The Committee on Judiciary was called to order at 8:00 a.m., on Friday, April 23, 1999. Chairman Bernie Anderson presided in Room 3138 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. Bernie Anderson, Chairman

Mr. Mark Manendo, Vice Chairman

Ms. Sharron Angle

Mr. Greg Brower

Ms. Barbara Buckley

Mr. John Carpenter

Mr. Jerry Claborn

Mr. Tom Collins

Mr. Don Gustavson

Mrs. Ellen Koivisto

Ms. Sheila Leslie

Ms. Kathy McClain

Mr. Dennis Nolan

Ms. Genie Ohrenschall

GUEST LEGISLATORS PRESENT:

Senator Dean Rhoads, Northern Nevada Senate District

STAFF MEMBERS PRESENT:

OTHERS PRESENT:

After roll was called, Chairman Anderson opened the hearing on Senate Bill 314.

Senator Dean Rhoads, representing the Northern Nevada Senatorial District, explained the history of S.B. 314. It was brought to his attention by the city of West Wendover that existing statutes only allowed a judge to be appointed for 1 year. The bill would allow the city to appoint a judge for a period longer than 1 year. Senator Rhoads remarked the representatives for the city had been present to testify in front of the Senate Committee on Judiciary but due to conflicts were unable to attend today’s hearing.

Tom Grady, representing the Nevada League of Cities, thanked Senator Rhoads for bringing the bill forward. He explained the bill passed through the Senate committee as well as the Senate floor unanimously. The bill and its adopted amendments met with what the city proposed and were acceptable to the judges' association. In cities of the third class, which West Wendover was, judges were appointed. They did not run for election.

Chairman Anderson pointed out he had been informed by the Legal Division of the Legislative Counsel Bureau (LCB) that there might be a possible conflict with S.B. 20 which had already been passed by the Assembly Committee on Judiciary.

Mr. Grady said originally, S.B. 314 presented a conflict but believed it could be worked out.

Chairman Anderson announced they would wait for further clarification from the Legal Division of the LCB and closed the hearing on S.B. 314. He opened the hearing on S.B. 62.

Frank Daykin, formerly a legislative counsel and currently a commissioner of the National Conference of Commissioners on Uniform State Laws, explained the bill stemmed from that conference and was endorsed by the Nevada Bankers Association. S.B. 62 would amend Article 9 of the Uniform Commercial Code (UCC). The UCC was created in 1967 and was last revised in 1975. Mr. Daykin stated although the bill was extensive, it did not make any fundamental or radical changes in the law. It would make the law more current with modern commercial practices. He pointed out in regard to uniformity of filing and forms, there had been some proposed amendments to accommodate the needs of the secretary of state. He noted the secretary of state approved of the proposed amendments. He introduced Alan Rabkin, General Counsel for Sierra West Bank, who would review the bill further from a banker’s viewpoint.

Chairman Anderson cautioned the members of the committee they were working from the first reprint of S.B. 62 and not the original bill.

Assemblywoman Buckley inquired if there was a summary of the UCC for the committee to review. Mr. Rabkin replied he would be happy to provide the committee with a summary.

Chairman Anderson asked Mr. Daykin to review with the committee the purpose and intent of the conference, pointing out he was the longest serving member of the National Conference of Commissioners on Uniform State Laws. He noted Assemblywoman Buckley, Assemblyman Humke, and Senators James and Amodei were also members.

Mr. Daykin explained the conference had been in existence since 1892 and its purpose was to enable delegations from the states to meet and prepare laws which all of the states then could enact in areas where uniformity would be desirable. The UCC succeeded some of the first uniform acts put out by the conference and were enacted in all 50 states. The conference was presently focused on renovating the UCC since it was more than 50 years old. The renovation of Article 9 was part of that project and only Articles 2 and 2a would remain. Mr. Daykin further explained the UCC had the fewest modifications in it of any of the uniform acts. He noted a primary focus of the conference was uniformity in commercial transactions. Many banks did business in a number of states and wanted, as nearly as possible, the same language.

Ms. Buckley told the committee she had received some correspondence from the consumer’s union and they seemed satisfied with the compromises reached but asked if either witness would be willing to highlight some of the issues from the consumer’s prospective.

Mr. Daykin referred her to section 101 of the bill where there was an extensive list of provisions of the code which the parties could not waive or vary by agreement. He pointed out historically, the lender would have a standard form and it would be carefully drafted in order to protect him. Now, there were extensive provisions dealing with, for example, the right to notice before collateral was taken or disposed if it was in the possession of the lender. Other sections that provided protection were sections 115, 119, 120, 121, and 21. Those sections received extensive discussion and resulted in considerable enlargement of remedies against the creditor if he failed to comply with those provisions. Mr. Daykin stated the remedies were not formerly in statute and opined those provisions met with the consumers’ satisfaction.

Mr. Rabkin explained the conference spent several years wrestling over consumer issues and he stated the protections for the consumer side were as good, if not better, than the old code and existing case law. Generally, the concerns were as to, for example, how specific you needed to describe consumer collateral. Wherever possible, compromises were reached to err on the side of letting a consumer debtor know specifically what it was they were pledging and to set up road blocks for creditors by way of notice. In that instance, there would be adequate protection for the consumer and also to the court process to make sure that people fully understand what was happening. The code was also streamlined when it came to commercial secured interests to make it more viable to be done from a laptop computer or from a quick filing basis. Mr. Rabkin said in that regard, a commercial debtor would need to pay more attention to what they signed because the remedies were streamlined. He reiterated there was more protection on the consumer side and the commercial side had been streamlined.

Chairman Anderson commented while the bill was daunting, the existing code had actually been reconfigured and then repositioned into a new statutory scheme that would be more identifiable to the national conference.

Mr. Daykin clarified those provisions were presently in Nevada Revised Statutes (NRS) 104.9501 through NRS 104.9507. Those sections were repealed but their substance was reenacted in the bill in order to logically fit with the new additions. With the supplement, every section of NRS would be given a number that was easily found from the numbers in the official version of the UCC.

Mr. Rabkin testified there were four general categories of changes in S.B. 62. The first change would update the old code bringing it current with the electronic age. The second change expanded the type of assets that could be perfected with the secretary of state to make it easier to work with new and different types of secured collateral. The third change involved incorporating current law into the updated version of Article 9. It would make it a more uniform provision and clarified it was not something based upon "the interpretation of a cord." "We wanted to make sure that what is good in Oklahoma is the same as what is good in California because these contracts cross borders and there is simply no way to confine them to a single state." The final change dealt with remedies; strengthening the consumer side and streamlining the commercial side. Mr. Rabkin pointed out all states were currently in the process of examining the statute and many had already approved it.

John P. Sande, III, representing the Nevada Banker’s Association, informed the committee the banker’s association had requested the legislation and asked the committee for its support.

Scott Anderson, Deputy Secretary of State for commercial recordings, testified in support of S.B. 314. He noted the secretary of state had worked with both Mr. Daykin and Mr. Rabkin and commented the bill came at an opportune time. He reasoned the bill would allow his office to switch to electronic filings. It would also allow for more uniform and expanded filings.

Being no one else wished to testify on S.B. 62, Chairman Anderson closed the hearing. He told the committee of his intent to hold the bill until the committee was able to review the summary of the UCC which Mr. Rabkin agreed to provide. He opened the hearing on Senate Bill 121.

Doug Dickerson, Legislative Representative for the city of Las Vegas, stated S.B. 121 was requested by Las Vegas in order to improve communications with residents within Clark County. He remarked the city was growing very rapidly and as people moved to the area, misunderstandings occurred in regard to zoning issues. He hoped the bill would help buyers better understand what could happen in their neighborhood. He noted when the bill was heard on the Senate side, he had worked with Irene Porter and the homebuilders to resolve some of their preliminary concerns. Currently, they supported the bill.

Mr. Dickerson proceeded to review the various sections of the bill. Mr. Dickerson’s prepared comments were attached as Exhibit C.

• Section 1: Described the chapter.

• Section 2: Provided definition of "seller."

• Section 3: Required disclosures and notices concerning proposed changes in zoning to be made at least 24 hours before signing a sales agreement.

Mr. Dickerson noted a seller must provide the purchaser with the most recent gaming enterprise district map and also the location of the gaming enterprise district nearest to the residence. In addition, the information must be updated every 4 months, must advise the initial purchaser that the gaming enterprise district was subject to change, and provide them with instructions on how to obtain more current information. A purchaser may waive that 24-hour period by signing a waiver. Mr. Dickerson explained that was to make people aware changes could occur in their particular area.

• Section 4: Before the initial purchaser of residence signed a sale agreement or opened escrow, whichever occurred earlier, the seller should provide zoning designations, designations of master plans, and general use plans. The information must be updated not less than every 6 months. The initial purchaser must be advised that the master plan was for the general, comprehensive, and long-term development and that the designations of the master plan, regarding land use, provided the most probable indication of future development that could occur in the surrounding properties.

• Section 5: Addressed the notice of a public hearing for proposed zoning changes. The notice must include the existing zoning designation, the proposed zoning designation, and a brief summary of the intent of the proposed change.

Mr. Dickerson noted currently, the notice used legal descriptions. He suggested using layman’s terms to better explain the proposal.

Chairman Anderson warned the bill might possibly need to be amended so a small technical change in drafting could be made. He then queried if the bill would prevent public comment.

Stephen George, Deputy City Attorney from the city of Las Vegas, clarified it would not impede the process in any way. People would still have the opportunity to express their opinions in favor or in opposition to a particular zone change request under the current standards.

Ms. Buckley asked what the bill would do that was not already done by law. Mr. George stated the intent was to refocus the attention of the potential purchaser from zoning to the general plan designation. He explained a problem they experienced on an ongoing basis was when a potential purchaser received the disclosure statement, they looked at but did not fully understand what it meant or what it did. As a result, they relied on the zoning classification. Based on the zone classification, the purchaser would believe the property would be a half-acre lot when, in fact, the general plan designated it for some type of commercial venture. He reiterated the bill would refocus the attention of the purchaser to call or come down to his office and review what the general plan classification would provide.

Ms. Buckley clarified sections 2 and 3 were existing law and the Legal Division had broken it down in order to make the language more clear. The only changes were on pages 3, 4, and 5 and their purpose was to get the consumer to ask questions about the master plan as opposed to the zoning classifications. She stated her concern was the average person would still be unaware of the system, particularly in Clark County, and pondered if the bill would really change that situation.

Mr. George replied clarifying the process as much as possible would be in everyone’s best interest. He opined the proposed language would be beneficial to people prior to them making a critical decision with the investment of a home. "It is substantially better than what we have."

Chairman Anderson shared Ms. Buckley’s concern.

Mr. George explained when people called the local government or came down to the office, it should be standard to inform them of the zoning designation and the general plan. The problem was there were hundreds of people making phone calls, coming down to the office, and the majority of the questions were not coming from potential purchasers but investors who called with the specific question of what was the zoning designation. It was difficult for a staff member to decipher who was calling and what their real intent was. In an effort to solve that problem, Mr. George told the committee he attended many meetings to explain the principle. He noted any additional input on how to educate the public and focus their attention on the proper issues would be appreciated.

Assemblywoman Leslie asked for clarification of a gaming enterprise zone, referring to the proposal to build "Jethro’s casino" in her district. Mr. George responded the gaming enterprise zones were the areas designated where a hotel casino could be operated with an unlimited gaming license. He remarked there were a number of stringent restrictions on those types of developments and in the 1997 Legislative Session, a bill was passed which imposed even stricter requirements on the development of a neighborhood casino. While he was only familiar with the jurisdictions in southern Nevada, he pointed out most of the jurisdictions were under the same requirements and had gaming enterprise zones. In regard to whether they applied to Washoe County, he was not entirely certain.

Ms. Lang clarified section 3 of S.B. 121 was only applicable to Clark County.

Assemblywoman Angle stated a lot of the growth occurring in Washoe County was in her district and therefore, she would like it to apply also to Washoe County. Mr. George explained none of the language previously adopted was amended. Only language regarding the notification that dealt with Clark County was amended. However, he commented he would not have any opposition to changing it to apply to Washoe County.

Ms. Lang further clarified the language of sections 2 and 3 was taken out of NRS 113.070. It was not new but separated out because it only applied to Clark County whereas the remainder of the section applied statewide. The drafters of the bill believed it would be easier in codification to have that section separated out.

Chairman Anderson reiterated the bill was really designed to meet Clark County’s needs. He opined representatives for Washoe County had apparently not come forward to request the bill also apply to it.

Ms. Buckley explained to the committee Washoe County was "pre-zoned" whereas in Clark County, "everything is just in a holding pattern." The zoning classifications could change from week to week. She expressed her belief that Clark County was one of the only counties in the country to do it that way.

Chairman Anderson asked for further explanation why the language was moved statutorily from one place to another. Ms. Lang explained section 4 applied statewide. The portion that applied solely to Clark County was the part that was deleted but added to sections 2 and 3 of the bill.

Mr. Dickerson emphasized he was not speaking for Washoe County. That was not the intent of the bill.

Assemblyman Brower stated his concern was the onus was placed on the seller to disclose to the buyer. He asked how long that requirement had been in effect. Mr. George replied it was created in the early 1990’s and then amended in the 1997 Legislative Session to include the disclosure of the general plan.

Mr. Brower asked for further explanation of how a seller would make disclosure to the buyer. Mr. George explained the bill dealt more with new home sales than existing sales but was not limited to that. He stated generally, there was a disclosure sheet, typically one page, and sometimes a map was included that showed the designations of the residence and the surrounding properties. It indicated the basic zoning designation and the general plan designation. He commented some home sellers disclosed using the map and others used a list which would provide the potential purchaser with enough information to determine for what specific uses the property could be used.

In response to further questioning by Mr. Brower, Mr. Dickerson also opined the language referred to the initial purchaser. He explained there had been talk about it applying to realtors, but the realtors stated it would be an impossible task.

Mr. Brower questioned if the language on page 1, section 3, which said "Agreement with the initial purchaser" was interpreted to mean only the sale from the builder to the first purchaser. Mr. George said that was how it had been applied in the past. He said it was not their intent to change that in any way.

Mr. Brower recognized that was why it would not affect realtors with which Mr. George agreed.

Assemblyman Manendo asked when public notification was required for zoning changes. Mr. George stated his understanding was within 500 feet, however, in the city of Las Vegas it had been expanded to 750 feet.

Mr. Manendo stated he was familiar with another bill which dealt with notifications. Mr. George said he was also familiar with that bill, but it dealt more with special use permits and variances requiring a notification zone of about 1,350 feet. He did not believe it would conflict with S.B. 121 in any way.

In regard to the minor technical change mentioned earlier by Chairman Anderson, Ms. Lang explained it would be advisable to have an amendment to the definition in section 2. She noted the reference to NRS 113.060 in that definition should be removed because the definition should only apply to section 3 and what was now section 4 of the bill.

There being no one else who wished to testify, Chairman Anderson closed the hearing on S.B. 121.

Chairman Anderson assigned S.B. 121 to Assemblyman Nolan for presentation on the assembly floor.

There being no further business before the committee, the meeting was adjourned at 9:20 a.m.

RESPECTFULLY SUBMITTED:

Jennifer Carnahan,

Committee Secretary

APPROVED BY:

Assemblyman Bernie Anderson, Chairman

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