The Committee on Government Affairs was called to order at 8:15 a.m., on Monday, April 5, 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

Ms. Gene Segerblom

Mr. Kelly Thomas

Ms. Kathy Von Tobel

Mr. Wendell Williams

COMMITTEE MEMBERS EXCUSED:

Ms. Sandra Tiffany

GUEST LEGISLATORS PRESENT:

Christina R. Giunchigliani, Assembly District 9

John C. Carpenter, Assembly District 33

STAFF MEMBERS PRESENT:

OTHERS PRESENT:

Chairman Bache called the meeting to order at 8:15 a.m. and opened the hearing on Assembly Bill 501.

Assemblyman Harry Mortenson, Assembly District 42, described A.B. 501 as a bill designed to help residents and small businesses. The chairman of Nevada Power Company had previously testified that large customers would be the principal beneficiaries of deregulation. The bill's main purpose was to make small business and residents into large customers. The bill allowed counties and municipalities to aggregate power and other services for the benefit of residents within their geographic boundaries. No combination would be prohibited. If a customer chose to select an alternate energy provider, he would be free to do so.

When deregulation was attempted in other parts of the country, Mr. Mortenson continued, participation by small businesses and residents was minimal. Supposedly, Enron in California had spent about $100 million to encourage customers to leave default groups. Since Nevadans were legislatively guaranteed a 2-year no-rate-increase ride, a very large default group of residents would be created.

Mr. Mortenson saw one of two things happening to residents and small businesses if counties and municipalities failed to become aggregators as enabled in the bill. (1) A few percent of residents would choose alternative providers, but nonchoosers would be assigned to provider of last resort (PLR) groups. That large default group would then be regulated by the Public Utilities Commission (PUC) for 2 years with electric rates comparable to current rates. (2) The PUC would then break up the large PLR group into zip code areas and auction off the areas to the lowest bidder. The zip code areas would be regulated for 2 years with electric rates again comparable to the existing rate.

If the PLR groups or the "fractured" zip code groups were under PUC regulation for 2 years, he continued, competitive suppliers would find the scenario most unattractive. While residents and small businesses had a so-called "honeymoon" for 2 years under a regulated climate, the industrial, commercial and other large consumers would have contracted for and "soaked up" the electrical power of the producers with the lowest generation costs.

"What happens with the honeymoon is over?" Mr. Mortenson asked. The residents and small businesses would find themselves in a climate where many of the low-priced providers had been absorbed.

Aggregating and bundling by counties and municipalities would seek to avoid those problems, Mr. Mortenson concluded. Such aggregation would form groups with incredible bargaining power for lower rates. As time passed, however, and entrepreneurs devised new and innovative methods to enlighten potential customers of the advantages of deregulation, it would become increasingly advantageous for customers to then leave the county and municipal groups and seek new low-cost services. A.B. 501 would provide the means for aggregation of consumers into groups with greater bargaining power.

Assemblywoman Freeman remembered that Nevada Power had testified it had already sold its powerplants and wondered how, having done that, the whole issue of deregulation fit into the concept of A.B. 501. Mrs. Freeman was concerned about the effects of deregulation on the small user, and alluded to a news article which stated in California there had not been any real savings to consumers due to deregulation.

Assemblyman Mortenson was unaware of the sale of powerplants by Nevada Power, but knew that under deregulation the divestiture was mandated. He opined deregulation was a "done deal" and A.B. 501 simply presumed that it would take place.

If the state was to mandate electric utility deregulation, he said, an even break must be given to everyone, not just the large customers. As a member of the Utility Shareholders Association, he had received an "alert" which said, "SB so-and-so has a number of proposed amendments that are potentially damaging to the financial health of Sierra Pacific Power Company and Nevada Power Company, and its shareholders. The most dangerous amendment would allow large customers to leave Nevada Power Company and Sierra Pacific." Again, he reiterated the need for an even break for everyone.

Chairman Bache believed municipalities could form cooperatives under Nevada Revised Statute (NRS) Chapter 704, and wondered how the provisions of A.B. 501 differed from the statute.

Co-ops were currently formed and regulated under the PUC, Mr. Mortenson explained. A.B. 501 would remove co-ops from PUC regulation.

Mr. Bache could not see where the bill would change anything. As the law stated, deregulation allowed either for the formation of co-ops or for alternative sellers.

Mr. Mortenson believed there was more incentive for county groups and municipalities to organize outside the purview of the PUC because many of them were worried over the loss of their franchise fees. Franchise fees were a big source of income for the smaller aggregates.

Mr. Bache could not see the small aggregates losing franchise fees because power could still be sold through the transmission and distribution companies.

Betsy Fretwell, representing the City of Henderson, supported A.B. 501. She felt it was one of the best opportunities for small and residential customers to take advantage of better electrical rates. The measure was not inconsistent with restructuring, she said. She cited the example of Henderson which already had a utility services department. Rather than take immediate advantage of the enabling legislation in A.B. 501, the city would first do a financial feasibility study. Henderson was very interested in having opportunities made available in the restructuring environment without compromising competition.

Ms. Fretwell went on to say that aggregation could be done as a co-op, regulated by the PUC, which was very different from being licensed by the secretary of state as a public utility. However, there was a mil rate associated with that regulation. It was important to recognize the various costs involved.

Chairman Bache asked why the city utilities were exempted from playing by the same rules as everyone else.

The matter really came down to who should regulate whom, Ms. Fretwell replied. The question was should the PUC regulate a local governing body that was directly elected by the people it represented. She felt the city utility could be highly competitive. She told the committee, "It’s really up to you whether you’d prefer to see us, a directly-elected body, be regulated by one [the PUC] that’s not."

Chairman Bache felt by having different rules for [local] governments competition was discouraged. No alternative seller would want to compete. It gave the local utilities special benefits.

Scrutiny was provided by the ratepayers of Henderson, Ms. Fretwell said. Not only did ratepayers see their utility bill once a month, they were also very much aware of rate increases and decreases, and could respond accordingly at the polls. The "game" was very different between a public sector utility versus a private utility. She felt the differential in and of itself was enough not to require the PUC to regulate the local governing bodies.

Chairman Bache felt the city utilities would still be subject to FERC (Federal Energy Regulatory Commission) if A.B. 501 passed. Ms. Fretwell agreed.

Assemblywoman Von Tobel was bothered by the term "deregulation".
She understood the PUC would have a much lesser role when deregulation was enacted. "What I’m hearing this morning is you’re asking for that very thing, that you not be regulated by the PUC, and that would help you as a local government." Deregulation was designed to encourage open competition, and the PUC would cease to function as a regulatory body.

Ms. Fretwell admitted she was not an expert on utility deregulation. Most people called it restructuring, not deregulation. She felt there was need for administrative oversight of the PUC. She also felt A.B. 501 gave flexibility to the municipalities. But she objected to having the municipalities regulated twice, once by itself and again by the PUC.

Harvey Whittemore, partner, Lionel, Sawyer & Collins, testified on behalf of the Nevada Resort Association and was in general support of the concepts behind A.B. 501. The bill continued the tradition of attempting to resolve the issues associated with deregulation. Two different components were evident within the context of deregulation versus restructuring, he said. Deregulation functioned by allowing competitive services to be acquired by individual users of that power in a context where the PUC went through a process and determined which services the existing utility provided were competitive and which were not. Restructuring addressed the issue of what happened as a result of deregulation.

A.B. 501 proposed to allow municipalities or counties to become aggregators. They would still purchase power from generators who would be outside the jurisdiction of the PUC, because generation was a competitive service. In other words, he said, municipalities could become aggregators and remain outside the jurisdiction of the PUC.

The Nevada Resort Association supported any efforts that would bring competition to the state. Any attempt to create a situation where residents and small business could, in effect, acquire market power allowing them to compete in the market at the same time as the resort association was ultimately in the best interests of the State of Nevada and individual consumers.

Mr. Whittemore addressed Assemblywoman Freeman’s questions regarding Nevada Power Company’s generation facilities. The facilities remained unsold. They were to be sold pursuant to a merger order allowing the two existing utilities [Sierra Pacific Power and Nevada Power] to merge. The timing of the divestiture was still under discussion. It was in everyone’s best interests that divestiture take place as quickly as possible without impacting the incumbent utility’s ability to get fair prices for those generation facilities or impacting the predictability and certainty of good service to residents and communities throughout the state.

Chairman Bache asked, "How do you see this as being different than a co-op like Mt. Wheeler Power? Right now they’re a co-op, and how would the municipalities be different from Mt. Wheeler?"

Mr. Whittemore referred Mr. Bache to lines 17 through 20 on page 2 of the bill where it said, "A governing body that procures generation, aggregation and other potentially competitive services for a consumer group pursuant to those sections will in fact not be subject to the jurisdiction of the commission as a utility or alternative seller." The bill basically said the municipal utilities would be treated differently from co-ops and they would not be subject to jurisdiction.

Chairman Bache said, "You’re setting up separate rules. You have two different groups playing different games as far as we enter competition or the deregulated environment. There you have one group purchasing services under PUC regulation and the other group with no rules at all, except those set up by FERC."

Mr. Whittemore felt the bill addressed a different category. If the alternative seller was asking to be exempt from certain rules, or it was asking to not be subject to the same rules as other electric utilities, then certainly it would appear two sets of rules were in force. But the bill stated it was appropriate that aggregators not be subject to jurisdiction. "What you need to weigh is if an alternative seller is a private entity versus a public entity aggregator who is subject to all those roles and regulations associated with how contracts are adopted, how they are negotiated, responsibility to consumers – and if that is a different system," he said. Clearly the question was, should there be different rules for different classes of aggregators.

Without regulation, Mr. Bache said, they [aggregators] could do anything they wished.

The argument had to be made there were reasons for the differential associated with municipalities versus the private sellers, Mr. Whittemore said. He suggested specific restrictions be placed on individual municipalities and counties as to where they could sell power. He felt the language in subsection 1 of section 5, which stated, "The governing body of a county or municipality may, by resolution, designate the county or municipality to be a consumer group for the purpose of obtaining electric service at a competitive price . . ." needed to be reworked.

"If we do this, why not go back and repeal Assembly Bill 366 [of the 69^th Legislative Session] and go back to the way we were before?" Chairman Bache asked.

The bottom line addressed in A.B. 501 was to treat residents and small businesses the same as the larger industrial customers, Mr. Whittemore said.

Assemblyman Lee questioned the language on line 25, page 2, " . . . If a resident or small business chooses to be excluded from participation in a consumer group . . " He wondered if a large hotel could classify itself as a small business and tell its employees not to join a group and offer the employees aggregated services at lower rates.

Individual business could indeed form its own aggregation unit in order to provide lower rates to employees, Mr. Whittemore said. But having a county or municipality come in and designate a large business as an aggregate, responsible for a large area, the benefits associated with competition would be precluded.

Assemblywoman Parnell asked if that particular issue had been addressed in A.B. 366.

Authority was given to the PUC to deal with aggregation issues, Mr. Whittemore replied. The PUC was given broad discretionary powers. A.B. 366 mandated that co-ops be treated the same as everyone else under the existing laws.

Assemblyman Mortenson intended to amend A.B. 501 in such a way that a resort association was not precluded from giving employees lower utility rates.

Ernest Nielsen, Washoe County Senior Law Project, distributed Exhibit C and described his organization as one providing free legal services to those 60 years old or older. He felt A.B. 501 was good for seniors because until the present he had seen little evidence that the private sector or any affiliate of the incumbent utilities were planning to develop energy service companies that addressed the problems of seniors and low income customers.

He preferred to think of the bill as providing default providers for customers who were nonchoosers and those who were unable to acquire service from alternative sellers, which was similar to the PLR service under the PUC. And rather than amending the bill or reworking the language, because of the late date, Mr. Nielsen said he would prefer to pass it as it was.

Thomas J. Grady, Nevada League of Cities and Municipalities, supported A.B. 501 in concept, but preferred seeing the finished product before making a final commitment.

Robert S. Hadfield, Executive Director, Nevada Association of Counties, told the committee the complexity of A.B. 501 had made it difficult to elicit responses from all of Nevada’s counties. He felt it in the best interests of the smaller counties to allow entities to assist residents in aggregating as a matter of public policy. "Our small counties simply do not have the expertise and could be eaten alive in a competitive environment if they do not get some help," he said.

Assemblyman Mortenson reiterated A.B. 501 was purely an enabling bill and that any county that did not wish to participate could apply to the PUC for regulation.

Assemblyman Humke complimented Assemblyman Mortenson for presenting a very complicated bill and for not inundating the committee with many amendments.

James Spinello, representing Clark County, stated Clark County generally supported A.B. 501. It was an important public policy issue to offer a safety net to consumers. He felt it appropriate, however, to include some regulatory criteria, whether through the PUC or established in statute, preventing small local governments from rushing "willy-nilly into new ventures".

Mr. Spinello defined several issues that needed to be reviewed. It was not clear the governing body itself could be among the customers who were aggregating. He felt it important to add a provision that if competition did not prove to be the boon to the consumer as was anticipated, then local governments could step in and become involved.

Assemblywoman Freeman wondered what providers would want to bid for services for small, low income and elderly users, and indicated her willingness to work on those issues.

Marta Golding Brown, representing the City of North Las Vegas, generally supported the bill.

Susan Miller, Governmental Services Representative, Sierra Pacific Company, opposed A.B. 501. She distributed Exhibit D. She clarified a comment made earlier in the hearing. Consumer groups that would be set up would not be under FERC control.

Gerald Canning, Vice President of Restructuring, Sierra Pacific Power, elaborated on Ms. Miller’s comments. Both Sierra Pacific and Nevada Power supported new competition as long as all competitors, including municipalities, played by the same rules. During recent PUC hearings, both the City of Henderson and the Senior Law Project asked for rules to allow municipalities to provide PLR (provider of last resort) services. The service authorized under A.B. 501 was not last resort service but rather competitive service provided by alternative sellers. It was very difficult for a consumer to not choose a provider and then find himself in a service that was still regulated and putting forth regular prices.

A.B. 501 was not needed, he emphasized. Under the rules that were written to implement A.B. 366 of the 69^th Legislative Session, municipalities had the same rights as any other potential market entrant to serve as an alternative seller. The only difference was two provisions in A.B. 501 that were troubling to customers. (1) The customers could be involuntarily transferred to a municipality. (2) The customers would lose the benefits of PUC regulation.

The impacts on customers themselves would be negative, Mr. Canning continued. Customers would be "slammed" by prospective new providers. Customers would be denied the protection of the PUC’s "consumer bill of rights" and dispute resolution processes. Customers would be denied price protection afforded other nonchoosing customers. The PLR customers would get regulated rates for a 2-year period. Municipal energy rates would more than likely be marked up to create a profit for the supplier. And the customer would be denied retail choice. If a city such as Henderson became an aggregator, the city would have effectively denied any customer in Henderson from having other retail choices.

A.B. 501 would have negative impacts on competition. Alternative suppliers would be competitively disadvantaged. Municipalities could impose anti-competitive business rules that would make it impractical for other suppliers to serve within the cities. And rates for customers in rural areas would rise. It was still more expensive to serve a customer in a rural area than in a city, but in today’s market those rates were averaged. If the lower costs to serve city customers were removed from the "pool" of all customers, rural rates would rise.

The financial health of municipalities would be affected negatively. Retail energy supplies were risky at best. It was the most volatile commodity traded. Cities were ill-equipped to take energy price risks as new alternative suppliers.

The bill, if enacted, would have negative impacts on regulation, Mr. Canning concluded. Funding for the PUC would be significantly reduced. Costs of regulation were currently collected by a mil tax on utility sales. In the future, those costs would be collected by a licensing fee based on sales. Sales provided by municipalities would be exempt from paying those fees. Either the PUC would shrink, or would be forced to increase charges to all other alternative sellers. And finally, the PUC would be unable to resolve municipal customer complaints.

Assemblywoman Segerblom felt customers living in aggregated municipalities could certainly benefit from lower energy rates. Mr. Canning reiterated the municipalities lacked the expertise and means of minimizing financial risks associated with the price swings in energy. He did not feel the provisions of A.B. 501 would be better for customers.

Assemblyman Mortenson disagreed that customers would be unable to address complaints. He believed anyone unhappy with his service could go to any county commission meeting and state his problem. "And of course there is the ballot box," he said. "And you said counties and municipalities are poorly equipped to understand what is going on in the electrical business. This bill allows any county that feels they do not have the expertise to get a professional aggregator. If you feel the professional aggregators are not equipped, then deregulation is going to be a horrible mess anyway."

Mr. Canning agreed in part, but reiterated that a city aggregator should still be subject to the same rules that applied to all other aggregators.

Chairman Bache asked Mr. Canning if he saw the provisions of A.B. 501 similar to the government taking over private enterprise, and if he thought the trend would lead to less competition.

Governmental entities did not have the same rules and restrictions as private industry, Mr. Canning responded. The effect would be anti-competitive because the private sector had to have a product that was better overall to offset the benefits the cities offered.

Assemblywoman Von Tobel asked Assemblyman Mortenson to explain who would benefit from A.B. 501.

The public utilities would still regulate the transmission and distribution of power, Mr. Mortenson responded. Sierra Pacific and Nevada Power would remain in that business. Competitive services would not be regulated but the PUC would make sure the alternate providers were financially stable.

Ms. Von Tobel’s biggest concern with the bill was that some groups would be regulated under the PUC and others not. "We do need a level playing field here," she said.

Mr. Mortenson explained. Under deregulation, the consumer would not have the same utility company he had previously. Nevada Power would no longer be in the generation business. Under deregulation, Nevada Power was mandated to divest itself of all power production. The large utilities would then be in the business of selling services to customers, such as meter reading services.

The regulation to be applied to aggregators, including utilities, Mr. Canning added, was in the area of consumer protection and licensing to make sure they were financially capable of supplying service. "If they go out of business, their consumers are not harmed," he said. "The consumer is transferred to someone else at no additional cost. It is basic consumer protection."

Mike Reed, representing the International Brotherhood of Electrical Workers Locals 1245 and 393, and also Mt. Wheeler Power Company, told the committee while A.B. 501 seemed seductively simple, it could be a nightmare in reality. The bill established a public policy where a governmental entity would be allowed to enter a competitive business and compete with private industry, and be subsidized for doing that. Since under the bill the governmental entities would escape regulation of any kind, a significant financial advantage would be established. Mr. Reed was concerned A.B. 501 would create an unlevel playing field. Avenues already existed for municipalities and counties to get into the electric business, but they then became monopolies and were not competing with private business. He did not feel it was good public policy. He was concerned about constitutional problems through the equal protection clauses, which provided a governmental entity a competitive advantage that was not available to other service providers.

Joyce Newman, Executive Director, Utility Shareholders Association of Nevada, also had problems with A.B. 501. She applauded Assemblyman Mortenson for his efforts in watching out for residential customers, but she was afraid the PUC could not "watch out for customers in this kind of situation." She went on record as supporting competition, and that the shareholders she represented were ready, willing, and able to go into a competitive market.

Judy Sheldrew, Chairman of the Public Utilities Commission, commented on her own behalf. The PUC had not taken a position on A.B. 501. "Since he [Assemblyman Mortenson] has now professed his love for the PUC, the PUC loves Mr. Mortenson," she quipped. Assemblyman Mortenson had taken the issue of restructuring the electric industry to heart, studied it deeply, and she and he had agreed it was important that small residential and commercial customers "got the opportunity to play." The best way to accomplish that scenario would be to put aggregates together which constituted buying power. Ms. Sheldrew had no conceptual problems with A.B. 501 but she did have concerns.

Assembly Bill 366 of the 69^th Legislative Session did not preclude municipalities from aggregating themselves, Ms. Sheldrew said. In 1997 the concern was if small governmental entities wanted to go directly into the utility business, the responsibility for securing distribution and transmission services was assigned to the purchasing departments. The decision in 1997 was not to preclude municipalities from participating in the marketplace, but if they chose to do so they would be required to go through a licensing process. That procedure ensured the entities were technically capable of meeting the demands of providing service to their citizens.

The failure of one provider on the interconnected electric service could affect a neighboring entity. It was for those reasons that the 1997 legislature concluded if a municipality wanted to operate as an alternative seller, it should come through the licensing process of the PUC.

Ms. Sheldrew went on to discuss the role of cooperatives, which were also addressed in A.B. 366. The PUC had some jurisdiction over co-ops in that the PUC could not establish rates but could establish service territories. The cooperatives were not impacted by competition unless they decided they themselves wanted to become alternative sellers. In that case, they were subject to the same rules and regulations as alternative sellers. She called that provision "The Texas Hold ‘Em" clause of A.B. 366.

A.B. 501 exempted municipalities directly from the regulation of the PUC. It was not clear the bill provided for last resort or nonchoosing customers. There remained much additional work on the bill to define the consumer protection requirements to be furnished by governing bodies, she said. She made several suggested language changes to the bill. She wondered what would happen to the affected consumers if a governing body decided to go out of business by resolution. There was no provision for providing electric service to the consumers.

In summary, Ms. Sheldrew concluded, she did not disagree with the basic tenets of the bill, especially with the provisions for the creation of small consumer groups. "From that standpoint," she said, "we have more of a concern about the method not being really what you were trying to accomplish. There is nothing to prevent municipalities today from providing these services if they so wish [under the provisions of A.B. 366], under what we think is a level playing field."

Assemblyman Mortenson felt if municipalities needed guidance in what was a very technical area, they could elect to be regulated by the PUC. The smaller counties could do that. Larger counties could recruit some of the entities that would do the bundling and aggregating. He still believed there would be a good deal of competition. "For three years I have been sitting and thinking about deregulation and trying to figure out who is going to benefit and who is going to get it in the pants, and it has always been the customer," he said. The customer would bear the negative part of deregulation. And that was the incentive for A.B. 501.

Mr. Mortenson believed the county consumer groups would slowly decrease over the years. In the beginning, the small consumers and homeowners would be relatively uneducated on the subject of deregulation and its ramifications. The bill would assure those people of good electrical rates in the beginning. "And as they become smarter and smarter and [more] enlightened in this process, they will do their own thing and we’ll have a wonderful situation – eventually," he said.

The bill would eliminate another worrisome group, Mr. Mortenson continued. One of the PUC proposals was to put consumers into PLR groups by zip code areas. "I worry we are going to have a zip code area over in west Las Vegas where there are less affluent people and they are going to get a bummer of a rate when they go out for competition when they are auctioned off," he said. He believed his bill eliminated those problems.

Ms. Sheldrew discussed PLR (provider of last resort) situation. The PLR was established by statute to be for those customers who did not choose or were not approached by an alternative seller. The PUC adopted regulations to assign the nonchoosing customers to affiliates of both Sierra Pacific and Nevada Power at the beginning of competition. Thereafter, after a prequalification and notification, the nonchoosing customer would have the choice of what the PUC called "transitional provider of last resort service" or a "universal provider of last resort service." Then and only then the PUC would hold an auction to see if providers would bid to furnish the service.

At any point during the transitional, or 24-month service, the customer was free to obtain service from any provider he wished. However, the universal service was regulated, would always "be there," and the consumer would never be approached by a competitive supplier. Ms. Sheldrew felt the bill, as written, would encourage competition at the governmental level. Essentially, she said, governments would be competing to provide power to all of their citizens.

Yet, if a municipality was technically qualified and truly wished to form an aggregate, there were no provisions in A.B. 366 which prevented it, she concluded.

Assemblyman Mortenson felt Ms. Sheldrew had explained a nice safety net. Under his bill, nothing would change. He said he understood not everyone would take advantage of the provisions of A.B. 501. However, there was one additional alternative for the counties. Counties could provide electrical services more competitively than under the current rules, because the 1 mil tax paid to the PUC would be eliminated. He did believe the bill provided the counties and cities available alternatives should they wish to avail themselves.

Chairman Bache asked Ms. Sheldrew if the proposed legislation might lead to alternative sellers not wanting to come into Nevada, i.e., seeing the legislation as discouragement for competition.

Ms. Sheldrew was indeed concerned. The theory that people would leave to go to alternative sellers would be fine except there might be no alternative sellers wanting to compete in a state that gave a better standing to municipalities. Attracting alternative sellers into Nevada would be difficult at best without putting up additional barriers, she concluded.

Chairman Bache closed the hearing on A.B. 501 and opened the hearing on Assembly Bill 598.

Assemblywoman Christina Giunchigliani, Assembly District 9, described A.B. 598 as the second portion of a bill from the interim committee that had studied school construction mandated by Assembly Bill 353 from the 69^th Legislative Session. The interim committee studied public works needs within school districts and made several recommendations and suggested amendments.

Two main points were addressed in A.B. 598, Ms. Giunchigliani continued. The first was a tighter definition of the terms "eligible" and "responsible" bidder as they related to public works projects. The second point was the issue of Americans with Disabilities Act (ADA) compliance, which had been addressed in A.B. 353. Many public projects were still out of compliance with ADA standards. She hoped A.B. 598 would create a process to have a certified individual do plans reviews prior to actual construction, to assure proper accessibility and ADA compliance standards were met.

An attempt was being made to set up a certification process for contractors within the State Public Works Board. Current modernization and rehabilitation plans for public buildings were still not being reviewed properly. Ms. Giunchigliani indicated she and Eric Raedke of the Public Works Board had worked on several amendments to A.B. 598.

Eric Raedke, Manager, State Public Works Board, discussed several sections in the bill that were already addressed in statute and could probably be eliminated. He offered to work with Assemblywoman Giunchigliani on the bill language.

Suzanne Thomas, a member of the Governor’s Committee on Employment of People with Disabilities, introduced herself as representing "me, myself and I," and emphasized the importance of A.B. 598 to people with disabilities. Under the legislation mandated by the ADA (Americans with Disabilities Act), state and local governments were supposed to provide avenues for assisting architects, design professionals, and builders in complying with the requirements of both the ADA and the Fair Housing Amendments Act. It did not happen in Nevada, she said. She described Las Vegas, currently undergoing a huge building boom, as the "sue" capital of the world when it came to ADA issues. Local governments were often forced into retrofitting older buildings that were not compliant.

She suggested the State Public Works Board be required to establish a process for certifying ADA consultants and that a list of state certified consultants be established who would provide plans checking services for entities covered under NRS (Nevada Revised Statutes) 338.180. The bill should be extended to include the private sector.

She proposed that state certified accessibility experts be required, as part of their certification, to cover liability insurance for errors and omissions made during plans reviews. Certification classes would be offered. Lloyd’s of London offered error and omission insurance for $800 per year. An architect could conceivably become a person wearing two hats. As an architect he would design. As a state-certified accessibility consultant, his errors and omissions insurance would cover him as a consultant.

People with disabilities found it difficult to obtain employment, she continued, because too often a prospective employer had already been through litigation due to noncompliance with ADA requirements. A.B. 598 and its proposed amendments would offer businesses and disabled people the protection they deserved. The Americans with Disability Act was an extremely complicated piece of legislation, and the public and private sectors needed the provisions of A.B. 598 for assistance in following it. "We’ve done a miserable job," she concluded. "I hope this bill will allow us the opportunity to correct that."

Ronald Smith, representing the Disabled Rights Action Committee (DRAC), concurred with Ms. Thomas’ ideas on A.B. 598 and her plans for implementation. DRAC had a reinforcement program aimed at being Nevada institutions’ worst nightmare, Mr. Smith quipped. "That’s all we do. We enforce. We give out lawsuits. We bring them into court and let them explain to a federal judge why our civil rights have been violated and what they intend to do about it," he continued. He urged the committee to listen to Ms. Thomas and incorporate all of her ideas into the final bill.

Paul Gowans, representing the Disability Forum, reiterated Mr. Smith’s statements. He indicated he and Assemblywoman Giunchigliani had spoken prior to the hearing and he hoped the problem of Nevada’s compliance with ADA would be solved by some simple cleanup language in the bill.

Crystal Marshall spoke for herself. She read from prepared testimony (Exhibit E). She said, "I believe A.B. 598 is a very important bill to pass because many buildings are designed and constructed today and they do not comply with the Americans with Disabilities Act or [the] Fair Housing Act. For instance, I could not go to UNLV where my dad used to teach at the School of Architecture because this brand-new building – now remember, a brand-new building -- was not in compliance. It wasn’t. Was not in compliance with the Americans with Disabilities Act. The passing of this bill would insure that many more buildings comply with these important laws. ADA has greatly improved access for people [with] disabilities – but much more needs to be done. [Here she pounded her fist for emphasis.] Passing A.B. 598 is an important step in improving the lives of people with disabilities. Thank you. Any questions?"

Chairman Bache thanked Ms. Marshall and told her she had made her point extremely well.

Steve Weaver, Chief of Planning and Development, Nevada Division of State Parks, and a licensed landscape architect, was in favor of improving accessibility to public facilities. He distributed Exhibit F. He was active in coordinating Nevada State parks’ efforts to comply with the ADA. He felt if one or more of his staff could be certified under the provisions of A.B. 598, present concerns would be resolved. However, he said, the implication was the parks would have to submit all facility plans to the State Public Works Board. The board would in turn submit plans to consultants who would require compensation. Many facilities, constructed on a routine basis, such as campgrounds, picnic areas, trails, boat launches, would be affected.

The bill would not only impact parks from a fiscal standpoint, he continued, but could have a major effect on the parks’ relative autonomy and inevitably lead to project delays and another bureaucratic layer. He felt the Division of State Parks’ Planning and Development staff would be best suited to become "certified" and make the determinations about the agency’s compliance with the guidelines.

He concluded by supporting A.B. 598 with his suggested modifications.

Assemblywoman Parnell asked if the state parks were ADA compliant.

Mr. Weaver indicated much headway had been made, about $2 million had already been spent retrofitting park facilities, but he had questions about the interpretation of the regulations.

John Sasser, Washoe Legal Services, and an attorney for Nevadans for Equal Access, said the fee issue was a difficult one for the committee, but it was an important need and that he looked forward to working with Assemblywoman Giunchigliani to "see if we can come back to you with something that will fly."

Vice Chairman Lee had a lengthy list of persons wishing to address their concerns to the committee.

Marta Golding Brown, representing the City of North Las Vegas and the City of Henderson indicated both cities had concerns with A.B. 598 as written. Her clients were concerned the [facility] plans as stipulated by the bill would have to go through the State Public Works Board, which in turn would slow down development. She, too, wished to work with Assemblywoman Giunchigliani.

"You heard the chairman testify he would like you to do that immediately, if you would," Vice Chairman Lee said.

Robert Hadfield, representing the Nevada Association of Counties (NACO) sought clarification of the process. Everyone wanted buildings built correctly and to ADA requirements, he said, and until he listened to the morning’s testimony, he had not been fully aware of the problems involved. The counties preferred handling their own building inspections and certifications rather than dealing with the Public Works Board. He asked for discussion on the certification issue, and said the counties would much prefer handling certification on the local level.

Assemblywoman Giunchigliani preferred to address Mr. Hadfield’s concerns in the meeting to be held after the committee adjourned. The intent of the bill would be to allow each governmental entity to train and certify its own inspectors.

Alex Ortiz, representing Clark County, had concerns with A.B. 598 and wanted to see the amendments.

Chairman Bache closed the hearing on A.B. 598 and suggested all interested parties meet with Assemblywoman Giunchigliani to resolve differences. If the Committee on Government Affairs was unable to reach agreement, he said, the bill would be sent on to the Committee on Ways and Means.

Mr. Bache opened the hearing on Assembly Bill 604.

Assemblyman John C. Carpenter, Assembly District 33, described A.B. 604 as a bill that would create districts for the maintenance of roads. He said he would ask the committee to amend the bill so it applied to counties with populations of 100,000 or less, feeling the larger counties might have problems with the legislation as written.

Mr. Carpenter referred to a letter from Cash A. Minor, Chairman of the Elko County Board of Commissioners (see Exhibit G), which had been distributed previously. The letter suggested the percentage of property owners needed to get approval before a petition to create a maintenance district was presented to the commission be changed from 50 percent to 51 percent. Mr. Carpenter told the committee all parties subsequently agreed it would be better to get 60 percent agreement of property owners before petitioning the commission.

If people wanted the district to be dissolved, 40 percent approval rather than 10 percent was suggested. Several more amendments were addressed in the letter from Cash Minor. Mr. Carpenter described the changes as 60 percent voter approval to start a maintenance district, and 40 percent voter approval to dissolve it.

Assemblyman Lee referred to page 3, line 38, of the bill which said, " . . . the remaining members of the board shall appoint a person to serve on the board . . .", but on line 42 it said, " . . .if after 30 days the vacancy occurs, the board of county commissioners where the district is located shall appoint a person . . ." Mr. Lee thought in those particular circumstances a county commission always made appointments.

Mr. Carpenter felt the language was put into the bill by the drafters to make sure there was a vacancy filled on the board.

Chairman Bache wondered if the districts created by A.B. 604 would be like a General Improvement District, and, if so, would they be subject to the open meeting law.

Mr. Carpenter felt those kinds of meetings should be open to the public, and if it was not specifically provided, he would suggest they be open as provided in the open meeting law.

Stephanie Licht, representing Elko County, supported the changes that had been made to the bill, although slightly different from Mr. Minor’s letter (Exhibit G). She indicated Milt Grisham would give the committee a short history of why the county preferred not to go the route of a General Improvement District.

Milt Grisham, a member of the Elko County Planning Commission, testified he was a property owner in one of "those divisions of land that aren’t quite a subdivision." In older districts not covered by CC&Rs (Covenants, Conditions and Restrictions), no one was responsible for maintaining the roads. Unless someone took care of them they rapidly deteriorated.

The Elko County Planning Commission had an existing requirement that a [homeowners] association be formed prior to obtaining a subdivision plot. By forming an association, members could levy the funds needed for road maintenance.

Assemblyman Neighbors asked, if roads and improvements were already in place in the new subdivisions, if they were dedicated to the county.

Elko County had a real financial problem, Mr. Grisham replied. Rights-of-way were dedicated, but the county lacked the funds to maintain roads. The planning commission made it clear that in new subdivisions property owners must form an association and levy the funds necessary for road maintenance.

Mr. Neighbors wondered if such an association would fall under the provisions of the open meeting law.

Assemblyman Carpenter reminded the committee that many subdivisions had been created in Elko County by simply filing a map. Because the county had no rules or regulations, the roads deteriorated. Some of the subdivisions were created over 50 years ago. The new subdivisions, of course, were maintained by the developer and later by a homeowners association. A.B. 604 addressed the problems of older subdivisions.

Assemblywoman Parnell had a problem with the 50 percent requirement stated in the bill. "When it only takes 50 percent of the people in a neighborhood that has not had prior assessment for maintenance of roads, to assess those not interested or not complying or not in support – I have a real problem with that," she said. She indicated she would prefer to change the 50 percent requirement to a higher figure.

Assemblyman Carpenter agreed. Having the petition for the creation of a maintenance district signed by 60 percent of the homeowners would give a fairly good indication that people were in favor of it. " . . . the county commissioners would receive this petition with 60 percent . . . signed up for the maintenance district, hold their hearing, and actually pass the ordinance at the next commission meeting," he said. If at that time, 40 percent of the people came to the commission meeting and voiced their opposition, then the commission could not pass the ordinance. Hopefully, he said, those safeguards were covered in the bill.

Carole Vilardo, Nevada Taxpayers Association, asked for a hardship provision in the bill. She was concerned about residents in the older subdivisions who lived on fixed incomes.

Chairman Bache closed the hearing on A.B. 604 and opened the hearing on Assembly Bill 639.

Mary Walker, representing Douglas County, said A.B. 639 raised the threshold for requiring the advertisement of competitive bids for rural communities. The threshold would be raised from $10,000 to $25,000. In 1993 formal bid limits for Washoe and Clark Counties were changed to $25,000, but rural communities were left at $10,000. She introduced an amendment (Exhibit H) which incorporated suggestions by the Nevada Association of Counties (NACO).

A.B. 639 was a government efficiency bill, Ms. Walker continued. In rural communities, a formal bid process was required for contracts between $10,000 and $25,000. At least 50 hours were required to process a bid and the cost was over $1,100. A non-formal bid requirement would take 2 hours at the most and cost probably $80. The bill would save taxpayer money and provide for a higher service level. She estimated the provisions of the bill would save Carson City around $10,000 per year.

More bidders would be attracted. By having a more flexible purchasing process for smaller purchases, smaller "mom and pop" types of businesses would be encouraged to bid. Vendors tended to bid higher when the purchasing process was complex. And lastly, response time to local governments would be minimized.

James Keenan, Purchasing and Contracts Administrator for Douglas County, introduced Exhibit I. Mr. Keenan was also a member of the Nevada Public Purchasing Study Commission mandated by NRS 332.215. He verified the examples given by Ms. Walker were typical for small entities throughout the state.

Claudette Springmeyer, Comptroller and Administrative Service Director for Douglas County, also supported A.B. 639. She indicated she had talked with several rural communities and counties, all of whom lent their support to the bill. She introduced a letter from Carson-Tahoe Hospital (see Exhibit J) and read it into the record.

Ms. Walker added the bill would not preclude any local government from going through a formal bid process.

Chairman Bache wanted to make certain of the Nevada Press Association’s views on the bill. In the past, he said, the association vehemently opposed increasing the bid level from $10,000 to $25,000.

Ms. Walker assured Chairman Bache she had worked with the Nevada Press Association. Their concern was to continue with accountability and not have a lessening of [advertising] revenues for smaller newspapers. Advertising prior to bid award would still be done. Ms. Walker indicated the Nevada Press Association and the Nevada Association of Counties were in favor of A.B. 639.

Robert S. Hadfield, Executive Director, Nevada Association of Counties, urged amend and do pass of A.B. 639.

Tom Grady, Nevada League of Cities, concurred.

Chairman Bache asked for a motion.

Chairman Bache opened the hearing on Assembly Bill 642.

Barbara McKenzie, representing the City of Reno, gave the committee some background on A.B. 642. For the past several planning sessions, she said, Reno had formed focus groups to develop its legislative agenda. The groups consisted of about 60 citizens, including business owners, board and commission members, and members of the seven neighborhood and advisory boards. All the citizens concurred that municipalities in Nevada should be able to form special assessment districts at the behest of citizens and taxpayers. Some of the issues discussed included enhancement of neighborhood park maintenance, parking facilities in small business districts, and better security provisions in certain neighborhoods. Currently, the Reno downtown area had implemented two special districts, one for maintenance of their extraordinary developments in the Reno Redevelopment District, and another which encouraged and allowed increased security through additional policing in the downtown area. A.B. 642 provided the tools to do enhancements in other business districts besides downtown, and in neighborhood areas as well – if property owners and taxpayers so wished.

Ms. McKenzie recommended a hardship clause for taxpayers on fixed incomes be included in the bill, and indicated such provisions had already been incorporated in several downtown improvement districts.

Marta Golding Brown, representing the City of North Las Vegas, supported the bill.

Guy Zewadski, representing the Arlington Towers Homeowners Association, had some reservations about A.B. 642. Arlington Towers was in the entertainment "core" of downtown Reno. Recently, the association was assessed about $18 million for the railroad track transfer. They were also facing possible sidewalk assessments. The association was starting to be concerned about the liens on Arlington Towers. He had a particular problem with lines 36 through 40, on page 2 of the bill, " . .  for the public hearing, written protests are filed that are signed by the owners of property located within the proposed special district who will be required to pay 51 percent or more of the total assessment proposed to be levied pursuant to section 8 of this act, the special district may not be established." He felt the language paralleled Assemblywoman Parnell’s concerns with A.B. 604. The opposition vote was limited to a percent of the payment of the project.

The voters and citizens in Reno would be disenfranchised, he continued. "To be on a neighborhood advisory committee, you have to be appointed. So if you speak out against public policies the city council wants, you never get appointed."

Mr. Zewadski’s final comment concerned the taking of an assessment normally funded by general bonds and creating a special assessment district scenario where liens were put on real estate. Those projects should be funded by general bonds, he said.

Carole Vilardo, Nevada Taxpayers Association, also opposed A.B. 642. She felt the bill was another way around the property tax cap. The provisions of the bill took general government functions and provided additional assessments. She saw very few redeeming features in the bill. If there was a specific need for special assessment districts, she said, those needs should be addressed by special improvement district laws.

Assemblyman Mortenson agreed with Ms. Vilardo’s comments, and agreed the bill allowed a "way around" the property tax cap.

Chairman Bache closed the hearing on A.B. 642 and asked Assemblywoman Parnell to discuss Assembly Bill 539 which made changes to the charter of Carson City.

Assemblywoman Parnell indicated the revisions in the Carson City charter proposed in A.B. 539 had been unanimously approved by the charter committee as well as by the Carson City Board of Supervisors.

Chairman Bache invited a motion

Chairman Bache asked for discussion. He recalled that one member had opposed A.B. 539, contending the charter could only be amended by a vote of the people. There were different types of charters in Nevada, he said, general charters and special charters. Carson City’s charter was a special charter. He asked for a vote on the motion.

The Chairman announced work sessions for Thursday and Friday, and adjourned the meeting at 11:50 a.m.

RESPECTFULLY SUBMITTED:

Charlotte Tucker,

Committee Secretary

APPROVED BY:

Assemblyman Douglas Bache, Chairman

DATE: