place which allowed that to happen. Mr. Hardy promised to look into the matter.

Mr. Mortenson re-emphasized he objected only to the amendment language presented by Mr. Hardy, not the original bill.

Chairman Bache asked Committee Counsel Eileen O’Grady if the proposed amendment would have to be paralleled throughout the rest of the bill in other sections.

Ms. O’Grady cited NRS 271.265, which allowed for park projects. If the intent of the amendment was to include it within the method of doing assessments, she continued, only section 3 needed to be amended.

Assemblywoman Gibbons wondered about an amendment applying only to Las Vegas. Mr. Hardy replied the language could say, ". . . cities in Clark County . . .," and again stated he was representing the City of North Las Vegas.

James Spinello, representing Clark County, affirmed his support of A.B. 95.

Chairman Bache, upon the request of a committee member, recognized J. Patrick Howard of Reno and invited him to testify.

Assemblywoman Freeman asked Mr. Howard how the City of Reno felt about A.B. 95. Mr. Howard, testifying on behalf of Washoe County, opined there was indeed interest in A.B. 95, most specifically from a group of businesses in the Incline Village area.

Ms. Neena Laxalt, representing the City of Sparks, indicated Sparks also supported A.B. 95.

Chairman Bache closed the hearing on A.B. 95 and opened the hearing on A.B. 128.

Brian K. Krolicki, Nevada State Treasurer, addressed the content of A.B. 128.

Changes in section 1, he said, were mostly cosmetic. It allowed the state treasurer more flexibility in delegating the authority to sign transaction documents at the time of the sale of bonds. While that was not a concern in normal transactions, he said it added latitude to timed transactions such as refundings.

Section 2, Mr. Krolicki continued, changed the title of one of the deputies in the treasurer’s office from Deputy of Operations to Deputy of Debt Management, which essentially sought to institutionalize the debt issuance function. That was done in order to centralize expertise of those functions into one area. Also in section 2 was a change suggested by the Legislative Council Bureau (LCB) codifying functions already in place; to allow the employment of professional services at the time state bonds were issued for capital improvement projects, or municipal, water, and cultural affair bonds.

Section 4, which pertained to the Nevada Department of Transportation (NDOT), allowed federal highway grants, payable to the state, to be used to pay down debt service on bonds; and it changed the duration of the possible life of those bonds from 10 to 20 years. That was done in anticipation of a new type of debt instrument called Garvey bonds, which were grant anticipation revenue vehicles. The Federal Reserve System allowed 80 percent of those revenues to be used in bonding, but whether they would be used was unknown at the time. It simply allowed NDOT more flexibility in highway construction financing. And again, Mr. Krolicki concluded, the financial advisers, bond lawyers and underwriters employed by the treasurer’s office were asked to resubmit their proposals every 2 years.

In response to a question from Assemblywoman Parnell, Mr. Krolicki indicated NDOT and Director Thomas E. Stephens were in accord with the changes proposed to A.B. 128.

Kurt Fritsch, speaking for the Colorado River Commission, indicated that the language of A.B. 128 simply codified the relationship the commission already had with the treasurer’s office.

Chairman Bache closed the hearing on A.B. 128 and opened the hearing on A.B.  129.

Mr. Krolicki, testifying on A.B. 129, indicated the bill was again cleanup language for the treasurer’s office. First, it dealt with investments made by the state treasury. It allowed the state treasury to buy Government National Mortgage Association (GNMA) bonds. And it allowed the purchase of asset-backed securities that were rated by a nationally recognized rating service as "AAA" or its equivalent.

Chairman Bache asked for more details on asset-backed securities. Asset-backed securities were very common in Wall Street, Mr. Krolicki said. He described them as similar to a large brokerage company which bought the inventory of a credit card company, restructured the payments, insured them, and created a new security called an asset-backed security. Credit card loans were risky, he opined, which was why all asset-backed securities were "AAA" rated, yet the treasurer’s office felt them to be safe investments and a good way for them to capture higher yields at certain times in the market.

Section 2 of A.B. 129 related to originating statutes for the State Treasurer in NRS 226.110, and allowed the treasurer’s office to contract with outside financial advisors to manage the state’s portfolio.

Chairman Bache asked if there was a budget category for the management fees. Mr. Krolicki replied the fees would be paid out of the proceeds of the investments themselves. As fees were so-called off-budget items, they would simply be priced into the costs of the securities.

Chairman Bache closed the hearing on A.B. 129 and asked for the introduction of BDR S-242.

• BDR S-242 – Revise provisions regarding the police officers of the Airport Authority of Washoe County. (A.B. 222)

Chairman Bache asked for motions on bills heard by the committee.

Chairman Bache appointed a subcommittee on A.B. 74 comprised of Assemblymen Williams and Humke, and Assemblywoman Parnell. He designated Assemblyman Williams as chairman.

There being no further business, Chairman Bache adjourned the meeting at 9:10 a.m.

RESPECTFULLY SUBMITTED:

Charlotte Tucker,

Committee Secretary

APPROVED BY:

Assemblyman Douglas Bache, Chairman

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