The Committee on Government Affairs was called to order at 8:20 a.m., on Friday, April 23, 1999. Chairman Douglas Bache presided in Room 3143 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All Exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Mr. Douglas Bache, Chairman

Mr. John Jay Lee, Vice Chairman

Ms. Merle Berman

Mrs. Vivian Freeman

Ms. Dawn Gibbons

Mr. David Humke

Mr. Harry Mortenson

Mr. Roy Neighbors

Ms. Bonnie Parnell

Mr. Kelly Thomas

Ms. Sandra Tiffany

Ms. Kathy Von Tobel

Mr. Wendell Williams

COMMITTEE MEMBERS EXCUSED:

Ms. Gene Segerblom

STAFF MEMBERS PRESENT:

OTHERS PRESENT:

Warren Hardy, representing the city of North Las Vegas, stated S.B. 182 dealt with the city beautification fee. The current charter allowed the city council to charge each housing unit an additional utility charge of 25 cents per month for purposes of graffiti abatement.

Mr. Hardy explained the definition of a housing unit included a single-family dwelling, a unit in a multiple-family dwelling, or a mobile home as indicated in by section 1, subsection 6, part (a).

Chairman Bache asked if even with the definition provided was a family who resided in a mobile home required to pay the water bill with North Las Vegas or was water included with the rental of the mobile home space. Mr. Hardy replied it varied from situation to situation; however, in most cases, water was included in the rent. Upon passage of S.B. 182, an owner of a mobile home park would be required to pay a larger fee in order to make up for the units in the park.

Chairman Bache was concerned with the how the language read. An individual could still argue the entire townhouse, apartment, or condominium complex was a single-unit. Mr. Hardy replied he felt the legal counsel was satisfied with the definition of a housing unit, and he believed the definition provided enough clarification in order to enable an ordinance change.

Ms. Berman asked for what was the money utilized, to which Mr. Hardy reiterated the money would be used for graffiti abatement.

In response to Ms. Berman’s question, Mr. Hardy said the city viewed the bill as cleanup language in an equity issue. It was not a specific project the city was trying to fund, but an ongoing project that would raise an additional $12,000 for graffiti abatement in North Las Vegas.

Ms. Berman questioned the need for the bill when Las Vegas currently received free graffiti abatement. Mr. Hardy replied the city of North Las Vegas performed its own graffiti abatement, and it was funded in that fashion.

Elizabeth Fretwell, representing the city of Henderson, related information to the committee relating to earlier professional experiences. While working for Clark County she had managed the division of code enforcement, which was responsible for the implementation and management of the graffiti hotline. The hotline provided for incoming calls to be transferred to the appropriate jurisdiction, which in turn, absorbed the cost of the cleanup. The graffiti abatement maintenance programs were fairly expensive totaling several hundred thousand dollars annually in Clark County.

Mr. Lee commented he understood the bill to mean every family in North Las Vegas who possessed a water meter donated 25 cents to the beautification project, and a mobile home park owner would be charged a greater amount to make up for those individual residents. The additional $12,000 earned would be included in the existing funds for the beautification project. Mr. Hardy said he was correct.

Mr. Mortenson was chagrinned to discover the beautification project was not really intended to beautify North Las Vegas, but was intended to only mitigate graffiti. He commented on remarks made by Carole Vilardo, Nevada Taxpayers Association, regarding government charges. He added soon residents would be charged for fire protection with the use of small fees tacked on to other utility bills when the city should fund such projects with available taxes. Mr. Hardy explained the council had determined there were some residents who were paying the fee and some that were not, and the city council viewed the matter as a tax equity issue.

Chairman Bache asked what was the vote of the council on that particular issue. Mr. Hardy believed the vote was unanimous, but would verify the answer and inform the committee. No further discussion ensued.

With no further testimony, Chairman Bache closed the hearing on S.B. 182.

Warren Hardy, representing the city of North Las Vegas, stated S.B. 454 was another change to the charter of North Las Vegas. The city council had decided to change the charter in order to provide that the city attorney was appointed by, and served at the will of, the city council. Passage of S.B. 454 would bring the city’s charter in line with most charters of southern Nevada cities.

In response to Mrs. Freeman’s comment, Mr. Hardy explained it was his knowledge cities in southern Nevada had always appointed their city attorneys.

Discussion ensued among committee members regarding the number of bill drafts to which the cities and local entities had access. Mr. Hardy stated the city had engrossed in many internal discussions with regard to effective presentation of similar legislation.

Mr. Lee asked if S.B. 454 was not passed, did the city of North Las Vegas have a contingency plan and what was the reason behind the development of the bill draft. Mr. Hardy replied the city council had felt S.B. 454 was good public policy and had examined how similar policies worked in other cities. It was an attempt to avoid future problems by adopting a better system.

With no further testimony, Chairman Bache closed the hearing on S.B. 454.

Dan Musgrove, representing the city of Las Vegas, stated S.B. 457 dealt with impact fees for both fire suppression and park projects. The Nevada Revised Statutes (NRS) chapter 278B dealt with impact fees for new developments. An "impact fee" was defined as a charge imposed by a local government on new development to finance the costs of a capital improvement or facility expansion necessitated by, and attributable to, the new development.

Mr. Musgrove stated by requesting the passage of S.B. 457, the language in NRS 278B would be broadened in order to include fire suppression and park projects, which would be financed with impact fees. He provided the committee with a primer on impact fees (Exhibit C).

Mr. Musgrove proposed an amendment that defined the term "park project" (Exhibit D). The definition offered would be more consistent with the existing definitions of eligible projects currently in statute. The proposed changes requested in Exhibit D would amend sections 3 and 4 of S.B. 457.

Mr. Musgrove said NRS 278B provided for a very detailed process on how impact fees were exacted. Through the capital improvement project and planning processes, the actual definition of what was to be constructed under the definition of impact fees was narrowly defined. The city believed the request to further narrowly define "park project" would need to be developed at the local level. Section 4 dealt with residential construction taxes (RCTs). He suggested before the committee had made any decisions, they allow for further examination of the definition of "park project," due to a disagreement with his legal staff. He wanted to ensure the RCT and park impact fees did not overlap in an illegal way. Support from the committee was urged.

Mr. Lee remarked he did not have a good understanding of residential construction tax and the situations in which it applied, and requested Mr. Musgrove clarify the issue for him. Mr. Musgrove said RCT was paid at the time permits were pulled. To his knowledge, impact fees had never been enacted by the city of Las Vegas; however, when an impact fee was exacted, any monies paid into the residential construction tax would be credited against the price of the impact fee. He provided examples of situations in which RCTs would be applied.

Mr. Lee asked how long the city allowed RCTs to remain a credit, to which Mr. Musgrove replied he was unsure but would provide that information to the committee at a later time.

With regard to Exhibit D, Mr. Thomas asked Mr. Musgrove to explain what was the reason for the exclusion of recreational trails and bike paths. Mr. Musgrove replied concerns had been expressed in Senate hearings the impact fees would be used to build a regional trail system throughout the entire valley. Because it was not the intent of the city to do so, bike paths and trails were specifically excluded in the amendment.

Mr. Thomas remarked recreational trails and bike paths were viable aspects to include in S.B. 457.

Concerning impact fees, Chairman Bache remarked there had to be a nexus between the project and the fees collected. A regional trail system would not have a nexus with the impact fees for a specific district or area. There had been a number of court cases over impact fees and defining what projects fell beneath that umbrella.

Mr. Mortenson advised the language of the bill did not prohibit the building of recreational trails and bike paths within a park parcel but could be constructed out to the parcel’s boundaries.

In answer to Ms. Gibbons’ question, Mr. Musgrove said NRS 278B pertained to both cities and counties and was specifically aimed at impact fees for new developments.

Irene Porter, executive director, Southern Nevada Home Builders Association (SNHBA), said SNHBA had originally been opposed to the inclusion of fire suppression projects within the impact fee law; however, would support park projects if the term was more narrowly and specifically defined.

Ms. Porter said she had objected to the prior inclusion of fire equipment in the bill because it did not meet the rational nexus test and could not be allowed under impact fees. Because the legal staff for the Senate Committee on Government Affairs advised impact fees could not be used for equipment, any reference to fire equipment had been removed. SNHBA currently maintained the philosophical belief fire suppression, fire equipment, fire buildings, and so on, were used by the entire community at all times, and therefore they should be funded by the community through the bond issue process.

Ms. Porter said SNHBA would support the inclusion of "park project" in S.B. 457 with a rational definition and with the removal of RCTs. Because it was unconstitutional to tax individuals twice, RCTs needed to be removed if local government imposed impact fees.

Ms. Porter said the way S.B. 457 was presently written, local government would be able to develop a park plan with the inclusion of neighborhood, community, and regional parks, utilizing impact fees. Because the language was so broad, there existed the potential for charging outrageous fees in order to pay for everything at one time. SNHBA felt the definition should be more narrowly drawn and she suggested amending the definition to read "…park projects and their facilities for parks, neighborhood, and community parks up to 40 acres in size…" The necessity for a bond issue would not be replaced because impact fees would only be used for new developments. Because everyone who utilized the facilities in the area would need to pay their fair share, a bond issue would need to be passed before impact fees could be imposed.

Ms. Porter stated SNHBA had supported impact fee legislation in the past and would continue to support impact fees for parks with the narrow definition because it eliminated the exaction process. She proposed SNHBA continue to work with the city of Las Vegas to further define the term "park project."

Mrs. Freeman commented she understood the need for bond issues where fire suppression was concerned and asked if there had been any analysis performed on which fee, an impact fee or RCT, would best benefit the entire community. Ms. Porter replied RCTs had been primarily used in the older parks, which had been part of its failing. In the long run, the community would be better served with the utilization of impact fee for parks.

In response to Mrs. Freeman’s question, Ms. Porter said a regional park would be equivalent to 100 to 200 acres. Because SNHBA would support an expanded definition to include parks up to 40 acres, they had proposed regional parks would not be included in the impact fee process. It would be extremely difficult to perform a rational nexus test for a regional park.

Bill Gregory, representing National Association of Industrial & Office Parks (NAIOP), echoed the comments expressed by Ms. Porter and added NAIOP believed the fire suppression projects were a community need and a bond issue was the appropriate vehicle to deal with the issue.

Carole Vilardo, representing Nevada Taxpayers Association (NTA), expressed the bulk of her concern regarded the definition of "park project" in S.B. 457 (first reprint) and the amendment that had been presented.

Referring to Exhibit D, Ms. Vilardo stated she believed the term "incidentals" referred to equipment. Because any equipment could be physically moved from one location to another, it would not meet the nexus issue; therefore, NTA objected to any definition other than one referencing permanently affixed facilities. She echoed Ms. Porter’s concerns regarding the service area language in an approved area, and commented the city could only tack on so many fees before housing was no longer affordable.

Mr. Humke asked if there was a specific exclusion for impact fees that went to pay personnel costs. Ms. Vilardo replied when the dollar amount of the impact fee was set, it pertained to a facilities charge and not an operational charge. At the time people moved into a newly developed building and services came online, those employees generated the revenue used for personnel costs.

Mr. Humke asked if any city had ever pushed to utilize an impact fee to pay those personnel costs, and if so, was there a line of court cases that showed the legislative intent. Ms. Porter replied affirmatively. There were court cases citing the prohibited use of impact fees for personnel costs. She reviewed with the committee additional situations for which impact fees were prohibited to be used which included:

• The construction acquisition or expansion of public facilities or assets, other than capital improvement projects, or facilities expansions included in the capital improvement program;

• The repair, operation, or maintenance of existing or new capital improvement or facility expansions;

• The upgrading expansion or replacement of existing capital improvements or facilities, to serve existing development to meet more stringent safety, environmental, or regulatory standards;

• The upgrading expansion or replacement of existing capital improvements or facilities, to provide better service to existing development;

• The administration or operating costs of the local government; and,

• Except as otherwise provided in NRS 278B.220, the payments of principle and interest, or other finance charges on bonds or other indebtedness.

Mr. Neighbors remarked the proposed amendment had not addressed section 6, item 2 "fire suppression project," and he asked Ms. Vilardo to provide him with an example. Ms. Vilardo replied "fire suppression project" was identified in section 2 of S.B. 457, and referred to the actual building.

In addition to RCT and imposition of an impact fee, Chairman Bache asked what other taxes would be applicable to the contents of S.B. 457 and how would they coordinate with each other. He expressed concern individuals would be assessed multiple taxes for the same item. With regard to Clark County, Ms. Vilardo replied the impact fee would be imposed on new developments. A contractor who was building a development had an RCT, sewer hook-up fees for drawing the lines into the property, and fees for drawing water lines into the property. In addition an assessed impact fee of $500 per residential dwelling unit, there was fee of $550 for tortoise mitigation, and sales tax on building materials, and so on. The developer generally applied for a construction loan and the fees referenced were paid up front with 5 years in which to develop on the acquired land. All of those fees charged to the developer impacted the cost of the house.

Continuing, Ms. Vilardo said an area was valued by the selling prices of property in that area. New homes that came in had an escalated value because of the additional fees assessed and now impacted the existing homes, which increased in value resulting in a greater level of taxes being paid.

In conclusion, Ms. Vilardo commented Ms. Porter had referenced exactions, which were defined as blackmail techniques. In order for a developer to receive a construction loan prior to developing a new area, a developer would be informed he had to build that facility or he had to erect traffic lights outside the intended development area. She said impact fees did serve a purpose; however, the person who bought the house would absorb costs.

Ms. Porter remarked as a result of an independent study that had been conducted, she was in possession of a list that cited those taxes assessed on the purchase of a single-family home in southern Nevada, which included every fee, tax, and exaction. She would supply each member with a copy of the list if they so desired.

Mrs. Freeman asked if Ms. Porter was aware of a similar list developed for northern Nevada homes. Ms. Porter replied she was unsure as SNHBA had commissioned the independent study to be conducted for homes in southern Nevada; however, she would be happy to call Reno Home Builders to find out if they possessed that information.

Mr. Neighbors commented the construction of a fire station should be addressed through a bond issue, not with impact fees. He queried why it was a new addition and never addressed in statute at any time prior, and asked if anyone could clarify the issue for him. Chairman Bache replied the committee had reviewed a bill draft dealing with fire and police stations in the 1993 session, but it had not passed at that time. Ms. Porter added many issues dealing with impact fees had been considered by interim committees prior to that session. At that time, interim committees felt police and fire stations should be built by the individual cities through bond issues rather than impact fees.

Chairman Bache remarked the cities of Reno and Sparks and Washoe County used impact fees only for road construction, and added possibly the reason impact fees were scarcely used was due to the definition of exaction provided by Ms. Vilardo. He asked how long Nevada had the impact fee statute as currently written. Ms. Vilardo replied the statute was established in the 1987 session as a result of an interim study committee.

Mr. Humke commented NRS 278B applied to every part of the state, so S.B. 457 would broaden the definition for Washoe County.

With no further testimony, Chairman Bache closed the hearing on S.B. 457.

Chairman Bache opened the hearing on S.B. 263 for discussion only. Testimony had been heard on April 21, 1999. In response to his question to Charles Abbott, executive director, Nevada Commission for Veteran Affairs, regarding the Office of Veterans’ Services being exempt from the Administrative Procedure Act, Chairman Bache provided the committee with a letter from Mr. Abbott (Exhibit E).

Chairman Bache remarked after having read the letter, he did not believe the answer that had been ascertained was adequate. The Department of Health and Human Services dealt extensively with federal agencies and that department was subject to the Administrative Procedure Act.

Mr. Humke recalled the Office of Veterans’ Services was funded almost in total with state general fund monies. If any federal money was received it was only a token amount. He failed to see the logic of section 5 that would exempt the office entirely from the requirements of NRS 233B.039 because it was not a specialized service.

Continuing, Mr. Humke stated he agreed with Chairman Bache and supported amending out section 5.

Carole Vilardo, Nevada Taxpayers Association, stated she agreed with Mr. Humke and saw no reason for the office to be exempt from the regulatory process of the Administrative Procedure Act.

Chairman Bache stated section 5 was new language; therefore, the Office of Veterans’ Services had been required to be in compliance with provisions of the Administrative Procedure Act at one time, and he saw no sufficient reason for the exemption presently. He called for a motion on S.B. 263.

There being no further business, Chairman Bache adjourned the meeting at 9:37 a.m.

RESPECTFULLY SUBMITTED:

Rachel Baker,

Committee Secretary

APPROVED BY:

Assemblyman Douglas Bache, Chairman

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