Eileen O’Grady, Committee Counsel

Senator Raggio said:

William J. Raggio, Washoe District 3, speaking on S.B. 255. Those who were in the last legislative session will recall A.B. 291 (of the 69^th session) which was passed and allowed all county commissions in the state to impose a ¼-cent sales tax for various infrastructure projects. In Washoe County, the money was designated for three purposes: railroad grade separation, which addresses the situation essentially through the downtown portion of the City of Reno; flood control in the county; and public safety projects. The latter primarily addressed some projects in Sparks. For Washoe, it also provided that the county commission should impose a room tax in downtown Reno to support the railroad project. For those who might be new to this, let me indicate the railroad project is a project of long-envisioned, in excess of two decades, for the improvement of the downtown Reno core area and, of course, its impact upon not only downtown Reno but the entire Washoe-Truckee Meadows Basin for that matter.

After the passage of A.B. 291 it was discovered that the county commission could not impose a room tax within the corporate boundaries of the city of Reno, so subsequently, in the last session, S.B. 494 was drafted to clarify that the city council had the authority to impose the room tax as part of the railroad project funding. It also stipulated that one-half of the ¼-cent sales tax, or in other words, 1/8, would be dedicated to the railroad project as long as 50 percent of the project funding came from other sources assured by the city of Reno. This provision was to ensure that Nevada citizens, who generate sales tax, would not be burdened with the majority of the funding. Room tax paid by visitors was intended by the legislature to be part of the other sources, and I can testify to that because this was my proposal to make sure there was other money, other sources of funding, to match the 1/8-cent money coming from the sales tax increase.

It was later discovered that language regarding the room tax was unclear and, as a result, those who have opposed this project in all forms and for whatever purpose, indicated that it was not the legislative intent and that the room tax might be excluded from the other source category. Let me make it clear today that has been at all times the legislative intent. The room tax that the city council has imposed and could impose under the authority of that act was to be part of the other sources, was to be money used as other sources against the sales tax, which was authorized initially. S.B. 255 was introduced to clarify the intent of the 1997 legislative session. You will be distributed an amendment, which I obtained after discussion with legislative counsel, that will make it even clearer that that is and has been the legislative intent (Exhibit C). That is the only amendment we are suggesting that this committee add for that clearer purpose.

In addition, S.B. 255 allows the sales tax and room tax to be used on a pay-as-you-go basis, and this saves approximately $500,000 annually on the railroad project. The potential savings, when we authorize this, can be up to $15 million over the life of the project.

Now this bill was heard by Senate Government Affairs and passed out of the Senate unanimously. At the hearing in Government Affairs, we heard a lot of the old arguments that came before the Washoe County commission, at the time this matter was considered. You heard arguments that go to the very reason for the project, whether it should be done. That certainly is not the purview of this legislative session nor was it really the purview of the last legislative session.

The purpose of the bill, of those of you who are outside of Washoe County, also know that A.B. 291 authorized ¼-cent sales tax to be decided in the other counties throughout the state for their own purposes. This is strictly, at this point in time, a Washoe County issue. We need to prevail on you to have this clarified so that the project can go ahead, and bonds, to some extent, have already been authorized and issued in part, and this is certainly needed to clarify the legislative intent and to insure the project can continue under the time line that has been projected.

We heard arguments about the way the project was going to be done, why it shouldn’t be done, why it should be done, in the other house. Let me again say this is not the time or the place to argue this. That issue was decided by public hearings before the board of county commissioners. You heard arguments in the other house that, "Well, that was a lame duck commission." That may be the case but it’s still a commission that acted within lawful authority. The matter went to a lower court in Washoe County and that lower court threw the arguments out and ratified what the county commission had done. So I would only caution you, please don’t let this hearing get to the extent that it was attempted to get to in the other house. That is not the issue here.

I can talk to the specific provisions of the bill, but essentially that is what the bill does, and why it's necessary.

Mr. Chairman. My name is Jeff Griffin; I’m Mayor of the City of Reno. I’m joined today with Charles McNeely, our City Manager and Stuart Schillinger, our Budget Manager. If I may, our testimony, I hope, will be fairly brief. I want to thank Senator Raggio and the rest of the Washoe County delegation for introducing this bill which makes technical changes to the sales tax bill approved last session. It’s our belief that these changes are going to save the citizens of Washoe County millions of dollars over the life of these projects. I think the senator has already given a pretty clear understanding of the language and what the intent of the legislature was. If I may, rather than repeat that, the final request that the city would like to make is to ratify the actions previously taken by the county commission of Washoe and the city council of Reno. Both the railroad project and the public safety and flood control are regional projects. This ratification would allow the city to move forward with the project on an expedited basis, and we think that’s going to create the least amount of disruption, particularly to the affected businesses along the railroad corridor. The ratification requested by the city confirms both the county board of commissioners’ lawful actions in adopting this tax. An additional request was made by Washoe County which alleviates the need for an agreement between the county and the Department of Taxation to process and collect the sales tax. The City of Reno is in agreement with this change, as we would be with anything which further expedites the completion of our project at a taxpayer savings. So if there aren’t any questions, I can turn it over for a few comments from the City Manager.

For the record, I’m Steve Varela, Director of Public Works and City Engineer for the City of Reno. To discuss the shoofly alignment right now, we are preparing a project plan that will go through the environmental process. We need to go through the NEPA (National Environmental Policy Act) process. That should start in May of this year. The shoofly as proposed at this point in time is at the south of the existing tracks, when it actually goes through the core of downtown, we’re looking at it being south of the tracks, north of the properties —buildings there along Commercial Row. That does not mean that as we go through the NEPA process and scoping process that that alignment may be changed, altered somewhat, to better fit the environmental impacts and all those other kind of issues that come out during the scoping process of the project.

(Someone whispered to Mr. McNeely here.)

Stuart Schillinger, Budget Manager for the City of Reno: The properties are valued at approximately $42 million. This includes the lease income that we receive of it annually. The lease income is $1.1 million yearly with the ability, for over the life of the project, to inflate those lease incomes. The properties themselves, I believe, have an assessed value of $9 million. If the assessed value is $9 million, the taxable value is probably close to $25 million. We’re also looking at the value of the air rights once the tracks are depressed. The financing plan includes the sale of air rights only after the project is depressed, and the air rights become more valuable. Not at the current time.

Harvey Whittemore, Partner with the law firm of Lionel, Sawyer & Collins, appearing today as legislative counsel for the Nevada Resort Association. We wanted to go on record as supporting S.B. 255. We think that the pay-as-you-go method which is provided for in S.B. 255 as well as the ratification of the legislative intent associated with the use of the room tax for a portion of the matching funds is appropriate. We believe that was always the intent of the bill last time, A.B. 494 – oops – S.B. 494 – and again I think that it’s clear from our perspective that this is a project which is clearly needed for downtown Reno. We’re facing extraordinary competitive pressures with Proposition 5 in California. We need to do a lot of work in the downtown area and we think this project will allow us to become more competitive and to increase the utilization of our properties in a way which is attractive to the tourists that are coming to our city. Again we would strongly urge this committee’s favorable response to S.B. 255 on behalf of our clients who again make up approximately 75 percent of the major casinos in downtown Reno. Thank you.

David Howard, with the Reno-Sparks Chamber of Commerce. I’d like to speak for the other businesses in the city of Reno and the city of Sparks and Washoe County who represent about 95 percent of our membership. The other 5 (percent) is within the area you’re discussing this morning. Small business is absolutely dependent upon a healthy downtown. It is the economic engine that drives the northern Nevada commerce. Reno has made several attempts to cure downtown, if you will, and there’s been lots of testimony in this legislature. We don’t need to go into the ills of Reno. This must happen. Assemblywoman Gibbons made the comment, "What happens if it’s over budget?" Well, we just can’t let it be over budget. This has to happen in the city of Reno now. The threats that have been discussed in this building for the last 2 months to the northern Nevada community are well documented. Northern Nevada is in trouble. This is an important piece that will help get it out of trouble, and Assemblyman Mortenson was very correct in – this bill deals with one specific thing. The debate is no longer whether we’re going to do it or not, or why we’re going to do it, it’s let’s get it done. What this piece of legislation does for you and does for the city of Reno is clarify the legislative intent. And that’s all that’s before you this morning. Not whether the debate about whether to do it or not, needs to had again. It doesn’t. The people who are in charge in Washoe County have made the decision that this will go forward. The bill before you this morning is simply to clarify how that money is to be spent.

Jack Fetters, State Legislative Director for the United Transportation Union (UTU). I represent approximately 300 UTU locomotive engineers, conductors, and trainmen in the state of Nevada. While I’m not familiar with the numbers and the costs involved, I do know that you also need to look at this as a public safety issue. Any time you can take pedestrians and cars away from the railroad tracks and either send the cars over the railroad tracks, or under the railroad tracks, it’s a good idea. I sleep better. I remember many years ago bringing trains in from Barstow, California, going 60 miles an hour over the Spring Mountain crossing there in Las Vegas during rush hour and people parking on the tracks trying to beat the gates. My heart always beat about 100 beats a minute faster. Luckily I never hit anyone although I did hit a pedestrian there one day and it was an ugly mess. Never hit a car. Hit a pedestrian. I believe this is a good bill from a public safety standpoint and it should be passed.

Frank Partlow. I’m speaking on my own behalf. I am an independent businessman in the city of Reno. There are a couple of points I’d like to make for the committee. First of all, reinforce what Senator Raggio said. This bill really, as I understand it, is just a technical fix to something that’s already been done. However, I think this committee, particularly those of you from the southern part of the state, justifiably want to know a little bit more about some of these matters, and so I think it’s entirely appropriate, from my point of view, that you ask whatever questions you feel are appropriate.

One point I’d like to make. Actually there are three points I’d like to make. The first one is that this is not a Johnny-come-lately issue. Many of us in our business community have been working on this problem since late 1995. First environmental assessment by the railroad for this project occurred in early 1996. It was then an 18-month study. Many of the people in this room were nowhere to be found when that 18-month study was being done, and it was determined that the railroad, at that time, was prepared, as Mr. Whittemore said, to pay about – actually they were talking $35 million – they were prepared to pay only about $17 million to assist. And their idea of mitigation was to speed the trains up through downtown Reno. You’ve just heard what kind of a result that might have had. So this project and all that surrounds it, is the result of a tremendous amount of hard work on the part of a lot of people and not just government officials. Pursuant to an 18-month study, as I said, and many of us participated in it, and then the 1997 legislation, and we are where we are today.

Second point I’d like to make is vision is not about dreaming. Vision is about taking tough political decisions so that you create situations for your constituents that are better than the situations they had before. Twenty years from now, when 4,500- to 6,500-foot long double stacked freight trains are going through the middle of the city of Reno, your successors in this legislature won’t have to deal with it because your predecessors did. There won’t be any accidents, as you’ve heard. There won’t be any school busses cut in half such as the one that was cut in half in Illinois a few years ago. There won’t be any deaths. And there won’t be any delays because this project separates train and car traffic, and because it was approved in 1998, and will be built, if the funds are sufficient for the project, in the early part of the next century.

Final point I’d like to make is that this project, as Dave Howard says, is not just about gaming. It’s not just about small business. In the 9 years I’ve been working with the business community in the city of Reno, this single project has gotten the broadest support of the entire business community because the entire business community sees this as a regional imperative. It is our future. It is tremendously important to our future. I’d like to leave that thought with this committee. Thank you very much.

Bill Osgood, President of the Downtown Improvement Association in Reno. We have 135 members, most of whom are businesses in downtown Reno. We have been involved as other have in the task force and the project. The business community has been totally involved, especially those most impacted by this project. I think you have to put it in the context that this is a response for the merger of the Union Pacific and the Southern Pacific. It will bring about a dramatic increase in the number of trains going through downtown Reno. Add to that the double stacking of these trains and the increased traffic, that whole project was built to mitigate those efforts. It would have a detrimental effect on downtown business. In the course of putting together the project, yes there have been concerns with the shoofly. We are confident, we have been involved in the process, our members have been involved in the process, that those concerns of the shoofly track during the construction will be accommodated and addressed. Within the project there itself there’s mitigation money to mitigate the impacts on businesses that are affected by the construction of it. We feel really confident the city has already brought about the work that the different options are still on the table for mitigating that shoofly and the construction impacts and that will be gone about during the EIS (Environmental Impact Study). And the voice of businesses and those impacts is being heard and being taken into account. We have supported this project. I agree with Mr. MacKay as all along the assumption was that the room tax, of which many of our members are paying, and agreed to pay, on this was part of offset and hope that you approve this bill to take care of that disparity in changing the technical language. I can just leave you with this project is absolutely essential for the economic climate and wellbeing of Reno. Every single option, bypasses, overpasses, and everything have been looked at, and this is the best solution. Thank you.

Judy Herman, a former member of the Reno City Council, and part of the original railroad committee for the City of Reno. I come here this morning to voice my opposition to 255 [S.B. 255], also referred to by Senator Raggio and the city manager as the pay-as-you-go. I’m asking you as responsible legislators to review and question the essence of these clarifications and revisions to this bill. Each one of you I’ve left a brief review of my comments today (Exhibit D). I would ask you to keep in mind this morning the city of Reno attempted to float a bond in December. That bond was for $104,395,000. That was in December of 1998. It failed. The bond issuers stepped away from it. The original estimated cost of the projects were $190 million and if you could pencil in on the side: $190 million. Fifty percent of that would be about $95 million.

We believe, based on the information that was released by the city of Reno and released in that preliminary bond draft, that the city of Reno is using extra money on projects related but not authorized by the legislation that you passed 2 years ago with this 8-cent [1/8-cent] tax. There is a – if you’ll look on your second page you’ll see a draft there of the preliminary official statement. At your leisure you can review that.

Number two, the bond states that the proceeds will be for offstreet parking projects. While I sat on the city council, I was not always privy to all the information that was going on with the railroad negotiations. Never did we hear or understand that there would be offstreet parking projects which might include parking structures or parking lots.

Number three. The same bond – preliminary bond draft – stated that the 1- percent room tax and the 8-cent [1/8-cent] would also help to pay a reserve maintenance fund. The city of Reno recently admitted that this reserve maintenance fund would be used to take care of their liability. Their liability that could include the two different levels where hydrology must be monitored and water must be pumped out. That also includes the constant looking over the concrete and inside the tunnel and the exterior fences. This does exclude the tracks and it does exclude the access road to the side of the tracks. Down inside the trench. We would ask, is that what you expected to hear? That the maintenance fund would be taken from this 1- percent and 1/8-cents.

Fourth, I would ask, in 1995, if you would review the 1995 agreement from the city of Reno, Sierra Pacific, Washoe County, and the City of Reno Redevelopment Agency, and that enabling legislation that you gave in 1995, for preliminary studies to discover the presence of the chlorinated solvents and the PCE (perchloroethylene) contaminants in that general area. What I would respectfully ask is that you take a look and see whether the UP property that the City of Reno will be receiving will in fact have solvents, PCE problems, and the city of Reno will then be responsible for removing those solvents. There’s a map within your packet of that area.

Finally, to Ms. Gibbons’ question about cost overruns, the city of Reno guaranteed to the county commissioners, as Madelyn Shipman reported in the Reno Gazette-Journal, that "the city of Reno will be responsible for all cost overruns for the depression of the railroad track." What I would ask you is to take a look at what you’re signing onto. Take a look at what you vote "yes" for. If you investigate and you look and you finally decide "yes, this is in the best interests of the citizens of Reno and the best interests of the citizens of Nevada," then I will know you have done your investigative work and that you truly represent the citizens, not only of Reno, Washoe County, but the citizens of Nevada. I would suggest that when you do the research, and your people do the research, you will find that this is not as it is stated here in the best interests of the entire community. I’ll answer any questions.

Barlane Eichbaum, Ike for short, and I live in the southwest Reno area in the unincorporated county. My background is in chemical and environmental engineering. I’ve spent some 20 to 30 years with the U.S. Bureau of Mines, Mr. Lear, and others, working on environmental issues with air and water and the cost of these matters. I’ve been involved with many super-fund sites like the Leviathan Mine down here, the Berkeley Pit. I’ve gone to these sites and many more in Colorado where Colorado now has 1,500 miles of polluted waters that they’re trying to clean up because of problems akin to this.

But getting into the heart of the matter, my concern is when you start digging a pit, a trench 50 feet down and 2-1/2 miles into this water plume that we have here, there’s got to be excess water that’s got to not only be moved but treated, and if it’s not good water, it can’t go back into the Truckee River. It’s going to have to be treated, which could put up a big treatment plant required. You go down about 10 feet and you're going to start hitting this water. They’re going to go down 50 feet. We now are going to put sides on this and seal it. Well, if get a real excess rain as we’re doing now, this thing may even float out of the ground because it’ll be like a big concrete ship. But that is a problem. The problem is – I don’t know if there’s been any test wells drilled. There’s been no real proposals or cost estimates on what this project’s actually going to be. And I feel, before going into this, I’ve been in a lot of government projects in the past where they’ve been overrun three in ten times, and I can foresee this one being overrun two to three times if they don’t have proper estimates on which to build. Now you wouldn’t go in and build your house without knowing there’s water there and other things. You’d want to know this all from the experts. We don’t have that information. There’s been no proposals, no bids, to know what this actual cost is. So we’re buying a pig in a poke.

Beside the water issue that’s going to be seeping in when you go down there into this plume, you’ve got air issue. You go down, now you lower the tracks, you got the stacks from the engines going through town, and that Diesel engine smoke’s going to be coming through there. You’re going to be polluting Reno unless you take some action to do something with that.

My concern goes back to what the county commission did with a lame duck commission. They voted on this without letting the people vote. There’ve been a lot of people – and there’s no 70 percent in favor of it as far as I’m concerned – maybe all of these different industries are – I think they ought to put their money if they want it – and ought to put some more taxes from the different gaming groups there. What I’m saying is I think the citizens have been taxed to weariness just like the British taxed the U.S. There’s taxation without representation. It’s like a tea tax and there’s new things starting now because of all these taxes. There’s the Nevada Citizens for Fair Taxes starting. There’s going to be a big tax revolt here because we had no chance of voting on something and they don’t even know the cost of [it]. It was passed on to us as a citizen. The city of Reno continues to annex and when they annex they increase the taxes on the people 12 percent and we’re right in that path. All of these major projects are going on and increased taxation and I don’t think any of us would run our own homes that way.

So I’m asking that you oppose this. I know it may not fit right in but if some modifications whereby they can’t just come to the till and come out to the county after they guarantee that they’re going to pay the taxes in Reno and then come to the unincorporated county and assess us 1 percent versus ¼ percent because it’s a big overrun. That’s my issue here is that I have yet to see any test well data, any environmental impact statements, or anything showing about the cost. Now Mr. Raggio or somebody brought up Silver Legacy had water seepage. That was one little area. It’s not a 2-1/2 mile long trench. So I would just say this whole thing ties in with taxes and who’s paying the bill -- and a lot of ‘em want it that are here lobbying – but the taxpayers, and I think I’m speaking for a lot of them. I’m in South Hills and I’m with the Citizens for Responsible Government, but I’m not representing either of them now. I’m representing the people. Thank you.

Patricia Puchert, I’m a resident and a taxpayer of the unincorporated part of Washoe County. I come here today to voice my opposition to S.B. 255. I hope this committee is beginning to see the dubious history of this particular piece of legislation. The way this bill was passed last year intensifies the level of mistrust we citizens have in our elected officials. One of the reasons I was so involved in my commission district race was because of my strong feelings on just this issue. Those of you from Clark County are lucky. You, at least, got to vote on your ¼-cent sales tax increase. Not only did not get to vote on this issue, I as well as voters in Washoe County District 2 did not even have the opportunity to have our elected official to vote on this tax. Former commissioner Sue Camp was appointed to this seat and voted on this tax after she was defeated on this issue. My newly elected commissioner never got to vote on it. That is taxation without representation. I too am wearing the tea bag. Let us remember the fundamentals of this country. All we have ever asked was a public vote on this issue. If the public would have gone along with this, that was fine. But we never had a public vote. Let me stress – you asked about a poll on this. Both commissioners that voted for this particular bill were soundly defeated at their next elections. That should tell you something.

I have lived in Nevada over 20 years. My husband owned property here since 1958 and we bought our first home in 1972 and we’re proud to be Nevadans. Our son was raised here and our son is a proud graduate of University of Nevada Las Vegas.

I am really concerned about the tax increases in this state. I think with tax increases there should be public vote. You will definitely see me in front of your taxation committee supporting Mr. Gustavson’s bill that is modeled after California’s Proposition 13. It is time for developers, these new developers to come in and pay their fair share of impact fees. God only knows we taxpayers have more than paid our share.

Mr. Chair, and members of this committee, you are our last chance. You’ve heard the evidence in this testimony of the impeding doom Reno taxpayers face when the city will have to cover the liability of digging this trench. By then, I fear, my neighborhood will have been annexed into the city and I will have to pay even more taxes. Mrs. Gibbons’ lame duck commission bill was heard before your committee last month. I would like to reiterate a quote of hers from a March 5 Sparks Tribune article on her bill and this tax. The tax is wrong because the voters didn’t approve it. We were not even allowed to vote on it. We the people, the voters have spoken. Please listen to us on this bill. Do not support it. Vote no on S.B. 255.

Dehné: Sam Dehné, I’m a Reno citizen who’s sick and tired of tax, tax, tax. To answer this question specifically, there were five votes. Mr. Galloway voted against this taxation boondoggle, and the other four voted for it. Two of those people are still on there. The two who voted for it, they’re gone. They were voted out. The two new people who are on there would have voted against this taxation without representation. That’s how it went down. They were lame ducks. The citizens didn’t get a chance at all.

Let me give you a little quick background of myself. I’ve lived in Reno for 32 years. I’m an Air Force Academy graduate, retired lieutenant colonel, flew F101s, B52s, F-4s in the Air Force, and was a pilot for Pan Am until their sad demise. In the last 5 years or so I have attended basically every government meeting that I can get to in Reno. I don’t think I’ve missed a city council meeting in all those years. Airport meetings, so on and so forth. And I challenge their mendaciousness and incompetence at every chance I get. And there’s a lot of it. Let me tell you right now. They even changed the law, the rules, from this beautiful open meeting law which – I love the open meeting law – it’s the First Amendment of Nevada. They changed it from 5 minutes down to 3 minutes. That’s all I get to talk any more. Of course, if you people get up there and say something nice, they can talk on all day long. They can filibuster. But Sam Dehné – they even have a special clock for Sam Dehné. I feel awkward without a clock ticking away and lights coming up and all that sort of deal. It’s really a crazy situation.

But anyway, back to this. This situation is nothing more than a corporate welfare project for the casinos, and I don’t want to blame all this on the casinos, by the way. You’ve got the construction industry that’s going to make millions off this. You’ve got all the developers. You’ve even got the warehousing operations. You’ve got the airport. All these corporate welfare structures are going to make money off of this. And I know that this thing is going down the track pretty heavy duty, but you folks – you know what the purpose of government and democracy at its lowest level is? To sound and honor the will of the people. They did not do this. I followed this project from day one. You ask, did we have public meetings? Well, first of all, the public meetings were held in violation of the open meeting law because they disguised – they camouflaged the wording of the agenda items until I brought it to their attention. So I don’t know the first 5, 10, 15 meetings were illegal according to the open meeting law. And even at those meetings you had lots of citizens sitting up and complaining, but – ah, they listened to them and they got those rubber stamps out and let’s go, rubber stamp, rubber stamp, rubber stamp. One after another. Sound and honor the will of the people. And you may not be able to – you may think you don’t have much going on here if you vote this thing down, which you can, if you take a stance against it, which you can, it’ll at least put a word out there and it’ll put a little bit – maybe a little cog in the mess going down the street.

I started this thing out – 3 years ago, they started talking about the noise, the danger, the blight of this railroad that’s been going through Reno all these years. I brought it to their attention that we’ve got other projects in town that are far worse than that. We’ve got an airport in the middle of town. They were trying to build a military base in the middle of town. Did they care about that? Not one hoot, not one diggly-dang, even though they put four of the members on the airport board. Four of the eight who serve at their pleasure. They wouldn’t listen to one word about that. No, it’s got to be the railroad project because, you know what? All you have to do is follow the money. Follow the money. Find out who was paying for their campaign funding. Find out who was doing it. I feel awkward with city council at my back. That isn’t normally the situation. Usually out here. [Much laughter.]

Follow the money. All of these casinos, all these developers, all these construction people who are going to benefit from this. You take that and you would be amazed at how much money we know about. We don’t even know about other money. How much money do these people have? Follow the money. This railroad project, there are other things. You could have overpasses. There are other solutions to this thing. But even if the trench is the best solution, it’s bizarre, ridiculous, it’s plain downright disconjerkutigulated to have the citizens paying for this. Citizens should not be paying for this. It should be the people who are going to benefit from it. I was here testifying at – Joe Neal’s 2 percent tax increase – a long overdue tax increase on the gambling saloon industry. And there’s another reason right here, because the casinos and the saloons and the construction, they’re all going to benefit off of this. But who’s paying for it? The citizens. Just another reason why they should have to pay taxes in that direction, they should be paying for this.

Just a couple more points here. They’re putting the cart way before the horse. Way before the horse. Just now starting, I think, if they’ve started it yet, an environmental impact statement, a roughly $2 million project, to determine now whether or not feasible, economically, environmentally – if it’s feasible to do this. And yet on the other hand they’ve got this boondoggle racing through the legislature, racing through –not the citizens, because the citizens didn’t get to vote, remember that – they got this racing ahead and they don’t even know that they’re going to be able to do it. An environmental impact statement, an honest, honorable one, that isn’t being controlled by these people, an honorable impact statement, environmental impact statement would find that you can’t do this. It’s going to cost too much. All of these things. And yet they’re already in the process of funding this thing.

Guess what happens if this all goes through? Guess what happens? And they find out they can’t build this railroad trench. Somebody brought it up awhile ago, sort of. Guess what? They will still be collecting those taxes. At least until the end of the EIS (Environmental Impact Statement), and maybe forever. I don’t know the technicalities of that aspect, but they might have a boondoggle of a tax coming in for the next 20 years, and it won’t even be applied to the project that it was designed for in the first place. I don’t know if they can get away with the whole 20 years. I’m sure they’d like to try. But they’ll at least have 2 years of it because you know that on April 1, they’re going to start this tax. They’re going to start the tax in a couple of weeks. And the problem there is – well, they got to have taxes in the coffers. Are they going to apply it to another project? Well, no, they’ll find some silly way – they’ll put it through another Mayors’ Conference – some other little pet project that only benefits the elitist fat cats downtown in Reno. The citizens never have a say in this town any more. I could go on project after project, they never put the big projects to referendum vote. And to allow lame ducks to vote on this thing? What a slap in the face. The process was flawed from day one. It continues to be flawed. You folks, you folks can stop this process. Don’t be part of the flawed process. Stop it. Vote against it.

Now I’d like to answer – I beg you – I beg you to ask me some questions so you can get a straight answer. I heard about three or four questions asked of the folks that were up here, and they never answered them. And yet you never said, "Wait a minute, what’s the deal here?" Somebody asked did the citizens have any say in this and they said, "Well the county commission had something to say," and they never said did the citizens have it – no.

Oh, one last thing. You’ve got to know, in Reno, Nevada, in Reno, Nevada, in northern Nevada, the government has control of the media. The government has control of the media. I’m not trying to brag right now but I think I’ve brought more to your attention in the last couple of minutes than you’ve heard from all of the other side of this issue, and you want to know something? I will put a $100 bill right here on the table that you will not read about it in the paper tomorrow, you will not see it on the news, and I’m challenging these guys over here, so now they’ve got to do it. You will not read about it in the paper because I’ve been saying this over and over at county commission, city hall, everywhere you want to go, but you will not read about it, because – and I can’t hold it against these guys – they’re just trying to make a living over here. But – and those over there – but city hall has a $1 million propaganda fund, the airport has $1 million propaganda fund, county commission is approaching a $1 million. Before I arrived on the scene they had like $50,000 one-person operation. I’m not bragging. These are just facts. They’ve got control of the media. They’ve got control of the media and they brainwash them right and left and up and down. It’s not a question of, "Well, this might be the best thing for the citizens," it’s "This is the way it should be done. This is the way it must be done."

Please ask me some questions. There must be something out there you want to hear. I’ve said it all?

Glade Hall, private attorney, retained by a number of taxpayers in Reno to contest the imposition of the sales tax by the Washoe County commission. Sam always provides lots of heat. I would like to provide some light if I may.

First of all, I think the major thing that needs to be cleared up here is that this does very much impact the sales tax. Section 3.1 of the bill in effect says that you, the legislature, are going to ratify, validate, approve and confirm what the Washoe County Commission did in their Ordinance No. 1047. Now let me explain the context of that.

When I was first retained by this group of taxpayers I’m representing, they asked me to look into the validity of the commission’s ordinance, and in looking into the validity, I first, of course, read A.B. 291, and then I went back and read the legislative history of A.B. 291. I can explain to you that when A.B. 291 was passed, first there were conditions placed on the imposition of the tax. There were discussions about it being submitted to the voters, although that was not one of the conditions. Second, there was a requirement imposed, or at least there was a philosophical backdrop to the tax introduced by Peter Ernaut that said, (1) we had to have broad-based public support, (2) we had to have a clear need for the project, and (3) we had to have accountability. I submit to you that two of those three legs are not in place in this project.

Let me explain. I brought the lawsuit that challenged the validity of the county ordinance (see Exhibit E). The basis for the lawsuit was that the precondition for imposition of the tax had not been met. The precondition under A.B. 291 was that before the county commissioners could enact the sales tax, which was to fund one-half of the depressed railroad project, the city had to find one-half of the cost of the project from other sources. Now if you read the context of the legislation, A.B. 291, it’s clear what they were trying to do was to put some leverage and pressure on Union Pacific to up their share of the cost of this project. Their share of the cost of this project has gone down since that point in time, not gone up. Let me explain. When I began investigating the preconditions of this tax, that is, the source of the funding, I first called city hall and was directed to Mr. Schillinger and was told he would answer my questions. The public was advised in various news media outlets, press conferences, press releases, that the city had accomplished a breakthrough in negotiations with Union Pacific. That breakthrough was that they now had $60 million committed from Union Pacific. This was embodied in something called a Memorandum of Understanding (MOU), a contract, between Union Pacific and the city of Reno. When I got that contract and actually read it, I found out that there is not one thin dime of money coming from Union Pacific. They have stated that they will front the cost for this shoofly, which they say is going to cost $17 million. They will then contribute property that is valued in the MOU at $42 million. So I asked Mr. Schillinger, "What do you have to back up the value of $42 million?" and he said, "Well, we don’t have anything." I brought the lawsuit.

We went to the tax assessor’s roll -- and let me explain to you, Mr. Schillinger, I submit, misrepresented to you the facts here. The assessed valuation of that property is $3.2 million. The full market value, according to the Washoe County Assessor, is $9 million. That property lies along the railroad track. I went to Bill Fleiner, the person who – the real estate broker who had represented the railroad for the last 20 years, trying to sell this property. Trying to sell air rights over this property, and Mr. Fleiner came forward and volunteered to testify that this property is largely land-locked, it is largely going to be consumed by the project, it is basically not worth anywhere near what even the tax assessor says it’s worth. The claim that this property has value because of the air rights, Mr. Fleiner said, "All the air rights that have any value are in the downtown and they have all been sold and are in private hands now." So the value of this property is not there.

Now, why is that important? Because that’s the basis of the lawsuit we brought. That lawsuit is now in the Supreme Court. And basically it’s a case of statutory interpretation that’s going to be engaged in by the Supreme Court, and if they agree that a bald commitment by the city of Reno of their one-half of the cost of the project – that is, a commitment without any source of funds to back it up – meets the intention of the legislature in 1997, then we can go ahead with the tax. And the tax is valid. But, if that bald commitment, without any real source of funds, does not meet the legislative intent, then that tax is invalid. And so your vote today has a very, very real impact on this sales tax. This is not a done deal. That tax may be invalidated by the legislature – excuse me – by the Supreme Court. And if it is, it has to then go back to a county commission that was voted into their positions based on their platforms about this sales tax. And you’ve already heard numerous times that both of our new county commissioners have said they would put this to a vote of the people. And if that were done, I submit that this sales tax would not be imposed.

Just a couple of other points here. The public has not been made aware of the facts. I may not pontificate the way Sam does, but we were met with studied silence by the Reno Gazette-Journal. We provided you with a packet of newspaper reports by the Sparks Tribune. They did a wonderful job of reporting the facts. The Reno Gazette-Journal did not. The public is totally – now this is Reno, Washoe County – they are totally unaware that this public announcement of $60 million from the railroad is blatantly false. And so they think the railroad is paying for a third of this project. That is not true, and if you were to run a poll with the true facts before the public, I think you would see a clear lack of public support for this project.

You’ve already heard about the lame duck commissioners. I won’t belabor that. I’d just like to take questions if you have any.

Bill Dickerson, and I’m President of Careborn Incorporated, a company that does medical research for the – we have a few scientists and engineers – but I came to Nevada in 1985 at really the request of Governor Bryan and of Senator Paul Laxalt. I was a member of R. R. Donnelly & Sons Company, which is a $5 billion-plus corporation that’s the largest single printing company in the world. And at that time I made the decision, with the influence of Senator Laxalt and Governor Bryan, to build a facility here for R. R. Donnelly which at that time we spent $120 million on a building on 120 acres next to the J. C. Penney distribution center in Stead. And since that time Donnelly’s, that I’m still somewhat affiliated with, has put another $70 million in that and we have 407 employees and think that this was the right decision to locate a facility in Nevada.

During my course of 28 years with R. R. Donnelly, we built 21 facilities in the United States, 5 in Europe, 1 in Mexico, and 4 in Asia, the last one in (unintelligible) China, and Krakow, Poland in Europe. In all our facilities we are rather large users of the railroad system. As a matter of fact in the facility in Reno I put in a mile of track on our 120 acres. We brought in 10 to 12 railroad cars full of paper every day. In one of my facilities that I had in the midwest, we brought in 26 railroad cars every day full of paper. And when you start dealing with some of the facilities that we’ve built across the country, we had a lot of experience putting in some of the construction for the railroad facilities to do and service our plants because of all the paper that came in. Donelly’s brought in over 250 railroad cars a day into our facility and we had our own trains, trackmobiles, and this kind of thing so that we could spot the cars, bring them in the plant and unload them.

When one of the commissioners, who’s now chairman of the county commission, Jim Galloway, who’s a physicist and an engineer and, I think, a very good commissioner for the citizens of Washoe County, first was asked about the railroad project, he said there’s a lot of engineering concerns that he had. So Jim came to me and asked if I would help him in sorting out some of the information on this. I said, after he convinced me to look into some of the things that were done, I said I would do that and get some of the other resources, through the 700 and some engineers that Donnelly’s has over the country, to do pro bono work and look at this project and see if some of the concerns Jim had were valid.

What we found, in reporting back to him, was that the cost of this project has been grossly underestimated. I think it was probably a situation where you’ve got to start with the answer. The legislation they all talked about sort of said that a 1/8 percent had to come from sales tax, and the other half from other sources. So that gave the city of Reno their answer, what the maximum number they could raise. The sales tax, 1/8 percent over a 30-year period, escalating the growth and revenue at 2 percent a year, came up with $104 million, so when you took the total project and you double $104 million from sales tax, you come up with $208 million. Basically they’ve stated the project’s going to be done for $192 million.

I determined, with the engineering and the people we’ve looked at, that this project is probably more in the nature of $300 to $400 million. Let me state that I think a lot of people, when they start looking at the work that the city and the estimates that have been put together, the project hasn’t been designed. It hasn’t been engineered. It’s just best guesses and estimates. When you look at this project, there are a lot of things you have to start putting dollars with. They put a big contingency in this, and are identifying the project to have fulfilled all the engineering and construction and environmental and everything else, and they’re identifying this contingency as the resource that can solve all these things.

The railroad track is an interesting project. First of all, because the property can’t be transferred right away to the city. It comes under the old congressional law that if the tracks are abandoned, it goes back to the people for parks and trails. So first of all, sometime in the next year or two, Congress in Washington has to take this 2.1 mile section and sanction that it can be given by the railroad and transferred in deed to the city of Reno. That, I think, is interesting. If you look at the Memorandum of Understanding that Glade Hall talked about, the contract agreement, all that’s in the contract with the city is – states that all the land, all the money and everything, goes into escrow. And in the event that the track is not built within a rather short time, if the main line isn’t severed within 4 years from when that was signed, December 1 or December 8 of 1998, all this that’s in escrow, the leases, the value of the property, whether it’s $9 million or $42 million, and everything else reverts back to Union Pacific. It seems like there’s a real flaw here that something – a tax can be put on people when there’s a risk if all this land and all this money reverting right back to Union Pacific.

Now, the value of the property is probably not there, but there’s a big eminent domain question with this construction. The eminent domain thing is that the railroad only owns 54 feet through the downtown corridor of Reno. The memorandum and the contract with the railroad shows that the inside wall from inside dimension to inside dimension is 54 feet. All of the wall, all the construction area, all the work of this trench has to be acquired by eminent domain. When you’re doing a trench project, you have to construct it for seismic and for other things and when you put up the walls you have to put what they call tiebacks as a construction. In the city’s records they show that the tiebacks on this construction will go back at an angle of about 45 feet – or 45-degree angle. I’m sorry. Fifty feet back under. So all the land under where these walls are going to be tied back along the two mile corridor, has to be either acquired as easement –and they want to say this is easement and it’s underground so that it doesn’t affect all the land – but that has to be acquired as eminent domain. There’s going to be, in the estimation, 50 to 100 lawsuits against the city for acquiring this eminent domain to do this. This is all going to come back to the legislature and the taxpayers somehow.

When you look at the situation in construction of trench projects, the city of Boston – and we happen to have offices there – is doing a 7-mile project that some of you may be familiar with, which was really a tunnel and it started out to be, 8t years ago, a $2.8 billion project. It is 4 to 5 years behind schedule, it is now estimated by Massachusetts and Boston, to cost $12 billion. This is bankrupting the state of Massachusetts. I don’t know if you’re familiar with the Alameda Corridor that’s the train that’s going through the Los Angeles area, and the estimates on that. All I’m saying is from an independent observer that has nothing in this project from the standpoint of concern, not affecting our company one way or the other. I sort of got drug into this by giving the county commissioner all this engineering stuff and giving the Sundowner and some of Glade’s clients information that we had, that we started getting all kinds of calls. Again, we said, this is not an issue that we really have a concern with our company, but it did have a concern from some of the things that my business principles. I’ve been a Rotary member for years and President of Rotary and Rotary International and been an ambassador to Japan at one time on an international exchange program where I toured. It doesn’t fit with my business beliefs and what I learned in Rotary and the Rotary rule of, "Is it true? Is it beneficial? Is it fair? Is it in the best interests of everyone?" It meets none of these principles without explaining to people up front that this project may be a project that the voters want. It may be a project that they would support. But they need to know that it’s going to be a $300 or $400 million project. When they shared with me this law that Senator Raggio is proposing to be nothing but some validation of his earlier intent, and it says it ratifies, validates and approves and confirms any commitments previously made with regard to this project, this is a new law that’s really allowing the project to go forward and to commit. If the lawsuits by the Sundowner and the other property owners that Glade represents, this is really a law that’s going to allow the Washoe people to be indebted for that $400 to $500 million range.

