The Committee on Taxation was called to order at 1:30 p.m., on Thursday, April 8, 1999. Chairman David Goldwater presided in Room 3142 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. David Goldwater, Chairman

Mr. Roy Neighbors, Vice Chairman

Mr. Bernie Anderson

Mr. Morse Arberry, Jr.

Mr. Greg Brower

Mrs. Vivian Freeman

Ms. Dawn Gibbons

Mr. John Jay Lee

Mr. Mark Manendo

Mr. John Marvel

Mr. Harry Mortenson

Mr. Bob Price

Ms. Sandra Tiffany

GUEST LEGISLATORS PRESENT:

Assemblyman Don Gustavson, District 32

STAFF MEMBERS PRESENT:

OTHERS PRESENT:

Dale Akers, Private citizen

Dick Mungett, representing Taxpayers Association

Ted Harris, Private citizen

Katie Lusk, Private citizen

Randi Thompson, Nevadans for Fair Taxation

Janine Hansen, President, Nevada Eagle Forum

Jennifer Stern, Partner, Swenseid & Stern

Bob Doxey, Private citizen

Tom Skancke, representing Las Vegas Convention & Visitors Authority

Don Kaplan, Private citizen

Rick Bennett, Director of Government Relations, University of Nevada, Las Vegas

Bob Dickens, Director, Governmental Relations, University of Nevada, Reno

George Scaduto, Vice President/Finance, University of Nevada, Las Vegas

John Sande, representing Reno-Sparks Convention & Visitors Authority

Bill Isaeff, Deputy City Manager, City of Sparks

Bob Faiss, representing Nevada Resort Association

David Sisk, Vice President, Caesar's Palace/Nevada Resort Association

Dennis Neilander, representing Gaming Control Board

Jeff Rodefer, Deputy Attorney General, Gaming Control Board

Carole Vilardo, President, Nevada Taxpayers Association

Guy Zewadski, representing Arlington Towers Home Owners

Tim Morse, representing Appraisal Industry

Harvey Whittemore, representing Nevada Resort Association

Note: The hearing was simultaneously videoconferenced in Room 4412 of the Grant Sawyer State Office Building, 555 East Washington Avenue, Las Vegas, Nevada.

Following roll call, Chairman Goldwater announced there were four bills and one resolution on the schedule. It would be the last meeting to consider Assembly bills.

Mr. Goldwater then opened the hearing on A.B. 554 which Assemblywoman Freeman had requested the committee to introduce.

A.B. 554 was requested by Reno/Sparks Convention and Visitors Authority (RSCVA). Testifying on behalf of the RSCVA was Jennifer Stern, bond counsel for the authority.

Jennifer Stern, Swenseid & Stern, provided a synopsis of the bill and suggested amendments.

Sections 1 and 4 of the bill reduced the population requirement from 400,000 to 100,000 to put the RSCVA in the same position the Las Vegas Convention & Visitors Authority (LVCVA) had been since 1995. The sections provided that room tax being collected by Washoe County and the cities of Reno and Sparks and pledged to bonds, must continue to be levied, collected, and transmitted to RSCVA as long as bonds were issued and outstanding, pursuant to the provisions of the Fair and Recreation Act. Sections 2 and 3 of the bill would allow any convention and visitor’s authority, not just RSCVA or LVCVA, to issue revenue bonds which were secured by and payable from that room tax. Currently, the convention and visitors authority was only allowed to issue general obligations secured by the room tax, and not revenue bonds secured by the room tax. The only revenue bonds they were authorized to issue were revenue bonds secured by revenues of the facilities, convention centers, livestock event centers, and so forth. In the case of Clark County, it would be facilities such as Cashman Center.

Section 5 provided the act was effective on passage and approval. The amendments suggested originated from Washoe County. They had logically requested that when the county fair and recreation boards issued revenue bonds, they should be in the name of the Fair and Recreation Board and not in the name of the county, which was the case with general obligation bonds. Where obligation bonds were pledging the full faith and credit of the county, they requested they be issued in the name of the Fair and Recreation Board.

Assemblyman Anderson asked if by dropping down the cap to the lower population level were all the requirements parallel to the authority in Clark County. Ms. Stern answered there were some sections in Nevada Revised Statutes (NRS) 244A that were specific only to Washoe County and those had not been affected. Mr. Anderson then asked if by picking up the additional bonding capacity and paralleling the Las Vegas Convention Authority by changing the population, was its structure in terms of its governance also paralleled. Ms. Stern said no, that it had not been the intent of the particular action. Mr. Anderson asked if Mr. Sande cared to offer an opinion.

John Sande, representing the Reno-Sparks Conventions & Visitors Authority, noted there had been no request to change any of the operational aspects of the RSCVA, it had strictly been an attempt to extend its lifetime so it would not terminate. He asked Ms. Stern the effective date. She said it would have been July 1, 2010 when assignment ordinances were in place with the cities and the counties. The bill would extend that assignment by statute.

Mr. Anderson said he was not comfortable without the other provisions.

Chairman Goldwater advised the committee that because it was the last meeting day to be prudent in asking questions. If the bills could be moved out they needed to move, and if not they would not move them.

Mr. Anderson asked Mr. Sande if he believed the RSCVA would agree to accept the same governance structure as Clark County. He added there were other provisions in Clark County that he would like to have examined and compared with the RSCVA beyond the taxing-revenue question, but time was of the essence.

Mr. Sande responded that was not the request, and he did not know what the RSCVA’s position would be. To his knowledge there were no complaints concerning the make up of the RSCVA or how it operated.

Mr. Anderson was of another opinion, as were the people with whom he spoke. In the community where he lived there were some major complaints about the operation of RSCVA and the involvement of the community

Mrs. Freeman noted she had asked for the committee introduction of the bill, because she knew it was an issue that would come before the committee, especially with all the publicity RSCVA was getting with their travel policy. She said she examined the issue and was quite uncomfortable with the fact that only five of the members on the board were elected people while seven were appointed. She had watched the membership change throughout the years and shared some of Mr. Anderson’s concerns. There was a difference between general obligation and revenue bonds. She cited an editorial in the Reno Gazette-Journal that day that said "We should forgive them for their past mistakes in RSCVA, but we shouldn’t have to bring those up as a reason to oppose something like this." Mrs. Freeman would still like the full faith and credit of the county involved when going for any kinds of bonds, whether they were revenue or general obligation. She was quite uncomfortable with it.

Mr. Goldwater noted in section 2, the bill stated they could pledge revenues from any license or other excise taxes levied for the purposes of a revenue bond. He asked if they simply wanted to limit it to room tax, or were there other sources. Ms. Stern felt that language was sufficient for the purposes needed.

Mr. Goldwater asked Ms. Stern what was she not being allowed presently that she needed. Ms. Stern said section 2, page 2, lines 14 to 20, allowed the pledge of excise taxes, as long as there was also a general obligation pledge. In other words, the property tax of the taxpayers was on the line as well. It was a double-barreled pledge. The new language would allow bonds to be secured solely by room tax revenues or facilities revenue and not encumber the full-faith and credit of the county, so property taxes would not also secure those kinds of bonds.

Mr. Goldwater said as he understood it, it was letting the property taxpayers off the hook for funding the Reno Convention Visitors Authority. Ms. Stern said he was correct, and it was providing another alternative. Mr. Goldwater said it released a little bit of the cap that was pledged for those revenue bonds. Ms. Stern said it would in the case of revenue bonds being issued. Presently they had not been issued, they had not had the authority to issue them. It would not release any of the cap, because what happened now was bonds that were issued as general obligation revenue bonds must be payable from the room taxes, so the debt service was paid from room taxes and not property taxes. Presently it was theory only that they were encumbering the property tax. As far as she knew there was no property tax being levied to repay any convention visitors authority’s bonds within the state.

Mr. Marvel asked if the full faith and credit of the county could still be used; were there both options. Ms. Stern said yes. Mr. Goldwater said he had a concern in section 2, subsection 2. He would feel more comfortable if county government was restricted in the kind of fee or excise tax they could pledge for a revenue bond and not open it up to any license or other excise tax levied for revenue by the county. Ms. Stern said perhaps they could limit that to facilities revenues of the convention and visitors authority, as well as excise taxes levied under NRS 244A. She was willing to work on that particular language. Mr. Goldwater felt that would make it much more palatable.

Mr. Anderson asked about property obligations pledged for the purpose in the past. Ms. Stern said all the outstanding bonds issued by the convention and visitors authority, whether it be RSCVA, LVCVA, or in Lander County had a general obligation backing, so there was a property tax pledge; although they had yet to be payable from property tax. Mr. Anderson asked if there were none to date that had been used, then no property tax had ever been used by RSCVA to pay off any of their obligations. Ms. Stern said that was correct.

Mr. Marvel observed the bonding company must feel comfortable with the revenue that would be generated, so he did not see any danger in it. Mr. Goldwater saw it as a plus for the property taxpayer.

Next to speak, William Isaeff, acting city manager for the city of Sparks, said the bill raised considerable concerns mainly because of the drastic change it made in existing law with respect to the room tax imposed by the city of Sparks pursuant to the business license tax authorization. They imposed the 7 cent room tax within the city. Those funds as authorized by law were pledged to the RSCVA by written contract and agreement with them, which as previously testified, would expire in the year 2010. The language in section 4 raised a serious question whether or not the legislation would be unconstitutional or an interference with the terms, conditions, obligations, and responsibilities of the particular contract that existed between the city and the RSCVA. It stated in essence that since the contract was not renegotiated nor was a decision made what would be done with the funds that came in 2010, it was mandated in 1999 that the tax would be dedicated forever. There would be an opportunity to renegotiate the agreement as the year 2010 approached, to see what the situation was then. By looking 11 years ahead and indicating that Sparks, Reno, and Washoe County would essentially be deprived of those funds forever, it would be a drastic change to the existing law about which they would be very concerned.

Mr. Goldwater commented that framed the issue well.

Mr. Sande said he was caught off guard, unaware there was opposition to the bill until today. If the bill did not pass it could jeopardize the ability to expand the convention and visitors authority in Reno, which was very important to the RSCVA and the gaming facilities. He said, "I want to emphasize that if we have to close up shop in 2010, and as I understand it, can’t issue bonds that would extend beyond that maturity date, that could cause us problems as far as being able to expand."

Mr. Goldwater asked how he would address Mr. Isaeff’s concerns that they would like the ability in 2010 to review the revenues pledged rather than have them obligated. Mr. Sande responded they would only be obligated if the RSCVA decided prior to that time they were needed for the gaming and the tourist economy of Reno. There were other factors as to why they were here testifying against it today. The bill had been out for a long period of time. Mr. Goldwater asked how much input Sparks had in the letting of bonds by the RSCVA. Mr. Sande believed they had a member on the RSCVA and there were various casino interests on the RSCVA, so they would have input on all those issues. All of the Sparks representatives were in favor of expansion of the convention and visitors authority.

Ms. Gibbons said she had a point she wanted to make. "I know Mr. Ascuaga Jr. is RSCVA, and Mr. Shaw represents Sparks, then I think there is a motel owner that lives in Sparks, and Mr. Breslow." Mr. Sande interjected they unanimously agreed because they had instructed him as their lobbyist to introduce the package. He added it was unanimous from the RSCVA Board of Directors, as well as approving the concept of a room tax increase to fund the Reno/Sparks Convention and Visitors Authority. The only issue had been the question of where any additional amounts should go to downtown, Incline Village, or Sparks. That bill was pending before the Senate Taxation Committee.

Mr. Anderson believed there was the bigger issue of how the city of Sparks was treated by the RSCVA. He recalled Mr. Isaeff's point relative to the single vote the city of Sparks had and that there was one motel operator and one major casino operator on the board. The city had a different interest they were trying to protect that might be quite separate from the overall issue of operating RSCVA that had been ignored for some time. He added he had followed the issue for over 20 years during which the city of Sparks had seen dramatic cuts in operations and resources. The people that he represented were not happy with the operation of the RSCVA. They were not happy with the $2 to park when they wanted to go to a local event, or the lack of concern for the city of Sparks, or the more recent loss of support for events produced by the RSCVA. He added, "That has nothing to do with their determination to fly first class or any of the rest of that hoopla that is going on with that group."

Mr. Sande responded to Mr. Anderson, saying "I would just hope that this bill would not be integrated into a debate about the membership. That is something obviously I cannot really address since I have not been informed as to what the board’s position is. But I can say this is a very important piece of legislation for us as far as expanding in the future and hopefully any of those issues can be resolved at a later date."

Mr. Anderson said he appreciated the fact Mr. Sande wanted to operate the same way Las Vegas had operated in the past. However, would he not have to simultaneously accept the governing body and the compromises that were made relative to that position at the time.

Mrs. Freeman remarked she had been around long enough to remember watching what was going on with the RSCVA and she was not impressed. People in her district complained frequently they were not allowed to bowl in the bowling stadium. She mentioned the bill before the committee earlier from a legislator from Las Vegas who wanted to use part of the room tax for parks and recreation facilities. She added that she was opposed because if the legislature increased what was being asked for there was nothing available for those facilities that were desperately needed in Sparks.

Mr. Goldwater intervened to frame the concerns. There were three issues in the bill: (1) Extending the pledge of the room tax beyond a certain date;

(2) Authorizing RSCVA to control their bond letting and redemptions; and (3) Releasing the property tax pledge from the "double-barreled" future of those instruments. One concern was the extension of the pledge that would affect how the board would operate.

Mr. Anderson felt the other issue was they were trying extend themselves to the same type of arrangement that the LVCVA in Clark County had. That came about as a result of negotiations at the time of the passage of the legislation that included a majority of board members who had elected positions. He said, "I think they are "cherry picking" parts of the RSCVA from the large county to only select those parts that they would like and not those parts that may not be acceptable to them, and that I think is part of the issue. I think it should be the same for both entities."

Mr. Goldwater wanted to differentiate between the function of the Convention and Visitors Authority and the ability to manage their finances. Mr. Sande said he had not represented the RSCVA very long; however, just on the room tax issue, there were a lot of players out there in addition to Sparks, and it would be a very contentious issue to start addressing at that time. It could be a matter for another legislative session, but for now he would like to simply process the bill and be allowed to expand the facilities in Reno. So far as the room tax, he pointed out any increase or decrease were basically with the legislature and not with the RSCVA.

Ms. Gibbons asked if Mr. Trounday would speak in regards to Sparks.

Roger Trounday, representing John Ascauga’s Nugget in Sparks, said they had always looked at the RSCVA as the marketing arm for the entire area. Changes had occurred in the past that had not been good. They still believe the RSCVA was a viable entity. It should be the one to promote marketing in the Truckee Meadows area. It was the vehicle that had the most resources available to market regionally and nationally. The recent situation had been the split between the two cities and the city of Sparks was now trying to get some of its revenues back. He could not comment on the position of the city of Sparks regarding the RSCVA, because he had never discussed that with any of the city officials. He did know they wanted to get some of the money back to be able to use for their own promotions and marketing and the Nugget had been supportive of that.

Ms. Gibbons wanted to pursue the issue that if A.B. 554 did not pass then Reno could not do anything to the convention center, and there were leaks in the roof.

Mr. Goldwater intervened, explaining the bill extended the pledge of room tax revenues to the RSCVA beyond the year 2010. It authorized a redemption, and additionally it released the property tax from obligating those bonds. The main issue brought by the city of Sparks was pledging the room tax revenue beyond 2010. They were concerned they would be able to review how the revenues were working and what was going on with those revenues. If they were extended beyond the year 2010 into "perpetuity", they would never have the ability to reclaim, reexamine, or take a look at those revenues, if the RSCVA was allowed to obligate them by bonds.

Mr. Trounday said he would still like to see the RSCVA remain a viable entity in the Truckee Meadows area. Individually, Reno, Sparks, Truckee Meadows, Incline Village, or anyone else could not do the marketing job that needed to be done on a global level the way the RSCVA could. The Nugget as a casino property supported the continuation of the RSCVA.

Mr. Isaeff wanted to make clear the city of Sparks remained fully committed to the expansion and the remodeling of the convention center facilities. The other point was he had hoped they might be a participant in the decision-making process, which they thought they were, since they entered into a voluntary pledge agreement under existing law to the year 2010. The bill would change that. If it was the will of the legislature that the funds should be done in that matter, that was what would be done. He said he was neither for or against the legislation, only commenting that it was a major change. He added "Please don’t let anything I said lead you to believe that we don’t fully support the proposed expansion of the Reno/Sparks Convention and Visitors Center."

Mr. Goldwater asked Mr. Isaeff if could see in the examination of the legislation, anything that might serve as a compromise. Mr. Isaeff could not immediately suggest anything, because he only became aware of the bill 2 days earlier. He added, they continued to support the RSCVA, albeit what might appear in the newspapers sometime, and particularly they supported the convention center expansion. Mr. Goldwater asked if he supported them short-term or long-term; that was the question to be answered.

Mrs. Freeman wanted to hear from Mr. Trounday again. "I was interested in one of your comments, and it really doesn’t have anything to do with this bill, but you said you supported it as being a viable organization, that it would be a great deal of help in marketing for the area. Given there is a new manager, and the rest, are you convinced that will indeed happen? Aren’t there still arguments over exactly just what RSCVA is going to do, and what the goals are?"

Mr. Trounday said "I don’t think so. Personally, I am a believer that the RSCVA is the marketing arm. I think the changes made in the RSCVA in the last year or year and one-half have been favorable. It has just taken a long time to catch up with some of the things that they needed to clean up. As a property we certainly support where they are going. We think it is going in the right direction, and we would hate to see anything happen that would derail that."

Next to speak was Harvey Whittemore.

Harvey Whittemore, a partner with Lionel, Sawyer, & Collins, representing the Nevada Resort Association, said A.B. 554 was fully supported by the Nevada Resort Association. It was a integral part of a package of bills which were in being addressed by the legislature in connection with the expansion and remodeling of the Reno/Sparks Convention and Visitors Authority. It was absolutely necessary A.B. 554 be passed in some form so the implementation of the room tax, which was contained in a companion Senate bill, was effective in allowing the RSCVA to expand the convention center. Those collateral issues associated with whether Sparks should get additional dollars were being negotiated and presented to the Senate Taxation Committee and would be reviewed by the committee if the Senate decided to process the legislation. He added that later in the day he would be presenting an amendment where a significant portion of the room tax being generated in Sparks would be returned to Sparks for their use on tourism or marketing functions.

Mr. Whittemore then said the overriding concern had been expressed very well by Roger Trounday. Indeed the entire membership was very concerned that the Reno/Sparks Convention & Visitors Authority remain an effective arm to market the entire community. He pledged to work with the committee on monitoring and modifying the Senate legislation if the committee thought it appropriate based upon its independent review should that legislation pass.

Mr. Goldwater said he appreciated Mr. Whittemore's information and passion on the issue.

Ms. Gibbons asked Mr. Whittemore since he was going to take care of Sparks, was he also going to take care of Incline Village. Mr. Whittemore answered the Incline proposal being presented in S.B. 477 was to codify the existing relationship that Incline was receiving 50 percent of the 6 and 5/8 percent room tax, which was exactly $950,000 more than Sparks presently received. He added the need to be aware there were serious issues that had been negotiated and were in the process of being developed in front of the Senate committee.

Mrs. Freeman commented that one of the problems during the current session was one body had absolutely no sense of what the other body was doing unless they happened to read about it in the media. It was very hard for them to find out, even as legislators, what was going on in the building. She added she would have appreciated a little information from Mr. Whittemore before the bill was heard today. It had been introduced on March 15. She had not known what was going on in the Senate. Mr. Goldwater had asked earlier if a compromise could be affected, could Mr. Whittemore think of a compromise, or did he think he had already offered it with what was going on with Sparks and Incline.

Mr. Whittemore responded, the purpose of his testimony was to suggest the bill was not the vehicle to continue the problems associated with dividing up the room tax proceeds. That bill was the tax bill that was imposing a 2 and a 3 percent tax on various entities in the Reno/Sparks community. Mrs. Freeman said it would have been better, instead of bringing the committee his last bill, they could have heard some of the other issues on the Assembly side as well.

Mr. Anderson made an observation about the bill. "We need to keep the RSCVA, I am not trying to see it done away with, although there are times when I would like to see that happen. I want that clearly known, because I don’t think the RSCVA, and I won’t use the term I would like to here, because I can’t say it strong enough. I don’t really think they care about the people of our community, and I think they care about issues in terms of the gaming industry and promoting, and that means jobs, and I think that’s good. But in terms of trying to provide services to the other people of this community who help support them in terms of tax revenue, I think they turn a deaf ear. I think they turn a deaf ear to this legislature, and they don’t care, and I have seen that time and time again. Having said that, I think at the same time they need the security of seeing a long-term bond question solved, because I think they once tried to provide something to this community. I think the bill has to move forward, but it is a hard swallow, and I hope that the next bill comes with some meaningful thing to take care of some of the other community concerns, other than what is good for the city of Reno."

Ms. Tiffany asked how much of the 7 percent that went to the convention authority was dedicated for bond repayment. Ms. Stern responded that 6 of the 7 percent was pledged to bonds, which were outstanding until 2010. The short-term bond issuance was impacting the ability to issue other bonds because that was only 10 years away. The 1 percent that was remaining was solely for the promotion of tourism. The State of Nevada received five-eighths of 1 percent for the Commission on Tourism, and three-eighths of 1 percent remained with RSCVA or LVCVA. Mr. Goldwater said it was the other way around. Ms. Stern said solely for the promotion of tourism, so the whole 1 percent could not be pledged to bonds and could not be used for capital improvements.

Ms. Tiffany asked how long they needed the 6 percent tied up to pay for that second expansion. Ms. Stern said bonds were usually issued for a period of 20 years. Ms. Tiffany asked if that meant to the year 2030. Ms. Stern responded the position of the RSCVA would be they wanted that statutorily assigned rather than assigned by ordinance of the counties and the cities.

Ms. Tiffany asked if that would be forever. Ms. Stern answered as long as bonds were outstanding.

Continuing in a similar vein, Ms. Tiffany asked if the 6 percent pledged was to be used to repair roof leaks, or floor replacement, or a parking lot that was cracked. Ms. Stern explained how the pledge worked under the bond resolution; operation and maintenance were paid first, then debt service on the bond, thereafter other capital improvements and other kinds of projects, including marketing. The 6 percent was a pledge, but was not used solely for payment of debt service. Ms. Tiffany then questioned the possibility as those bonds matured, or were bought out early, there would be some period of time the community could use them for something else. Ms. Stern said under current statute that dated back to 1959, the money was to be used for recreational facilities, for marketing of RSCVA. The way Ms. Tiffany understood the matter, if the revenue was dedicated forever, it gave the locals no opportunity to come back and say they would like to use it for a golf course or something else that they felt would support the community.

Ms. Stern said Ms. Tiffany was correct. What had happened in the past was the city of Reno increased their room tax so they received 1 percent for those kinds of projects. The city of Sparks had not increased their room tax.

Mr. Goldwater stated Sparks was not allowed to.

Mr. Goldwater noted a teleconference in Las Vegas had been set up with someone waiting to testify.

Mr. Skancke, representing the Las Vegas Convention and Visitor’s Authority, said they had an amendment to the bill that would help clear up some things on which the Convention Authority had been working for several years. It was in section 2, page 2, section 2, line 20. The line started with "as may be legally made available for their payment." The amendment they wanted to have considered was such contracts did not include the prepayment of rent or other like obligations. The reason for that amendment was they accepted prepayments for rent for the facility, and they wanted it in statute. They felt it was a house-cleaning measure.

Mr. Goldwater asked Mr. Sande and Ms. Stern if the amendment would be considered friendly and not do harm to the bill. Mr. Sande said he had no problem with the amendment. Mr. Goldwater then noted a typographical error in reference to NRS 244.673. It should have been 244A.637. Mr. Skancke said that was correct.

There was no additional testimony either for or against A.B. 554.

Mr. Goldwater explained the possible amendments to the bill being twofold: (1) As Mr. Skancke outlined and (2) clarifying in section 2, subsection b, subsection 2, referring specifically to room tax. Additionally, Ms. Stern had an amendment. He asked the committee's desire.

ASSEMBLYMAN MARVEL MOVED AMEND AND DO PASS A.B. 554.

SECONDED BY MR. NEIGHBORS.

THE MOTION CARRIED.

Mr. Goldwater moved on to A.B. 601.

Mr. Goldwater said Mr. Morse from Las Vegas would be the first witness.

Tim Morse, a Nevada certified appraiser and also an MAI appraiser, said he had been active as a real estate appraiser in the State of Nevada for over 25 years. He had served on the Clark County Board of Equalization since 1981 and had been the chairman of that board since 1987. He testified in support of the legislation which would enable the assessor’s office to better utilize their professional judgement in the methods they used in appraising real property for taxation purposes. The first portion of the legislation was a revision related to allowing an appraiser to use their professional judgement in determining the economic unit of a group of individual parcels. What it did was allow the appraiser to have the latitude in determining the individual parcels and how they should be appraised. It allowed them to utilize their professional judgement in determining what was an economic unit to properly determine the highest and best use of that property and then appraise it according to the proper method.

The second portion of the new part of the bill added a provision to allow an appraiser to use a discounted cash-flow analysis as one of the methods in valuing property. A discounted cash-flow analysis was also a "yield capitalization," and that estimated a series of cash flows. It was an appropriate method of valuation in certain circumstances. The method had been recognized within the industry as an appropriate way to value property. It was a much more accurate method in certain circumstances to value a property. At least four or five examples came before the Clark County Board of Equalization in 1999 where it would have been appropriate to use this method in valuing the property. One was a mini-storage property in the Henderson area that had not achieved a normal occupancy level. It was still in the absorption stage, and the property was having difficulty attracting tenants because of all of the competition in the market. It was fairly easy for an appraiser to utilize the standard three approaches; cost, income, and market approaches, to value a property on a stabilized bases. However, Mr. Morse believed an appropriate methodology to determine the present value of that property would have been to estimate the stabilized value, and then allow for a discount in the value to reflect the lack of tenants or the time-period it would take to achieve a normal occupancy.

Mr. Morse believed the bill to be good legislation for a couple for of reasons. One, it allowed appraisers to use their professional judgement in determining the appropriate methods and techniques. Two, when several of those property owners came before the Clark County Board of Equalization, the majority of board members were made up of professional appraisers, and they used those same tools and techniques the bill requested to apply to individual petitions. It was already a tool professional appraisers were using on a daily basis in estimating market value of property. He added the legislation would enable the county assessor's office to have the tools to properly appraise property for taxation purposes.

Ms. Tiffany noted Clark County was a very explosive growth area and many people, including her, were buying large parcels of land for speculation or development. Some of that could have been under development, some partially developed, or other scenarios. She wanted to be very careful that Mr. Morse used an example of somebody that developed but had a vacancy problem. She asked him to explain the worst case example he knew of where would it hurt someone and where it would help someone.

Mr. Morse said he thought the only time it could possibly hurt someone was there would be a difference of opinion as to what the basis of the assumptions would be and the utilization of the discounted cash-flow analysis. He cited one example: a tax appeal was filed by Howard Hughes Properties on the substantial vacant land they still had in the western portion of Las Vegas within the master plan community of Summerland. There were two appraisals prepared, both used a discounted cash flow analysis, and there was a difference of opinion as to certain assumptions that would be made in both of those appraisals. The board weighed the positives and negatives, just as they had any other petitions presented, and considered the factors as to what would be a reasonable approach. Then the appraisers were asked to revise those discounted cash-flow analyses based upon certain parameters the board determined to be appropriate. Mr. Morse did not foresee anyone would be hurt by allowing appraisers to use the proper methodology in determining the values of properties for taxation purposes.

Ms. Tiffany restated her question. "If I owned a large piece of property and it was going to be undeveloped, partially undeveloped, subdivided, or had multiple owners, it sounds to me like what you are doing is a way to evaluate that is different from today and would raise taxes. Is that true."

Mr. Morse felt her question related to the first part of the legislation, that an appraiser would have the judgement to group various parcels into a larger economic unit to appraise them. The assessor’s office had assigned parcel numbers to various properties. Mr. Morse cited an example: a shopping center comprised of four individually identified tax assessor parcel numbers. On that property was one income-producing improvement. The four parcels that had individual parcel numbers should be appraised as one parcel. The legislation allowed the appraiser to disregard the fact four of the parcels were contiguous, had the same ownership, and were put to the highest and best use, and to appraise those as one economic unit, instead of four individual land values plus the building improvement, as now happened.

Mr. Morse continued saying what they wanted was to be more equitable. "We are not trying to raise people’s taxes, we are trying to equitably appraise vacant land parcels under the highest and best use scenario. That would then be the same type of assessment would apply to parcels of land along the Las Vegas strip, where the assessor’s office is appraising those based upon the use potential and the present use that they are presently under."

Mr. Goldwater intervened and asked the assessor to come forward

Mark Schofield, the Clark County assessor, who opined A.B. 601 was innocuous piece of legislation. Historically, the board in Clark County had employed discounted cash flow as a methodology for many years. It was just another tool in the box of appraisal tools available for the appraiser’s use for determining value. The discounted cash flow was an income analysis, a derivative of the income approach, often used by investors to determine what their outlay should be, based upon what they projected to be their income. It was a method accepted by the National Appraisal Institute. He felt the statute provided clarification, but as it related to section 1C, it read in the professional judgement of the person determining the taxable value if the parcel was one of a group of parcels that should be valued as a collective unit. The operative term there was judgment; the judgement of the person putting the taxable value on the parcel.

Mr. Schofield added there were occasions when those judgements would warrant combining those parcels and valuing them as a single unit. They found more of those situations as the more sophisticated developers involved in business employed discounted cash flow analysis to come up with a value. That did not mean, however, it would result in a property tax increase. In fact, the discounted cash flow analysis results were just the opposite in most cases. He added, "If it did result in the property tax increase, I would be up here protesting the use of this methodology, just as I would the use of employing a market value approach, the protocol for valuing all property, it would result in a property tax increase. The answer is, as far as creating a property tax increase for anyone, I would say no, absolutely not."

Ms. Tiffany asked if it had been used or was currently being used, why did it have to be in statute. Mr. Schofield indicated it was being used, he did not indicate it was being used by the assessor’s office. That methodology was something that was used by the Board of Equalization to determine value for equity purposes. That did not necessarily mean they would not occasionally explore the possibility of using discounted cash flow analysis in valuing property. Ms. Tiffany pressed, asking why the bill was needed. Mr. Schofield said it was more or less a clarification as it related to discounted cash flow. It stated in NRS 361.227 that the capitalization of the fair economic income expectancy or fair economic rent could be used, and it added to that an analysis of the discounted cash flow. However, what he interpreted that statute to mean was: "You could indeed use the discounted cash flow analysis because it is part of the income approach. As it relates to C in section 1, what that is essentially doing is providing the same benefit to owners of property, contiguous parcels that you currently provide to developers of subdivisions. We currently use a developer’s subdivision discount, where we discount the value of the property, determined by the number of years it will take to build that property up. That is currently being employed. This essentially would employ that same theory in valuing vacant parcels. You are giving them that benefit even though they are not subdivided. We don’t have a problem with that. In fact, that is something the board has already advocated the last two consecutive years. I think your primary concern is 'what is the hidden agenda here.' There is none."'

Ms. Tiffany was still concerned it meant a tax increase when one parcel could be less than another parcel, and what the assessor's office was doing was equalizing it all to the highest value. Mr. Schofield said that was not the case. From a technical standpoint that would not be the method employed. That would not be the thrust of using the method.

Mr. Schofield continued, adding "Mr. Chairman, the only time the assessors employ the capitalization of the fair and income expectancy, the only time we use that, is to test whether or not the taxable value that we place on property under the law exceeds what the owner of that property can get on the open market. I think a lot of people are under the misconception that we use that to boost values up. We use it just for the opposite, to test our taxable value and if the income suggests it is a lower value we use that to set the value. We use the income. And that is how discounted cash flow (DCF) would be employed and that is how this methodology would be employed."

Ms. Tiffany asked if the language was needed. Mr. Schofield felt it was a fair proposal. He said he personally did not need the language because he could read into the statues what the spirit of the language was. However, there was a concern that arose over the Howard Hughes appeal that Mr. Morse spoke of earlier, and actually they had heard that appeal for 3 consecutive years.

Ms. Tiffany asked: "We have had in various committees a lot of issues that have been involved in a PUC argument or a court argument or a county versus city argument usually end up here. Can you explain to me the Howard Hughes situation and if this would have been employed at that point, would it have hurt or helped them."

Mr. Schofield answered: "It probably would have resulted in us getting to resolving the dispute before it got to the board level. As a matter of fact, it went all the way to the State Board. From the County Board to the State Board and they are going to the State Board again this year because they don’t agree with the values we put on."

Ms. Tiffany asked if it would it have hurt or helped them, increased or decreased the tax. Mr. Schofield responded that using DCF resulted in a decrease. It helped them. Using DCF would not result in a property tax increase currently under Nevada Law under any condition. Ms. Tiffany then wanted to know if it would have made them happy. Mr. Schofield said their interest was not trying to make one party or the other in a lawsuit happy, their interest was in following the law. He added, "Could it have been resolved in advance, perhaps. I can tell you this, when we valued that particular holding this year we essentially deployed the hybrid of DCF. The reason we did that was because we knew that the board was probably going to do the same thing."

Mr. Goldwater tried to sum it up. He felt Ms. Tiffany’s concern was, would it raise taxes. Paragraph 5 just served as a check of exceeding the market value just using DCF, so it was just a check, it could do nothing but reduce taxes, using DCF. Mr. Schofield said that was it precisely.

Mr. Neighbors asked besides the highest and best use, on comparable sales, how did they use that when there were recent sales, as opposed to vacant land that had not sold. Was that a tool, or were they indexing property up. How was that handled. Mr. Schofield replied they used the sales to establish the value; they used comparable sales. Furthermore, when they valued vacant land they valued its highest legal use, not its highest and best use.

Mr. Goldwater asked Mr. Morse if he had anything to add; had the assessor represented the issues appropriately. Mr. Morse stated Mr. Schofield covered all of the items very succinctly. He thanked the committee for allowing him to provide testimony.

ASSEMBLYMAN LEE MOVED TO DO PASS A.B. 601.

SECONDED BY MR. MARVEL.

THE MOTION CARRIED.

Mr. Goldwater noted a state employee in the audience and said he wanted the taxpayers to be getting their money out of him, which they were not doing when he was sitting in the audience. He then asked Mr. Neilander and Mr. Faiss to come forward, and moved to the work session document and A.B. 669.

Mr. Goldwater asked Mr. Faiss if he had reached a compromise with the Gaming Control Board.

Bob Faiss, with Lionel, Sawyer and Collins, counsel for the Nevada Resort Association, appeared with David Sisk, vice-president of finance, and treasurer of Caesar’s Palace. Mr. Faiss noted the veteran legislators might remember he had appeared before them in the past as an expert witness on gaming tax matters.

Mr. Faiss, in answer to Mr. Goldwater's question, said he had almost resolved it. They had agreed on the language to be submitted to the committee for section 1 of A.B. 669. An aspect of the problem that precipitated the request for A.B. 669 was not resolved. If it could not be resolved soon, he said they would resolve it on the Senate side. Mr. Goldwater said they would redraw it in that case. Mr. Faiss said what they would like to do was redraw the language now and substitute simple language that specified the clarification of the bill upon which Mr. Neilander, the board, and the Nevada Resort Association agreed. Mr. Neilander concurred with Mr. Faiss’ assessment.

Mr. Neilander also gave assurances that although he was a state employee he brought "a big bag full of work" with him in case he had downtime.

Mr. Faiss provided written testimony and proposed amendments (Exhibit C). He noted section 1 dealt with the casino entertainment tax, which was 10 percent of the amount received for admission, food, refreshments, and merchandise. In 1985, the committee acted to make certain everyone understood service charges were not receipts for admission, food, refreshments, or merchandise. The language on lines 11 and 12, page 1, of A.B. 669 read "Service charges collected and retained by persons other that the licensee are not taxable pursuant to this section." The reason A.B. 669 was introduced was that earlier in the year there was a difference of opinion between the gaming industry and the gaming audit agent as to whether the credit card service charge was subject to the casino entertainment tax. He said the good work and talent of Mr. Neilander had done much to resolve it. He discovered credit card service charges were within the present statute, and the tax did not apply when a credit card company collected money from the patron and retained a service charge.

They were in agreement the appropriate amendment was before the committee. It would change the language on lines 11 and 12 on page 1 to read "Service charges including those imposed in connection with the use of credit cards or debit cards that are collected and retained by persons other than the licensee are not taxable pursuant to this section."

Mr. Goldwater said that was clear.

Mr. Neilander wanted to make it clear for the record that it was just that portion of the credit card that was attributable to the service charge and not the credit card amount. It had to be collected and retained by a non-licensee. There were some factual issues still being addressed. Mr. Goldwater asked if they would be able to audit the amounts specifically attributable. Mr. Neilander admitted the audit ability of it was the concern.

Mr. Faiss interjected that was in section 1, but the committee had the entire amendment, and there were other amendments with which the board and the gaming industry had some concern. The amendments dealt with persons who had been denied a license, who had been found unsuitable, or had a license revoked. Under present law the licensees were prohibited from having a business relationship with such persons without the prior approval of the gaming commission. However, a situation had developed in which one or more of the prohibited persons had sought to do business through companies they controlled. Those amendments, which were jointly supported by the NRA and the board, would essentially prohibit the unsuitable person from doing or attempting to do business with the gaming licensee without the prior approval of the gaming commission. That put the burden equally on both the licensee and the unsuitable person to avoid a prohibitive business relationship. It was not an absolute prohibition. The gaming commission could always use its discretion to allow such a relationship if it found public policy was not violated and the gaming commission had done so on many occasions.

Mr. Faiss noted a typographical error on page 3 that began section 3, that should read section 4. The amendments would allow any existing contract with such an unsuitable person to be terminated without liability to licensee. They would require the gaming control board to maintain and make available a list of persons denied a license, or found unsuitable, or who had a license revoked. Finally, they would prohibit the licensee from contracting with a business that the licensee knew or under the circumstances reasonably should know, was under the control of the unsuitable person. The reasonably know standard was necessary because a major resort that had numerous business divisions which together entered into thousands of contracts a year, some of them of minimal value, might find an unsuitable person had slipped by despite responsible compliance procedures. Those amendments dealt with the unsuitable person. Section 5 was an unrelated housekeeping item that was requested be adopted to fill a void in the Gaming Control Act. It provided a specific procedure and timetable for a motion to rehear a gaming commission decision on a claim for tax refund. Those were not now delineated in the statutes and the absence of them should be corrected.

Mr. Goldwater asked for further comments, if any from Mr. Neilander. Mr. Neilander said only that they had reviewed the amendment and had no opposition to it. They found it equitable that the denied applicant had some burden placed upon them, that they not enter into those relationships with business entities. They also did not want to relieve the licensee of their responsibility to do its own do diligence in determining the caliber of people with whom it associated and contracted. The language as crafted achieved both those goals, therefore, they stood in support of the bill.

Mr. Neilander made one final point. Section 8, page 2 required maintaining a list of denied applicants. The practice had always been whenever anyone was denied, to issue an industry letter notifying every licensee that person had been denied. One problem, however, had been when licensees came on later they were not aware of previous letters. That would no longer be a problem as they would compile a list and make it available on a more formal basis.

Assemblyman Lee asked how extensive was the list. Mr. Neilander believed there were approximately 60 denied applicants. Mr. Price suggested they start a gray book to go along with the black book.

There being no further discussion on A.B. 669, Mr. Goldwater closed the comment period and brought it back to the committee.

ASSEMBLYMAN MARVEL MOVED TO AMEND AND DO PASS

A.B. 669.

SECONDED BY MR. LEE.

Mr. Price disclosed, as he had in the past, that his daughter had worked for Caesar's Palace for the last 22 years. Nevertheless that fact would not affect his decision in voting on the bill. The vote was then taken.

THE MOTION CARRIED.

Mr. Goldwater then turned to A.B. 527.

Rick Bennett, director of government relations for the University of Nevada, Las Vegas (UNLV), identified himself and introduced Bob Dickens, representing the University of Nevada, Reno (UNR), and George Scaduto, vice-president of finance at UNLV.

Mr. Bennett provided a description of A.B. 527, marked Exhibit D, and explained the original bond authorization they would like to amend was established in 1991 and amended in 1995. Those were revenue bonds and not an obligation by the State of Nevada, only by the university system. On line 4, page 1 of the bill, they would like to insert the words "land and". That would change the definition project to include the construction, land and other acquisition, rehabilitation, improvement, or any combination thereof. The explanation for that was land and buildings beyond the current campuses were being considered for acquisition, and the current language was not clear as to whether land would be included, therefore, land was being inserted for that clarification. On lines 4 and 5, page 2 of the bill, they would like an additional statement related to what types of projects could be bonded, that read campus facilities required or desired by university master plans at the University of Nevada at Las Vegas. Again, the explanation was that projects other than student housing and parking facilities were under consideration, and campus facilities related to master plans would broaden the definition and allow those projects to be financed with those revenue bonds.

On line 18, they would amend the current authorization from $17.5 million to $32.5 million. UNLV was currently issued approximately $7.5 million in bonds provided by the current authorization. They had projects totaling $24 to $25 million dollars under consideration. Increasing the amount of bonds to be issued from the $17.5 million to $32.5 million took into consideration the remaining $10 million of the existing authorization and would increase that by another $15 million.

On line 22, page 2, the change requested was from 9 years to 18 years. The current statute provided bonds be issued within 9 years of the effective date of the original 1991 act, which would be the year 2000. Increase in the timeframe for issuing the bonds to 18 years would provide an additional 10 years, to 2009 for the issuing the $25 million in bonds.

Ms. Tiffany asked the revenue source for guaranteeing the bonds. Mr. Bennett said the Universities Securities Law established the revenue sources. Primarily there was either revenue generated by the project, such as a residence hall, or there were certain fees defined as pledged revenue which might include the capital improvement fee that was a part of the current registration fees. Ms. Tiffany wanted to make sure money would not come from the general fund. Mr. Bennett said "absolutely not." It was revenue generated from the project or from certain fees.

Ms. Tiffany next asked how land was acquired. Mr. Bennett said a good example might be the Boy Scouts of America (BSA) who had a building and land situated inside of the campus, close to the Student Union. They had discussions in the past with the BSA about purchasing the property and using it for some activity related to student services. Ms. Tiffany wanted to know how they would guarantee the revenue for that. Mr. Bennett said it would be a reasonable project to use a portion of the capital improvement fees that were charged to students.

Mr. Dickens provided a proposed amendment, marked Exhibit E, which would bring UNR into the legislation. In the creation of the statute in 1991, UNR and UNLV were together. Mr. Dickens said UNR did not have the foresight UNLV had in requesting the legislation, so the amendment was proposed. On page 2, lines 4 and 5, the amendment added the University of Nevada, Reno. On page 2, section 2, subsection 5A, the amount was changed from $12 million dollars authority line to $25 million dollars. The potential projects within UNR's master plan were primarily related to student housing and related support facilities. The indebtedness incurred would be retired by revenue from students’ fees to live in the dormitories, and possibly through a joint venture with Carl’s Jr., or similar franchise operation that might be part of a dining complex. Those were revenue bonds, an indebtedness to be retired from revenues generated from the facilities themselves and would not create a demand on the general fund at all. The bonds typically ran for 20 years. Sometimes, as was the case with slot-tax bonds in the 1997 session, they were retired early to buy them down.

Mr. Goldwater remarked that having been a student 10 years ago, he hated paying those fees. Mr. Dickens said he might consider the 18 years of sunset. Mr. Goldwater replied that was his thought too, "sunset on all other kinds of taxes we pass. In fact, it is Ms. Vilardo’s bill."

Dickens noted the current fees related to capital improvement projects were $7 for under graduates and $6 for graduate students. Those fees had been established by the Board of Regents and could not be increased without their approval. They had always been used for good and appropriate purposes. However, Mr. Goldwater said he paid a fee for parking garages at UNLV at one time and had never seen that parking garage. Mr. Dickens said it was currently under bid and they hoped to have the construction started very soon.

Mr. Goldwater returned to the question of the sunset provision and asked if it was unacceptable. Mr. Bennett responded he did not think it would be a good idea at present. They would like to issue some of those bonds soon, but it could be several years before they were issued, and there might be a problem as far as the terms of those bonds. Mr. Goldwater suggested putting a sunset based on the term of the bonds. For example, the fees expired or the authority expired upon 25 years from issuance of the debt. Mr. Bennett said he would rather not commit without having some additional consultation. "I would prefer not to answer and would prefer that you not do that at this time." Mr. Goldwater responded that he was not sure where Mr. Bennett was "coming from." Mr. Dickens interjected "I am going to take a bite of this apple and I am fully aware there is probably a worm in it, and I am going to regret it. The student capital construction fee is something that each of our respective student governments assessed on themselves, and they have been doing these kinds of fees for quite some time. They tend to be on our campus very vocal about where these dollars go." He went on to explain a portion of those fees went into a new student services building that was about to be constructed on campus. Also, renovation of the student union, renovation and construction of a student wellness center, and a fitness center at Lombardi Recreation. The students were very involved with the fee income stream. He added that "What amazes me is that students are with us for 4 to 6 years, and these fees have been around for much longer than that, but there is a lot of institutional memory among the students about the fact that this is theirs."

Mr. Goldwater asked if students had a veto power over any fee increases. Mr. Dickens confirmed they "certainly" did. Mr. Goldwater felt comfortable knowing that.

With no further testimony forthcoming, Mr. Goldwater closed the hearing and asked the committee's wishes.

ASSEMBLYMAN MARVEL SECONDED THE MOTION.

THE MOTION PASSED.

Next on the agenda was A.J.R. 17.

Assemblyman Gustavson, representing District 32, said he realized the bill might be controversial because it proposed a major change in Nevada law, a change that was not taken lightly. Several states including California and Oregon had implemented a property tax cap or state-spending caps. Many people, nationwide, had worked countless hours to develop legislation to be fair to property owners and yet not bankrupt government. Although government representatives might oppose the bill, the real fiscal impact could not really be predicted presently.

Mr. Gustavson provided written testimony and supporting data, marked Exhibit F, and summarized what A.J.R. 17 would accomplish. First, it would roll back the taxable value of property to 90 percent of 1995-96 values, plus any later improvements. The ad tax would be set at 1 percent of the market value of the property for general government revenue plus up to two-tenths of 1 percent of an additional taxable value to cover bonded indebtedness. The percent increase in the taxable value or assessment would be limited to the lesser of the increase in the consumer price index, or 2 percent. Citizens over 62 years of age who sold their residence and purchased another home of similar value could transfer to the new home the taxable value of the old residence. Also, when 50 percent or more of a property was sold outside of the family, the taxable value was set to equal the market value at the time of the sale. Six counties had seen a decrease in assessed valuation over the past years. Mr. Gustavson referred to the chart on page 9 (Exhibit F) which showed the 1995-96 levels. Four counties actually had assessed values that were higher than in 1999. Eureka County, for example, had an assessed value of over 1 billion in 1996. In 1999, the assessed valuation was only $641 million. Mineral County went from $175 million dollars in 1996 to $110 million dollars. If those counties felt like they needed to increase property tax by raising the cap, they had their answer with A.J.R. 17.

Mr. Gustavson opined the property owners in the county would not be pleased because the state would receive quite a bit more property tax revenue. Some said the bill was unfair because similar homes would have different tax rates; however, that existed now with depreciation, which was 1.5 percent per year. Simply because the home was older the need for services did not change. A young family that purchased a 30-year old house still needed schools, yet they really were not paying the same for the services as the owner of a newer home down the street. Value for services should be assessed on a true values not an artificial value. Further, under A.J.R. 17 there was no more depreciation, a change the cities of Reno and Las Vegas would appreciate.

A.J.R. 17 helped the county catch up with taxes that currently were not allowed when a home was sold. It was no more unfair than the traditional method of taxation under which owners of more valuable property paid more for the same service than those with less valuable property. If the state was that concerned with apportionment between the amount of tax and the level of service, it would create system of nothing but user fees. The resolution was certainly fair to the current property owners because it based tax liability on acquisition value and not on fluctuating real estate market value. It was based on what one paid for his home, not what one's neighbor paid. It was also fair to the new property owner because it gave him two things they did not now have: benefit of a reasonable tax rate of 1 percent, and absolute certainty as to what their tax bills would be in future years.

Mr. Gustavson related an incident when he was told by a woman who owned rental property in Nevada that prior to 1979, when Proposition 13 was passed, she had a steady stream of customers from California because people were being forced out of their homes. After 1980 the stream stopped. Tax stability returned to California and people stopped leaving the state. Nevada needed to stop the exodus from Nevada before it began. The current system was unfair and unpredictable. He added, "We are not going into uncharted territory, we need to look at our neighbors both north and to the west, and learn from their mistakes and their successes. We also need to look around the country. Recently, a study on the performance of every state government revealed several states received A’s in financial management. Several of those had enacted state-spending limits, some by legislator introduction, others by voter initiative; including Mississippi, Oregon, and South Dakota. Washington state received an A- for financial management. Their budgeting was tied to a collection of spending limits enacted by the voters. They had a budgeting process based on a 6 to 10 year plan. Nevada received a B for financial management. Nevada would be following a national trend, and if its legislature body did not take the lead, the voters would. It was unknown the impact that might have on the government, because the Legislative Counsel Bureau (LCB) had not had adequate time to evaluate the bill. For that reason, Mr. Gustavson urged the committee's support of A.J.R. 17. He said by passing it out of committee the LCB would have more time to conduct a complete analysis. It did have to go to the Committee on Constitutional Amendments next. While the true impact of the proposal on government was unknown at present, the impact of the current tax system on taxpayers was known.

The testimony of some homeowners would be heard, but inclement weather prevented many others from being present. He related the story of one such taxpayer: Mary Jane, now a widow who lived in Incline, built her home with her husband in the early 1960’s. They had a conservative three-bedroom home that had not changed since the day they built it. In 1998 Mary Jane’s tax bill rose from $14,000 to $28,000. In 1999 her tax bill went up to $32,000. The reason was because billionaires were buying out the millionaires and escalating the land value of everyone’s homes. Property values were currently based on the ever-fluctuating real estate market instead of actual acquisition value of a home. Buying a home was a life-long investment for many. Consumers did not prepare for the wild changes in the real estate market. There was a huge difference between buying real estate for an investment and buying a home. Under the current system, those profiting from the speculative real estate were adversely impacting the average homeowner. Mr. Gustavson said he was very angry when he heard bureaucrats saying people like Mary Jane could simply sell her house if she could not afford the taxes. Such a belief was dictatorial and ran counter to the American dream. "Mary Jane paid for her American dream, who were we to take it away. What right did government have to force someone to sell his or her home." Those homeowners had not changed or improved their home, their neighbors had, and government was forcing a burden on taxpayers they should not have to bear. No one could budget for such incredible increases. Representatives of the people could not allow that to happen.

In closing, Mr. Gustavson said government and local leaders would say A.J.R. 17 would hurt local government, they would have to cut services, even police and fire. They always brought that into the fray and those services should be the last to consider cutting back. Government cried out whenever their budgets were threatened, it was their job to protect their jobs. The legislature had to protect the voters, the taxpayers, the people footing the bill.

Mr. Goldwater thanked Mr. Gustavson for his thorough presentation.

Mr. Neighbors commented that based on the fact the new governor had indicated he would make a very thorough study of the taxes, it was doubtful to expect any changes. Examination of the fiscal impact and projecting it over 5 years revealed over $200 million in lost taxes. He expressed concern about the impact that would have on the small counties who were already at the $3.64 limit. He referred to Eureka and Mineral counties shown on the graph (Exhibit F): Mineral’s valuation was down primarily because they were involved in taxing exempt property, a situation presently in litigation. Eureka County was down primarily because of the net proceeds in the mines. He asked for an explanation of the charts, particularly as related to Mineral County.

Randi Thompson, executive director, Nevadans for Fair Taxation, provided written testimony and supporting documentation, marked Exhibit G, and explained the figures had come the LCB's comprehensive data compiled annually. She offered to furnish Mr. Neighbors with the book. Mr. Neighbors said he did not understand Eureka County shown at $381.5 million. Ms. Thompson agreed those were incredible dollar changes. Mr. Neighbors asked if those numbers also included the schools. Ms. Thompson responded it was only the assessed valuation of properties. The dollar figures for four counties were actually larger in 1995 than they were in 1999; they had a decline of assessed valuation. Mr. Neighbors asked if he was talking about tax dollars or assessed valuation. Ms. Thompson said it was the ad valorem or the assessed valuation.

Mr. Neighbors said he was not opposed to the tax issue; however, it would absolutely bankrupt some of the little counties that were "already on the ropes."

Mr. Goldwater agreed, particularly the mining counties since they fluctuated so much all of the time. He asked if the resolution would prohibit the imposition of the real-estate transfer tax. Mr. Gustavson said it would. Mr. Goldwater noted a portion of the tax was dedicated directly to school construction in Clark County and was desperately needed there. He did not know if they could get around prohibiting the collection of tax considering current bond obligations. Mr. Gustavson said a provision for bonded indebtedness up to two-tenths of 1 percent was already approved. Mr. Goldwater said he did not know if that covered the real estate transfer tax or simply the ad valorem.

John Carne, who spoke up from the audience but did not identify his affiliation, stated the 1 percent cap applied primarily to the government operations. Mr. Goldwater said he understood that part of the ad valorem, but asked if the resolution prohibited the real estate transfer tax. Mr. Carne said it did, but the monies of which he was speaking for school construction could come out of the allowable, voted upon bonded indebtedness. Mr. Goldwater acknowledged they would make it up that way; however, it would be a major shift in policy.

Mr. Goldwater asked Ms. Thompson to tell the committee about her organization.

Randi Thompson said the group was founded about 4 months earlier. She explained that while campaigning for the legislature, she met many people who were outraged at how their property assessments had increased throughout Washoe County. After the election, the group formed, and they asked to head up the effort to bring the issue to the legislature in the 1999 session. She added many people were concerned about taxes and many of the committee members had heard about it often from their constituents; in fact, many committee members were co-sponsors of A.J.R. 17. Ms. Thompson said she was surprised to learn how many people were hurt by having to move from their home because of their property tax increases. Some people called A.J.R. 17 an "Incline Bill" to help those rich home owners in Incline. Such was not the case; many retired fixed-income people did live in Incline and throughout Nevada, and they were a major portion of the population.

Ms. Thompson referred to the chart included in Exhibit G to illustrate what had happened to Incline over the past 10 years, and the dramatic impact on residents. She emphasized proponents did not take the proposal lightly. She cited a quotation that summed up how Proposition 13 was viewed in California. "Nearly 20 years after the revolutionary Proposition 13 lanced state government, voters have consolidated powers into their own hands, and are clamping a tight hold on purse strings." She noted the movement of clamping purse strings was happening nationwide and also in Nevada. Taxpayers were no longer going to sit quietly by and watch as their county and state governments circumvented the intent of the Gibbons Tax Restraint Initiative, and raised taxes without the vote of the people. In Washoe County there had been promises of no more school bonds for 4 years, and yet within 6 months after the election, residents were told the county needed more money. They had seen a proliferation of taxes created or increased since the tax shift in 1981. The intent of the tax shift was to protect property owners, but what had occurred was an actual increase of over 45 different taxes or a creation of different taxes to compensate.

She added, "I would like to make one historical note here as someone brought up already; what Governor Guinn is starting to look at. In the 1979, 1981, and 1983 legislatures, which were responsible for creating the tax shift, Nevada was in a recession. We created a tax structure that tried to help bail out the counties and the state. These taxes were increased to prevent a bankruptcy and yet none of these had a sunset clause. Now, I am no tax expert, but it seems wrong to dramatically change tax policy in the middle of a recession, and that is why we strongly support Governor Guinn’s proposal to reanalyze our tax structure as it is. Our goal, if anything today, is to make sure that the property owners have a seat at that table when Mr. Guinn has that talk. We have lost faith in our government due to a lot of these tax increases and we found a loophole with the Gibbons Tax Restraint Initiative, well, now we want to fill that loophole. We know there are legitimate things that the government needs to do, but when it exceeds what it should do and does what it wants to do, something has to be done to bring back that control. That is why we are seeing property tax limits and spending caps popping up all around the country. In doing research for this bill, I was surprised to discover the percentage of the county budget that actually comes from ad valorem taxes."

Ms. Thompson continued, stating property tax was a major component of a county’s budget, but as the charts (Exhibit G) illustrated, in most cases, ad taxes came to about one-third of some counties' budgets. In the overall general budget, it came up a slightly higher. In 1997, Oregon passed a bill much more restrictive than the one proposed. Measure 50 in Oregon cut property values to 1995 levels and capped the amount assessments could increase to 3 percent. It did not have a catch-up clause as A.J.R. 17 had. While political leaders predicted that Oregon would fall into the ocean, the reality was quite different. News headlines trumpeted things like "property taxes on firmer ground," "revenue cut not as harsh for counties," "revenue boom could crush state’s credibility." She cited among her personal favorites: "donations overcome cuts in library funding, "surprise, Measure 50 actually increases tax intake," and "new ideas brew for state school funding formula."

Ms. Thompson reported prior to Measure 50, Oregon also implemented a state school tax limit in 1990, which was Measure 5, and the headlines continued to surprise the political establishment to say that there were no cuts in school spending. County assessor in Oregon, Ray Erland, was quoted in the Oregonian, after Measure 50 passed, saying "The system will provide more stability and predictability for citizens’ property values." That was our goal for the proposed legislation. Finally, she said her parents had owned their house in Reno for over 30 years. They paid roughly $2500 per year in taxation because they had 45 percent depreciation. When they sold their home, under current tax, the buyers would assume their tax basis. "I think whoever buys my parent’s house is going to have kids because it has the bedrooms, the pool, the tennis courts and it is within walking distance to a great school. Yet, the people who buy this home will need the services of the school system, but they won’t be paying it. The same neighbors next door with the three kids in a newer house will be paying it. There you see an unfair shift in the burden to what is really not an equitable system now. Under our bill, when my parents do sell their home, the tax basis will become the market value of their home. The county will actually see a windfall when those kinds of homes sell, and I guarantee you there are thousands of homes in Washoe and Clark Counties and in the rest of the state that will offer that same kind of windfall to the county. Sure, the windfall will be bigger when the first time starts, but every five to seven years is the average for selling of homes. Any of the county assessors here will tell you that the average appraised value of a home is 70 to 80 percent. With the catch-up clause and basing our tax basis on 1 percent of the market value of a home, you are going to see a shift in those taxes that will actually be more equitable to pay for the services."

She reiterated what Mr. Gustavson said earlier about fairness. The proposed legislation was no more unfair than the traditional method of taxation under which owners of more valuable property paid for the same service as owners of less valuable property. A.J.R. 17 was certainly fair to current property owners because it based tax liability on acquisition value, not on the fluctuating real estate market. It was also fair to new property owners, because they had the benefit of a reasonable tax rate of 1 percent and the absolute certainty of what their tax bills would be in the future. A tax rate based on acquisition value was considered the norm in our society. In conclusion, Ms. Thompson urged passage of A.J.R. 17 so the LCB could continue to study it.

Mr. Goldwater thanked her and noted what he liked was the fact that people often complained about what was fair, or what should be done, yet there was never a proposal. Whether one agreed or disagreed with the proposal presented, the proponents had addressed their complaints and had included a proposal. "I think that is a responsible thing to do."

Mr. Goldwater then advised Ms. Thompson that he represented a very urban district made up of many people who were long-time residents. With the upsurge in population in Clark County and especially Las Vegas, many were moving out. The proposed legislation, it seemed to him, might discourage someone from change, from making that transition, perhaps from an urban neighborhood, or upgrading in any way. He believed it took care of the long-time residents who had well-established residences, but seemed to prohibit upward mobility. He felt there was a disincentive, and asked the concern be addressed.

Mr. Gustavson explained that whenever anyone purchased a new home, regardless of area, they knew they were going to be paying the new tax value of that home, whatever it was at that time. So, that would not change, it would be the same. Mr. Goldwater's contention was that in a neighborhood the real estate market or the assessed valuation increased or decreased incrementally. If it was capped for a long period of time at a low figure, the acquisition value would be a quantum leap from what one paid before. Under the current system it moved around.

Ms. Thompson related that in an ex parte conversation with the Clark County assessor he felt by giving an incentive with depreciation, people would buy older homes knowing their tax burdens were less. Also people would repair, renovate, or remodel older homes, because they could afford it.

Mr. Marvel returned to the issue of Eureka and Lander counties and asked if figures on the assessed values included net proceeds of mines. Ms. Thompson was unsure, because the LCB book grouped some data together. It broke out the income for ad valorem based on properties and then net mining proceeds, but that particular aspect was all assessed valuation of properties. Mr. Marvel said the tax rate applied to net proceeds too. Ms. Thompson felt those were probably the mining decreases.

Mr. Goldwater asked Ms. Thompson to consider allowing the legislature to provide for the transfer of the taxable value to the principal residence, for a person 62 years of age or older, to another residence of comparable value. To limit the amount of ad valorem tax on that policy, would that be a tough one. Ms. Thompson said it was an equity issue again, but that became a philosophical approach to taxation, "of trying to protect the people who have committed to our community, who have stuck it out here for so long, who have become a part of our volunteer base and stuff."

Mr. Goldwater opined "We have got to get them out. The more I stick around here it is between kids and senior citizens. It is getting very expensive around here." Ms. Thompson agreed it was one way to protect seniors.

Mr. Gustavson reminded the committee what Ms. Thompson briefly touched on, and that was there were only four counties in the state that received more than 20 percent of their total revenue from property tax. In the overall revenue the counties derived from all tax sources, it was less than 20 percent, except for four counties: Washoe, Clark, and two others. Moreover, it was a constitutional amendment change, therefore, even if the committee did pass it, the governor had to see it, and it could already be in place for the 2001 session. The final decision could be made at that time, and if it was to continue, it would then go to a vote of the people.

Mr. Goldwater said it would be a challenge to put the description on the ballot.

Next to speak was Ted Harris, a Nevada taxpayer, who provided his written testimony and supporting data, marked Exhibit H. He said the issue with which he and many taxpayers were concerned was fairness. Fairness in the tax system applied to all levels, whether it was income tax, sales tax, or any other type of tax, it should be fair. In the inherent unfairness of the property tax system, the issue was defined by the fact that the property owner had absolutely no control over the increases in the assessed value of his property. The local government did not impose that on him, the assessor did not; it happened because that was what the market dictated. However, the unfairness of it was that the taxpayer did not get to vote on whether or not the assessed value went up, and therefore the county or city or local government derived a windfall in income. If the assessed values in a given county increased by 25 or 30 percent, one simply had to pay the increased tax. The unfairness came from the fact that if one had lived in his home for an extended period of time, had a certain income, but in an area where taxes had increased dramatically, the increase could bankrupt the homeowner. He simply could not afford to continue to live in his own home because he could not pay the taxes. That happened in California. In the mid 1970’s the value of properties were increasing dramatically and consequently, the taxes. The property owner was trapped. The key issue on which the amendment focused was the issue of fairness.

The other issue that was going to come up, in opposition, was that many counties would suffer a huge revenue loss, and how would that be made up. The other speakers had addressed that issue quite well.

Mr. Harris turned to the market value of property. In Nevada, the ratio of appraised value to market value, in one opinion, was 70 percent in Washoe County. What happened was when that property sold, it went to full market value, there was no more arbitrary judgement as to what the appraised value was relative to the market value. The market was the ultimate determinate of the value of the property, so why should that be argued.

Mr. Goldwater asked if he would sell his house for what it was appraised. Mr. Harris said absolutely not, and he did not agree with the fact the system defined the appraisal process in such a way that it valued it below the market value. "I would prefer to know that when I brought my property, if I paid $100,000 for it, I ought to be paying a tax based on that value. That is the simplest, most understandable." The majority of people in Nevada did not understand the property tax system. The issue was that the taxpayer needed a specified, understandable, predictable limit on his taxes.

Mr. Goldwater commented on testimony from the White Pine School District and their needs, which was not unique in White Pine. It also happened in Lincoln and some of the smaller counties. Their buildings were in deplorable condition, they were cutting educational services to children. He asked how he as a policy maker explained to them that in the quest for fairness the legislature was making a policy change, and although they were limited now, it would further limit their ability to provide essential services. Mr. Goldwater added that like other taxpayers, he too wanted to restrain government’s waste; however, there were some places in Nevada where there really was no waste. Especially, in some counties where they were not buying textbooks, where there were holes in roofs, buildings that were falling apart, and where teachers were being let go.

Mr. Harris suggested there were several answers. The provisions of A.J.R. 17 permitted any bonded indebtedness over and above the 1 percent factor that was being taxed. The second answer was it was up to the communities and the cities to establish their priorities in such in way that they took care of the primary needs. And if schools fell into that category, then those should be first considerations. Every department within the city and county was going to argue that their services were absolutely essential. And there would be a constituency for every service. But, the bottom line was could government be permitted to tax an individual without limit and without any specificity. Certainly bonds did pass; people voted for those because they wanted those schools, and it was their choice. That was the system. However, the money that paid for bonded indebtedness was not going to be a deduction to the counties. The 1 percent of the basic tax would be up to the local government, to establish their priorities, to properly allocate those funds, and that was what should be done.

Mr. Goldwater said 25 cents out of that ad valorem actually went to continuing programs. Mr. Harris urged the passage out of committee in order to get help and analysis of the LCB research department.

Next to speak was Janine Hansen, state president of Nevada Eagle Forum, whom she noted had long stood for lower taxes and less government. She stated the previous speakers had expressed their concerns very well. She did ask to address one issue, as she had earlier in the Committee on Government Affairs, regarding counties that were hurting with regard to their tax base. She said, "I think that can be answered, particularly in the long term, with a look at A.B. 672 which is the Nevada Public Lands Bill which I talked to Mr. Neighbors about yesterday in that committee. What that tells us is that there are several counties, including Esmeralda, Lincoln, Nye, Mineral, and White Pine that have between 1 and 3 percent of their county only that they have control of, all the rest is controlled by the Federal Government. If we could implement the Nevada Public Lands Act and begin to take our land back from the Federal Government, these counties would increase the amount of taxable property in their counties and they would be much better off in terms of being able to sustain the important needs of the local communities which taxes are probably the ones people consider to be the most important."

Mr. Goldwater agreed it was a great idea.

Mr. Anderson spoke next and opined that having traveled extensively throughout the state, not all the land appeared to be readily usable by the average citizen, in terms of turning it into real quick tax property. He asked if Ms. Hansen's theory was based on all of those lands being readily picked up by the local government entities and taken on as part of the counties and then quickly turned into private ownership.

Ms. Thompson believed A.B. 672 had addressed that part of the issue. In that bill, "the Board of County Commissioners of a county in which the public lands are located for any public purpose of the county or any city or town in the county select a portion of the public lands located within the county that it wishes to acquire and notify the state land registrar in writing of its selection. Upon receipt of the notification, the state land registrar shall convey to the county all right, title, and interest of the state in and to that portion of public land selected." She believed it would be a process over a period of time.

She added there had been testimony in the Committee on Natural Resources and Mining that they anticipated in some other states actually making a profit on the public lands. In Utah, for instance, the state controlled that portion of the public lands.

Mr. Goldwater asked for further testimony. He noted much had been covered by Mr. Harris, Ms. Hansen, and Ms. Thompson

The next speaker was Don Kaplan, a private citizen, who explained he was a recent arrival from California and a new citizen of Nevada. He said he "owned homes when Proposition 13 went through and as the Chair said I am one of those senior citizens, but I can’t believe I am, the years went by so fast and the Chair will find this out very shortly. The particular home that I owned, from 97 to 98, the assessed value went from $132,000 to $240,000, an increase on the land of 95 percent, the building up 82 percent, overall 84 percent, the tax up 85 percent. I went to the county assessor and spoke to a very nice assessor who understood the problem, and he said would you let me in your house to look at it. That was a real strain to agree to that, but I did. When he came in, he said he had too high of a rate for replacement and part of the law is to use the replacement value. I also pointed out that the land was originally was $45,000, they were now assessing it at $135,000, full value. He reduced it somewhat, and I did get some relief from this assessor, most people cannot understand that, but even now with the revised assessment, which went from $2.43 to $1.98, it is still up 73 percent on the land, 45 percent on the building, an average of 50 percent up. Copying California is not a very wise decision that is why I am in Nevada. However, there are some things that are good in California as there is in every state. And I submit to you that Proposition 13 is one of them."

Mr. Neighbors asked, on the property he had in California, what was his tax rate. Mr. Kaplan believed it had been 1 percent.

The next speaker was Guy Zewadski, representing the Arlington Towers Home Owners Association, a residential condominium community in downtown Reno. He explained they were mostly retired people, and they supported A.J.R. 17. They were concerned about the increased forms of taxation on their real estate through special assessment districts. They believed one of the goals of good government would be to create stable communities, and they felt the bill did that.

Carole Vilardo, representing Nevada Taxpayer Association, testified against the bill. However, she said it was definitely a problem, and that had been acknowledged. She also expressed some confusion about the bill.

Mr. Goldwater noted many of the members were supposed to go to another committee and suggested the matter be set for a later work session.

Ms. Vilardo said she would confine her questions to five points. First, the discussion of going to market value; there was no place in the bill for that to happen. There was a discussion about depreciation. The bill references taxable value. By the time that were to pass, values would have dropped back better than 10 years. It was unknown what that impact would be. For a constitutional change, if there was a problem or an error, it would take another 5 years to make a change. It had a great deal of specificity, which she questioned. Page 3, subsection 5A, allowed a person 62 years or older to transfer the value of a residence. What happened if the transfer was between counties. What would that do to the base of the counties. If the person was 62 years of age, why was it not means tested. No one liked the increase in property taxes, but particularly working through S.B. 253 in the tax committees, they had looked to means test individual’s exemptions. That was not done in A.J.R. 17, therefore there were a number of procedural questions, or infirmities, to be clarified before the bill passed.

The other area she believed was problematic was the reference to California. The property tax limit had worked in California thus far. In California, 2 years ago there was an effective statewide tax rate. The effective statewide tax rate in Nevada, 2 years ago was .99, just about 1 percent. The effective tax rate in California, statewide, was 1.32, and that was with their Proposition 13. The other thing was, California, in fact, had the largest fee increases of any state in the nation for the first 3 years and had since raised its personal income tax.

Mr. Goldwater said he was not in favor of an income tax in Nevada.

Ms. Gibbons said it was obviously a great problem for seniors who were on a fixed income. She asked Ms. Vilardo to confirm what they had both spoken about with Senator O’Connell, who was chairman of the S.B. 253 committee, that her intent was to study the issue and have all parties involved.

Ms. Vilardo responded the committee had been looking at the entire issue of property tax. The S.B. 253 Committee was to look at the distribution of taxes, particularly with seniors on a fixed income, or who were having hardships because of property tax. S.J.R. 11, from the S.B. 253 Committee had passed. It was a constitutional change to provide relief when property taxes caused an economic hardship. It was for the person who owned and occupied their own home, it was not just for seniors. One of the problems, and why the S.B. 253 Committee had taken so long to look at the issue of property taxes, was because when one change was made, it orchestrated a reaction in other areas. If a change in assessed value to market value occurred, even though there was a cap, there were still other formulas in place. One had to know how those formulas had to be adjusted to accomplish the goal. What needed to be examined was the bonding capacity, the amount of assessed value, what was 35 percent of the assessed value versus possibly increasing to 100, and so on. It was not simple, and that was Ms. Vilardo's concern

Ms. Gibbons remarked everyone would agree they would love property taxes capped at 1 or 2 or even 3 percent; however as responsible citizens realized they were going to have to live with limited government. It might be an issue for an initiative petition. It was something that citizens had to come together and realize that in asking the government to cut back they had to be sure they were willing to accept the consequences.

Mr. Goldwater noted Ms. Vilardo had been advocating limited government in the building for more years than she would like to remember.

Ms. Tiffany said she had a "yes or no" question. Should government not start with capping expenditures before it looked at the revenue side. Ms Vilardo answered, "My Board will support it." Ms. Tiffany said if an initiative was undertaken, it should be on capping expenditures. Ms. Vilardo countered it should be on general fund expenditures. Ms. Tiffany said it sounded to her as if government could do whatever it wanted on the revenue side, but the expenditure side did not stop, "they just make it up in any other pot that they can."

Mr. Harris interjected he would like an opportunity to work with the committee and answer some of Ms. Vilardo’s questions. Perhaps the issue was understanding. Mr. Goldwater advised him issues of understanding usually were not handled before the committee. That was not to say the committee did not understand, but it was not a forum to debate back and forth. He added if Mr. Harris wanted to talk with Ms. Vilardo about her concerns, he felt she would make herself available.

Mr. Harris asked how his group would be able to participate in the work sessions. Mr. Goldwater said it was conceivable on a limited basis. Additionally, individual members were generally receptive to explanations by mail or telephone.

Last to speak was Bob McGowan, Washoe County Assessor. He said he was not against the bill necessarily, but he was not sure the end result of the bill would accomplish the goal, which was to make the pain of paying property taxes less painful. If, in fact, either market or taxable value were adjusted at the time of sale, homes sold more often than commercial properties. "Over time, that tax burden gets shifted to the very people we are telling right now we are trying to help out, and that is the home owner. And I don’t think that is the goal of anyone here and even the goal of those who drew up A.J.R. 17. I, for one, don’t think there is enough information out there to tell you what the exact dollar amount and impacts are going to be on schools, on cities, on counties. I think there is a negative number but I don’t think anybody knows exactly what that number is. We have tried to put them together and we have to make certain assumptions as we go. I feel very strongly that this does not get us where we want to get, and if somebody has the magic that can make paying taxes easier, I would support it and work hard to make it work, because we are the first line."

He added the people who worked in the assessor’s office were the ones who got the calls when taxes made big jumps. "You have to look them in the eye and tell them it is a market value. I appreciate Mr. Harris saying it’s not the assessor’s fault, I wish he would tell more of his friends that."

Mr. Goldwater said the legislators were telling them it was the assessor’s fault. Mr. McGowan said the issue did require a lot of study and felt it was everybody’s goal, at least every caring and thinking person’s goal, to try to find how to make taxes less of a burden on people. "It had to be across the board, not just one or two people."

Ms. Gibbons received many complaints about homeowner’s property tax bills and referred them to the assessor's office. She was curious how complaints were handled, how many people complained, were overtaxed, and how those were resolved. Mr. McGowan said when they sent the value notices, between November and December each year, until the close of the filing of the appeal period, which was January 15, they received around 5,000 calls. Most were handled over the phone, sometimes people came in and the problems were solved by discussion with the appraiser. Sometimes, there were points where reasonable people could not agree. That was what the county boards and the State Board of Equalization were set up to handle, and each side then presented his case. Last year in Washoe County there were only 140 such individuals. He said he did not know the numbers of who prevailed, the board or the taxpayer, but could get that information. The assessor’s office probably prevailed in most cases, because, it had tried to have the facts straight. There were a couple of tests: (1) The assessor could not exceed market. The other test, even if they had not exceeded market, was the data correct. If they had not exceeded market, but had the wrong data, they probably had the wrong value. Those were things that could be discussed with the homeowner or the businessowner. There were 130,000 parcels in Washoe County; talking to the owner and getting the right information changed 200 to 300. On the appeal level it was much less, he explained, because by that time all the factual issues had been discussed. Then it was a matter of "No, you are looking at the wrong thing," or "I just don’t want to pay higher taxes. And that was a matter for the board to listen to."

Mr. Goldwater thanked him for bringing out the commercial side. "I was on the fence on this, but I think you convinced me. I have a family member who has a piece of property downtown in Las Vegas. In 1950, he put a 99 year lease on it, it is now where the Lady Luck is. I could have a 1950 basis on that land. My family will be happy with that one."

Mr. McGowan noted it still did not get rid of the fact that "there were some hot-spot areas where areas that the market is just going nuts. That does create some higher value and generally a higher tax dollar. How do you correct that? I don’t know if there is a simple answer out there to do that, but I will be happy to work with anybody because it would reduce the number of calls and workload, you could have fewer bureaucrats running around."

Mr. Goldwater told Mr. McGowan if the job was easy, he would not be needed to do it.

There was no further testimony on A.J.R. 17. However, Mr. Dale Akers submitted a letter in support of the measure, which was marked Exhibit I and included for the record.

Mr. Goldwater noted committee members had to leave, or some had left, and he would try to schedule a work session later in the evening or on the following day. He then adjourned the meeting at 4:20 p.m.

RESPECTFULLY SUBMITTED,

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Darlene Rubin,

Transcribing Secretary

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Nykki Kinsley,

Committee Secretary

APPROVED BY:

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David Goldwater,

Chairman

Date:____________________________