The Committee on Ways and Means was called to order at 4:05 p.m. on
May 11, 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.

COMMITTEE MEMBERS PRESENT:

Mr. Morse Arberry Jr., Chairman

Mr. Bob Beers

Mrs. Barbara Cegavske

Mrs. Vonne Chowning

Mr. Joseph Dini, Jr.

Ms. Chris Giunchigliani

Mr. David Goldwater

Mr. Lynn Hettrick

Mr. John Marvel

Mr. David Parks

Mr. Richard Perkins

Mr. Robert Price

COMMITTEE MEMBERS ABSENT:

Ms. Jan Evans, Vice Chair (Excused)

Mrs. Marcia de Braga (Excused)

STAFF MEMBERS PRESENT:

Stephen Wells, President of the Desert Research Institute (DRI), introduced Linda Smith, the former Acting Deputy Manager and Assistant Manager for Administration, Department of Energy (DOE), Nevada Operations, who was also a member of the Executive Committee of the Nevada Test Site Historical Foundation. Also present was Jennifer Stern, partner in Swendseid and Stern, University Bond Counsel. Dr. Wells stated he was present to discuss the unique partnership and opportunity to construct a joint-use facility with the DOE. S.B. 371 would permit the University and Community College System of Nevada (UCCSN) to sell a 20-year revenue bond, which would pay for the construction of a 38,000 square-foot building. The bond would be guaranteed by the Federal Government and all costs of the bonds, as well as a debt service, would be paid from federal sources.

Senator Dina Titus explained the facility would be built on the DRI campus in Las Vegas. S.B. 371 would permit UCCSN to enter into a 20-year lease partnership with the DOE to house a Nevada Test Site Research Center. She stated she would provide background information on her interest in S.B. 371. In the Spring of 1982 she spent a semester in Washington, D.C. as a faculty intern for United States Senator Howard Cannon. During that time, the issue of radioactive fallout from the Nevada Test Site moved to the forefront of the political agenda. Hearings were conducted, lawsuits were filed, and legislation was introduced in Congress. Senator Cannon had been troubled by that for numerous reasons. First, he had been a strong advocate of the country’s Cold War defense policies so he was hesitant to criticize the testing program. Second, the test site had made considerable financial contributions to Nevada, which he did not want to jeopardize. And third, with southern Nevada’s economy increasingly dependent on tourism, he did not want to create an environment of hysteria and fear about nuclear weapons that might jeopardize tourism in the state.

However, Senator Titus continued, Senator Cannon was a Mormon and a veteran, the two groups most adversely affected by the test site’s former policy. He could not ignore the newly-released information. His solution had been to assign her to do more research on the issue. The more she studied the history of the test site, the more fascinated she became by its story and its indelible impact on the state and the nation.

Senator Titus explained here was now a voluntary moratorium on nuclear weapons testing and the DOE had been much more open and cooperative than in the past. What had not changed was the need for information, research, and knowledge about the impact of those earlier years. A place was needed where the test site records could be stored, categorized, and accessed by scholars, journalists, alleged victims, and any other interested parties. S.B. 371 would allow bonds to be sold to build such a facility, which would be shared by the DRI and the DOE. The DOE would lease the facility for 20 years under contract with the General Service Administration (GSA), with the possibility of renewal. The area would house test site artifacts, atomic age exhibits, storage and retrieval services for 350,000 atomic testing documents and records, a public research and reading phase, and a conference room. The test site was certainly controversial, but S.B. 371 in no way diminished its significance.

Dr. Wells stated the facility would be a compliment to the DRI’s work in Cold War archeology, as well as historic and prehistoric preservation in cultural resources. He thought the facility would help in the economic diversification in the area. In addition, the DRI had the goal of acquiring a Smithsonian Institute affiliation, for which the negotiations were in progress.

Dr. Wells explained the DRI had submitted a proposal to the UCCSN Board of Regents in June of 1998 to request permission for the university to sell a 20-year revenue bond in order to construct the facility in Las Vegas. The Board of Regents approved the proposal for $8.6 million, with the understanding that the entire bond and its debt service would be paid from federal sources. He noted the revenue bond did not count against the state’s bonding capacity.

Linda Smith stated she had spent most of her career associated with the DOE in the Nevada Operations office and was an officer of the Nevada Test Site Historical Foundation. The foundation’s purpose was to preserve the history of the test site and to foster public access to the site’s records and artifacts. An equally important objective of the foundation was to promote the cultural, scientific and educational programs, which encouraged a public exchange of views regarding the test site and the strong impact it had made on the state and the country. The test site, which would recognize its 50^th year of existence in January of 2001, had been a major contributor to the country’s defense, as well a major part of the state’s economy.

Ms. Smith explained the facility would provide a venue for three complimentary programs. The first was the coordination and information center of the department of energy’s Nevada operations office, which would house a collection of 350,000 documents, photos, and records. The second program would be the archeological collections, which were unique to the DRI. Third, the institute would sponsor an exhibit center that would feature artifacts, documents, and information on the 50 years of Nevada Test Site programs and would be sponsored by the foundation.

The revenue bonds, Ms. Smith continued, would be underwritten by the GSA, identifying the funding source as the DOE. She explained the DOE was committed to funding the project. DOE policy, bolstered by Congressional mandates made in 1978 and 1979, required the DOE, through the Nevada Operations office, to maintain radiation exposure records and other test-related data and to make that information widely available to the public. The funds appropriated annually for that purpose, approximately $1 million, would underwrite the bonds. The partnership among the DOE, the DRI, and the foundation was an excellent example of the spirit of cooperation that existed between the Nevada Test Site and the university system.

Mr. Price asked if former test site employee records would be available to the public and Ms. Smith replied that was highly likely.

Senator Titus stated President Truman had approved the Nevada Test Site in December of 1950 and the first testing occurred there in January 1951. She anticipated there would be a lot of national attention on the site, as its 50^th anniversary was approaching.

Jennifer Stern of Swendseid and Stern, Bond Counsel for the University of Nevada, presented a memorandum on S.B. 371 (Exhibit C). She explained Sections 1 through 14 provided definitions that were typically used in UCCSN bonds. The only differences between those and other bonds issued under the Universities Securities Act were the definitions of "pledged revenue" and "project." The project was the building itself, in which the DRI would house records. The pledged revenue consisted of lease revenues that would be paid by the Federal Government to the DRI as well as other kinds of grants and revenues of other facilities of the DRI. No other revenue would be pledged to the bonds so other UCCSN revenues were not at issue.

Section 15 authorized the Board of Regents to issue the revenue bonds in a principal amount not to exceed $8.6 million and provided the authority to issue the bond pursuant to the University Securities Law. Section 16 authorized the Board of Regents to request the State Public Works Board to delegate certain authority with respect to construction of the project. Ms. Stern emphasized that was discretionary because the Board of Regents could request it and the State Public Works Board could choose to do it or not.

Sections 17, 18, and 19 provided for the act to be liberally construed, provided a severability clause, and provided that the act was supplemental to other acts adopted by the legislature. Section 20 provided that the act was in effect upon passage and approval.

Mr. Marvel asked when the facility would be completed. Marilou Jarvis, Vice President of the DRI, explained the facility was a 12-month project. It was anticipated the construction of the facility could begin by fall of 1999 so it would be completed in fall or early winter of 2000. Mr. Marvel asked if operating and maintenance funding had been provided. Dr. Jarvis replied the DOE, through the GSA, would pay for the full operation and maintenance of its 38,000 square-foot portion of the facility.

Mr. Goldwater said the agreement had the effect of a triple-net lease. He noted once the facility was completed, the DRI would still have the ability to rollover the revenue source. He said it had been found to be a benefit to taxpayers to sunset some of the pledged revenues, regardless of the revenue source. He asked if DRI had considered that in completion of the project, rather than simply rolling it over in perpetuity. Ms. Stern asked Mr. Goldwater if by rolling over the revenue, he meant the revenue would continue to come in but there would no longer be any debt after the bonds were paid off. Mr. Goldwater said Section 15, Paragraph 3 said "this act does not prohibit the board from funding, refunding, or reissuing any securities of the university or the board at any time." Ms. Stern replied that portion of Section 15 referred to the fact that the bill only concerned the revenue bonds issued for the project. Mr. Goldwater asked if there was a sunset, once the project was completed. Ms. Stern replied the bonds would be issued one time, in the amount not to exceed $8.6 million and would be able to pledge revenues to service the debt. DRI would have to come back to the legislature for any continuing authority, other than refinancing the bonds. Mr. Goldwater said the bill also provided for the reissuing of the bonds. Ms. Stern replied that was a technical term that had been used in the University Securities Act that really meant refunding. Mr. Goldwater asked why it did not just state refunding, if that was what the language meant. Ms. Stern said she thought the bill simply tracked the language that had always been used in the past. Mr. Goldwater asked if there was assurance that once the project was built, the revenues would not be used to fund another project. Ms. Stern replied that was correct, because there would not be the authority to do that.

Mr. Beers asked if the facility would be in operation in time for the 50^th anniversary. Dr. Jarvis replied the facility was never expected to be fully operational by the beginning of the 50^th anniversary year. The anniversary lasted for a full year and the DRI hoped that at some point during that year, most of the construction would be underway.

Mr. Parks said Page 4, Lines 32 and 33 indicated the board may issue bonds or securities within 5 years of the effective date of the act, which was somewhat of a sunset provision. Ms. Stern said that was correct.

With no further questions or comments, Chairman Arberry declared the hearing on S.B. 371 closed.

Assemblywoman Sheila Leslie explained A.B. 540 came out of the Assembly Concurrent Resolution 38 interim study in 1996 on housing as the first priority. The bill passed the Assembly the previous session but did not pass out of the Senate. The purpose of A.B. 540 was to create more affordable housing in the state by giving the gaming industry an incentive to become involved in building affordable housing for its employees. She noted the bill was not a mandate and participation of the gaming industry would be optional. A.B. 540 allowed an unlimited gaming licensee to participate in building an affordable housing project by partnering with a non-profit or for-profit developer. After the gaming licensee determined its partner, it would make an application to the State Housing Division. If the application was appropriate and the gaming licensee qualified, the division would provide a written notice of their eligibility to the gaming commission.

Sections 2 through 5, Ms. Leslie continued, gave definitions for the bill. Section 6 outlined the process by which the gaming licensee may apply to the division for the credit, including the criteria to be used by the division to determine eligibility. Section 7 required the division to provide written notice to the licensee of its determination in terms of appropriateness and eligibility. Section 7 also explained the requirements of the licensee in providing to the commission a written estimate of their liability based upon the total amount of fees they owed in the previous year. It outlined the role of the commission in determining the total amount of credit it would grant to the non-restricted licensee. Section 8 specified that the commission shall not approve more than $500,000 in credits in any one calendar year. Section 9 concerned the agreement between the Gaming Commission and the non-restricted licensee. Sections 10 through 13 gave more details about how the agreement would be carried out, including what would happen if the licensee was found to not be in compliance with the agreement. The housing project had to be completed within 2 years after the effective date of the written agreement. Sections 14 and 15 required the Housing Division to adopt regulations to carry out the program.

Ms. Leslie said the idea of A.B. 540 was to encourage private investment in affordable housing. As the state had grown, it had fallen behind in affordable housing. The bill would encourage a larger commitment to affordable housing from the gaming industry.

Joseph Johnson, representing the Nevada Housing Coalition (NHC), presented a written statement on A.B. 540 (Exhibit D), which included the NHC’s membership list (page 2) and a flow chart which showed the expected timeframe of the applications and subsequent agreements. The bill had been amended and the effective date would be 2001, so A.B. 540 would have no budgetary impact in the coming biennium. Referring to the flow chart, he explained that after the effective date, in the year following, on March 1 a non-restricted licensee may submit an application to the Housing Division. By June 1 the Housing Division would make a determination as to the sufficiency of each application. From the applications received, the division would select one or more of the proposed housing projects. By July 1, the division would provide written notice of its determination to the non-restricted licensees and transmit a certificate of eligibility to the Gaming Commission. By August 1, a non-restricted licensee would provide to the commission a written estimate of liability of fees. By November 1, the commission would determine the total amount of credit it would grant to the non-restricted licensee. By December 31, the non-restricted licensee may enter into a written agreement with the division. The division would oversee and monitor the progress of a housing project that was covered by a written agreement, and the housing project would have to be completed within 2 years of the December 31 date.

Mr. Johnson stated he thought the fiscal note for the cycle in 4 years would be $160,000. The gaming industry did not support or oppose the bill because it was strictly a voluntary process.

Armando Ornelas, of the Affordable Housing Resource Council (AHRC), explained the AHRC was a non-profit organization that provided technical assistance to developers of affordable housing. Over the previous 5 years, there had been some successes in the affordable housing arena. With much effort and training, AHRC had developed a pool of developers who were capable of developing affordable housing. The financing for affordable housing tended to be more complex than market rate projects, in part because of the number of sources that must be combined to put together projects. In addition, there had been meaningful progress in terms of meeting a portion of the need for affordable housing units, which was not to say the full need was close to being met. There was a large backlog of unmet need, particularly for the low-income and special-needs population. Moreover, given the rate of population growth in the state, the state would be hard-pressed to keep up with the need, much less meet the backlog.

Mr. Ornelas explained the main constraint in developing affordable housing was the availability of resources to offset the gap between what it cost to produce and operate quality affordable housing and the rents that would be collected in order to keep the projects affordable. An investment was required to offset that difference. As an example of the resource limitations, the federal tax credit program, in the current fiscal year had almost $7 million in application from Nevada housing developers. The amount of tax credits available was only $2.2 million. In Washoe County, only one 30-unit to 80-unit project was awarded tax credits due to the limited supply. In order to keep up with the need for affordable housing, more resources were needed, which A.B. 540 would supply.

Mr. Marvel asked how many units of affordable housing would be built if A.B. 540 was passed. Mr. Ornelas said he thought the bill would provide another 50 additional units per year. If units were targeted at people who earned 40 percent of the area median income, it would be less because the rent collected would be higher. If units were targeted at a higher level of income, the number of units could increase. Mr. Marvel asked for the estimated level of need for affordable housing. Mr. Ornelas said it was a changing figure so he did not have a statewide estimate. Based on Washoe County’s projected population increase for the next 10 years, approximately 16,000 housing units affordable to households earning less than 80 percent of the area median income would be needed. A.B. 540 would most likely be focused on multi-family housing, which typically housed households earning 60 percent or less of the area median income.

Mr. Marvel asked whether the units would be rented or purchased. Mr. Ornelas replied they would typically be rentals, but he was not sure whether the bill could provide subsidy for owner-occupied units. Mr. Marvel asked whether banks would receive Community Reinvestment Act (CRA) credits if they participated in the program. Mr. Ornelas explained banks had obligations to meet CRA requirements, so currently, almost all affordable housing projects had the maximum amount of conventional debt that each project could carry. Banks that participated in financing affordable housing projects received CRA credit.

Mr. Marvel asked if the gaming industry would take a position on the bill. Ms. Leslie said Harvey Whittemore, who represented the Nevada Resort Association (NRA), testified that he was personally in favor of A.B. 540 before the Assembly Judiciary Committee. The gaming industry had indicated it would like to have the option available, but had formally taken no position on the bill. Mr. Johnson stated he thought the gaming industry had not officially taken a position on the bill because it did not want to be perceived as seeking another gaming tax credit.

Alfredo Alonso, representing the NRA, reiterated Mr. Whittemore’s testimony in favor of A.B. 540 had been personal opinion. He noted the NRA had not taken a position on the bill, but had been favorable to that type of legislation in the past.

With no further questions of comments, Chairman Arberry declared the hearing on A.B. 540 closed.

Ed Flagg, President of the Nevada Corrections Association (NCA), stated Nevada’s correctional employees faced a daily threat from inmates who decide to hurl feces and urine at officers and other correctional employees. The need for S.B. 149 was demonstrated by the case of Correctional Officer Linda Avala, Ely State Prison, who had feces and urine of an HIV-positive inmate thrown at her and there were no criminal sanctions against the inmate. S.B. 149 would require an investigation and criminal referral in such cases. If the inmate was found guilty, the bill would require a consecutive sentence. In addition, the bill would eliminate the current ability for an inmate to earn statutory good-time credits while the inmate served disciplinary sanctions. In previous hearings, the legislation was endorsed by the Attorney General’s office, the Washoe County Sheriff’s Office, the Nevada Sheriffs and Police Chiefs Association, the Las Vegas Metropolitan Police Department, Department of Prisons Director Bob Bayer, and the State of Nevada Employees Association.

In the bill’s Assembly Judiciary Committee hearing, Chairman Bernie Anderson noted the relatively small fiscal impact of S.B. 149 was an investment in protection for the states correctional employees. The NCA concurred with his assessment. The fiscal impact of the bill had been estimated at less that $14,000 for the coming biennium and approximately $3,000 annually, thereafter.

Bob Bayer, Director of the Department of Prisons (DOP), stated he supported
S.B. 149, and noted there was a problem associated with the bill’s fiscal note. After the bill’s last hearing, before the present hearing, the request for a fiscal note was received with the amendment. The fiscal note provided was on the original bill, which did not have an amendment. The amendment affected good-time credits. The fiscal note had not yet been submitted because there was disagreement on interpretations of the bill. Currently, the good-time credit portion of the bill was substantial, according to DOP staff. He said he would like a few more days to review those calculations before he committed to a fiscal note. Mr. Bayer said he would have the fiscal note completed by Thursday, May 13, 1999.

Mr. Ghiggeri said he was still waiting for information from DOP staff regarding the bill’s original fiscal note. Mr. Bayer said he would get that information to him.

There being no further business to come before the committee, Chairman Arberry adjourned the meeting at 4:45 p.m.

RESPECTFULLY SUBMITTED:

____________________________

Christina Alfonso,

Committee Secretary

APPROVED BY:

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Assemblyman Morse Arberry Jr., Chairman

DATE:__________________________________