One of the things on this project that you heard and you’ll continually hear, and it’s part of this, is "we want to do a pay-as-you-go." This pay-as-you-go is just another synonym for design-build. Design-build is against the statutes of the State of Nevada. There’s a reason for that. Any of the design-build projects that you do usually cost twice as much. We did some design-builds in Europe, in Asia, and the projects were double to triple what they were here. The problem with this project is they can’t meet the time frames they have to meet. They can’t do the environmental impact study. They can’t go move the utilities. They can’t go out for bids and do it and make any of the time frame. Four years from that December date they signed that contract with the railroad, that $60 million may be only $10 million or whatever, that disappears. There’s an interesting thing that one of the other people that gave me ---

Excuse me. Andrew Barbano, I represent Casinos Out of Politics and other citizen organizations that will shortly be in the initiative petition business with some of the members of this legislative body. Very quickly –let me cut to the chase – the project that you’re talking about was not put on the ballot. The official reason was not enough time to educate the public. That became a self-fulfilling prophecy because they acted, after they had educated the public in a series of so-called public meetings, but they didn’t need to do that because the county commission voted after the election that was never held anyway. The Reno Gazette-Journal has given marginal coverage to this and has, on occasion, mentioned the financing. But the Reno Gazette-Journal has intentionally refused to disclose a corporate conflict of interest. And I say intentionally because I confronted their editor on television about this. They have two directors of Union Pacific on their board of directors. Two Union Pacific executives, including the father of the Union Pacific-Southern Pacific merger, Drew Lewis, sit on the board of directors of Gannett Newspapers. The Gibbons Tax Restraint Initiative was not the reason for the super majority needed at the county commission level. That was put in the original enabling legislation as a way to get around the Gibbons Tax Restraint Initiative so that you wouldn’t need a two-thirds vote of this body. You may all remember that. So the super majority at the county commission level was required as part of the enabling legislation.

This bill is no more than an attempt to head off Glade Hall’s lawsuit at the pass in the state Supreme Courts. Section 3.1 is pretty explicit. As to that effect, that needs to be said. Mr. Partlow said there won’t be any accidents, deaths or delays if this project is funded sufficiently with respect to railroad accidents. No. This trench is because accidents are going to happen. It’s only a matter of time. Mr. Demuth here, a consultant to the city, has said "accidents will happen". They’re digging the trench to mitigate the impacts of a for-certain future accident as you double the number – triple the number of trains, double their speed, and increasingly load those trains with nuclear and other hazardous waste.

The city council has, in the past, held a series of secret and serial meetings as a way to get around the open meeting law and say they were obtaining consensus on the issues. This city council does not speak with any credibility as far as properly educating or informing the public as to their actions and their support among their own constituents, I submit, especially on this issue, is without credibility.

Let me cut to the chase to the bottom of my remarks and get you down to the floor. I’ve submitted a copy of this Reno-Gazette Journal article from last December (Exhibit G) which notes, Tax Revolt in the State of Nevada Over Property Taxes. Casinos are the reason. Corporate welfare is the reason. Casinos skimming money for their own benefit is the reason, and Proposition 13 is going to be the remedy. I would call your attention to the members of this body and some of the members of this committee that several members of the Washoe delegation who signed onto this bill should reevaluate their support of that bill. Especially given the fact that some of them have signed the Taxpayer Protection Pledge and promised to "Oppose and vote against any and all efforts to increase taxes." Signers of that pledge may be found at the Americans for Tax Reform Website noted in your testimony, atr.org. That website lists the following as signatory to the No tax Pledge or Efforts to Increase Taxes: Representative Gibbons of Nevada; State Controller Augustine; Senators Washington of Sparks and Rawson of Las Vegas; Assemblymembers Goldwater of Las Vegas, Neighbors, Berman, Gustavson and Von Tobel. So there are members of this committee who have basically already committed to Americans for Tax Reform that they would not support any attempt to increase taxes. This bill is no more than an ex post-facto ratification of a tax increase that was rammed down the public’s throat without a public vote because we weren’t educated enough and couldn’t be educated enough by November of 1998 to make an informed decision.

That’s less than what I had to say but that’s as quick as I could say it. Thank you very much.

For the record my name is Sue Camp, also known to this body as lame duck. I was one of those county commissioners and I just wanted to clear up some misconceptions here. As far as our vote was concerned, we did not even have information finalized on negotiations with the railroad until the week of our vote. This is why, continuously throughout the election period, we constantly stated to our constituents that we did not have all the information available. We did not until that particular week. We did not feel that we could make an informed decision until we had all the decision before us. So consequently, we did not put it on the ballot which would have had to have been on the ballot by May. The vote was taken in November.

The first time I heard about the sales tax issue was in November of 1997, shortly after I became a member of the county commission. At that point in time I said if you intend for this county commission to act on this, it should happen well before any election takes place. I want people out there, at least in my district, to understand what I voted on, and why I voted on it. That did not happen. The county commissioners, the four county commissioners that voted for this, are good people, conscientious people. We all had nightmares about this vote. We worked long and hard to make sure we had the facts before us before we took the vote. There was no deception on our part. It was just perceived that way and, of course, to our opponents it was easy for them to attack us and state that.

I‘d like to correct one other thing. My resounding defeat of 100 votes out of Mr. Dehné’s set of 15 percent turnout didn’t quite justify the fact that – or cement the fact that people out there were totally opposed to the sales tax increase. Thank you for the time.