The Senate Committee on Government Affairs was called to order by Chairman Ann O'Connell, at 7:50 p.m., on Tuesday, April 6, 1999, in Room 2135 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Senator Ann O'Connell, Chairman

Senator William J. Raggio, Vice Chairman

Senator William R. O’Donnell

Senator Jon C. Porter

Senator Joseph M. Neal, Jr.

Senator Dina Titus

Senator Terry Care

STAFF MEMBERS PRESENT:

Julie Burdette, Committee Secretary

OTHERS PRESENT:

Chairman O’Connell opened the meeting asking for testimony on Senate Bill (S.B.) 530.

Virginia Valentine, Lobbyist, City of Las Vegas, declared that as city manager she would be testifying in support of S.B. 530. Ms. Valentine drew attention to the committee’s knowledge of the measure and would therefore not go into detail except to say she recognized there were some mechanical problems with the bill. S.B. 530 would have to be substantially and significantly amended. Ms. Valentine reiterated support for the concept and her desire to work with the committee.

Chairman O’Connell questioned whether Ms. Valentine realized that S.B. 530 would not affect Clark County, in fact removed Clark County from the language.

Ms. Valentine replied that she understood and remarked that would be one of the amendments put forward. She noted that section 10 excluded cities and counties with populations over 400,000. Ms. Valentine explained that the City of Las Vegas had a limited redevelopment budget and S.B. 530 could be the vehicle whereby some of the older areas could create special districts without placing a burden on other funding sources. The business community in those areas had agreed to tax themselves in order to make improvements.

Chairman O’Connell requested that the sponsors of the bill come forward and present the bill. Chairman O’Connell disclosed for the record that she is a business owner in Las Vegas.

The Chairman summarized the testimony given by Ms. Valentine as agreement with the concept, and recognition of the major problems with the bill. Ms. Valentine concurred with the Chairman’s statement. Ms. Valentine introduced Peter Thomas representing the City Center Development Corporation, and Karen Zaustinsky, Downtown Center Development Committee; individuals who had accompanied her in support of S.B. 530. Ms. Valentine explained the City Center Development Corporation is a panel of experts in real estate development and financing that provide guidance for the city's redevelopment efforts, while the Downtown Center Development Committee is a group comprised of citizens and business owners working towards the improvement of their own areas.

Chairman O’Connell noted the committee needed to begin with an explanation of the bill because there were major problems with it.

William H. Osgood, President, Downtown Improvement Association, qualified that this was an association of 135 business in downtown Reno and submitted a newspaper supplement regarding the Downtown Improvement Association (Exhibit C. Original is on file in the Research Library.). Mr. Osgood noted that the association had sponsored the introduction of the bill and he remarked they were prepared with some proposed amendments (Exhibit D) to the bill. Mr. Osgood began the explanation of S.B. 530 and defined the business improvement district (BID) as an entity basically involved with self-assessment and self-management. Forty-nine states had passed enabling legislation to allow for the creation of business improvement districts. There are 1100 BIDs currently in action in the United States. The BIDs allow property owners to manage their environment, safety, security, special events, marketing, promotion and other activities. Mr. Osgood stated that the Downtown Improvement Association, of Reno, strongly supported S.B. 530 as the enabling legislation that would set up the process for Nevada cities to utilize in the creation of business improvement districts.

In Reno, Mr. Osgood maintained, the experience with special downtown improvement groups had been costly and lacked control. A "maintenance district," Mr. Osgood pointed out, was an amalgam of loaned operators, money from property owners and money from the city redevelopment district. Property owners have little control over this type of maintenance. The maintenance district began with an advisory group but the City of Reno had recently transferred the operation of that district to the Department of Public Works.

It had been very costly, Mr. Osgood averred, to provide the supplementary services; for example the issue of security. The district employs 14 law enforcement personnel ($905,000) and that does not really provide an adequate number of people on the street. Mr. Osgood remarked to the committee that Reno had attempted voluntary groups, joined together in a common interest, special events, marketing and promotion, intervening with panhandlers and providing personnel to do that. The average life cycle of those associations or groups is about 6 months.

Mr. Osgood asserted that a business improvement district would provide a steady income stream; the private sector managed by a private, nonprofit management group. Employees would be hired to provide these supplementary services. There would not be the irregular income streams that occur with voluntary associations.

Mr. Osgood clarified the intent of S.B. 530, as enabling legislation allowing for the creation of business improvement districts. In the past, there had been a great deal of confusion; this would be just another special assessment district, installing and maintaining curbs and gutters, etc., and all the things that special and general improvement districts do. S.B. 530 is more specific and has the adaptability of private sector management. S.B. 530 spells out that the governing body is to contract with a nonprofit corporation to provide the activities and the improvements.

Mr. Osgood stressed that language would be added to address the services provided by the business improvement district as supplementary in nature and would not replace or substitute those services normally provided by the city. He emphasized there would be a steady income stream rather than irregular funding that occurs as a result of voluntary associations.

Senator O’Connell suggested that Mr. Osgood approach the bill by going through it section by section, drawing the committee’s attention to any amendments.

Senator Raggio expressed a further suggestion, emphasizing that first, the committee needed to understand the reason S.B. 530 was being requested, what was proposed, and what kinds of projects were envisioned that could be utilized with this type of mechanism; then go through the bill section by section.

Mr. Osgood began by stating the concept was to create a business improvement district for Reno. It would be initiated by a nonprofit corporation. A 5-year business plan would be developed delineating the exact supplementary services and improvements, which would be provided. The plan would be attached to a petition and sent out to the property owners. Mr. Osgood pointed out the current legislation stated that 51 percent of assessed property owners within the boundaries of the proposed district would have to approve this.

Chairman O’Connell asked whether that was part of the amendment because the bill says 50 percent or less. Mr. Osgood replied it should be at least 50 percent. Chairman O’Connell cited it could be less than 50 percent. Mr. Osgood stated no, it had to be over 50 percent.

Senator Raggio stressed his opinion that it would have to be at least 50 percent of the total assessed valuation of the district. It could mean that one or two major hotel properties could comprise more than 50 percent of the assessed value of a district. Senator Raggio voiced the need to be aware as to what was being said.

Mr. Osgood maintained the intent of this enabling legislation would affect more than downtown Reno and that was the basis for over 50 percent. If the bar was raised too high, i.e., 70 percent, it would be virtually impossible for a district made up of many small properties to obtain the necessary number of signatures on a petition. Mr. Osgood said if Senator Raggio’s concern was with the idea of 50 percent, then the bill could be amended to reflect that not one single contiguous property could have more than 10 percent of that 50 percent. The business plan would detail the services to be provided by the business improvement district and would be drafted by the nonprofit entity. The mission of the business improvement district envisioned for Reno would involve enhanced cleaning and maintenance of sidewalks and alleys within the district (7 days a week, including steam and pressure washing and very specific items that are not currently addressed). Public safety officers would be hired, primarily foot and bicycle patrols for duty 24 hours a day, 7 days a week. The shifts would meet the needs of the downtown businesses they serve. Mr. Osgood commented that the public-safety employees would also serve as ambassadors, guides, and support visitors rather than in a strictly law enforcement capacity. Mr. Osgood emphasized the other function would be consumer marketing to attract visitors to downtown Reno by leveraging marketing funds with the businesses. Some of those funds could and would come from the assessment. Mr. Osgood asserted that S.B. 530 would enhance the business climate, manage the downtown environment in a fashion that would be over and above what exists currently.

Mr. Osgood noted that the question had arisen if the business improvement district created by S.B. 530 would want to fold in the existing districts. That would be determined in the initiation process and based on dollars and cents, what the property owners, the true initiators, would be willing to pay for the level of services they want. The decision then would be made to add to the existing districts or vote to dissolve them. That would be a decision made in Reno and it would be made by the property owners who are the ratepayers currently in the existing district.

Mr. Osgood summarized, stating this was the overall objective from the Reno perspective, but S.B. 530 had been written so that it would be applicable to other cities as well.

Senator Raggio clarified for understanding stating that S.B. 530 was to form a basis for raising revenue within a core area of the city, in this case Reno; to clean up the city, and to deal with some specific problems. The Senator pointed to stone sidewalks that had been put in place at considerable expense, but had not been maintained. This bill would provide the means to contract for the maintenance and repair work. There would be an assessment on the properties in the district in addition to assessments that presently exist. Senator Raggio continued, stating this would provide for bonding. Mr. Osgood interjected that language had to be written into one of the amendments to delete the bonding because the district could be dissolved. Senator Raggio questioned other types of projects envisioned. Senator Raggio stressed whether the bill had the authority to acquire property. Mr. Osgood replied, not at all; that it was largely providing services, not acquisitions and building projects.

Senator Raggio pointed out that Reno had a special taxing district in the downtown area that was supposed to provide some additional police services. Mr. Osgood agreed. Senator Raggio asked how that differed from this bill. Mr. Osgood responded that it was a very specific function. It would provide 14 additional police officers that were largely law enforcement. This would be in addition to; it would take the security function from strictly law enforcement and add it to that of ambassadors, guides, and security. This would be supplemental to that existing district, if the property owners decided they wanted to continue that district. Senator Raggio asked if the plan contained any further definition of improvements other than what was in the bill. Would there would be sufficient specificity for the 5-year plan so that when the petition goes to the property owners they will know exactly what they would be getting, and what it will cost them. The property owners can then make a considered decision whether to agree to the petition or not.

Chairman O’Connell questioned Kim Guinasso, Committee Counsel, Legal Division, Legislative Counsel Bureau, as to where the S.B. 530 definition of a nonprofit could be found in the Nevada Revised Statutes (NRS). Ms. Guinasso asked if the Chairman was thinking of the federal definitions of the nonprofit organizations, 501(c)(3), etc. Chairman O’Connell replied no; the Downtown Improvement Association wanted to change it. They did not want to be known as an assessment district or business district. They want to be known as a nonprofit corporation, and the question is do they have to follow any specific laws insofar as the nonprofit corporation would be concerned.

Ms. Guinasso said she was not certain if the location within the chapter of the NRS would change. The type of nonprofit corporation would need to be identified with some specificity. As far as the NRS was concerned, Ms. Guinasso was not aware of any particular or specific requirements. Certainly, on the federal level, with respect to taxation, etc., there are significant requirements. Usually a nonprofit corporation of this type is tied to the federal definitions that would be appropriate, but Ms. Guinasso did not have the exact subparagraph under which this would fall. Chairman O’Connell requested that Ms. Guinasso research the answer.

Senator Neal recalled that the Legislature had dealt with Incremental Tax Financing Districts, whereby the ad valorem taxes are used for the improvement of that particular area. Chairman O’Connell remarked that she did not think that was the case here. The sponsors of S.B. 530 were not asking to use any of the current tax structure. They want a special assessment like a BID, and add an assessment to what is already being paid; this would be the enabling legislation to do that.

Mr. Osgood said this would give an alternative to the property owners; not only in downtown Reno, but other areas in Reno such as Wells Avenue, Kietzke Lane and other business areas. Property owners prefer using this method rather than using the sometimes acrimonious incremental tax financing because there are other entities that see this as competition for property taxes. This would give them an alternative for using that as a vehicle for redevelopment or these types of improvements.

Senator Neal clarified, stating he gathered the downtown association would not want that. Mr. Osgood replied that they wanted the ability to self-assess and the nonprofit corporation is responsible to the ratepayers within the district to manage it.

Senator Raggio asked what authority would the special nonprofit corporation have. Would it self-assess? What authority would it have to enforce that? Mr. Osgood responded, saying that was what the enabling legislation would provide. The governing body or the city would collect the assessment, turning the funds over to the nonprofit management company identified in the plan, to be used in accordance with the execution of the plan.

Senator Raggio countered saying the obvious question was, is that not a tax? Mr. Osgood said it fell into the assessment, giving a special benefit to a specific group of people who are assessing themselves with a tax that has a common benefit spread across the tax base.

Ms. Valentine explained that they would want to amend section 10 to simply read that a city may create one or more districts.

Senator Raggio asked if they wanted to allow Clark County to participate. Ms. Valentine replied yes, and clarified saying if this amendment passed that would include all of the cities in Clark County. Ms. Valentine agreed the language was convoluted, it did not speak to cities of 400,000 or more, but cities in counties of 400,000 population. S.B. 530 would be a tool, she pointed out; they presently have a nonprofit that would like to use this tool to help themselves. They would only assess those who benefit directly so that the burden of these improvements would not be shared by the whole tax base, just by that group that immediately benefits. Ms. Valentine reiterated that they would like to have the ability to use this in Clark County.

Senator O’Connell asked if, as a city, they were prepared to do the contracting for all of it. Ms. Valentine said they were, and realized it was a cumbersome process. But this was an opportunity for nonprofit organizations or groups such as City Center Development Corporation (CCDC) to use the city as the mechanism to create a business improvement district. Ms. Valentine elucidated citing the Fremont Street Experience as being in a sense a business improvement district, but noted there were many large property owners with great resources. Smaller groups, small business areas or small associations do not have that ability. S.B. 530 would provide, through the creation of a nonprofit organization, the mechanism to create improvement districts.

Senator Porter referred back to the Fremont Street Experience and asked if there were an interbusiness agreement or an interlocal operating agreement with the city. Ms. Valentine responded not with the city, but among themselves as a partnership. There were a number of funding sources, and Ms. Valentine drew attention to the fact that the legislators themselves had created that improvement district by dedicating 2 percent of the room tax to be used to fund a portion of the canopy. There were also direct cash contributions.

Senator Porter questioned the operating agreement, clarifying that the partnership creates the operation and maintenance. Ms. Valentine added they fund that themselves through a limited liability corporation, The Fremont Street Experience Partnership.

Chairman O’Connell explained that concerns had been raised when this was previously brought before the committee. The Chairman itemized the need to see a budget and boundaries. Also of concern was how the assessment would be done. Could an absentee owner be involved and would the person leasing the property have a vote in this; would they be counted in the 50 percent? The committee would need to look at the answers to those questions.

Mr. Osgood replied that the enabling legislation would allow the nonprofit organization to write the business plan. This could not be done in isolation, but with focus groups ascertaining what additional services the ratepayers wanted. Mr. Osgood mentioned that it was very difficult to secure the participation of property owners even with all the information available. This would include property owners, not business owners. One would expect that there would be a pass-through to the business owner from that but the petition, as written now, would go to the property owners because it uses proportional property valuation as the basis for proportion property assessment.

Senator O’Connell said this had been of concern previously. The concern was that the assessment would be passed on to the business owners (the ones who have the investment in the business) but the business owners would not have a vote, only the property owners. Chairman O’Connell reiterated the committee’s concern regarding this issue.

It was Mr. Osgood’s thought that there could not be a two-tiered foundation or approach in the creation of a business improvement district. The methods employed would be either assessed valuation or possibly another method which would take into account linear footage, the distance from a pedestrian center, etc., and then use the tenants or business owners as the foundation Mr. Osgood said he did not believe it could be based on tenants and property owners if assessed valuation was used as a criteria.

Ms. Valentine suggested adding a notification requirement for people who are tenants so that they could have a voice in the proceedings.

Mr. Osgood continued, stating that in section 11, line 15 the amendment would change the word "association" to "corporation," the same change would occur in line 31. Mr. Osgood noted that there were no changes in sections 12, 13, and 14. Sections 15 and 16 would also amend the language from "association" to "corporation."

Chairman O’Connell pointed out that they would be dealing with overlapping districts as well. Ms. Valentine responded that issue could probably be cleaned up by deletion of a section. Mr. Osgood clarified that the language "overlapping districts" would allow for an existing assessment for either a police district or a maintenance district, but overlapping business improvement districts, as defined by this enabling legislation, would be prohibited. It would allow some flexibility for creating zones within a district based on benefit.

Senator O’Connell took issue with the fact that after the plan was voted on, the plan could be modified. Mr. Osgood replied that could be done, with the approval of the governing body. In other words, you would have to go back to the governing body that created the district in order to modify the plan.

Chairman O’Connell asked if that would be the people who had signed off on the plan, or when Mr. Osgood said "governing body," was he speaking about the city with which the contract was made. Mr. Osgood replied it would be with the city with which the contract had been made.

The Chairman repeated, stating the plan could be modified without the people knowing that you were going to modify it. Mr. Osgood agreed, but pointed out there could be no increase in the assessment. The Chairman queried, if it could change for what they were paying.

Mr. Osgood responded that he was not certain how to specify that the board of

directors for the nonprofit corporation would be made up of ratepayers within the district. He also stressed he was not certain that could be mandated in the enabling legislation. The decisions to modify a plan would certainly be approved by ratepayers, large and small, within the district, before being sent to the governing body for implementation. Mr. Osgood reiterated that the board of directors of the nonprofit corporation would be the ratepayers.

Chairman O’Connell asked for clarification, restating that the nonprofit corporation would be contracting with the city to manage the district. Mr. Osgood replied that was correct. The city would contract with the nonprofit corporation to manage the district. Chairman O’Connell continued, asking for clarification as to whether the city would then contract with another entity to manage the district.

Mr. Osgood responded that the city did not have to; they could hire another entity. But he went on, remarking that it would be cheaper and a better form of management to use the efficiency already in place.

The Chairman asked Ms. Valentine if they would need more people to accomplish this type of project.

Ms. Valentine stated that it would be difficult to estimate, she did not know how many districts would be created. Ms. Valentine stated that she had not really envisioned a large number of these districts being created. For example, the City Center Development Corporation would have only one that would be eligible right now. This would involve a tax, and there would probably not be a lot of districts springing up with the idea that people want to pay for these improvements themselves rather than place that burden on the city’s general funds. Ms. Valentine stressed that on the whole this would still be of benefit.

Chairman O’Connell queried that since there already was one of these districts operating, why did they need the legislation. Ms. Valentine replied that they did not have a "district." What they had was a nonprofit organization that would like to utilize S.B. 530 as a tool. She clarified, stating that the Downtown Center Development Committee believed they needed this legislation. Chairman O’Connell reiterated the position of S.B. 530 sponsors, commenting that the sponsors did not think they could establish districts without this legislation. Ms. Valentine replied that was correct, they did not think they could establish the districts without S.B. 530.

Senator Porter drew attention to page 5, section 15, number 3, and questioned whether local government would have the opportunity, annually, to assess the cost at a public hearing before there were changes made to that assessment. Mr. Osgood replied yes, if the existing plan was going to be modified. He continued, stating that when the district is created there is a 5-year plan, and the plan delineates what the costs and the services will be and the level of detail outlined within that. The city then budgets the funds created by the district and the city’s role in this is not providing additional resources, but collecting the assessment.

Senator Porter explained that he wanted to know if there would be a public process if there were a change in fees assessed a member of this district. Senator Porter also said he thought section 15 was addressing the public process other than just the board. Mr. Osgood replied that it did. Senator Porter clarified the statement, saying there would actually be a public hearing if there was any change in the assessment, and asked if that would be correct. Ms. Valentine responded saying that if the plan was amended that would require an ordinance for the plan to be amended and that would be a public hearing. Senator Porter reiterated there would require a public hearing before there was a change in the assessment; an amendment could change the fee. In order to change the fee there would need to be an amendment, which would cause a public hearing. Ms. Valentine agreed that process would trigger a public hearing.

Chairman O’Connell declared that S.B. 530 would be giving a non-elected group of people the authority to tax another group of people and that would include assessments, collection of interest and penalties, lien property, etc. The Chairman stressed that was extensive power for a non-elected group.

Ms Valentine emphasized that this would be a non-elected group who have decided they want to tax themselves and need the structure of a local government to create that mechanism, so they would be agreeing that they want to tax themselves for some stipulated amount. Chairman O’Connell stressed that at least 50 percent of them would be agreeing to it. Ms. Valentine replied that was correct.

Mr. Osgood interjected that it was the governing body that would be levying the assessment and collecting the assessment.

Chairman O’Connell emphasized to Mr. Osgood that this was not an elected governing body. The Legislature does not normally allow this.

Peter M. Thomas, City Center Development Corporation, interjected that perhaps he could explain further, that, yes, the Chairman was correct in that the initiation is non-elected officials, namely 50-plus percent of the assessment district that would be assessing themselves. If this came to fruition, the assessment would be on the whole district; but in the process of this thing coming "alive," there are three public hearings at which time all of those 49 percent have a chance to make their case and convince 2 percent more to sign against it. Also, there is a point after the first public hearing where the elected officials basically have to certify that, yes, this is of public benefit, and if they do not do that, it dies right there. So while they are not initiating it, their approval, as a public elected body, as to the public benefit and the fairness to this group that is being assessed, has to take place before it becomes final.

Mr. Osgood stated that was correct and further commented that the governing body was the city which would create the districts, levy the assessments and contract with the nonprofit corporation

Chairman O’Connell clarified that if there were any liability involved, it would not be the city’s liability. Mr. Osgood replied that was correct. It would not be the city’s liability; it would belong to the nonprofit corporation.

Senator Care questioned section 17 which contained a statute of limitations; for example, if someone objected to the validity of the ordinance, they would only have 30 days after the effective date of the ordinance to challenge its validity. Senator Care suggested that seemed to be short period of time. He wondered how they settled on 30 days and the rationale for it.

Ms. Osgood responded that this had been the case in other state’s enabling legislation. He stressed there would be no problem with extending that time period. Ms. Osgood restated to the committee that section 2 would be deleted.

Chairman O’Connell asked the committee for further questions on S.B. 530.

Senator Porter voiced his opinion to the chairman that he thought the chairman’s question about liability was very germane. He wondered if language could be provided or if the city would be receptive to being the ultimate responsible party. Ms. Valentine acknowledged that it seemed that they usually were, whether they wanted to be the responsible party or not. But in responding to Senator Porter, no, she did not think the city would, if the city had to weigh that in on every project, Ms. Valentine did not think it would do anything to harm the process. It was something they should study anyway.

Mr. Osgood also remarked, saying that the contract between the city, defining the contract, the baseline services, defining the responsibility, and defining the liabilities that would be involved is really the mechanism by which this gets delineated on an individual basis between cities and the nonprofit corporations they were contracting with to perform these services. That it would be there that these things got ironed out.

Senator Neal questioned Ms. Valentine on the number of lawsuits they were involved with due to the Fremont Street Experience. Ms. Valentine replied that she was not aware of any, but she would ask the city attorney.

Senator Neal prompted asking had they not had lawsuits in terms of taking people’s property for the Fremont Street Experience. Ms. Valentine asked if Senator Neal meant the use of eminent domain. Senator Neal replied, yes. Ms. Valentine stated the one she was most familiar was the lawsuit in reference to the "red garage." Senator Neal queried whether this would be similar.

Ms. Valentine responded it would not; this bill would in no way affect the power of eminent domain. This bill would do something different; it would allow groups to come together to tax themselves to make improvements.

Senator Neal reiterated that it would allow 50 percent of the group to come together. They would pay 50 percent and tax the other 50 percent. Ms. Valentine replied that was correct.

Senator Neal then asked what if one of the other 50 percent objects and does not want to be taxed; would they be able to sue in court. It was Ms. Valentine’s opinion that by engaging in this process, they could protest through any of the three hearings. It could be that if enough people protested, Ms. Valentine did not think it would mandate the city approve it just because 50 percent or 51 percent wanted it. Ms. Valentine noted she was not a legal expert but that the court system would probably be available as an option.

Mr. Osgood reiterated that section 17 defined those who have a legal interest; i.e., ratepayers involved certainly could challenge the validity of the ordinance, and the type of the assessment and the project, given the types of services that are agreed upon in the business plan and the contract.

Mr. Osgood strongly emphasized that S.B. 530 in no way implied the use of eminent domain. He further stated that would be entirely inappropriate under this ordinance and this type of a district.

Senator Neal insisted that the government entity, in this case the city, had the power of eminent domain. Ms. Valentine responded that was correct. Senator Neal then asserted that the city could exercise that power. Ms. Valentine said, yes.

Senator Titus questioned whether Mr. Osgood and Ms. Valentine had testified that Nevada was the only state that did not allow this. Mr. Osgood said that was correct. Senator Titus expressed the view that everyone talked about the need for public/private partnerships. It seemed to Senator Titus that this was a good example of a public/private partnership to allow people who want to do something to make the core of the city better, and to facilitate their ability to do that. Was that not true? Mr. Osgood replied that Senator Titus’ statement defined the rationale for the district.

Senator Titus drew attention to the concern regarding the 50 percent. Senator Titus explained further that the voters have said there needs to be a two-thirds majority in order to pass any tax. What would that do to the plan, if a two-thirds majority was needed rather than 50 percent?

Mr. Osgood explained to the committee that the highest bar in the United States was the State of Mississippi’s enabling legislation that required 70 percent of assessed value going into a district. As a result, Mississippi has one business improvement district in Jackson. It failed to get the 70 percent the first time through the petition process, obtaining 67 percent. The next year the petition came in with 71 percent. Mr. Osgood repeated that was an extremely high bar, and even 66 percent would be a high bar. Again, Mr. Osgood pointed out that having the experience of passing petitions in downtown Reno this would be difficult. He noted that part of the difficulty were the absentee landowners, speculators, etc. It would be Mr. Osgood’s suggestion to amend the bill if there was concern that several large property owners could constitute 51 percent. Put a cap on what a property owner could mean in terms of that percentage. For instance, no one property could constitute more than 10 percent, that would allow for a balance.

Senator Raggio directed attention to section 20. He remarked that he had started to raise the issue of the bond, and stated that Mr. Osgood had started to tell the committee something about it. Mr. Osgood mentioned several amendments, the one discussed with Senator Care, and line 30 on page 6 that they were asking to have deleted. Senator Raggio clarified, saying they would delete section 20. Mr. Osgood replied that was correct. Senator Raggio thought the purpose for S.B. 530 was laudable, and understood the procedure was used throughout the United States. Senator Raggio stated he was not concerned about the use of eminent domain as he did not think it was applicable in this situation; even though a city or a county could do that. Senator Raggio thought that with restrictions on eminent domain, unless there was a specification in this kind of a district, it could not be used for that purpose. Senator Raggio requested that at least that should be on the record.

Senator Raggio voiced the concern that there could be a situation where several large properties could dominate; the Legislature would not want to provide the authority where, for example, there were two large properties and 50 smaller property owners who felt they were being dragged in involuntarily to become participants. This would have to be something where the majority of the properties really wanted to be able to contribute something to keep the property up, and Senator Raggio thought if it were used in that way, S.B. 530 would be beneficial. The Senator thought Mr. Osgood’s suggestion that no one property could not comprise more than 10 percent in the computation of the assessed valuation had merit.

Senator Care noted Senator Neal’s questions regarding litigation in reference to the Fremont Street Experience. Senator Care then referred to section 7 of the bill, and remarked that "maintenance" is included in the definition of "improvement," and he pointed out that ramps, sidewalks and plazas are included on line 24, subsection 12. Senator Care wondered if they had given any thought to whether that would entitle the district to regulate who may and may not hand out handbills or anything like that in the district.

Mr. Osgood responded stating that there was no intent to regulate any behavior, beyond existing city ordinances that would apply in the district as well.

Senator O’Donnell referenced Senator Raggio’s remark that S.B. 530 was laudable. In his opinion, it was more dramatic and he would have no problem if the owners in the downtown business district wanted to get together and form a special improvement district in order to clean up the sidewalks. Senator O’Donnell urged the committee to look at the whole picture. He emphasized that the casinos and various businesses downtown were there for our economy and the cleaner that district was kept, the better. Senator O’Donnell remarked that Senator Care’s reference to people handing out leaflets and pamphlets was a good point. He noted that these people could not be prohibited from this activity, but they could certainly be cleaned up with this kind of special improvement district in place. Senator O’Donnell stressed the serious problem with sidewalks and cleanliness in downtown Las Vegas. In his opinion, this was a measure that could mitigate some of the damage that has been thrust upon the downtown area. Senator O’Donnell stated he would support S.B. 530. Senator O’Donnell reiterated that he thought this was a "great piece of legislation;" the cooperation between business owners and the government to clean up those districts.

Senator O’Connell questioned Ms. Valentine asking if this would replace what the city currently did in this area; if that was the intent. Ms. Valentine replied this would not replace it, but add to it.

Chairman O’Connell acknowledged Ms. Valentine’s response, but wondered what attention the city would give this area. The Chairman emphasized that the people in the area were going to pay twice for the same services.

Ms. Valentine defined the group’s formation because they wanted to provide something beyond the basic level of service. This would not mean the city would stop sweeping streets or cease code enforcement, etc. S.B. 530 would allow for the maintenance and enhancement of the district; the basic level of service would not be reduced.

Senator Neal queried whether this bill would permit the business owners to close off the street.

Ms. Valentine replied that if the city found a need to close off a street or the district wanted to do so, the city would allow the district to pay for the closing.

Chairman O’Connell asked the committee if there were any further questions or testimony in support of S.B. 530.

Peter M. Thomas, City Center Development Corporation, explained, for the record, what the City Center Development Corporation was. Mr. Thomas stated it was a collection of businesspeople, from different fields, that the city had organized for advice on a comprehensive redevelopment plan for downtown Las Vegas and the execution of that plan. CCDC was modeled after a plan that was very successfully executed in San Diego that redeveloped the whole downtown core. Mr. Thomas pointed out that this was a tool that is needed in the Las Vegas area just as much as it is in the Reno area. The funding mechanisms for redevelopment in Las Vegas are not what they need to be. CCDC is looking for every tool possible in order to leverage private dollars into upgrading the area downtown. This would be one of those tools, should individuals decide they want to be able to assess themselves. CCDC is fully in support of that and if it could be of benefit in Reno, they saw no reason that it would not also be of benefit to the cities in southern Nevada. Mr. Thomas stated, for the record, the City Center Development Corporation supported S.B. 530.

Barbara A. McKenzie, Lobbyist, City of Reno, wanted to go on the record that the City of Reno had officially voted to support a measure of this type. Ms. McKenzie recognized that S.B. 530 had need of amendments to add assurances into the language, as discussed, regarding responsibilities and control. She pointed to some date changes that needed to be made because they did not match with Reno’s budget dates. Ms. McKenzie stated that basically it was a tool and agreed that it was something that could only help Reno. Ms. McKenzie stressed that she understood the bill would have to be amended and the language cleaned up in various areas.

Helen A. Foley, Lobbyist, Boyd Group, stated that the Boyd Group had played a very active role in downtown redevelopment, certainly with the creation of the Fremont Street Experience. Ms. Foley mentioned that she had been a participant in the Howard Hughes Round Table discussion on infill development, which was part of the Lead Institute of Real Estate Studies at the University of Nevada, Las Vegas (UNLV). Ms. Foley commented on the serious problem in southern Nevada, as Reno had, in finding ways to redevelop or revitalize some of the city center areas. Therefore, the Boyd Group would support any tool that might become available to create a better atmosphere downtown. Ms. Foley also understood there were some amendments that needed to be made and the Boyd Group would certainly contribute their knowledge and support.

Fred L. Hillerby, Lobbyist, American Institute of Architects, came forward and stated the southern chapter had formed a growth committee that responded and participated in the strategic planning committee which had been put into place 2 years ago. Mr. Hillerby stressed that committee was particularly interested in those activities which can improve infill development, downtown areas, and the small commercial areas that need this kind of assistance. The American Institute of Architects wants to be on the record as supporting S.B. 530; recognizing that there obviously need to be some amendments that will allow it to happen in Clark County.

Bill Thornton, Co-owner, Club Cal-Neva, Reno, declared that for several years Club Cal-Neva had contributed voluntarily to pay additional taxes and provide services. In order to make things cleaner, they had formed a special assessment district and later formed one for additional police protection. In each of those cases, Mr. Thornton explained, they had to go out and convince their fellow property owners on the idea. It had worked fairly well but a better vehicle was needed. At the present time approximately $1 million a year was being raised. In addition to that, his company and several other companies contribute employees to the cleaning process downtown (approximately $300,000 is contributed in this way by various property owners each year). Mr. Thornton pointed out that this model had been most successfully used in Time Square, New York. For the record, Mr. Thornton supported S.B. 530.

Roberta Ross, Concerned Citizen, stated for the record that she lives in a condo building in downtown Reno in the entertainment corridor. Ms. Ross remarked that she owns a 153-unit apartment building in downtown Reno, which she categorized as "affordable housing." Ms. Ross stated that she was on the Citizens Advisory Committee to the Redevelopment Agency and chairs that committee in conjunction with being a director with the chamber of commerce. Ms. Ross drew attention to the fact that as a small business owner, a resident, and someone involved with the community, it was her opinion that this legislation was very favorable and good for downtown Reno. Ms. Ross expressed concern for her business and her tenants particularly their safety and security in downtown Reno. Ms. Ross maintained the need for added services. She stressed again the issue of the safety of individuals who live and work in the downtown area. Ms. Ross commented that she would not like to see any further deterioration in downtown Reno.

Bob Rusk, Concerned Citizen, stated that previously he had represented downtown Reno on the county commission. Mr. Rusk also called attention to the fact that he had served in the Nevada State Legislature, most notably, as the minority leader during the 1981 session. Mr. Rusk pointed out that he continues to serve on a number of committees, but added they had never been able to get a consensus of the city council to go forward on this issue.

Mr. Rusk put forward his opinion that several things had to be done, including either tearing the Mapes Hotel down or refurbishing it, the City of Reno demolishing all the city-owned buildings on First Street, and relocating the soup kitchens out of the downtown area. Mr. Rusk stated that Reno does have a solid city council that is moving forward in accomplishing great things.

For the first time in Mr. Rusk’s 30-year history with the city, the public and private sectors were coming together; willing to join under this vehicle to create the business improvement district, notwithstanding the fact that several casinos had closed. The business owners feel they are at the bottom of the barrel and need the help of this enabling legislation to allow them to be successful over the next few years.

Carole A. Vilardo, Lobbyist, Nevada Taxpayers Association, stated that she had no objection with what either entity was trying to accomplish. Ms. Vilardo expressed her opinion that the bill had major problems and major conflicts. She commented that she had been involved in discussions regarding S.B. 530 with Mr. Thomas and Ms. Valentine, both of whom had agreed with Ms. Vilardo regarding the problems. Discussions had occurred with Mr. Osgood and Mr. Rusk as well. Ms. Vilardo particularly questioned why S.B. 530 had been placed in NRS chapter 268 rather than NRS chapter 271.

Chairman O’Connell expressed her interest in that same question.

Ms. Vilardo drew the committee’s attention to NRS chapter 271, pointing out that provisions for protests and hardship already existed. Ms. Vilardo emphasized that NRS chapter 271 had been developed over a number of years to systematically deal with special districts. Ms. Vilardo noted the redevelopment area in downtown Reno currently had special assessments for maintenance and police. S.B. 530 would allow an additional special assessment. Ms. Vilardo pointed out that the bill, as written, referred to zones and that there could be overlapping zones. S.B. 530, as drafted, does not include a notification procedure for the business owner. Ms. Vilardo voiced concern regarding the small business owner who might suddenly find they have 4 or 5 assessments. Ms. Vilardo summarized that in her opinion the concept was fine, but that mechanically S.B. 530 did not work.

The Chairman queried Kim Guinasso, Committee Counsel, Legal Division, Legislative Counsel Bureau, as to why S.B. 530 had been placed in NRS chapter 268. Ms. Guinasso replied that she did not know why the bill had been placed in that chapter but did not see any reason why it could not be placed in NRS chapter 271.

Chairman O’Connell asked Marvin A. Leavitt, Lobbyist, City of Las Vegas, if he knew the reason S.B. 530 had been placed in NRS chapter 268. He responded no, he did not. Ms. Vilardo Interjected, stating that no one she had spoken with could answer that question.

It was Ms. Vilardo’s thought that a number of problems would be solved by putting S.B. 530 into NRS chapter 271. Ms. Vilardo reiterated that many of the procedures were already in place to set up the districts, and at the very least there would be some boilerplate language that could be modified to satisfy the needs in this bill.

Mr. Leavitt commented that the only reason for placing S.B. 530 in NRS chapter 268 was that it applied to cities. He clarified that NRS chapter 271 extended beyond cities to other types of local governments. Mr. Leavitt agreed with Ms. Vilardo asserting that chapter 271 already had the administrative procedures that relate to levying of assessments, property owners’ rights, etc.

Ms. Vilardo observed that if S.B. 530 was a good bill and of good intent, it should be made available to a county, an urbanized area of one of the larger counties, or a city. She noted that too frequently issues are pigeonholed because of an immediate need. Ms. Vilardo summarized by suggesting if the committee thought this was a good idea and the amendments to S.B. 530 made the bill mechanically sound, to put it in NRS chapter 271 so that it would be available to everyone.

Robert A. Ostrovsky, Lobbyist, American Nevada Corporation, requested that American Nevada Corporation wanted to go on the record stating that they would like to review the added language in S.B. 530. Mr. Ostrovsky remarked that until today, American Nevada Corporation had not looked at this bill, because it was only applicable to Reno. Mr. Ostrovsky stressed that with the added language S.B. 530 had become a bill that would affect the City of Henderson where American Nevada Corporation is a large property owner. American Nevada Corporation would like to discuss this issue with city representatives and research the impact of S.B. 530. Mr. Ostrovsky testified that American Nevada Corporation was concerned with the language of the bill. There was the question of how many taxpayers would be required to create such a district. Their thought was if a large casino was surrounded by small property owners and residential property, under this current draft that casino alone might be able to justify the creation of a district. American Nevada Corporation did not think that was appropriate. Mr. Ostrovsky reiterated the concerns of American Nevada Corporation and that they wished to go on the record with those concerns and the request to review the language. Mr. Ostrovsky emphasized their desire to participate in the process.

Chairman O’Connell asked Ms. Guinasso to check the parameters of the law with regard to the constitutional two-thirds requirement. The Chairman clarified that did not refer to the Senate Committee on Government Affairs voting on the bill, but rather the city-level entity. Ms. Guinasso said it was her understanding that the two-thirds majority vote requirement applied only to the Legislature. The Chairman asked for clarification, questioning if the two-thirds requirement did not apply to any local government? Ms. Guinasso stated again that was her understanding but that she would research the subject.

Chairman O’Connell formally closed the meeting on S.B. 530. The Chairman informed the committee that S.B. 525 had been withdrawn and stated they would now hear testimony on S.B. 501.

Marvin A. Leavitt, Lobbyist, City of Las Vegas, came forward and stated that his testimony would reflect his role as chairman of the Committee on Local Government Finance. Mr. Leavitt explained that S.B. 501 had been requested by the Committee on Local Government Finance.

Mr. Leavitt suggested the bill would solve several problems that had arisen in recent years. He went on to say the problems particularly related to ballot questions in reference to levying of taxes for various purposes, including bond issues and special overrides. Mr. Leavitt recalled that during the last biennium, Ms. Vilardo had drawn attention to the variations in language and presentation of the ballot questions.

Mr. Leavitt maintained, that while reading some of the questions, he had wondered how anyone could understand their purpose. For example, Mr. Leavitt pointed to the phrase "increase in taxes ad valorem." That is not a term in general usage and there are those who would not recognize that as an increase in property tax. Mr. Leavitt emphasized that even the way the rates of those taxes were expressed appeared with many variations. Much of the variation is caused by the subjective interpretations of the law among the district attorneys in the diverse counties.

Mr. Leavitt pointed out one objective of S.B. 501 would be to give the responsibility to the Committee on Local Government Finance to prepare forms for use as templates for these questions and ensure wide availability. Mr. Leavitt described the composition of the committee as being comprised of professionals from the private financial sector as well as public accounting professionals representing cities, counties, school districts, etc. Mr. Leavitt emphasized the experience of these professionals in dealing with the many different questions as they relate to local government finance in the issuance of bonds, etc.

The second objective of the bill, Mr. Leavitt averred, was the attempt to provide for the standardization of these questions. Information would be disseminated to the general public relating to bond issues and requests for additional information about, for instance, duration of the levy and average increase in the property tax on a $100,000 home so that it relates to the specific needs or obligations of a taxpayer. Mr. Leavitt noted one additional item regarding special elections. There is a specific provision stating that a special election can be held on the date of a primary and municipal election or primary state election just to add further options as relates to these particular special elections. Mr. Leavitt then deferred to Ms. Vilardo since she had made the initial request to consider this issue.

Ms. Vilardo spoke in support of the bill. She thought it was one thing to have a ballot question defeated because the voters understood the question, and an entirely different matter to have a ballot question defeated because the voters could not possibly understand what the question said; specifically regarding tax questions.

Ms. Vilardo pointed out that often people do not read all of the material in a sample ballot. S.B. 501 would set into statute that the Committee on Local Government Finance was responsible for the clarification of language and the dissemination of information. Informed voter decision would be the result. This would also be important in gathering information from the various counties, election departments and/or the election clerks. The Committee on Local Government Finance will be a point of reference for newly elected district attorneys and clerks; i.e., there will be a statutory reference for information provided by the committee. Ms. Vilardo voiced her opinion that S.B. 501 was an important bill and urged support for the passage of S.B. 501.

Senator Titus reflected that because of low voter turnout during primary elections, ballot questions, especially those that required an increase in taxes, were not suggested. Mr. Leavitt responded to Senator Titus’ comment stating that if he had read the provisions correctly this could only occur when an emergency existed. Senator Titus clarified by restating that ballot questions would not appear on a primary unless there was an emergency. Mr. Leavitt replied, that was correct.

Senator Neal queried when these forms would have to be presented to the clerk. Mr. Leavitt explained that section 13 of the bill provided that on or before April 1, 2000, the Committee on Local Government Finance shall provide the forms. Therefore, the forms had to be available by that date. Senator Neal asked if that applied only one time. Mr. Leavitt drew attention to a provision in section 1, which establishes these forms, requires the committee to provide the information to each county clerk, city clerk and district attorney; and then he pointed out that the section, as it is written, expires. Mr. Leavitt noted it expired by limitation on June 30, 2008. He was not certain as to why that language was there. But he supposed that until 2008 they had the responsibility to ensure that every city clerk, county clerk and district attorney had a copy of these forms. It was Mr. Leavitt’s opinion that if this bill did not work, it would be eliminated by then.

Senator Neal questioned saying that as these issues come up at various times, if it was the intention of the legislation for the Committee on Local Government Finance to provide the forms each time there was an election.

Mr. Leavitt responded no, that the bill did not specify that, but he thought Senator Neal’s suggestion was to the point. It would be a good idea to disseminate the material on a regular basis so that it corresponded with every general election and that it was clearly available to everyone that needed the information.

Chairman O’Connell formally adjourned the meeting at 9:30 p.m.

RESPECTFULLY SUBMITTED:

Julie Burdette,

Committee Secretary

APPROVED BY:

Senator Ann O'Connell, Chairman

DATE: