The Assembly Ways and Means and Senate Finance Joint Subcommittee on Capital Improvements was called to order at 8:30 a.m. on Tuesday, April 6, 1999. Chairman Morse Arberry Jr. presided in Room 3137 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List.

ASSEMBLY SUBCOMMITTEE MEMBERS PRESENT:

Mr. Morse Arberry, Jr., Chairman

Mr. Joseph Dini, Jr.

Mrs. Jan Evans

Mr. Richard Perkins

Senator William Raggio, Chairman

Senator Bob Coffin

Senator Bernice Matthews

Senator Raymond Rawson

SUBCOMMITTEE MEMBERS ABSENT:

Mr. John Marvel (Excused)

STAFF MEMBERS PRESENT:

Chairman Arberry called the meeting to order at 8:30 a.m.

Eric Raecke, Manager, State Public Works Board stated the agenda listed Capital Improvement Projects (CIP) that included some Business and Industry projects, Mental Health, and Veteran’s Affairs projects.

Mr. Raecke noted the 1,200 square foot addition to a 5,000 square foot building was in Las Vegas. The extension was needed to reduce overcrowding in the Division of Agriculture.

When the project was first proposed, the cost was estimated at $297,000, but had since been raised to $337,000. The original estimate was made at $100 per square foot, but because the project was in a laboratory facility, that figure was raised to $110 per square foot.

An area around the perimeter of the facility had to be fenced which raised the site costs from $22,000 to $25,000. The need to add ceiling sprinklers to the entire building instead of just the addition raised those costs from $18,000 to $28,000.

Senator Coffin asked if water sprinkling as a fire safety measure was the proper solution for a laboratory facility with the different kinds of compounds they handled. Mr. Raecke replied the majority of the building was a typical office building but the laboratory portion should be reviewed to ensure water sprinkling was appropriate. He added water sprinkling seemed to be acceptable unless very exotic mixtures were present.

Senator Coffin asked if the building was a single story facility. Mr. Raecke replied it was.

Chairman Arberry asked Mr. Raecke to explain the need for 1,200 additional square feet. Mr. Raecke deferred to the staff from Department of Agriculture. Paul Iverson, Administrator, Division of Agriculture, testified when the proposal was first crafted, the agency had looked at the space and function of the facility. The facility included a metrology laboratory that was supposed to be an environmentally controlled area for weights and measures testing. At present a portion of the metrology laboratory was used for office space. Two weights and measures staff had their offices in the laboratory. Because of the tremendous amount of pest control operators taking certification tests, a majority of time they were placed in the conference room to take their tests in an isolated environment. Staff meetings wound up being held in the metrology laboratory.

Because of the nature of Las Vegas, Mr. Iverson stated the agency experienced approximately a 10 percent growth rate in devices that required testing. The agency had projected growth over the next 10 years in staff in general and eventually more weights and measures inspectors. The building addition provided additional office space and space in the lab as well.

Chairman Arberry noted the Division of Agriculture had requested some new positions in The Executive Budget and asked how many of the new positions would be housed in Las Vegas. Mr. Iverson replied when the budget was first crafted, the agency had asked for quite a few more positions than what appeared in The Executive Budget. The agency anticipated one agriculture specialist and .5 of the weights and measures person would be in Las Vegas. The Executive Budget only recommended one agriculturist, one weights and measures position and one chemist to be added to present staff. It was anticipated during the next legislative session the agency would return to request further new positions.

Chairman Arberry clarified all of the new positions being requested would be housed in Las Vegas except for .5 of the weights and measures person.
Mr. Iverson replied that was correct.

Chairman Arberry noted additional furnishings were being requested for the new positions. He had understood the new positions were supposed to work in the field and only be in the office occasionally. He asked why expensive new furniture was needed. Mr. Iverson responded the agency would be more than happy to use Prison Industry furniture. The CIP proposal request for furniture was done using the "typical" furnishings needed to house a staff person. He added those new positions did need to be in the office. Everyone had paperwork, record keeping and filing that was necessary. However, the positions were in the field the majority of the time.

Chairman Arberry noted Project 99-C05 included an off-site utility cost of $16,000 and asked if, since the building already existed with sidewalks, curbs, and gutters why the additional amount was needed. Mr. Raecke replied that as the building was added onto, because it was a laboratory building it was anticipated additional water or sewer and especially electrical connections would be needed. The building had already reached its maximum for electrical service.

Mr. Raecke commented on the furnishing question that the facility being furnished was a laboratory and labs needed a lot of special benches to conduct their testing. If hoods were needed, those were very expensive. Chairman Arberry commented the project called for modular furniture and that was the question. Mr. Raecke replied he would revisit the furniture issue with
Mr. Iverson.

Mr. Raecke testified the building was located in Sparks, Nevada next to the Nevada Mental Heath Institute. The project was brought on in the original budget cycle as an agency project, but at an Interim Finance Committee (IFC) meeting it was recommended to be funded as a CIP project. Through that transition the amount needed had grown a little. The funding summary showed the project would still be done with pollution funds.

Paul Iverson testified the funds for the project came from the Pollution Control Fund, which was also the funding source for Budget Account 4537. The petroleum laboratory was doing strictly petroleum work. There were only two petroleum labs in the state located in Reno and Las Vegas.

The agency was simply out of space at the facility located at 350 Capitol Hill in Sparks. Originally the request was made for an entirely new building with the hopes everything could be put into one new site. Unusual things happened in the petroleum lab; fuels were getting more complex, new fuels were being added such as Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG) and down the road they might also be looking at hydrogen fuels, propane, and premium diesel. The problem with the laboratory in Sparks was strictly one of space. With all the computers, benches and test equipment there was not enough space to perform adequately. He estimated the laboratory was taking about 2,400 samples per year. Adding in complaint samples that had to be worked it had been hoped to consolidate everything into one laboratory building with a new modern lab where gasoline was not being driven across town and testing would not take place in the middle of a residential area. Mr. Iverson noted the weights and measures staff were the ones who gathered the gas samples and if everything was in one place safety and efficiency was improved.

Chairman Arberry asked what the existing square footage was at the present petroleum laboratory. Mr. Iverson replied the existing lab was 600 square feet.

Chairman Arberry stated he saw a cost breakdown of $170 per square foot and asked why it was so high. Mr. Raecke replied he thought $170 was a very applicable number for laboratory construction when one considered the exhaust systems, special floors, and hoods that were an integral part of a laboratory. He offered to revisit the figure but he thought the $170 per square foot was appropriate. The Chair stated the figure raised a "red flag" because another laboratory project was proposed for Truckee Meadows Community College that was not costing nearly as much per square foot. Mr. Raecke offered to compare the two figures and report back to the subcommittee.

Chairman Arberry asked Mr. Iverson if there were some assurances that the pollution control funding would be received from the Department of Motor Vehicles and Public Safety (DMV). Mr. Iverson replied the funds in the Pollution Control Fund were earmarked for fuels and air quality. The Division of Agriculture had communicated their need for approximately $1 million. Initially, the intent was to transfer the money right away and place it in reserve. It was known $1 million was in the Pollution Control Fund and the project need had been discussed with the Division of Environmental Protection (DEP) and also with DMV. The Chair directed Mr. Iverson to get a commitment from DMV and DEP in writing for the funding.

Senator Raggio asked if there were sufficient Pollution Control Funds to also fund Project 99-C05 in Las Vegas. He noted all the Las Vegas project was scheduled to be funded through bonding. He was aware the funds were also used for other purposes like the Tahoe Regional Planning Agency (TRPA), Forestry positions, and some Agriculture positions. He asked if those were all appropriate uses for the Pollution Fund. Mr. Iverson responded when the division had tracked how much cost was actually associated with fuel issues in his agency, that resulted in 15 percent of the Weights and Measures Budget being paid for from Budget Account 4537 as well. He offered to revisit that for the Las Vegas area and the Weights and Measures employees would be housed in the new portion of the building.

Mr. Raecke commented when the Chair had asked him to compare the cost per square foot of the Sparks project with the TMCC project, he had done so during the discussion. The building at TMCC was not a laboratory building at all. The project in question was Project 99-C16, which called for some new construction of a student development center, and the two projects were not comparable.

Chairman Arberry referred back to Project 99-C05, which was a laboratory and was figured at $110 per square foot. Mr. Raecke replied that project was an addition to an existing lab whereas 99-L01 was a new lab facility. He offered to review the cost per square foot of Project 99-L01.

Mr. Raecke stated the project included planning only for a new psychiatric emergency service crisis center in Southern Nevada at the Southern Nevada Mental Health Services (SNAMHS) campus. The original budget had requested $3.8 million for planning and construction of the center but in an effort to balance the budget the construction phase was pulled out. The space would emulate what was going to be built at Nevada Mental Health Institute (NMHI).

Dr. Carlos Brandenburg, Administrator, Division of Mental Hygiene and Mental Retardation, spoke to the need. He stated the current program was located in a residential treatment facility that was built in the 1970’s for treatment of adolescents. The agency had gone through some renovation to try to improve the safety and security of the facility. However, the facility floor plan continued to be unsafe for the type of emergency treatment needed. The facility had low ceilings with sprinkler heads within easy reach of clients, many areas were not directly observable and men and women were in rooms open to common areas thus preventing privacy. The current structure was also away from the psychiatric hospital and that created a security problem when transporting an acutely mentally ill person from the emergency service into the hospital. The proposal was to attach the Psychiatric Emergency Service (PES) directly to the mental hospital.

Chairman Arberry asked if there was an anticipated growth level for the project. Dr. Brandenburg replied the current bed capacity was 10 and the plan was for a 20-bed facility that should take the agency through the next 5 or 6 biennia.

Chairman Arberry stated the project summary showed some remodeling of the existing hospital and asked for an explanation of what "some remodeling" meant. Mr. Raecke replied the term referred to the connection that would hook the new PES to the existing building because some remodeling was needed to make the connection work. The Chair asked Mr. Raecke to provide a breakdown of what was included to staff. Mr. Raecke replied he would.

Assemblywoman Evans asked what was being done with the space that was vacated in southern Nevada when Desert Willow was opened. Dr. Brandenburg replied the space was currently being used for office space for some staff, and would possibly be used for expansion of the in-patient services when that was needed. That space had been looked at for the PES on a temporary basis; however, it did not lend itself to that purpose. The clients would have to be brought through the ward and the pharmacy unit to get to the area.

Assemblywoman Evans noted the space had previously housed juveniles and asked what was planned for its future use. Dr. Brandenburg replied it would eventually provide the growth space for the hospital instead of having to add a third floor. Assemblywoman Evans commented that would be an upcoming project then and Dr. Brandenburg indicated that it would.

Mr. Raecke stated the project was for new hospital construction at the Nevada Mental Health Institute (NMHI) that was originally brought forward as 97-C06 in the last legislative session. When the budget needed to be balanced last fall, the project was chosen for reversion because it was being funded from General Fund dollars. It was placed in the 1999 CIP projects for funding from general obligation bonds. From the 1997 project, $9,526,000 was reverted, but by the time the figures were escalated for the time delay, the project would cost slightly over $10 million in the 1999 CIP program. The need had been defined in the 1997 biennium.

Senator Raggio asked if the same design and project was planned as that approved by the 1997 Legislature. Mr. Raecke agreed. Senator Raggio asked what additional costs would be incurred as a result of delaying the project.
Mr. Raecke replied he had built in the standard inflation rate of 5 percent. Senator Raggio asked if there was reasonable assurance that the project could get on-line as quickly as possible and that the authorized amount should be sufficient to cover any additional costs that resulted from the delay. Mr. Raecke replied he was very comfortable with the numbers. Senator Raggio asked if the project could be put on a high priority list, as it was very much needed and long overdue. Mr. Raecke responded the plans were all drawn and ready to go to bid in June or July. Allowing for a 14-month construction period, the project should be complete in September 2000.

Senator Raggio asked for a status report of the PES center on the Sparks campus. Dr. Brandenburg replied the agency was currently in the process of negotiations with the architect to renovate Building 7. The renovation was expected to be complete by the first week of September 1999 and in use by the first week in October.

Chairman Arberry stated the original design had been 55,000 square feet and now the project was listed as a 60,000 square foot facility. Mr. Raecke replied the current plan was drawn from the original and there was no additional square footage planned. The additional cost was estimated to include the inflation rate driven by the difference in bid time. The Chair stated the project description for 97-C06 prepared by Mr. Raecke showed 54,820 square feet and the project description for 99-C21 showed 60,000 square feet. Mr. Raecke stated the 54,000 might have been the number shown on project 97-C06, but the 60,000 square feet was the very approximate number that was the needed. The 60,000 square feet had been worked within the exact budget numbers awarded in 1997. Mr. Raecke had tried to accommodate the program within the building and let the building grow to fit the program within the budget.

Assemblywoman Evans asked where the operational funding could be found for the project to renovate Building 7. Dr. Brandenburg stated the agency was instructed by the 1997 Legislature to come in during the current session and secure the operating funds for the program but because of the budgetary shortfall there was not enough money available. Assemblywoman Evans asked if the operating costs were supposed to be reflected in the institute’s budget and noted no operational funding was shown. Dr. Brandenburg replied that was correct.

Assemblywoman Evans asked what plan the agency had developed for opening and operating the facility if the renovation was completed in the fall of 1999. She asked if the building would just sit there until the next biennium. She assumed a budget was mapped out for operating costs of the PES.
Dr. Brandenburg replied the Ways and Means Committee had requested the operations figures to be submitted to staff. If the PES was not funded in the coming biennium, then it was likely the building would remain vacant until the next biennium. Assemblywoman Evans stated the subcommittee was delighted the agency was able to move forward on the construction project but it would be indeed unfortunate if the building was not utilized throughout the biennium.

Senator Raggio stated the option of having the building unused throughout the next biennium was not acceptable. He asked for an estimated operations cost report. Dr. Brandenburg replied the estimated operational costs were
$1.2 million for the biennium. Senator Raggio asked if the building would be fully functional with all necessary equipment when the renovation was completed in the fall. Dr. Brandenburg replied that was correct. The Senator emphasized it was unacceptable to build the renovation and then let it sit idle.

Mr. Raecke stated the project included renovation of five buildings that were in excess of 20 years old. The heating, ventilation and air conditioning (HVAC) units were failing and needed to be replaced. In reviewing projects for the agenda he found several that did not include construction cost breakdowns and stated he would provide those that were missing to staff.

Chairman Arberry stated that was one of the questions the subcommittee had for Mr. Raecke but as long as it was provided to staff that was sufficient. The other portion the subcommittee felt was missing was the warranty on the maintenance agreement. The Chair asked if that would be built into the construction costs of the project or whether it would be a separate item. Mr. Raecke replied he would provide that information with the construction cost breakdown to staff.

Mr. Raecke stated CIP Project 99-M09 included 11 seclusion rooms in Las Vegas at the Adult Mental Health (SNAMHS) campus. The seclusion rooms were typically pretty badly beaten up and the 11 units in the project were in terrible condition. In the past some of the rooms were renovated with fairly inexpensive material that had caused the agency numerous problems .

The planned wall and floor coverings were a rubberized material similar to what had been used in the Desert Willow facility. The material should last quite a while. The project also included replacement of some monitors and cameras in those rooms for the safety of the patients placed there.

Chairman Arberry asked what type of material was planned for the floors and walls. Mr. Raecke stated the product was a welded-vinyl on the floor with a cushion back for some protection. He thought the walls would have about a three-eighths inch thick closed-cell rubber material that protected occupants from injury.

Dr. Brandenburg stated the wall material was a non-porous material because the clients who used those rooms had a propensity to defecate and urinate and engage in a lot of unseemly behavior. It was important to have a non-porous material to make the surfaces easier to clean and they would not absorb the moisture and ultimately give off odors. The same type of material had been used successfully at Lake’s Crossing for over 20 years and had worked very well for the safety of clients and staff. The Chair asked if there was a new product on line that would replace the product that had been used for 20 years. Mr. Raecke stated the product had been upgraded and it was a non-porous seamless material that had not been used in southern Nevada before. The product currently in place in southern Nevada was fairly porous and as a result it held a lot of stench and smell in the material. It was hard to keep clean and was not safe for the clients or staff.

Dr. Brandenburg stated when a client was placed in restraints they were usually very combative and the rooms needed a material that would protect the clients and staff in case they were banged up against a wall.

Chairman Arberry stated the project showed a 10 percent inspection fee for the Public Works Board and asked why that was so high. Mr. Raecke replied the project maintenance and inspection fee was because the rooms could not be done all at once and would probably last over a period of several months. He offered to review the justification for the fee and the Chair requested he do so.

Mr. Raecke stated Project 99-M10 was for replacement at the inpatient hospital of an existing cyclone fence that had been in place a long time. It was obvious that over a period of years patients began to unravel the fence from the top.

The project would install a brand-new fence with a rubberized interior to avoid harm to the patients.

Dr. Brandenburg testified the impetus for the project was due to three escapes from SNAMHS. The type of clients the agency had at the facility when it was built was probably appropriate, but present-day clients were much younger, more aggressive, and had a greater likelihood of trying to leave the facility. The new fence would enable the agency to provide a more secure setting for the inpatient hospital as well as the community.

Chairman Arberry asked if there had been any consideration of using wrought iron fencing because patients could not climb those. Dr. Brandenburg responded the entire hospital itself was surrounded by the cyclone fence and the proposal was to replace the cyclone fence with the rubberized material that would actually encapsulate the hospital.

Chairman Arberry noted the project did not include the cost per linear foot.
Mr. Raecke replied any of the projects missing construction cost breakdowns on the agenda would be provided to staff.

Mr. Raecke explained the project would upgrade the temperature control systems in buildings 2, 3 and 3A. The current system in those buildings was so outdated and unreliable that the custodian had a tough time controlling the heat and cooling. The project would bring the buildings into "the Twentieth Century." He added the construction cost breakdowns were not included but would be provided to staff.

Mr. Raecke said the new system would also allow ease in monitoring the HVAC systems in the buildings without having to physically go into those units. The systems could be checked from a central location.

Chairman Arberry noted one concern of the subcommittee was that the project included a cost for Architect and Engineering (A&E) design and supervision. Inspection fees were also included. Mr. Raecke replied there would definitely be some design costs, mainly engineering, and the Public Works Board did expect to monitor the project as it was being done. He would review the numbers when he provided construction cost breakdowns.

Mr. Raecke stated he originally thought the project was a duplicate of 97-M02 but he had discussed it with Dr. Brandenburg and the current project was for a completely different section. Project 97-M02 had done the lighting around eight buildings and project 99-M12 was a necessary project on a completely different part of the campus. He had re-verified the project was not a duplicate with
Dr. Brandenburg and he would also check with Mr. Tom Clements at the facility.

Chairman Arberry asked if the 20 new light poles were just replacing existing poles or if they were a completely new installation and where they would be placed. Mr. Raecke said he would provide the information to staff.

Mr. Raecke stated the doors to be replaced were all wooden doors with a light metal frame and the Las Vegas climate had ruined them.

The project would replace the frames, build down the existing doors, install panic hardware and other accessories. The projection was at $4,000 per door for the building. All doors were 30 years old and had been beaten to death.

Chairman Arberry stated the subcommittee was not questioning the need, however the project estimate included A&E design and supervision costs.
Mr. Raecke stated he would delete A&E costs and have his project manager do the project supervision.

Mr. Raecke stated the that was a long-standing project that had been approached piecemeal fashion over three legislative sessions. The current project was the final phase.

Chairman Arberry asked why the project had taken so long. Mr. Raecke replied the fire alarm system upgrade was a very large project and the Public Works Board had tried to "eat" it one bite at a time. He added perhaps they should have "bit the bullet" at the beginning and done it as one project.

Chairman Arberry stated the subcommittee was trying to get a handle on the project and he hoped it would not return next legislative session asking for more funds. Mr. Raecke assured the Chair the current project was the final phase that would replace the simplex system.

Chairman Arberry referred to CIP Project 97-M03 and asked if the current project asked for sufficient funds to complete the project because the 1997 project made it appear the funds requested in 99-M14 might not be sufficient. Mr. Raecke stated he did not have 97-M03 with him but he would go back and review the figures. The Chair noted the project description stated funding might not be sufficient.

The Chair asked Mr. Raecke to also report back to the subcommittee an accounting of all the previous CIP projects that were needed previously to arrive at Project 99-M14. Mr. Raecke stated he would.

Mr. Raecke stated the project was a replacement of heating and air conditioning units at NMHI in Sparks. The project would include five buildings with roof mounted units that had reached their life expectancy. Those units were the only units serving the buildings and any failures in the units made the buildings almost uninhabitable. That project did include a construction cost breakdown.

Mr. Raecke stated the project included an occupied building allowance and if he could work with someone to move inhabitants while the work was being done that cost could be eliminated.

Mr. Raecke stated Project 99-M16 was to replace the water heater in building 8 on the campus. The water heater was over 20 years old and failure was almost imminent. The Public Works Board preferred to do the project on a preventive basis rather than an emergency because sometimes a water heater that large was hard to get. A construction cost breakdown would be provided.

Chairman Arberry stated the subcommittee was concerned about what building 8 would be used for, once Project 99-C21 was complete. Dr. Brandenburg stated building 8 would probably be used for an expansion of the psychosocial rehabilitation program. They were also exploring development of a duly diagnosed treatment program there.

Mr. Raecke stated the project would replace restroom fixtures in Southern Nevada Child and Adolescent Services (SNCAS) campus, buildings 7 and 8. As stated in the project description the fixtures were really "trashed."

Mr. Raecke apologized that the construction cost breakdown called for seclusion rooms and he stated the project was actually for restroom facilities. The project would include new toilet partitions, wall finishes, new fixtures, some new flooring and the projected cost of $75,000 was pretty realistic.

Chairman Arberry stated a concern of the subcommittee was that in the breakdown, Project 99-M17 included A&E design supervision costs. Mr. Raecke replied an A&E might be needed when working on wall finishes and they might want to reposition some of the equipment for a better look and accessibility. He offered to use a Public Works project designer if the subcommittee members were that concerned and absorb that cost. The Chair noted it seemed like a simple project that should not incur A&E costs. Mr. Raecke stated the project was not as simple as taking out a stool and putting a new one in. Partitions had to be removed and replaced, and some wall and floor work needed to be done.

Speaker Dini commented the project was cheap because the last replacement of bathroom fixtures at his place of business had cost $110,000 for seven stalls on each side.

Mr. Raecke stated Project 99-M18 would replace safety lighting between buildings 15 and 16. It would also replace lights around buildings 15, 16, and 17. A pool cover needed replacement because the pool was actually closed for liability protection. He noted the choices were whether to continue use of the pool or fill it in, either of which would incur a cost.

The lighting was a safety issue in some of the parking areas and buildings. The lights were rusted and weathered. He clarified the project was a Child and Family Services project rather than a Southern Nevada Child and Adolescent Services project.

Speaker Dini asked if the pool cover planned was made of the new material that was durable enough to be walked on. Mr. Raecke stated the pool cover was designed to be rolled over the pool and locked so that no one could use it.
It was thick enough so that a person would not fall through it.

Chairman Arberry asked if there was a conflict between CIP Project 97-M02 and 99-M18. Mr. Raecke replied he realized some of the building numbers were the same but he would be in Las Vegas the next day and would verify that there was no duplication on the projects.

Mr. Raecke stated building 15 was originally given to the state as a donation. When the original heating system was installed it did not extend all the way to both ends of the building. That resulted in hot and cold spots in the building. The project would establish some kind of decent air quality and temperature control. A construction cost breakdown would be provided.

Mr. Raecke stated the project was at the Southern Nevada Child and Adolescent Services. The windows were in such poor condition that they could not be sealed in wet weather. Some carpet had been replaced fairly recently and that carpet had already sustained damage because of the leaking windows. The estimate of $45,000 would replace the windows and frames and do some repair from leakage damage to the inside of the building.

Chairman Arberry noted that was another project that had A&E supervision costs. Mr. Raecke offered to review the need for A&E on the project.

Mr. Raecke stated he wanted to review the project because an offer had been made recently from the Carson City Fire District who would like to burn the building down as a practice exercise. Mr. Raecke noted the problem had been the fire district had not explained how they would clean up the burn. He did not want to proceed without that information. The other possibility was using prison labor to demolish the building and Mr. Raecke had spoken to Senator Jacobsen about that. He estimated if he did not eliminate the project entirely the cost could be cut down to almost nothing.

Chairman Arberry stated the concern with the project was that it showed a 15 percent construction contingency and another 10 percent contingency. There was an additional contingency that altogether totaled 32.5 percent. Mr. Raecke responded he would attempt to get rid of the project and do it a different way.

Bruce Alder, Deputy Administrator, Division of Child and Family Services (DCFS), testified the agency would really like to see the building removed for a number of reasons. It was an old wood barracks-type building. There had been several instances where transients had gotten into the building, and the building was on the grounds of the Boys and Girls Club where the children seemed to be fascinated with it. Staff was concerned that some day there would be a fire. He voiced his support of Mr. Raecke’s contingency issues on the project because there was at least one underground fuel tank in the vicinity of the building. The building was originally heated with fuel oil. He explained past experience proved the situation was fairly unpredictable. When the old shop was torn down to build the fire station an underground fuel tank was found there that had to be excavated. It was prudent to leave some contingency money in the project for those issues.

Mr. Raecke stated NYTC had requested some work on the building in the 1995 and 1997 sessions that had not been funded. The current session should be the one to fund the project. The project included ceiling replacement, lighting fixtures, and general renovation. The ceiling had been patched and pieced together from leaks. The vinyl asbestos tile had to be removed and Mr. Raecke had left an asbestos removal allowance in Project 99-S06 to cover that. The building was built in 1961 and had suffered the effects of time. The cost projection was $218,348 for renovation.

Chairman Arberry asked if the kitchen facility could continue to be used during the project. Mr. Raecke replied he had not talked to Ed Burgess, Director of NYTC about the actual scheduling but he was sure they could figure out a way to phase the project and work around kitchen needs.

Mr. Raecke explained 99-M23 covered the gymnasium building at NYTC. The ceiling had been smacked with basketballs and suffered other types of damage since the building was constructed in 1977. Parts of the ceiling had flaked off and the ceiling needed to be taken down and replaced with some material that would not damage as easily during athletic activities.

Originally the walls were carpeted for acoustical reasons and would not meet current building codes. The building had approximately 9,000 square feet of wall space and the plan was to remove all the carpet and replace about 1/3 of the surface. The project would entail some shutdown time for the gym but
Mr. Raecke assured the subcommittee Mr. Burgess could schedule around that.

Chairman Arberry asked if the ceiling deterioration had damaged the new floor that had been constructed in the gym. Mr. Raecke replied the ceiling was made of a fairly light fibrous material that didn’t cause damage to the floor. It just made a mess.

Chairman Arberry asked if the project included replacement of the roof on the gymnasium. Mr. Raecke replied that was not included in the project. The Chair asked if the roof was leaking. Mr. Raecke responded the roof had leaked in the past but he thought a repair project a few years back had taken care of the problem. Mr. Alder agreed with Mr. Raecke’s assessment.

Mr. Raecke stated the needs of Project 99-M24 were likely to be seen time and time again. Backflow prevention devices were being required by water companies all over the country. All the new projects included backflow preventers. However, Sierra Pacific Power Company that supplied water to the Reno-Sparks area requested the devices to be placed at least on the main lines to the NMHI campus so that anything that happened on the campus could not get back into the domestic system.

Mr. Raecke stated the project would retrofit the campus and allow it to the meet the requirements of the water provider.

Chairman Arberry asked if there was a deadline on retrofits for the backflow devices. Mr. Raecke replied he was not aware of a deadline. The Public Works Board (PWB) tried to include them on any projects where it was logical and also included them on all new projects. He offered to research and report to staff whether there was an environmental deadline.

The Chair asked when the PWB anticipated the project to be complete.
Mr. Raecke replied the PWB would need 3 months to bid the project and the devices would have to be ordered so the project would probably take 9 months from the time of funding.

Mr. Raecke stated the project was for cemetery improvements at the Veterans’ Memorial Cemetery in Fernley. The cemetery had always had a lot of federal money put into it. Federal funding had included a small improvement during the 1997 Legislative Session for which the state matched funding. The current project was also a funding match between federal and state funds. The state was being asked for $373,000 that would finish the enclosure of the pavilion and construct some public restrooms. Currently if staff was not present, the public had no access to restroom facilities. Some of the funding would also work on the Master Plan by adding some cremation niches and development of an additional five acres of land. Mr. Raecke commented the cemetery was growing.

Chairman Arberry stated the biggest concerns of the subcommittee was whether there was approval from the Federal Government for their portion of the expenditure. He asked if a letter of commitment had been obtained. Chuck Abbot, Commission for Veterans’ Affairs, replied the normal process was that the commission would apply for a pre-grant approval and receive that approval first. In that project the Federal Government had changed the rules in October. To get approval for the federal funding the commission must first submit some architectural and design work. The good news was that the commission would probably be able to finance about 90 percent of the project through the Federal Government once the A&E work was done. The Chair asked if Mr. Abbott had any idea of when he might receive a commitment from the Federal Government. Mr. Abbott replied it would take approximately 6 weeks from the submission of the A&E design. The Chair asked when the A&E design would be submitted. Mr. Raecke stated he conferred with Mr. Abbott and he would be willing to adjust the project so that it contained a much larger federal funding match and commit to the subcommittee that the project would go no further than the A&E drawings until the federal portion was committed.

The Chair asked what the 90 percent federal funding would cover. Mr. Abbott explained he anticipated that to cover the entire construction cost of the project. The only thing he was not certain of was if it would cover the architectural and engineering design work.

Chairman Arberry asked how many cremation niches were being requested.
Mr. Abbott responded they had researched that question through a couple of private vendors and they thought the funding would cover 2,000 to 3,000 niches. The Chair asked Mr. Raecke to explain the terminology "Master Plan." Mr. Raecke replied the Master Plan was the extension of future plans for the Fernley cemetery and described where and how their next phase would be done. It simply provided on orderly process for expansion.

Speaker Dini stated the pavilion construction at the cemetery was very necessary. The pavilion provided a place to hold interment services. It was originally open on all sides and then three sides were enclosed. He asked how many burials had been done at the cemetery. Mr. Abbott replied the cemetery was running about 250 to 275 burials a year. That was another of
Mr. Abbott’s concerns because the capacity was good for about another year or year and one-half before they ran out of space.

Perry Comeaux, Director, Department of Administration introduced Robin Reedy of the Treasurer’s Office. Explained Ms. Reedy produced the book entitled "2000/2001 CIP" which he provided to the subcommittee as Exhibit C, on file with the Research Library, of the Legislative Counsel Bureau.

Mr. Comeaux stated most of the material in the exhibit was backup and informational material. Mr. Comeaux reviewed the first three charts and pointed out several other charts the plan included.

The first chart of Exhibit C, on file with the Research Library of the Legislative Counsel Bureau (LCB) was titled "Estimated Property Tax Revenues Available for Debt Services." Mr. Comeaux explained the exhibit had been constructed in January 1999 and since that time the office had received an update from the Department of Taxation on the estimated assessed value for FY 2000 so the chart would need to be revised.

The projection as of the hearing was that the assessed value did increase in the last estimate and that would produce an additional amount of approximately $1.8 million per year for FY 2000 and FY 2001. The projected revenue produced at the current existing tax rate of 15 cents in FY 2000 would be $66.8 million plus another $1.8 million. In FY 2001 those figures would be $72.8 million plus another approximately $1.8 million.

Mr. Comeaux stated the second chart in Exhibit C, on file with the Research Library of the Legislative Counsel Bureau, was titled "Debt Capacity Calculation." He explained the chart detailed the debt capacity under the
2 percent constitutional debt limit. At the time the chart was compiled in January 1999, the Department of Administration included in the proposed indebtedness an estimated amount of financing for the juvenile detention facility. It was included even though the state had used certificates of participation instead of bonds for financing which did constitute a general obligation debt of the state. Those certificates did count against the debt capacity.

Mr. Comeaux stated the important column on the second chart was Column Z, which indicated that the debt capacity with the additional bonding being recommended financing a capital improvement program. The remaining debt capacity at the end of FY 2000 would be approximately $131.8 million and in FY 2001 approximately $131.2 million.

The debt capacity schedule would also need to be adjusted for a couple of things. The original estimate for the financing of the juvenile detention facility was about $9.5 million but the current estimate was approximately $15 million. The increased assessed value estimate would also cause an adjustment to the Debt Capacity Schedule.

Information had also been sent to the legislature suggesting an adjustment to the amount needed in bonding to finance the Capital Improvement Program. Additional Justice Assistance funding availability information had also been provided to help construct Phase II of the Cold Creek State Prison. That project was about $4.5 million, which would reduce the amount of bonding necessary.

Because of the revised population forecast for the prison system, the Department of Administration would be recommending that funding for the expansion of the Silver Springs Conservation Camp not be authorized during the current session. That would reduce the bonding needs by about $750,000.

Senator Rawson asked if deletion of that project would increase the General Fund need by about $8 million. Mr. Comeaux asked the Senator to restate his question. Senator Rawson explained part of doing the expansion of the Cold Creek Prison was phasing down the Southern Nevada Correctional Center. He stated if that facility was not phased down it would kick up the General Fund need. Mr. Comeaux replied if the Southern Nevada Correctional Center was not mothballed and the staff transferred to Cold Creek, it would cost the state whatever those positions used to man the core facilities of both institutions would be. The figure was approximately $8.5 million per year. For the biennium that figure would be around $10 million because the funds would cover a portion of the first year of the biennium and all of the second.

Senator Rawson asked if the decision not to proceed with the Cold Creek expansion would affect the funding just discussed. Mr. Comeaux answered if he had stated the decision was not to proceed with Cold Creek it was in error. The decision was to recommend not proceeding with the expansion at the Silver Springs Conservation Camp. In the latest forecasts the female populations had dropped fairly significantly.

Mr. Comeaux stated with the adjustments that were needed to the debt capacity calculation, the rough estimation was that the remaining debt capacity at the end of FY 2000 would be about $159 million and at the end of FY 2001 about $163 million. It was important to keep that kind of debt capacity available because it was a fairly safe bet that during the next legislative session there would be discussions about additional prison expansion. Mr. Comeaux added it was conceivable that the state could find itself in a situation similar to the current budget crisis wherein there was little or no cash available for prison construction and bonding would be required.

Senator Rawson stated he had understood Mr. Comeaux to say it was important to keep the set-aside of approximately $131 million and he asked why the figure to be set aside was now $159 million. Mr. Comeaux stated he was not prepared to provide an exact figure. He added, under the 15-cent debt rate the debt rate would probably be restricted even a little more. He explained when the agency had originally looked at the current $131 million debt rate, the agency thought the state could handle an additional $112 million in bonds. The $159 million was not a magic number.

Mr. Comeaux added if Phase II of the Cold Creek Prison was $53 million, Phase III would be a little more than that. Then there would be some other critical issues to be dealt with. He recommended the state keep at least $100 million available or more if possible. Senator Rawson agreed it was important.

Chairman Arberry referred to the first chart in Exhibit C, on file with the Research Library of the Legislative Counsel Bureau, which included the estimated property tax revenues. He noted it showed fiscal year ending dates and a growth rate of 9.06 percent that tapered down to 4 percent. He asked why the dramatic drop in growth rate was projected. Mr. Comeaux replied the Department of Taxation, with the help of the counties, felt comfortable in forecasting the 2 years of a biennium. They were very uncomfortable in trying to forecast anything beyond that. The Department of Administration had traditionally been very conservative in forecasting growth in assessed valuation beyond the 2 years of the coming biennium. They traditionally used
4 to 5 percent. It was just a conservative estimate on the part of the Budget Office. It was not unreasonable to believe that the growth rate should drop considerably because it appeared after the next biennium there were no major casino expansions in the works in Las Vegas. He commented a lot of the
9 percent growth in the current biennium was due to increased assessed valuation related to new construction in that area.

Assemblywoman Evans asked if the regional justice center costs of $8.9 million proposed by the Supreme Court were computed in the finance plan.
Mr. Comeaux stated that proposal was not discussed with his office and was not included in the financial forecasts. If the state decided to build the regional justice center that would add another $8.9 million in bonding necessity. Assemblywoman Evans commented the bill proposed to build the facility in conjunction with Clark County and noted the committee had taken no action because if the project costs were $9 million for 20,000 square feet of space they could build one heck of a building for that amount.

Mr. Comeaux stated the third schedule in Exhibit C, on file with the Research Library of the Legislative Counsel Bureau, was entitled "Consolidated Bond Interest and Redemption Fund." The schedule showed the balance forward into the current fiscal year of the bond interest account, the anticipated receipts into the fund that would be mainly from property tax revenues, and a couple of other sources. Columns Q and R showed interest income and reimbursement from Wildlife. The schedule also showed the current and proposed debt service requirements.

Mr. Comeaux stated the figures reflected the debt in existence as of that moment plus what was proposed. The initial proposal was $155.5 million in bonds to finance the Capital Improvement Program reviewed earlier by the subcommittee. Mr. Comeaux stated that it would also be necessary to issue another $2 million in cultural affairs bonds. Tahoe bonds would be
$13.2 million of which $10 million was the remainder of the voter-approved bonds. He explained voters had approved issuance of $20 million in Tahoe bonds. $10 million had been issued and the remaining $10 million would have to be issued during the coming biennium. Another separate proposal was for $3.2 million to finance 2 years worth of activity for environmental improvement programs at Lake Tahoe. Apparently the $10 million in voter-approved bonds could be used for highway related projects. The $3.2 million was needed to fund some park and other types of projects not authorized in the voter-approved bonds. The estimated property tax revenues listed would tie back to the first schedule discussed and showed what the existing 15-cent tax rate could do to service the state debt.

The important part of the schedule was found in columns U and V that indicated what the cumulative or balance in the bond interest and redemption trust fund would be at the end of each one of the fiscal years listed. Column V showed what the amount represented as a percent of the next year’s debt service requirement. The state had not adopted a firm policy as to what that balance should be. However, Ms. Reddy had informed him that the rating agencies basically looked for a reserve that was equal to about 6 months worth of the debt service requirement. Six months worth of Nevada debt service requirement might or might not be about 50 percent of the next year’s worth depending on how principal payments were scheduled. It did however, make a pretty good benchmark. It was obvious that under the original proposal, that the figures were pretty much in the "ballpark." The biennium would start out at 43 percent reserve then drop to something just under 40 percent and then build steadily after that. The assumptions were calculated without any further debt being incurred which was probably not too realistic.

The adjustments made to the schedule as a result of the increased estimated assessed valuation and the decrease in the amount of bonds needed for the two prison projects would bring the balance to around the 50 percent figure Mr. Comeaux recommended.

He stated the schedules could be rerun at the subcommittee’s pleasure. However, the more information that was provided concerning projected needs would make the schedules more valuable.

Mr. Comeaux pointed out the new financing proposed by the Department of Administration was included in a separate debt service schedule under separate tabs in Exhibit C, on file with the Research Library of the Legislative Counsel Bureau: Tab J – for the CIP program, Tabs K and L – for the cultural affair bonds, and Tab M – for the Tahoe Bonds. Tab N would show under the original proposal, the financing in year 2002 for the remaining $112,000 in capacity under the 15-cent debt rate would look like.

Speaker Dini stated a bill had been introduced to remove the $5 million set-aside for the V&T Railroad project and asked if it was feasible to propose a $5 million bond so that if the railroad’s supporters got the required matching support funds, the bonds could be issued immediately and the project could be started. He asked if there was room in the debt capacity for that. Mr. Comeaux replied since the Budget Office had informed the legislature there was about
$4.5 million in additional federal funds for the prison construction and it did not appear necessary to expand the Silver Springs Camp at $750,000 that would free up about $5.2 million so the proposal was feasible.

There being no further business before the subcommittee, the meeting was adjourned at 10:00 a.m.

RESPECTFULLY SUBMITTED:

Cindy Clampitt,

Committee Secretary

APPROVED BY:

Assemblyman Morse Arberry Jr., Chairman

DATE:

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Senator William Raggio, Chairman

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