MINUTES OF THE meeting
of the
ASSEMBLY Committee on Government Affairs
Seventy-First Session
May 10, 2001
The Committee on Government Affairswas called to order at 8:16 a.m., on Thursday, May 10, 2001. Chairman Douglas Bache presided in Room 3143 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Mr. Douglas Bache, Chairman
Mr. John J. Lee, Vice Chairman
Ms. Merle Berman
Mr. David Brown
Mrs. Dawn Gibbons
Mr. David Humke
Mr. Harry Mortenson
Mr. Roy Neighbors
Ms. Bonnie Parnell
Mr. Bob Price
Mrs. Debbie Smith
Ms. Kathy Von Tobel
Mr. Wendell Williams
COMMITTEE MEMBERS EXCUSED:
Mrs. Vivian Freeman
STAFF MEMBERS PRESENT:
Eileen O’Grady, Committee Counsel
Dave Ziegler, Committee Policy Analyst
Linda Utt, Committee Secretary
OTHERS PRESENT:
Myla Florence, Director, Department of Employment, Training and Rehabilitation
Charles Horsey, Administrator, Housing Division, Department of Business and Industry, State of Nevada
Lon DeWeese, Chief Financial Officer, Department of Business and Industry, Housing Division, State of Nevada
Mark Fiorentino, Lobbyist, Nevada Outdoor Media Association
Danny Thompson, Lobbyist, Nevada State AFL-CIO
Charles Pulsipher, Zoning Administrator, Clark County Comprehensive Planning
Janelle Kraft, Senior Financial Analyst, City of Las Vegas
Tom Burrous, Economic Development Analyst, City of Sparks
Douglas Smith, Chairman, Citizens for a Scenic Reno
Stephanie Garcia, Lobbyist, City of Henderson
Bristol Ellington, Assistant Director of Community Development, Henderson
Michele Richardson, Assistant City Manager, City of North Vegas
Senate Bill 502: Eliminates state job training office. (BDR 33-1314)
Myla Florence, Director, Department of Employment, Training and Rehabilitation, explained S.B. 502 was a simple bill that eliminated the reference of the state Job Training Office as the administering entity for the Job Training Partnership Act (JTPA) funds (Exhibit C).
Ms. Florence commented the JTPA funds were replaced with the Work Force Investment Act. The state implemented the program on July 1, 2000, in a transition year. The goals of the Work Force Investment Act integrated all employment and training programs at the state and local levels through Work Force Investment Boards.
Ms. Florence noted S.B. 502 eliminated the references to the former state Job Training Office, which was integrated in the department and renamed the Work Force Investment Support Services. Duties of the support services related to the Displaced Homemaker Program and the State Council on Libraries and Literacy. The department had representatives currently serving on both boards. Ms. Florence concluded the bill implemented a decision unit in the executive budget recommended by the Governor.
Assemblywoman Parnell expressed concern about the possible closing of the Sparks office where the handicap workshops were located. Ms. Florence confirmed vocational rehabilitation was included in the department, but was located in Reno. She maintained the office would not close and the vocational assessment center service would continue with the exception of the production unit. The state would utilize community-based providers for the production service and would integrate in the community, as opposed to a sheltered workshop. Ms. Parnell confirmed the production unit would be picked up by another agency and was relieved it was not eliminated.
Assemblyman Williams questioned if any job positions would be eliminated because of the change. Ms. Florence responded all positions would be retained and integrated within the department.
Senate Bill 552: Makes various changes relating to assistance to finance housing. (BDR 25-1448)
Charles Horsey, Administrator, State of Nevada Housing Division, Department of Business and Industry, testified the Governor’s Fundamental Review Committee recommended the housing division be privatized similar to the 39 other housing finance agencies throughout the country. The Governor suggested the housing industry be provided the necessary flexibility, but remain a state agency rather than being privatized. Mr. Horsey noted the bill draft was prepared with the intent of obtaining the necessary flexibility; however, the first hearing before the Senate Government Affairs Committee greatly reduced the original bill.
Mr. Horsey explained the division needed to help the cities of Las Vegas, Henderson, and Reno, with downtown revitalization efforts and begin the monumental task of addressing the needs of Nevada for assisted living projects and persons with Alzheimer’s disease (Exhibit D).
Mr. Horsey commented four or five years ago the use of variable rate bonds became popular within the current interest rate environment. It was to the advantage of low-income tenants and homeowners of Nevada to have the ability to issue variable rate bonds. Mr. Horsey pointed out Section 1 of the bill allowed the division to use variable rate bonds with only two provisions. First, the State Board of Finance provided the authority to use the bonds, and secondly, the division had the ability to enter into protections or rate caps eliminating any interest rate risks.
Mr. Horsey explained the language in Section 2 was derived from various parts of NRS Chapter 319 and incorporated into one section. Mr. Horsey noted the language in line 44 provided the division the ability to generate grants currently not available. The grants would be used on a limited basis in areas which were hard to develop, and would provide small down payment assistance or small development cost assistance to develop those areas. In addition, Mr. Horsey indicated lines 25 and 26 clarified circumstances other than foreclosure that the housing division was authorized to acquire.
Mr. Horsey pointed out Section 3 provided assistance to the downtown revitalization efforts. Under current statutes of NRS Chapter 319, the division did not have the authority to help in those efforts. S.B. 552 broadened the division’s authority and enabled them to assist cities in redevelopment efforts. Section 3 also allowed for urban renewal and eliminated a $5,000,000 ceiling imposed several years ago on the division’s issuance of letters of credit.
Mr. Horsey noted Section 4 updated the definition of “mortgage.” Inconsistencies related to federal insurance programs were eliminated and further protections were provided with additional approvals needed by the State Board of Finance.
Section 5 was a technical amendment, which eliminated the inconsistency related to buying loan participations that were not federally insured. Mr. Horsey remarked clarification was requested in the Senate because certain people felt the provision “all insured or guaranteed mortgage loans” would have been eliminated.
Mr. Horsey pointed out Section 6 eliminated the Housing Division as an exempt organization from the Purchasing Division within the state of Nevada.
Mr. Horsey remarked several parts of Section 7 were deleted, but the flexibility of S.B. 552 allowed the division to begin their efforts in assisting senior citizens and those that needed assisted living (Exhibit D).
Assemblyman Mortenson questioned the process of awarding grants to developers and asked if the division would award grants to people who attempted to buy the houses. Mr. Horsey responded currently the housing division had a successful down payment assistance program that was a major part of their effort to provide home ownership. The grants referred to were for not-for-profit organizations to begin projects and offset some of the development costs. The housing division planned on using the grants on a limited basis, but felt they should be available when the need arose.
Chairman Bache questioned the exemption from NRS Chapter 333 and asked why the division needed exemption from the purchasing division.
Lon DeWeese, Chief Financial Officer, Housing Division, Department of Business and Industry, State of Nevada, responded to Chairman Bache. Mr. DeWeese explained the exemption stemmed from the division’s joint ventures with project developments. When the housing division needed to purchase nails, shingles, and drywall, and engage in the use of subcontractors, it was on a rapid basis. Under current purchasing procedures, the division would not be able to participate. The lawyers believed the best way to handle such circumstances was to create the exemption.
Chairman Bache asked about the public works statutes. Mr. DeWeese replied the Housing Division was never subject to the public works statutes and they were not applicable.
Assemblyman Price questioned the assistance in the downtown development and asked if the division would be able to participate. Mr. DeWeese explained the cities of Las Vegas, Henderson, and Reno, asked to avail themselves of their expertise in financial markets. Currently, they did not have that ability but S.B. 552 would provide the first step for assistance.
Senate Bill 265: Requires city or county to pay just compensation or authorize alternative location for certain nonconforming outdoor advertising structures under certain circumstances. (BDR 22-156)
Mark Fiorentino, representing the Nevada Outdoor Media Association (NOMA), distributed a document entitled “Talking Points” (Exhibit E), and advised the committee he would use the document as a guide. S.B. 265 protected certain property rights by requiring “just compensation” in circumstances where local governments wanted to remove legally permitted, off-premise advertising signs. Many local governments had adopted provisions requiring the removal of legally permitted signs. The ordinances required the removal of structures over a period of time without compensation to either the owner of the sign or to the owner of the property where the sign was located. NOMA believed that was unfair and created a devastating effect on the outdoor industry, and on other industries that relied on the outdoor industry. Mr. Fiorentino pointed out many structures were built under leases where the outdoor company paid revenues to the owner of the property, and often the revenues were important to the property owners.
Mr. Fiorentino noted the adoption of ordinances requiring the removal of off-premise advertising signs was a real problem. There were at least two jurisdictions that had ordinances in place. If the jurisdictions were allowed to operate and proceed without S.B. 265, the industry would loose 60 to 70 percent of their structures.
Mr. Fiorentino explained the bill only applied to permanent signs. When a sign was erected, there was no time limit and no requirement for the company to justify the sign’s existence at a future period in time. The bill stated if jurisdictions required the removal of signs there were two options. The owner of the sign would be paid for the value, and the owner of the property would be paid an amount equal to what would be lost in revenue, or the owner of the sign would be allowed to relocate the sign to a comparable site. NOMA was not requesting to grow as an industry but the revenue streams permitted would allow their maintenance.
Mr. Fiorentino clarified a critical provision of S.B. 265 stated if the owner of a sign and the local government could not agree on compensation, factors would be codified to determine the value. The factors came from a Nevada Supreme Court case in which the Nevada Department of Transportation (NDOT) needed to widen a highway. In order to complete the project, the department had to acquire additional property. When the property was acquired, it affected existing outdoor advertising structures and the removal of signs. Mr. Fiorentino explained when the roadway was constructed there was uncertainty regarding how much money should be paid. During the court hearing, NDOT argued to only pay for the value of the steel and structure, and possible relocation costs. The industry argued the value was based upon income stream. There was an unexpired “lease term” and since the signs generated a certain amount of revenue each month, the industry felt they should be compensated on a formula based upon the income stream. The Supreme Court ruled in favor of the industry and maintained when a value was placed on a sign, it was necessary to use a formula taking into consideration a number of factors, including the income generated from the sign. Mr. Fiorentino commented NOMA had attempted to codify the factors in S.B. 265.
Mr. Fiorentino indicated there was another key exception in the bill that applied only to approved signs and was subject to a condition which allowed the local government to review and make a determination whether the sign was appropriate over a period of time. Mr. Fiorentino noted the exception was important to the city of Las Vegas. He mentioned use permits approved many of the outdoor signs existing in the city of Las Vegas and Carson City. The city council approved a sign at a public hearing but approval was subject to the condition that in two to five years, it would be necessary to come before the council to verify the sign was still appropriate. The industry was not trying to affect those existing conditions, and S.B. 265 would not apply to signs under those conditions. Mr. Fiorentino indicated compensation would not be necessary if the public hearing determined a sign was no longer appropriate.
Mr. Fiorentino pointed out S.B. 265 had been amended in the Senate. The original bill was not limited to outdoor advertising structures and it protected every legally permitted use or structure. Mr. Fiorentino commented several local governments had expressed grave concerns over the broadness of that portion of the bill. S.B. 265 was limited to only outdoor advertising structures and, therefore, billboards should be protected.
Mr. Fiorentino referred to page 2 of Exhibit E and highlighted various sections. According to a survey compiled by NOMA, which included some of the companies who operated in Nevada, the outdoor advertising industry created employment for advertising agencies, sign construction companies, contractors, and various other advertisers. Payments made to private property owners exceeded $10 million yearly. Mr. Fiorentino explained if someone bought property for retirement or investment purposes, substantial revenue was paid to the property owners. Outdoor advertising contributed substantially to public service campaigns and was a valuable part of Nevada’s economy.
Mr. Fiorentino remarked the industry was not trying to do anything that had not been done in other states. As indicated in Exhibit E, there were 37 other states with similar legislation in their statutes protecting the outdoor advertising industry.
Mr. Fiorentino noted structures located along federally funded highways were governed by federal regulations. The federal regulations required a local or state government to compensate the owner of a sign for the removal of the sign. S.B. 265 extended the same protection to signs not located along federally funded highways.
Concluding, Mr. Fiorentino pointed out two inaccuracies regarding S.B. 265. The bill did not limit a local government’s authority to regulate off-premise advertising, and they could ban those structures and establish limitations. The language in the bill stated signs already in the ground would need to receive compensation if there was a necessity to remove a sign. The local government’s ability to regulate signs would not be affected. Mr. Fiorentino referred to the initiative petition presented in the city of Reno, where the citizens adopted a petition instructing the city council to ban outdoor structures. Mr. Fiorentino emphasized S.B. 265 had no effect on the ban. The city of Reno could continue its ban on new structures, but structures already in the ground with permanent permits would require compensation or relocation to be removed.
Mr. Fiorentino clarified S.B. 265 did not require the local government to spend a “single dime.” NOMA wanted to maintain their existence and not receive checks from the local governments. Mr. Fiorentino indicated NOMA was aware locations changed and structures built might not be appropriate, and the industry needed to work with local and city governments to acquire alternative locations.
According to Mr. Fiorentino, the amortization provisions were key items and a valuable tool, and NOMA had attempted to reach agreement with the local governments on the significant features of amortization.
Assemblywoman Gibbons wondered if the city of Reno, with an ordinance banning future outdoor structures, could purchase a sign for its value and not have amortization. Mr. Fiorentino responded “yes,” and indicated that was the purpose of the bill since it provided the same protection as in the eminent domain statutes. If the city of Reno required a particular house for a roadway or park, no one would question the city payment towards the house. However, the language in S.B. 265 stated if the city required the structure for some other reason, it would be necessary for the city to pay. Mr. Fiorentino noted the bill allowed compensation and offered an alternative in relocation to a comparable site deemed less sensitive in order to maintain the revenues. Mrs. Gibbons asked if it was possible for the city of Reno to move the signs to another available site within the city due to the ordinance stating, ”no new signs.” She questioned if that was an instance where the city would pay the value. Mr. Fiorentino replied the city of Reno would need to change their ordinance if the structures were relocated.
Assemblyman Price mentioned it was not unusual to have a sign painted on the side of a building or barn and he asked if such structures would be affected. Mr. Fiorentino responded if the sign advertised a business in the building, it would be considered an on-premise sign. Mr. Fiorentino added some outdoor advertising companies rented a space and attached a structure to the side of a building, and in those circumstances the bill would protect them.
Assemblywoman Smith questioned the issue of compensation and asked if the owner of a house that had to be removed because of a proposed freeway would receive fair market value. In addition, she questioned what the price value of a billboard would be based upon. Mr. Fiorentino remarked the bill stated the city would need to pay a fair market price for the billboard structure; however, the concern was how to figure out what the outdoor billboard was worth. The value would need to be based on the length of the term lease over a five to seven year period, along with a formula to evaluate the worth of the sign. Mr. Fiorentino pointed out a common method of evaluating was to use the income stream of the structure for purposes of eminent domain or taxation. The amount provided in income would assist in figuring the value.
Mrs. Smith questioned since the bill addressed only permanent signs, which could be in place forever, how a calculation would be projected. Mr. Fiorentino replied the signs protected were ones with no expiration date. The bill set forth different factors to compensate for the sign rather than relocation. One factor would be the uniqueness of the site where the sign was located. Another factor was the lease term. If the owner of a sign advised the city he wanted $10,000 for his structure, the owner would need to prove how he reached that figure, along with how much time remained on his lease term. If the lease expired in seven years, there would be no expectation for 100 years.
Assemblyman Lee questioned if a sign was included in a family trust, would that be considered “forever” because the heirs would become owners of the sign. He asked how the city would figure the lifeline of a sign in that instance. Mr. Fiorentino indicated he was not aware of case law that addressed the issue. Negotiation by the parties or a court decision would be necessary and would be the same as any other eminent domain case.
Assemblywoman Parnell wondered what the removal process would be for a sign located in Las Vegas that was considered a nonconforming outdoor advertising structure. In addition, Ms. Parnell asked why the change was necessary. Mr. Fiorentino responded it varied in every jurisdiction and was part of the reason for the problem. Clark County testified before the Senate they had a five-year period that had never been used. If there was a permanent structure with no lease expiration, the county could send a letter stating the structure needed to be removed in five years. The city of Henderson had ten years and the city of North Las Vegas had seven years, and all were part of the problem with no mechanism for compensation. Mr. Fiorentino emphasized there were no local ordinances in Nevada requiring compensation.
Assemblywoman Smith questioned if the city or county had an ordinance stating a billboard had to be removed in a certain period of time, did advertising companies lease the billboards for that period of time. Mr. Fiorentino replied leases varied in each case because individual leases had unique terms and the potential expiration date could vary. He pointed out Clark County had a five-year program that had never been utilized.
Assemblyman Humke referred to Exhibit E and the attachment from OAAA, a national association of outdoor advertising companies, which listed 37 states with laws equivalent to S.B. 265. Mr. Humke noted Arizona, California, Idaho, Oregon and Utah, had similar laws and those states surrounded Nevada. Mr. Fiorentino indicated OAAA confirmed the states received some form of “just compensation” for removal of a billboard.
Mr. Humke asked Mr. Fiorentino for a review of the condemnation proceeding by referring to a scenario using plan A and plan B. Mr. Humke clarified plan A would be a straight real estate deal with a county requiring a building. Plan B would be the same but involving a piece of land where a billboard was located. Mr. Fiorentino pointed out he was not an expert on condemnation proceedings but would attempt to explain the process for both. Plan A, under the current eminent domain law, had two options. The county could make an offer, which took place most often, or they could initiate a legal proceeding to condemn the land. If an offer was accepted, there would be consummation of the agreement and a check would be issued. If the offer was not satisfactory and was rejected, the county would either withdraw or initiate a condemnation proceeding in court. Most proceedings disputed the amount to be paid along with cases where the county made an offer and posted a bond with the court to cover the offer. The parties went to court and an independent arbitrator would negotiate the property’s value. Mr. Fiorentino believed under today’s law without S.B. 265, the same process would be used if there was an outdoor structure on the property. As the property owner, a determination would be made on the lease payments that would be lost when the sign was removed, and the owner of the sign would require the owner of the property to also pay. As a tenant, the owner of the sign would also lose an asset. Mr. Fiorentino explained the purpose of S.B. 265 was not how the industry lost structures through eminent domain proceedings but through regulation proceedings by laws adopted for their removal. If the county adopted a law, they were no longer required to pay for the revenue losses. Mr. Fiorentino posed the question, “If the public needed a sign due to a roadway versus the public requesting the outdoor sign be removed for another reason, why payment differed.” In his opinion, they should be equally reimbursed.
Assemblyman Lee asked if a permanent sign was located in the downtown area and the city wanted to remove it, would another “permanent” relocation be found. Mr. Fiorentino responded the bill did not address the question and he believed the local sign companies would have the authority to negotiate what was deemed to be appropriate.
Assemblywoman Smith questioned what happened if a billboard was located on her property and she decided to sell the property, would the sign be included in the bill of sale or only if rezoning occurred. Mr. Fiorentino stated if S.B. 265 passed she would receive more protection because the bill required local government to pay for the sign or locate it elsewhere. If the property was sold, the buyer had protection but was subject to whatever lease was agreed upon with the original owner. Mr. Fiorentino clarified the same lease would apply with the original owner if the property was sold to another party. Mrs. Smith asked if current ordinances contained mandates to change the status of the lease if property was to be sold. Mr. Fiorentino responded he was not aware of any ordinances in which the sale would trigger a change in lease. Certain ordinances stated the development of the property triggered a change. If someone owned a vacant piece of property which included an outdoor structure and a decision was made to develop a warehouse, some ordinances stated there would be a change, but they varied. Mr. Fiorentino concluded various ordinances mandated the sign needed to come down, and others stated it was necessary to proceed with a public hearing to demonstrate compatibility.
Danny Thompson, representing the Nevada State AFL-CIO, presented testimony on behalf of numerous employers and employees from the outdoor sign industry. Mr. Thompson emphasized there were concerns regarding the use of eminent domain and amortization powers utilized in the industry. The bill represented a fair compromise and established a standard for local governments. Mr. Thompson recalled the problem 20 years ago and stated his group felt a taking should be compensated. Property rights were one of the strongest rights under current law. Just compensation was fair and was negatively impacted when the industry lost compensation from their signs.
Charles Pulsipher, Zoning Administrator, Clark County Comprehensive Planning, spoke in opposition to S.B. 265. Mr. Pulsipher read from prepared testimony that included five points of opposition, and indicated amortization was a legal and fair means of elimination of nonconforming signs (Exhibit F). In addition, Mr. Pulsipher noted the majority of court cases upheld the amortization of signs as legal. Along with the owner of the sign recovering their investments, the community was assured of the eventual removal of the sign. The owner of the sign also had an option of making the sign legal.
Mr. Pulsipher pointed out amortization should not be prohibited to remove nonconforming signs, and he believed the billboard industry would receive preferential treatment with the language proposed in S.B. 265. If the county wanted to remove an “adult use” sign from a certain location or “vacation homes” signs were removed as legally nonconforming, they would be permitted and legal if the bill was adopted. Some billboards were prohibited and required removal but were not confiscated. The sign could be relocated to a permitted location without the loss of the sign. The owner of the property would not lose his property. The sign and property were not confiscated.
Mr. Pulsipher commented if amortization was prevented, the community would be assured nonconforming signs would remain forever, regardless of how offensive the sign might be, and compensation by the community for the sign’s value would not be affordable. Fiscally, taxpayers could not be obligated for the cost of compensating billboard companies because the value was derived from the proximity to major streets and highways, and improvements were made from taxpayers’ funds. According to Mr. Pulsipher, the billboard companies should not be compensated because of their location, and again be compensated when the sign no longer complied with public requirements.
Assemblyman Lee advised the committee he had served with Mr. Pulsipher on the Comprehensive Planning Board. Mr. Lee explained an outdoor sign received a building permit and at times could cost $40,000. Mr. Lee pointed out there was a difference between a sign and property because the sign was only visionary. In addition, Mr. Lee noted if a county did not care for the architecture of a building, it could be torn down.
Mr. Pulsipher explained a sign was required to receive a building permit in addition to a land use application. If the sign was located in an area where the public could observe it, and the county required the removal of the sign, the sign could be compared to the architecture of a building. Outdoor signs were unrelated to the use of the property because the properties were generally used for commercial or industrial enterprises. Mr. Pulsipher remarked billboard use on property was separate and unrelated to principal use of property. Mr. Lee asked if a county had ever moved certain businesses to other locations. Mr. Lee clarified he considered a sign to be a business because it derived income and had employees. Mr. Pulsipher replied Clark County had a problem with a property owner in Las Vegas International Country Club Estates who rented out several houses on a nightly and weekly basis. Under the county code it was not permitted except in conjunction with hotels and motels. The District Attorney drafted amendments that were adopted to their ordinance, which provided an amortization period of three years. During that period of time, the property owner could continue business as usual, but when the time expired, he was required to stop his business. Mr. Pulsipher indicated he believed the situation was currently in litigation.
Assemblyman Humke asked Mr. Pulsipher for a definition of “taking.” Mr. Pulsipher stated a taking was by governmental regulation pertaining to a situation where there was no reasonable use of the property. Regulations prevented a person from using a piece of property and that would be called a taking and subject to litigation. Mr. Humke remarked the remedy for a taking would be to use the power of condemnation. Avoiding a lawsuit from the owner of the property because of a taking was to use the power of condemnation. Mr. Pulsipher asserted if the county required a property, it could do so by condemnation or eminent domain. If the regulation provided for a sunset for the use of the property, amortization would be the mechanism to use. Mr. Humke pointed out it would be simple for Las Vegas to make a decision to put a road through an owner’s property, but today they were in an area that was not simple, and that was why S.B. 265 was proposed. Mr. Humke commented he struggled with the concept of land use and nonconforming use because in 1960, they were permitted but in 1999 it was no longer permissible. In his opinion, it was due to the concept of population moving toward the use and what the city deemed nonconforming. Mr. Pulsipher responded that was correct but it would be unfair to preclude local governments from using that as a mechanism for nuisances detrimental to public health and welfare.
Assemblywoman Parnell questioned how frequently billboards were found to be nonconforming. Mr. Pulsipher replied very infrequently under the current code. Ms. Parnell asked if S.B. 265 became law what fiscal impact would be created for the city and, if any, she requested notification.
Assemblyman Mortenson remarked he did not understand the difference between a house and a billboard rental structure. If someone owned a building used as a rental, the owner could depreciate the unit over a period of years. Mr. Mortenson asked if a house depreciated to zero under the Internal Revenue Service, and because of depreciation determined by the city, could the value of the house be lowered. Mr. Pulsipher believed if the property was being acquired for public use, the city would have to pay the market value of the property based on comparable sales in the vicinity. Mr. Mortenson asked how that would be accomplished with a billboard that was depreciated over time, therefore allowing the county to obtain it at no cost. Mr. Pulsipher emphasized the amortization was not in regard to the value depreciating, but the sign becoming a nonconforming sign within community standards, and they expected, over a period of time, it would come down. Clark County recognized the sign owners who intended to recoup their money along with recognizing the property owners who received money for the upkeep of the sign. It was also important for the community to be advised when the sign would be removed.
Assemblyman Price questioned if the legislation would affect current signs as well as future signs. In addition, he requested legal advice based on the premise when the legislation was enacted, theoretically it would not be retroactive, and under the concept discussed the current rules should not affect what happened in the past. Mr. Pulsipher maintained his concern was regarding a nonconforming sign or structure, originally permitted under past regulations but would no longer be permitted under current regulations. Nonconforming uses were permitted to exist as long as there was no expansion. In certain cases, community standards required the removal of a structure in the interest of the public.
Janelle Kraft, Senior Financial Analyst, City of Las Vegas, observed Mr. Pulsipher had explained amortization very well. Originally, the local governments had concerns with the bill regarding all nonconforming uses of S.B. 265. Ms. Kraft pointed out if an expansion was denied, that would also be considered a taking. Once the bill was amended to include just billboards, the local governments compiled their concerns into one amendment. There were a number of items included in the amendment that were valid and would not be objectionable to the industry. She indicated their proposal was not perfect but was the best compromise the city attorney was able to put together with Mr. Fiorentino and NOMA (Exhibit G).
Ms. Kraft explained the amendment addressed a number of issues with the exception of Section 3. The city of Las Vegas still believed amortization should be included as an alternative for local governments, and it was a fiscally responsible way to pay just compensation for those types of structures. According to Ms. Kraft, there was confusion with regard to the definition of amortization, and she advised it was a phasing or length of time for people to recoup their costs because they made considerable income from billboards. Ms. Kraft responded to Assemblywoman Parnell’s question regarding the fiscal impact. Ms. Kraft remarked they were unable to determine the fiscal impact for each of the billboards, but the city of Las Vegas had a small piece of property used for billboards only, and she was aware it sold for $1 million. The income was significant and the fiscal impact to the city with 140 billboards would be so significant, it would prevent them from ever removing a billboard using the cash method.
Ms. Kraft emphasized the city of Las Vegas favored having no legislation. She indicated they preferred the flexibility to respond to the community’s needs and the changing desires as the city matured. Most of the billboards located in the city were in older areas that could be redeveloped and where neighborhood communities could decide whether they wanted to improve their quality of life. If people decided to come before the city council, the city would not be able to respond to their needs because of the lack of the amortization option. Ms. Kraft was aware other local governments had little time to look over the amendment, but there were some things they agreed upon, and they wanted an opportunity to go through each section of the amendment and answer any questions.
Assemblyman Lee referred to Section 1, subsection 4 of Exhibit G which stated, “destroyed or damaged beyond 50 percent of its material structural value” and questioned if lightening struck a large sign would permits allow the replacement sign to be the same size as the original structure. Ms. Kraft replied if through no fault of their own something happened to the structure, it would not be considered a loss and would be allowed to be rebuilt, and the city would not be required to pay just compensation for the loss. Subsection 5 of Exhibit G stated, “A city or county shall not require the removal of a nonconforming outdoor advertising structure as a condition of the development or redevelopment of the property.” Mr. Lee declared the language was different than Mr. Fiorentino’s testimony and the way current statute worked. Ms. Kraft responded the language was a compromise and, in her opinion, they could remove the structure without a public hearing.
Chairman Bache referred to Ms. Kraft’s proposed amendment and asked for clarification that everything proposed was agreed upon and there were no disputes. Ms. Kraft replied all concerns had been worked out with their city attorney and Mr. Fiorentino, with the exception of the Section 1, subsection 3. She pointed out there were concerns regarding “illumination” included in the routine maintenance section. In older areas of the city, certain billboards were not illuminated and they wanted to include language to prevent the billboards from becoming lit. Mr. Fiorentino asked them to remove that portion; however, they decided to leave the section because of local government’s concerns.
Assemblyman Humke commented he had trouble with the entire concept of amortization. He questioned if there was the stipulation a billboard was nonconforming because population moved within the area, would that be a case where the billboard was considered to be nonconforming. Ms. Kraft replied she did not remember the city of Las Vegas ever having removed a billboard, but recently a few were taken down to widen the beltway, but they were allowed to reconstruct them. Ms. Kraft referred to the map she distributed which showed numerous billboards (Exhibit H). She remarked due to community outcry, the city of Las Vegas anticipated at some point decisions to remove the neighborhood billboards would occur. The city of Las Vegas wanted to keep the option open. Mr. Humke suggested if a billboard became nonconforming, new development should pay for the cost to remove the structure.
Mr. Humke strived to understand the history of the amendment presented by Ms. Kraft. Ms. Kraft clarified the amendment was not offered in the Senate. All of the local governments discussed their requests and combined them into the amendment in one day. Mr. Humke asked if Ms. Kraft could identify how the Senate felt regarding S.B. 265. Ms. Kraft responded the Senate would be happy if the parties involved worked out a solution that was acceptable to both sides. Ms. Kraft indicated she did not get the impression they would accept amortization, but she did not feel amortization was explained or given an opportunity during the hearing in the Senate.
Tom Burrous, Economic Development Analyst, City of Sparks, distributed a letter from Sparks Mayor Tony Armstrong (Exhibit I). The letter expressed concern and opposition to S.B. 265 since the bill required the city and county to pay just compensation for authorized alternative locations for certain structures. The city believed the bill limited the authority of local governments relating to all uses involved with outdoor advertising. Specifically, Mr. Burrous noted, was the use that had been determined, through a public process, to be detrimental to the health, safety, and welfare of the community, and should not be subject to relocation. Mr. Burrous pointed out the problem would be moved to another location. Mr. Burrous emphasized the amount of compensation determined by an agreement was naive because if they allowed continuance of the nonconforming use, there would be long delays and no immediate agreement. Concluding, Mr. Burrous commented S.B. 265 removed the ability of the people, through their locally elected officials, to decide the quality of life factors within their communities.
Mr. Burrous reintroduced himself as the President of Redevelopment Association of Nevada, representing the cities of Reno, Carson City, Boulder City, North Las Vegas, Las Vegas, Mesquite, Henderson, and Douglas County. Mr. Burrous maintained the parties in favor of the bill stated they had approached cities regarding S.B. 265 and possible amendments. Mr. Burrous expressed concern because the city of Sparks had never been approached about negotiations. He noted it was the job of the redevelopment agencies within the state and within their cities to revitalize downtown areas that had become blighted. In addition, Mr. Burrous claimed attempting to get a project started on a property where a billboard was located was a “poison pen” because of the potential of paying large amounts of money and in most cases the land remained vacant.
Assemblyman Lee asked Chairman Bache if a community such as Sparks and their citizens decided to remove 50 percent of their signs, would the city of Sparks be able to put together a bond issue.
Madelyn Shipman, District Attorney, Washoe County, acting as substitute legal counsel for the committee, clarified any community could put forward a bond issue which could be used as a possible mechanism.
Ms. Shipman remarked her billboard career began in law when she worked for the Department of Transportation from 1982 through 1987. She worked on the Highway Beautification Act on the Nevada highways, which required just compensation be paid for billboards removed along the highways. Ms. Shipman referred to her experiences with the attempts and power of the OAAA nationally that put to rest the efforts to complete beautification projects along the highways. The OAAA had been successful in removing the payout of appropriations nationwide by Congress for the removal of those billboards. Ms. Shipman explained the reason the Ladybird Act from 1968 had not been completed was because the OAAA had been powerful enough nationwide to stop the appropriations which assisted in the removal of billboards.
Continuing, Ms. Shipman commented a billboard on leased property was not a takings issue. If a local government exercised eminent domain for a rental house payment, the just compensation and the depreciation on the house would mean nothing in terms of the value of the home. The property would be purchased for public use and the houses would be improvement on the property with the value and the money going to the owner of the property, and not to a renter in the house. The owner and the renter determined the compensation between each other or what was provided in the lease agreement. Ms. Shipman indicated most leases held interest and the owner of the property decided how their money would be distributed.
Ms. Shipman asserted the issue was not with takings but was a policy issue for the legislative body to determine. Ms. Shipman remarked the Legislature had the right to decide whether local government could not use amortization and many states had made that decision. In the 1987 and 1989 Legislative Sessions, local governments attempted to pass laws for compensation but the counter-offer stated it should be put to a vote of the people. The Legislature never acted upon the bills because they were withdrawn. The local governments did not want the issue to be put to a vote of the people knowing the people would not want billboards cluttering their highways.
Local governments were reflections of what the people desired in their jurisdictions, stated Ms. Shipman. Washoe County, Sparks, and Reno currently had ordinances in place that limited the number of billboards allowed. Washoe County had a law regarding unincorporated areas which limited the number of billboards. As the city annexed into unincorporated areas, the number of billboards was reduced. Ms. Shipman remarked additional billboards were not permitted except along certain highways, which most local governments had designated. Unfortunately, all the vacant spaces were currently filled, so there was no place to relocate a billboard.
Continuing, Ms. Shipman noted Reno and Sparks both had two different district court judges deem their ordinances as void because they exercised a special use permit. She suggested every local government with an ordinance relating to billboards was vulnerable under the current district court decisions. In addition, she suggested special use permits should no longer be used for billboard placement.
Ms. Shipman pointed out in the local government amendment on page 2, lines 20 through 29 were not included. Ms. Shipman explained the language was removed because the national case dealt with eminent domain and provided guidance as to how the Supreme Court would rule with criteria that determined just compensation. Two types of appraisals and two different methods of determining valuation were presented by the parties. Ms. Shipman indicated when the amendment was considered local governments hoped special criteria would be removed. The determination of just compensation in accordance with traditional fashion had appraisers in court, based on the facts of each individual case.
Ms. Shipman mentioned discussions were held regarding the change in ownership of billboards in the last five years. When property was purchased the buyer looked at the regulations in place at the time of the purchase. Ms. Shipman stated when people bought a billboard in an unincorporated area in Washoe County, the purchaser was aware regulations stated no billboards could be used in other developments on another parcel.
Ms. Shipman pointed out nonconformance might occur because of community standards relating to size and structure and it was not always the location of the billboard.
Ms. Shipman clarified local government should not be required to pay just compensation because a person decided to change the use on their property. According to Ms. Shipman, paragraph 5 placed local government in jeopardy of paying just compensation if the people and local government determined the billboard was nonconforming. Ms. Shipman remarked Mr. Fiorentino’s membership of NOMA did not represent all billboard companies. In her career, she had never known a billboard company to “walk away” and it had taken five years and the Supreme Court to remove a billboard from their regional park. Ms. Shipman emphasized if S.B. 265 was not written carefully and clearly, litigation would occur. She had not read the amendment, but the amendment she suggested would unite the local governments’ opposition to take away the right to utilize amortization.
Ms. Shipman explained Washoe County had an amortization program, and the companies had pressured the county to have it removed. She commented they spent one year deriving regulations with limits and removal on development. An agreement had been reached with the companies present at the time. Ms. Shipman concluded the Washoe County ordinance now reflected that agreement, and she had a problem since those companies now wanted to change the rules.
Assemblyman Lee questioned a sign Ms. Shipman had mentioned in a park and wondered if they had thought about moving the sign to another location. Ms. Shipman said she should not have mentioned the sign because Washoe County was the owner of the property and also were the owners of the lease. The local government chose to terminate the lease and had ended up with four years of litigation. Ms. Shipman noted that was an example of prior experience resulting in litigation. In terms of relocation, the places where signs were allowed were completely full and there were no additional sign sites available.
Assemblywoman Smith questioned since the city of Reno had a moratorium on new billboards, how could they relocate or would just compensation be the only avenue. Ms. Shipman believed Reno assumed when development occurred on the parcels the billboards would come down since no amortization had been adopted. Ultimately Reno would be free of billboards. Ms. Shipman felt the county had taken the same position as the city of Sparks. All three entities did not allow new billboards. Billboards were allowed on certain stretches of road but the sites were full and no additional sites were available. Mrs. Smith mentioned Sparks and her district would not have many alternative locations for billboards other than the Interstate 80 corridor. Ms. Shipman indicated unless Sparks adopted an amortization schedule there would be no need to relocate. The question was in reference to the interpretation of paragraph 5, relating to development occurring in a parcel where a billboard was located. The language in S.B. 265 permitted the possibility of a cause of action to be filed by the billboard company against the city that sought either compensation or relocation. Since relocation was unavailable, compensation would be the only alternative. The city ended up paying the just compensation under the bill.
Douglas Smith, Chairman of Citizens for a Scenic Reno, testified the group consisted of volunteers dedicated to preserving, protecting, and enhancing the aesthetic character of Reno. Mr. Smith explained the group had taken their issue of possible amortization to the public for a vote on November 7, 2000, and 57,782 registered Reno voters cast their ballot. Mr. Smith emphasized 57 percent of the public voted “yes” and 43 percent voted “no” (Exhibit J).
Mr. Smith pointed out another organization formed by the billboard industry called “Nevadans to Save Jobs and Fight Extremism” spent over $250,000 in an attempt to defeat the referendum in Reno. Mr. Smith asserted his group spent a total of $3,221, which was a 70-to-1 ratio on expenditures. According to Mr. Smith, the citizens of Reno affirmed there were enough billboards and they did not want more; however, no standing billboards would be removed.
Mr. Smith pointed out the Legislature defeated bills in 1987 and 1989 that were similar to S.B. 265. Mr. Smith maintained the last time he saw S.B. 265 there was supposed to be a fiscal note attached. He was aware the city of Sparks had submitted a figure of “several hundred million dollars,” therefore, costing the taxpayers money. Mr. Smith explained when a billboard was removed that had cost $300,000, it was not considered real property, but personal property. Billboards were regarded as “depreciated out” and possible review might provide future tax revenue for Nevada.
Mr. Smith contended the bill was special interest legislation because it was drafted, written, and introduced by NOMA. The billboard industry was opposed to amortization because it would affect the city of Henderson and possibly another city. Mr. Smith believed NOMA was using the legislation to “thwart the will of the people.” The citizens of Reno made it clear by their vote that they were opposed to new billboards. Relocation in Reno would remove a billboard from an area where it was not making money, such as old South Virginia Street, and relocate it on Highway 395 South. In his opinion, Mr. Smith felt the area was beautiful and only had one billboard located on Indian land that was protected.
Mr. Smith pointed out his group’s initiative petition stated no new billboards, no new locations, and no relocations. There were currently 278 billboards in Reno, and moving them to other locations would not solve problems. NOMA claimed the company would loose 5,000 jobs; however, when Mr. Smith verified the number, he discovered there were 45 employees. Mr. Smith reiterated S.B. 265 was not about constitutional rights and the Nevada federal courts confirmed repeatedly the phasing out of nonconforming use over a reasonable period of time did not constitute a taking. In addition, Mr. Smith noted maintenance of billboards was a consideration that needed to be mentioned. Mr. Smith presented pictures of rundown signs to the committee, which he photographed often. During the Los Angeles mayor’s race, $500,000 was allotted for spending on billboards. Mr. Smith concluded there were architects, teachers, and businessmen that belonged to their organization, and as property owners were not against property rights (Exhibit K).
Assemblyman Mortenson commended Mr. Smith on his work and mentioned similar work he had completed a few years ago. Some ordinances were being implemented for billboards, and Mr. Mortenson remarked he had managed to gather the town boards together, along with commissioners, to make a statement of not wanting billboards. Mr. Mortenson indicated after listening to testimony there was something worse than billboards. He felt it was wrong for government to confiscate a person’s source of income by amortization and take their billboard away. Mr. Mortenson maintained if he owned a hardware store purchased for $500,000, and earned another $500,000 to pay off the store, government should not be able to take that away.
Mr. Smith claimed they were not attempting to remove billboards but they did not want any more erected. At least three states allowed the use of amortization and regulated outdoor advertising signs. Alaska, Hawaii, Rhode Island, Maine, and Vermont prohibited the use of outdoor advertising altogether. Alaska had not had a billboard since 1926. Seven states prohibited the use of amortization and sixteen states did not address the issue. Mr. Smith commented membership in their organization continued to grow and they were beginning an organization in southern Nevada called “Scenic Nevada.” Members looked at billboards, byways, and other areas requiring attention.
Stephanie Garcia, representing the City of Henderson, introduced Mr. Bristol Ellington, Assistant Director of Community Development in Henderson. Mr. Ellington testified although the bill was amended to address concerns of local government, the only significant changes were with narrowly defined applicability of the bill to nonconforming billboards. Mr. Ellington advised the committee the remainder of his testimony centered on the proposed amendments as they related to the bill (Exhibit L).
Section 1, subsection 1, allowed for amortization as a means of just compensation for the loss of a nonconforming outdoor advertising structure. Amortization was the most fiscally responsible tool local government could use in removal of nonconforming structures. Federal and State Supreme Courts upheld amortization schedules as methods of payment and compensation. Mr. Ellington noted the procedure was not new and recently was used to remove all billboards within the jurisdiction. Amortization also allowed owners enough time to recuperate their losses and relocate to compatible zones. In addition, Mr. Ellington clarified many signs in the city of Henderson were bought and sold over the last ten years even though they had a ten-year lease and may have been purchased at reduced rates with knowledge of the amortization period. In 1991, a sign ordinance was created and included a requirement for the removal of nonconforming billboards within ten years of the signed code.
Mr. Ellington commented the billboard industry was able to seek relief by expanding the sign zone and requesting reduced distance separation requirements between the signs. In addition, they wanted an extension of the amortization period. Mr. Ellington stated there was six months from the deadline of the ten-year amortization period wherein the billboard industry could seek relief at the state level.
Mr. Ellington referred to the proposed amendment from the city of Henderson and highlighted various sections for the committee (Exhibit M). Mr. Ellington emphasized there was concern that S.B. 265 may retroactively apply to their sign code adopted in 1991. Section 1, subsection 1(c), was proposed to include amortization for removing nonconforming billboards. He expressed concerns with Section 1, subsection 1(b), pertaining to the definition of a comparable site, and noted the city of Henderson felt it would be difficult to quantify. The city recommended changing the language from “comparable” to “permissible” sites.
Mr. Ellington commented Section 1, subsection 2, was in agreement with the local government proposals but elaborated the definition of routine maintenance in subsection 7. In addition, Section 1, subsection 3, eliminated stability to use amortization and should be stricken in its entirety and replaced with parameters under which an amortization schedule could be established by a local government.
In Section 1, subsection 4, Mr. Ellington agreed with the proposed changes within the subsection but recommended the deletion of subsection 5 of Section 1 entirely. The subsection tied the hands of the property owner and provided additional rights to the billboard owner allowing them a hearing before development could occur. Property owners who sought approvals could be delayed until a public hearing afforded to the billboard industry occurred. Mr. Ellington pointed out an agreement between a property owner and a lessee was a private matter outside the jurisdiction of the local government.
Mr. Ellington suggested omitting lines 20 through 29 in Section 1, subsection 6, because the courts determined the just compensation. Concluding, Mr. Ellington indicated Section 1, subsection 7, defined routine maintenance and also should include ”lighting.”
Assemblywoman Von Tobel referred to Section 1, subsection 1(b), line 12, a “comparable” site, and felt the billboard owners had a right to a comparable rather than “permissible” site. Ms. Von Tobel questioned when a sign would not be allowed in a ”permissive” place. Mr. Ellington responded there was concern over the difficulty of agreement and there were too many gray areas regarding who made the determination. Mr. Ellington explained because of the vagueness of the language in reference to “comparable,” they made the change to “permissible.”
Stephanie Garcia maintained the fear with the word “comparable” was that there was only one “spaghetti bowl” and if a billboard was to be removed at the “spaghetti bowl,” how would a comparable site be determined. The city attorney of Henderson believed the language “permissible” was lenient. Ms. Von Tobel commented there was mention the billboard companies had the right to appear before the court and discuss what was “comparable,” and that could be a topic for debate between the billboard companies and the city counsel. Ms. Von Tobel emphasized she would not be comfortable removing or replacing the word.
Ms. Garcia pointed out amortization was not new to Nevada, and was used successfully in Douglas County. In addition, it had been upheld by the courts and was considered just compensation. Ms. Garcia noted states that upheld amortization were listed with their amortization periods (Exhibit N). The amortization periods were also being used for cases other than billboards such as junkyards and adult businesses that were not conforming to local ordinances. The amortization schedule was based on the fair market value of the signs to ensure that the sign owners had adequate time to recoup their investment. Ms. Garcia explained at the conclusion of the amortization period, the use or structure must be abated or removed. The period of amortization should be long enough to allow the owner sufficient time for investment recovery and to make plans to relocate to compatible zones. The amortization periods ranged from three to ten years and were considered fair for just compensation. According to Ms. Garcia, when the sign ordinance was developed in 1991, the city looked at approved legislation, and at that time, five years was considered a generous amount of time. When the amortization schedule was developed, the time period was doubled. In addition, Ms. Garcia noted local government could afford zoning regulations that ensured the health, safety, and welfare of the community without compromising the rights of business owners.
Concluding, Ms. Garcia remarked the billboard industry had no way for the community to protest a location. By not allowing amortization, the only tool available to local governments for the elimination of nonconforming structures and the government’s authority would be reduced. The citizens of Henderson had selected planning policies through a public process and those policies determined quality of life issues.
Michele Richardson, Assistant City Manager, City of North Las Vegas, presented testimony in agreement with the technical entities. Ms. Richardson was concerned with the amount of amendments, and she noted some were proposed before the city attorney and staff had a chance to review them.
Ms. Richardson wanted to establish the legal and constitutionally correct solutions for society dilemmas. The city of North Las Vegas attempted to achieve a balance between business interests as well as the demands of the taxpaying residents in their city to maintain quality of life. Ms. Richardson asserted the city of North Las Vegas had initiated and completed a yearlong process and brought forth an ordinance to achieve a balance for the citizens and the industry.
Ms. Richardson presented a chronology of what occurred in her city, and advised the committee that the industry was fully aware of the development of the city’s ordinance. In addition, Ms. Richardson pointed out the industry was invited to and participated in the process. In 1999, the North Las Vegas City Council directed staff to schedule the planning commission review of amending requirements for billboards. The ordinance amendment was comparable and was modeled after the city of Henderson. On June 23, 1999, the proposed ordinance was presented to the North Las Vegas Planning Commission, and the commission voted to continue consideration of the ordinance until after a workshop with the industry was held. Ms. Richardson commented the purpose of the workshop was to discuss the ordinance with representatives of NOMA. On September 8, 1999, the workshop was held and the sign companies were notified about the workshop. Ms. Richardson announced on September 22, 1999, a draft ordinance was recommended for approval by the planning commission. On November 3, 1999, the draft ordinance was introduced to the North Las Vegas City Council. On November 17, 1999, the city council voted to continue their consideration of the ordinance to allow time for NOMA to discuss concerns with the city council, and allow time for NOMA to present their own draft ordinance. Ms. Richardson stated the drafts were continued on January 19, February 16, March 15, April 5, and May 3 of 2000, to allow staff, the city council, citizens, and industry to work on the draft ordinance. On June 7, 2000, the city council adopted a new ordinance, which included various suggestions presented by NOMA, including billboard owners to allow additional billboards on Interstate 15 in exchange for removal from other locations. A larger number of billboards were allowed on Interstate 15 because the minimum separation requirement was reduced by negotiation with the industry from 750 feet to 500 feet.
Continuing, Ms. Richardson emphasized the city of North Las Vegas had been intimately involved with the process and had involved the industry and integrated a portion of NOMA’s recommendations and suggestions. She mentioned the proponents of the bill indicated the local government had not provided for just compensation within the context of the ordinance. Ms. Richardson maintained the city had provided just compensation by virtue of amortization. According to Ms. Richardson, prior testimony established that amortization was constitutional and viable for local governments. The city’s ordinance provided for relocation of signs under certain conditions. Concluding, Ms. Richardson remarked her local government did not seek to violate the rights of the industry, but rather to balance the rights of the industry with the rights of the city to provide the best possible quality of life for the citizens. Whether there was a resident of a new area or an old area, the demands for the quality of life remained the same. Ms. Richardson believed through the city’s billboard ordinance and other pieces of legislation enacted by the city council, they had worked to balance both industry and citizens’ needs.
Chairman Bache closed the hearing on S.B. 265 and adjourned the meeting at 11:05 a.m.
RESPECTFULLY SUBMITTED:
Linda Utt
Committee Secretary
APPROVED BY:
Assemblyman Douglas Bache, Chairman
DATE: