MINUTES OF THE meeting
of the
ASSEMBLY SubCommittee on Government Affairs
Seventy-First Session
March 7, 2001
The Subcommittee on Government Affairswas called to order at 8:00 a.m., on Wednesday, March 7, 2001. Chairman John J. Lee 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.
SUBCOMMITTEE MEMBERS PRESENT:
Mr. John J. Lee, Chairman
Mr. David Brown
Mr. Roy Neighbors
GUEST LEGISLATORS PRESENT:
Mr. Douglas Bache, Assemblyman District 11
Ms. Kathy Von Tobel, Assemblyman District 20
STAFF MEMBERS PRESENT:
Eileen O’Grady, Committee Counsel
Dave Ziegler, Committee Policy Analyst
Cheryl Meyers, Committee Secretary
OTHERS PRESENT:
Delmar Leatham, Representative, Overton Power District, Mesquite, Nevada
Assembly Bill 104: Makes various changes concerning collection of charges for services provided by certain general improvement districts. (BDR 25-880)
Assemblywoman Kathy Von Tobel, District 20, stated she hoped the subcommittee could come to some resolution on A.B. 104 that would be fair and equitable for apartment owners and Overton Power Company. She had not received any other communication from the Moapa Valley Water District other than the original letter received by e-mail (Exhibit C). The letter recapped the water district’s objection to A.B. 104. The water district only had one meter at each apartment complex, however, so the water district would not be affected by A.B. 104. Ms. Von Tobel stated Assemblyman Brown had indicated at the last subcommittee meeting the contractual agreement language had never been followed by Overton Power Company. She would like to have some further discussion on that issue. She felt contractually the power company had only dealt with the individual tenants, never the owner of the buildings. In order to use the lien language in the statute they should have followed those guidelines.
Ms. Von Tobel had spoken to the Chair regarding a letter of intent that urged Overton Power Company to reimburse the apartment owners. The letters sent to apartment owners attached the tenants’ bills to the general property of the owner. She urged the subcommittee and the complaint committee to write letters of intent urging the power company to reimburse the apartment owners. The buildings had been attached incorrectly without following statutes. She stated the power company had no right to assess the apartment owners. The apartment owners had paid the power company’s lien on their properties. The bills were paid under the threat of having their own power turned off.
Delmar Leatham, Representative, Overton Power District, stated there were two issues: the right of the power district to lien a landlord’s property and the practice of Overton Power attaching a renter’s bad debt to a landlord’s common meter. The power district had suspended the practice of the latter. The first issue, he felt, was a philosophical issue. The legislature would have to answer as to the right of the power district to lien a landlord’s property. The board of the power district was implementing a structured policy to deal with the second issue that would conform to the guidelines of NRS 318. In the process, the power district would clearly outline to the landlord what the obligations were and what the process would be to place a lien on the landlord’s property for bad debt. The main issue was the agreement with the landlord pointed out by Assemblyman Brown. The agreement, he stated, indicated to the landlord the responsibility for payment. Mr. Leatham stated the lien process did not begin until 60 days and future agreements should explain to the landlords in detail so they could avoid the lien and subsequent fees.
Mr. Leatham stated the solution the power district offered included keeping the ability to lien the landlord. The company was willing to correct the practices of the past and to structure a policy that more closely followed NRS 318.
Chairman Lee indicated he would like to examine A.B. 104 in more detail. On page 2, line 23, “guaranty by the owner of property that the bills for service to the property or the occupants thereof will be paid.” Mr. Lee stated the subcommittee did not feel the power district had the statutory authority from the owner to attach the main power meter. To continue to hold that unjust enrichment, he indicated, was wrong and a refund was due the owner of the property. He asked Mr. Leatham if he agreed with the comments. Mr. Leatham stated he would have to address his board to determine whether or not his company made a refund. From Overton Power’s standpoint, NRS 318 granted some broad powers to collect bad debts. The power district assumed they were operating within their right to interpret those broad powers in statute. He stated he would recommend to the board of the power district that monies be refunded. Mr. Lee queried if the amount of the refund would be between $4,000 and $5,000. Mr. Leatham stated that would be his estimate.
Mr. Lee stated the committee had the right to obtain the Attorney General’s opinion on the issue for Mr. Leatham to present to his board. Mr. Leatham stated the next board meeting was March 21 and he hoped he would be able to resolve the issue with a firm answer at that time. Mr. Lee stated he understood the power district had some question and discussion on the statute; however, the committee had to follow the statutes exactly. He submitted the power district could have thought they were acting within the scope of the law when in fact there was no guarantee of payment by the owner of the property. Mr. Leatham stated the board, in the past, had always been anxious to follow the letter of the law.
Chairman Lee clarified the second issue was the ability of the power district to lien a property. The power district had requested clarification in the law on the matter. On the contrary, Mr. Leatham stated, the power district wanted to leave the law just as it was. The problem was to structure Overton Power’s policy to reflect the guidelines and structure of NRS 318 as well as the method of foreclosing on a mechanics lien.
Assemblyman Brown asked what the average monthly electric utility bill was for an apartment. Mr. Leatham stated the range was $40 to $150 and was dependent upon the number of persons in the apartment. Mr. Brown stated he had discussed some of his concerns with Mr. Leatham and felt modifications were necessary to paragraph 2 in A.B. 104. Paragraph 4, Mr. Brown stated, was the main collection mechanism for the power district. It provided for three alternatives: the district could discount for prompt payment of bills; require a deposit for electrical service; and, as stated in paragraph 4, Subsection B, could actually charge up to one year’s service charges as a deposit or prepayment. There was additional security for the power district in the paragraph. Mr. Leatham stated the power district did not usually require a large deposit because it precluded most persons from renting an apartment. The district usually required a $100 deposit. Mr. Brown stated the amount could be a negotiation tool with the landlords. He proposed the power district could require three months prepayment at certain buildings and bill against the retainer that would be replenished each month.
Chairman Lee stated the subcommittee wanted to look at the resolution and asked Ms. Von Tobel to approach the witness table. Mr. Lee stated that as sponsor of the bill Assemblywoman Von Tobel had the right to change the bill; however, the bill then became a part of the whole. The subcommittee would like to report back to the committee with a bill that satisfied everyone. He understood Ms. Von Tobel’s concern and felt the bill could be adjusted with a resolution regarding the fees that had been collected unjustly. He corrected an earlier statement and said the Legislative Counsel Bureau (LCB) would draft a letter of intent and not the Attorney General’s Office. He felt the power district could solve the problem by returning the monies collected.
Ms. Von Tobel stated she would be mostly satisfied; however, she still had a concern. The owner of the property had few options. Overton Power had to guarantee the property owners had some control over the situation. If the landlords had no recourse they would have to include the utility fees in the rental fees. With individual meters, the fees could range from $40 to $150 as quoted by Mr. Leatham, she stated. Ultimately the only protection the landlord had was to include the utilities in the rents. Ms. Von Tobel felt very uncomfortable; the power company had more rights than the landlords. Mr. Lee pointed out that was correct but the owner did own the property and the owners had the right to keep it or sell it. He stated there was no way the law could protect the owner from a bad renter. The subcommittee was not counsel to the power district, and it would behoove Ms. Von Tobel to set up a meeting between the owners and the power district.
Ms. Von Tobel voiced how pleased she was the subcommittee recommended refunds for the apartment owners. She indicated the language was not clear in statute and the agreements would have to be crafted between the owners and the power company. She revealed she would let the bill remain as it was and allow the LCB to craft a letter of intent urging a refund between $2000 and $5000. She ascertained she might have to revisit the bill next session based on the new contract and possible concerns from apartment owners. Each tenant had a meter, she stated, and each owner was ultimately responsible for the bill. She questioned if the owner had the right to cut the meter when he/she realized the tenant had not paid their bill and they would be held responsible. She wanted to make sure the apartment owners were protected and had some rights to cut the tenants power before they were affected. The electric bill could then be covered by the deposits of the renter.
Assemblyman Brown asked in relation to this matter if Overton Power District reported to large apartment complex owners the delinquency of tenants. Mr. Leatham clarified the power bill would have to be two months in arrears for a meter to be removed. At the time of delinquency, which was two weeks in arrears, the third party involved was sent a notice of delinquency. Mr. Brown asked if the contract permitted a third party notification. Mr. Leatham stated in the affirmative. To address Ms. Von Tobel’s question in regard to the landlord requesting a disconnection of a meter, Mr. Leatham stated if the person was delinquent the due process had to be followed and it would be incumbent upon the power company to disconnect the meter themselves. Mr. Brown asked where the disconnection to the service took place. Mr. Leatham stated the landlord could disconnect the breaker to the apartment; however, there was a question of safety involved. The power company physically removed the meter and put insulated boots on the meter. Mr. Brown asked if the apartment owners would like the ability to remove the meter and how would the subcommittee mitigate the damage.
Ms. Von Tobel stated that was the problem. Because of safety measures the owner could not remove the meter and until the power company removed the meter, the power bill continued to increase for the apartment owner. Under these contracts the apartment owners ultimately had no choice but to estimate the high usage of power and charge the tenants the power bill with the rent, she insisted. She did not think it would be fair for the apartment owners to charge additional deposits and the only option would be the rent/utility payment. She emphasized the owners had control over when a tenant could be evicted but not control over the meter for power.
Assemblyman Neighbors asked how many customers Overton Power District served. Mr. Leatham stated 9,000 customers. Mr. Neighbors asked if Overton was approximately the same size as Valley Electric. Mr. Leatham stated Valley Electric served approximately 13,000 to 14,000. Mr. Neighbors queried if a Mr. Lou Hovak had called the power district regarding the issue of A.B. 104. Mr. Leatham stated Lou Hovak represented Valley Electric, a true co-op organization affected by different laws and regulations than Overton Power District. Mr. Neighbors was informed that the power district was to attend the meeting with some type of amendment. Mr. Leatham was not aware of that fact; however, his recommendation to his board would be to adopt a policy that conformed to NRS 318 as currently written.
Mr. Neighbors asked if he was to build a home and wanted to hook up power to his home would he have to pay a deposit. Mr. Leatham stated the company did not require homeowners to pay deposits because if a homeowner defaulted on his bill the power company could lien his property. Ms. Von Tobel stated the language in the bill did not take away Overton Power District’s ability to lien a homeowner. The language referred to a tenant/landlord relationship. Mr. Neighbors asked if the homeowner moved out and rented his house would a deposit be required. Mr. Leatham replied a $100 deposit would be charged the tenant. At the end of six months of power bills paid on time the deposit was returned to the renter. Mr. Neighbors asked how the power company was handling the apartment tenants at this point. Mr. Leatham stated the same policy was applied to the apartment renter. Mr. Neighbors asked if the tenant owed money after the refund of the $100 deposit would the landlord’s property be attached. Mr. Latham stated that was correct. If the renter had not paid the bill the meter would be disconnected and the apartment owner would be held responsible. If the renter tried to rent another apartment the bill would have to be paid before the power would be turned on.
Assemblyman Neighbors asked about the policy of Overton Power District concerning low-income seniors that could not afford to pay the power bills. If the seniors were low-income and could not pay their bill, Mr. Leatham indicated, they would be referred to the state’s program available through a federal grant to help them pay their power bill. The basic policy was to disconnect. The power district would grant, on a one-time only basis, leniency to pay half the bill and the other half in a week. Mr. Neighbors asked the cost of the meter to install at a residential building. Mr. Leatham replied the cost was approximately $800 to $3,000. A homeowner would pay $25 to connect service to their house.
Chairman Lee posed, for clarification to Ms. Von Tobel, if he was building a ten-unit apartment building and the power company required a $100 deposit per unit, it would be reasonable to assume that only one out of the ten units would have a bad debt. Instead of charging $260 for rent he would add $10 to cover the cost. Most of the tenants, he felt, paid their power bills and the ones who did not would balance out with the extra $10 collected in rent. Mr. Lee stated the subcommittee had offered Ms. Von Tobel a letter of determination from the LCB and if a determination was in the apartment owner’s favor, the subcommittee would expect Overton Power District to live in the spirit of that determination and refund the monies to the landlords. If the bill was stricken at the committee’s direction, Ms. Von Tobel would be allowed to attend the agreement meetings between the power district and landlords to help represent the owners. If resolution was not made, Mr. Lee stated the legislature would be prepared to revisit the issue at the next legislative session. He concluded the power district needed a period of time in order to find resolution with the apartment owners and the community.
Assemblywoman Von Tobel expressed she was very pleased the subcommittee saw the seriousness of this situation and was willing to support the refunds for the apartment owners. The biggest problem could be the current accounting practices did not release the apartment owner’s lien of property once the debt was paid by the debtor. She suggested Overton Power District needed to correct the policies and current practices. She stated she was happy to drop the bill as long as Overton Power understood the seriousness of the situation, reimbursed the customers and then drew up contracts to solve the problems.
Ms. Von Tobel stated she would like to be a part of the meetings and assumed they were open meetings. Mr. Leatham stated the meetings were open and he would send her a draft prior to the meeting. She thanked the committee and was happy with the resolution.
Chairman Lee asked Mr. Leatham if he had a follow-up. He replied Overton Power would try to balance the liability between the landlord, the renter and the other customers of the power district to the best of their ability. The power district would send Ms. Von Tobel a draft of the policy adopted by the board.
Mr. Neighbors wanted to submit for the record Exhibit D. The letter read was from the Lincoln County Power District No. 1 in protest to A.B. 104. Mr. Louis Cole, Manager of the power district, felt the bill was discriminatory toward the three power districts in the state because it did not affect other special improvement districts such as water, television and sewer. Mr. Cole believed the landlords had the ability and the right to collect security deposits from renters that they could hold until the renter could prove the utility bill had been paid.
Dave Ziegler, Committee Policy Analyst, stated if the subcommittee had a question to pose to the LCB he would convey the question to Eileen O’Grady, Committee Counsel. Mr. Lee indicated he would like the LCB to verbalize Ms. Von Tobel’s concerns and state a reason why the monies should be returned to the apartment owners. The legislature would then create a resolution specifying to the board of directors of Overton Power District how the state wanted the customers to be treated in the future. Mr. Ziegler asked if there would be a request for a legal opinion. Mr. Lee stated there would be a question of taking monies unlawfully. Mr. Ziegler thought the question could be “are the practices of the district in compliance with NRS as to liening an apartment owner for the bad debt of a tenant in the absence of a contract or guarantee between the district and the owner.” Mr. Lee added the question should include asking LCB if the monies taken should be refunded. Ms. Von Tobel stated the power district had admitted in testimony the company had never drawn up a contractual agreement with the owners and therefore they did not follow the statute and were not able to use the liening powers. Mr. Laetham added the intent of Overton Power District was to create a policy of contracting with apartment owners in the future.
Chairman Lee acknowledged Douglas Bache, Chairman of the Assembly Committee on Government Affairs. Mr. Bache stated he had received by e-mail the letter from Lincoln County Power District No. 1 read by Mr. Neighbors. He had e-mailed the Lincoln Power District and told them the hearing would be teleconferenced to Las Vegas. He stated Lincoln was in close proximity to Las Vegas and the company had an opportunity to attend the hearing.
Chairman Lee seeing no further business adjourned the subcommittee at 8:58 a.m.
Cheryl Meyers
Committee Secretary
APPROVED BY:
_____________________________________________
Assemblyman John J. Lee, Subcommittee Chairman
APPROVED BY:
Assemblyman Douglas Bache, Chairman
DATE: