MINUTES OF THE

SENATE Committee on Commerce and Labor

 

Seventy-First Session

April 26, 2001

 

 

The Senate Committee on Commerce and Laborwas called to order by Chairman Randolph J. Townsend, at 7:00 a.m., on Thursday, April 26, 2001, in Room 2135 of the Legislative Building, Carson City, Nevada.  The meeting was video conferenced to the Grant Sawyer Office Building, Room 4406.  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 Randolph J. Townsend, Chairman

Senator Ann O’Connell, Vice Chairman

Senator Dean A. Rhoads

Senator Mark Amodei

Senator Raymond C. Shaffer

Senator Michael A. (Mike) Schneider

Senator Maggie Carlton

 

GUEST LEGISLATORS PRESENT:

 

Assemblywoman Debbie Smith, Washoe County Assembly District No. 30

Assemblywoman Merle A. Berman, Clark County Assembly District No. 2

Assemblyman Lynn C. Hettrick, Douglas County and part of Carson City             Assembly District No. 39.

 

STAFF MEMBERS PRESENT:

 

Scott Young, Committee Policy Analyst

John L. Meder, Committee Policy Analyst

Jan K. Needham, Committee Counsel

Lydia Lee, Committee Secretary

 

OTHERS PRESENT:

 

Terry Johnson, Labor Commissioner, Office of Labor commissioner, and             Director, State Apprenticeship Council, Department of Business and             Industry

Kimberly M. Scranta, Lobbyist, Nevada State American Federation of Labor-            Congress of Industrial Organizations (AFL-CIO)

Lucille Lusk, Lobbyist, Nevada Concerned Citizens

Alan H. Glover, Lobbyist, County Fiscal Officer Association

Larry M. Osborne, Lobbyist, Carson City Chamber of Commerce

R. Bruce Bannister, D.O., Vice President, State Board of Osteopathic Medicine

Trey Delap, Administrative Assistant, State Board of Osteopathic Medicine

Mary C. Walker, Lobbyist, Board of Landscape Architecture

Vern L. Krahn, President, Board of Landscape Architecture

Jim Knasiak, Legislative Chairman, Association of Nevada Collectors

Rod Barbash, Chief Executive Officer, Collection Service of Nevada

Richard Peel, Construction Coalition

Renny Ashleman, Lobbyist, Southern Nevada Homebuilders Association

Steve G. Holloway, Lobbyist, Associated General Contractors

Margi Grein, Lobbyist and Executive Officer, State Contractors’ Board

Karen D. Dennison,       Lobbyist, Lake at Las Vegas Joint Venture

Michael E. Buckley, Lobbyist, Howard Hughes Corporation

Tami DeVries, Legal Administrative Officer, Real Estate Division, Department of             Business and Industry

Eldon Hardy, Ombudsman, Ombudsman for Owners in Common-Interest             Communities, Real Estate Division, Department of Business and Industry

Pamela J. Scott, Lobbyist, Howard Hughes Corporation

Michael Trudell, Manager, Caughlin Ranch Homeowners Association

Maddie L. Fischer, Lobbyist, American Consulting Engineers Council of Nevada

Kimberly Maxson Rushton, Legislative Liaison, Office of Attorney General

Dan Ahlstrom, Chief Deputy District Attorney, Bad Check Unit, District             Attorney, Clark County

 

Chairman Townsend opened the meeting with Assembly Bill (A.B.) 149.

 

ASSEMBLY BILL 149:  Revises provisions governing duty of state apprenticeship council to deny application for approval or suspend, terminate, cancel or place conditions upon approved program of apprenticeship. (BDR 53-1056)

 

Assemblywoman Debbie Smith, Washoe County Assembly District No. 30:

I brought forward A.B. 149, on behalf of some people in the apprenticeship community.  The bill clarifies the authority of the State Apprenticeship Council (Department of Business and Industry) to deny an application for approval of an apprenticeship program.  In addition, A.B. 149 requires the council adopt regulations to specify violations in Title 53 of Nevada Revised Statutes (NRS), which are labor and industrial relations items for which the council may deny an application for approval of a program; suspend, terminate, cancel or place conditions upon an improved program; or place an approved program on probation.  The statute does not grant the council authority to use wage or safety violations, for example, when they are considering an application, or if they have a program with which they are experiencing problems.  This would simply clarify the law so regulations could be adopted in that manner.  The Assembly has worked with Mr. Johnson, the labor commissioner, to clarify and simplify the language to accomplish our goal regarding this bill.  As a side note, this bill did pass in the Assembly with a unanimous vote. 

 

Terry Johnson, Labor Commissioner, Office of Labor Commissioner, and Director, State Apprenticeship Council, Department of Business and Industry:

I am here to speak in support of A.B. 149.  As labor commissioner, I also serve in the ex-officio capacity as the state director of apprenticeship and also serve as director of the State Apprenticeship Council.  The apprenticeship council has made remarkable gains in the past year and a half, or so.  When we first came on board, there were a lot of concerns and complaints about how the council did its business and how it administered the state’s laws.  I feel this bill would strengthen apprenticeship training as a viable option for persons trying to develop skills and become craftspersons in their respective occupations.  The state of Nevada receives enormous economic benefit from apprenticeship here.  This bill would strengthen and clarify the aims of the state of Nevada through its State Apprenticeship Council.  I support it.  I believe it is a good bill.             I believe it helps advance aims of apprenticeship, but most importantly, it creates a new tone.  One of the complaints I used to hear about the State Apprenticeship Council, when I first came on board, was it did its business very inconsistently: ruling one way in one case, and another way in another case.  This bill lets people know up front the parameters by which they will be judged when appearing before the council.  The State Apprenticeship Council will adopt regulations so the public can be put on notice as to what the expectations are.  In a lot of instances, people do not have as many objections to standards, which are made available and known.  When the standards fluctuate from one quarter of the year to the next quarter, and when there are different standards being applied to different organizations in the community, problems arise.  This bill clarifies the intent of the State through its council to make sure everyone is put on notice as to what the expectations are.  It’s a good bill.  I support it.        I worked with Ms. Smith (Assemblywoman Debbie Smith) and the apprenticeship community in drafting the amendment.  I hope you will pass this measure.

 

Kim Scranta, Lobbyist, Nevada State American Federation of Labor-Congress of Industrial Organizations (AFL-CIO):

We want to go on record in support of A.B. 149.  I have presented four letters of support for this bill (Exhibit C) to the committee.  The Nevada State AFL-CIO believes it is important for the State Apprenticeship Council to be able to deny an application for an applied or approved program as a result of violations of the law.  We want to go on record as being in support of this legislation.

 

Chairman Townsend closed the hearing on A.B. 149. 

 

            Senator Rhoads moved to do pass A.B. 149.

 

            Senator Carlton seconded the motion.

 

            the motion carried. (Senators Shaffer and Schneider were             absent for the vote.)

 

*****

 

Chairman Townsend opened the hearing on A.B. 74. 

 

ASSEMBLY BILL 74:  Prohibits employment of children under 16 years of age in certain activities relating to commercial sales. (BDR 53-659)

 

Assemblywoman Merle A. Berman, Clark County Assembly District No. 2:

We have a good working outline of the proposed amendments (Exhibit D) dealing with Senator Rhoads’ concerns regarding farm work and with            Ms. Lusk’s (Lucille Lusk, Lobbyist, Concerned Citizens) concerns regarding the sale of buttons and other things to fund church organizations or political campaigns. 

 

Senator Rhoads:

The amendment still does not address people in theater, for instance, or in television commercials or radio commercials.  I will read the amendment I have, which would be inserted after line 7 (on page 2): “(f) A child employed with the permission of his parent or guardian by a person engaged in an agriculture activity.” And also “(g) A child employed with the permission of his parent or guardian by a person engaged in a theatrical, musical, performing arts, or other entertainment enterprise.”  Perhaps with the two amendments, we could blend something out?

 

Chairman Townsend:

You would also include the proposed amendment (Exhibit D) in section 2,     page 2, “church or political organizations.”  Is there a legal term that connotes religious organization, to include synagogues and mosques along with churches, in the language?    

 

Assemblywoman Berman:

I would like to get clarification from Senator Rhoads.  Are you speaking about children who go to the theater and get remuneration for acting?  Are you, instead, speaking about children working in the theater who sell candy bars and such in order to take acting lessons?

 

Senator Rhoads:

I am referring to children who are being paid to act.

 

Senator O'Connell: 

I think Senator Rhoads is referring to a situation that occurs in southern Nevada during the holiday season.  Theatrical groups enlist choirs from local high schools to work on show production or they may hire child actors to perform in a movie project. 

 

Senator Rhoads:

Yes, it is.

 

Mr. Johnson:

It was my understanding the intent of this bill was to limit the employment of children in connection with the solicitation or selling of any product, goods, or services from those various places.  I am not clear as to whether the persons who are employed in movies, television shows, commercials, or stage productions are involved in the selling, or what has been termed              “youth peddling,” of products, goods, or services, or if they are            engaging in a whole different activity such as performing or entertaining.
 

Senator O'Connell:

How would you categorize them, if they were going on television and promoting the movie or the stage appearance?

 

Mr. Johnson:

I would not see that as solicitation for a product, goods, or service.  If you advance the argument, you could say if they are appearing on a commercial for toothpaste, for instance, then they are soliciting for the sale of toothpaste.  I do not know if it would get that technical.

 

Senator O'Connell:

I am wondering how far it could get in a court of law.  That is my concern for gaining clarity about this.

 

Lucille Lusk, Nevada Concerned Citizens:

I think if you look at section 2, subsection 1, not only does it say it is limited to solicitation for sale or selling of any product, but it also specifies where:  from a vehicle, at a residence, or in a parking lot.  The only place there could be a question would be regarding sporting events or performing arts, but again, it is narrowed by the, “solicitation for the sale or selling.”  It does not seem like there could be a reasonable interpretation that performing or being on television soliciting could fall under the interpretation.

 

Senator O'Connell:

Look at the beginning (of section 2), “Except as otherwise provided in this section, no child under the age of sixteen may be employed, permitted, or required to work in any capacity including without limitation . . ..”  The word “any” is what bothers me. 

 

Chairman Townsend:

Maybe the period should go there.

 

Senator O'Connell:

That would do it.

 

Ms. Lusk:

If you go on to say, “in connection with,” that is part of the same sentence.  If indeed it can be interpreted the way Senator Rhoads thinks it may, then it goes way beyond what its original intent was.  We would also have other serious problems, if this were the case.  The placement of Senator Rhoads’ amendment puts it in the place of the voluntary, and would not take care of it as far as employment is concerned.  There are two basically different sections of this bill: the portion dealing with employment, and the portion dealing with voluntary things.  Another thing that the three of us have agreed on is on page 2, lines 3 and 4, regarding non-profit corporations in which reference is made to United States Code, Title 26, section 501, subtitle (c), paragraph (3).  We would ask that you remove the reference in the bill to subtitle (c), paragraph (3), which would then leave in the bill all references to educational and charitable organizations from Title 26, section 501 of the United States Code.

 

Chairman Townsend:

Senator Rhoads is referring to a 14- or 15-year-old individual who works in a farm or ranch setting, who perhaps goes to a rodeo, which is considered a sporting event, and informs people in the community that Senator Rhoads has hay or livestock for sale.  That young person would inadvertently fall under the language in this bill.  I think we need to improve on the language in the bill.

 

Assemblywoman Berman:

In section 2, subsection 1, line 3, “Except as otherwise provided in this section, no child under the age of 16 years may be employed,” then go to, “in connection with the solicitation for sale or selling of any product, good, or service from a vehicle or at a residence . . ..”  We are not talking about “permitted to work in any capacity”; we are talking about “in connection with the solicitation or selling of a product.”  That is really what the heart of this bill is about.

 

Chairman Townsend:

The product can be cows and alfalfa.

 

Assemblywoman Berman:

They are selling candy bars and tickets.  They are not selling cows.

 

Chairman Townsend:

We understand what you are trying to accomplish.  We know what your intent is.

 

 

 

Ms. Lusk:

That’s why an exemption with regard to farm work is recommended, to resolve that problem. 

 

Chairman Townsend:

Is “farm work” a legal term including ranching?

 

Ms. Lusk:

That is what came out of chapter 609 of NRS.

 

Senator Rhoads:

Chairman, why do you not want 15- and 16-year-olds selling candy bars?  Would you rather have them buzzing around the local shopping centers?  Isn’t it better for them to be working?

 

Mr. Johnson:

It’s not that we do not want them working, but we are concerned about       two issues: safety and integrity.  Based upon everything we have looked at, and information from hearings, persons older than 16 are more capable of protecting themselves than younger people.  Companies, which utilize individuals under 16, especially, prefer to have someone younger, due to the sympathy factor that can be employed.

 

Chairman Townsend:

I suggest we send for counsel to address the committee and answer some of our questions in this matter.  We will go out of the work session until counsel arrives. 

 

Chairman Townsend temporarily closed the work session on A.B. 74, and opened the hearing on A.B. 154.

 

ASSEMBLY BILL 154:  Revises provisions governing persons who conduct business under assumed or fictitious name. (BDR 52-443)

 

Alan H. Glover, Lobbyist, County Fiscal Officer Association:

I am the only clerk in the state of Nevada who does not handle fictitious names.  By ordinance, that duty falls on the treasurer of Carson City.  There are literally thousands of fictitious names on file with the various county clerk offices throughout the state.  The clerks would like to free those names up and get a better idea of which names are active and which are not active.  Legally, the clerk could give the same fictitious name to more than one person; however, most will not do that, due to the possibility of litigation.  Many people file their fictitious names and are never heard from again.  This bill is an attempt to require a renewal of fictitious names every 5 years.  Those fictitious names, which have been filed within the past 5 years, would remain active until the end of the 5-year term.  Shortly before the end of the term, a renewal reminder letter would be sent.  The renewal fee is $15.  There is no fiscal note associated with this bill, since the consensus of the county clerks is that there is only minimal cost involved, and any costs incurred are well within their existing budgets.  The main issue regarding this bill is the freeing up of fictitious names.

 

Senator O'Connell:

In the case of a lawsuit, if a landlord has a property that has been trashed by someone who has a fictitious name, does the landlord have access to the information about a person who has filed a fictitious name statement?  Is this public information?

 

Mr. Glover:

Yes.

 

Chairman Townsend:

Could you give us a perfect example of the situation referred to here?

 

Mr. Glover:

A person would come in to file a fictitious name, then open up a storefront business.  After being in business for a short time, the person would seemingly disappear.  Years later, someone comes in and wants to use the same name, but is not able to, because that name is tied up, even though the first business is long gone.  I believe the main problem is in Clark County.  If you can imagine how many fictitious names there are in that county.  It is a storage problem for the counties keeping those records.  In Carson City, we microfilm them and the Carson City treasurer can access them on a computer. 

 

Senator O'Connell:

We have encountered this problem working with worker’s compensation issues.  The business owner has not covered the employees or purchased worker’s compensation insurance.  When cited, the business owner simply shuts down
the business and then reopens under a different name.  I do not know if this bill would help in these types of situations, but at least, if an address were publicly available, it would be helpful.

 

Mr. Glover:

We are merely performing a ministerial function.  We do not question the integrity of the people seeking to file a fictitious name.  We take them at their word that the truth is being relayed.  We cannot make those kinds of judgments.  Not all counties have business license departments.  Normally, business license departments would keep track of businesses in their counties.  The counties not requiring business licenses rely solely on the fictitious name filing to track businesses.

 

Larry M. Osborne, Lobbyist, Carson City Chamber of Commerce:

The main concern we have is the fictitious name certificate will now expire 5 years after it is first filed, but no notification procedure is included in this bill.  It is our recommendation a notification procedure be made a part of this bill.  We believe business owners should be notified this new bill exists, so a business owner would not be caught by surprise and operating illegally, upon the expiration date of the certificate.

 

Chairman Townsend:

Do you know if the Department of Motor Vehicles and Public Safety notifies driver’s license holders of the date when their license is due to expire?

 

Mr. Osborne:

Yes, insurance companies notify you when your policy is coming due, also. 

 

Senator O'Connell:

Did you object to this on the Assembly side?

 

Mr. Osborne:

Yes, we did.

 

Senator O'Connell:

Why did they not correct it there?

 

 

 

Mr. Glover:

I do not know, since I did not testify on the Assembly side.  I was concentrating on some other bills and other clerks were handling this one. 

 

Senator O'Connell:

They did hear your testimony, and still did not address this issue?

 

Mr. Osborne:

Two of us testified during the Assembly work session, but it still passed.

 

Senator Amodei:

Do you have any objection to a notification requirement?

 

Mr. Glover:

I do not have any objection.  Clark County could experience a burden, due to the number of certificate holders there.  The mailing cost to notify them would be expensive, so perhaps a published notice in the newspapers would be the best method of notification.  Fictitious name certificate holders who are currently in business would receive a card notifying them of the certificate’s upcoming expiration date.  Yes, I agree with Mr. Osborne, notification is necessary.

 

Senator O'Connell:

Is there any matching between filings for a business license and a fictitious name certificate within the clerks’ offices? 

 

Mr. Osborne:

Not to my knowledge.  In some counties there are business license requirements.  An additional line could be placed on annual business license renewal notices, asking if the license holder is still operating under the recorded fictitious name certificate.  The counties which do not have a business license requirement would have to take care of that issue differently.

 

Senator O'Connell:

Those counties not having a business license requirement seem to already have that taken care of.  I think the most efficient and appropriate way to track businesses would be to match a business license application with a fictitious name certificate filing.

 

Mr. Glover:

There are people who hold fictitious name certificates who may not be in business any longer, but who wish to retain that name.  An example is    “Carson Brewing Company.”  Another example is “Chism Ice Cream,” an old company, which, for sentimental reasons, wishes to keep its fictitious name certificate.  We would not want to interfere with that.  We would just want them to renew it when the certificate expires. 

 

Chairman Townsend:

The bill states, “A person doing business in this state under an assumed or fictitious name that does not indicate the real name of each person who owns an interest in the business, must file a renewal certificate, containing that information with the county clerk.”  You have to do that every 5 years under the proposed bill. What about the people who currently have registered this name?  Does it mean that 5 years from now they have to come in and re-do it?

 

Mr. Glover:

That is correct.

 

Chairman Townsend:

Is there something like a 5-year moratorium for everybody to get it together, or does it mean everybody has to do this right now?

 

Mr. Glover:

That is not clear; I agree with Mr. Osborne.  We had this discussion earlier.  The way I read this bill, right now, I think it starts 5 years from now.  If I were doing this, I would send out a notice to each fictitious name certificate holder stating, “This legislation has passed.  Are you currently active or are you not at this time?  Would you like to renew your certificate?”  At this time, it is not exactly clear. 

 

Chairman Townsend:

Section 10 defines it.  I am not sure I totally understand it.  To me, it appears if you have a fictitious name certificate filed on or before October 1, 1996, you must file for a renewal no later than November 1, 2001, in the county in which you originally filed.  There would be no “grandfathering in,” for these fictitious name certificate holders.  If you filed for a fictitious name certificate after October 1, 1996, but before October 1, 2001, you must file for renewal, no later than 5 years after the certificate was first filed.  Your point is very important, especially in Clark County, because there are many old fictitious names filed before 1996.  Those certificate holders will need to renew their certificates before November 1, 2001, to remain legal.  Clark County will somehow need to notify these fictitious name certificate holders, under this new bill, if they do not renew these certificates, they will lose them. 

 

Mr. Glover:

I would suggest the placement of a public notice, at the very least, would be in order. 

 

Senator O'Connell:

According to the date as stated on the bill, it is not effective until October 1, 2001, and they are asking for compliance by November of 2001.  That will be physically impossible in Clark County. 

 

Mr. Glover:

If those dates were set for a year from now, it would give the counties more time to prepare for the anticipated renewals and for the notification process.      I don’t think the dates here are too important.  The concept is the main thing. 

 

Chairman Townsend:

Whoever represents Clark County needs to know the effective date, so they can determine whether this causes a substantial fiscal impact.  In many cases, these certificate holders have passed away, moved out of state, or do not remember what they registered; so, how do we notify these certificate holders?

 

Senator O'Connell:

Remember more than 35,000 businesses filed for bankruptcy just last year, alone.  

 

Chairman Townsend:

We will try to deal with this noticing-issue part of the bill. 

 

Senator Carlton:

Is this piece of legislation in conflict with the bill we passed on fictitious names?  Will it be causing more problems when the two of those hit at the same time? 

 

Senator O'Connell:

They should work together.  The other bill dealt with the protection issue.

Senator Carlton:

Good, I just wanted to make sure.

 

Chairman Townsend closed the hearing on A.B. 154 and reopened the work session on A.B. 74.

 

Chairman Townsend:

Ms. Needham (Jan K. Needham, Principal Deputy Legislative Counsel, Committee Counsel) is here to answer some of our questions regarding A.B. 74.  We have a unique question.  Mr. Johnson, Ms. Lusk, and Assemblywoman Berman have brought A.B. 74 before us.  We have found some potential “holes” in the bill, which we consider to be a very serious issue.  We appreciate the attempt which has been made, and I believe there is consensus to try to deal with that attempt; however, the language gives us great concern regarding our rural communities, farm work, ranch work, religious organizations, and political organizations.  I will give you an example of what I am referring to.  Fourteen-and fifteen-year-olds are hired to stand in front of a grocery store during a petition drive to solicit signatures from registered voters.  Another example is a youthful ranch worker who is soliciting sales for an alfalfa crop, for instance, which would be a normal occurrence in the rural communities.  We want to make sure we are not over-reading something in this bill. 

 

Jan K. Needham, Principal Deputy Legislative Counsel, Committee Counsel:

As it is written, I would think what you just described would be included in this bill as long as it is in connection with a sale or selling of a product or a service.  We could probably craft those exemptions out of the bill, if you would like to put those into subsection 2.  We could come up with some language, which would exempt those circumstances you just described.

 

Chairman Townsend:

If we give you the amendment draft Assemblywoman Berman submitted to us today, would you be able to craft something the committee could look at next week sometime?

 

Ms. Needham:

Yes.  We can do that.

 

 

 

Senator Rhoads:

I am also concerned about musical bands and rodeo clubs going house-to-house soliciting money donations, and conducting car washes to raise funds for their groups.  I think those groups should be excluded.

 

Ms. Needham:

Instead of trying to figure out every exemption to this, perhaps we should look at asking the labor commissioner to adopt regulations along those lines.  If you think you know exactly what you want to exempt, we can put those exemptions into the bill. 

 

Senator O'Connell:

Please look at line 4 on the First Reprint of A.B. 74.  Can we take out “permitted or required to work in any capacity, including, without limitation, as an independent contractor”?  If we took that out and put in “Except as otherwise provided in this section, no child under the age of 16 years may be employed in connection with solicitation,” I think it would be better.

 

Ms. Needham:

That certainly narrows it down.  Obviously, employment means you are being paid for something.  I do not know whether that will cover all the circumstances you are describing, but it would drastically narrow it down. 

 

Chairman Townsend:

Have we given you sufficient direction? 

 

Ms. Needham:

Yes.  You have.  I will get the language from Scott (Scott Young, Committee Policy Analyst), and we will put together an amendment proposal for the committee.

 

Chairman Townsend closed the hearing on A.B. 74 and opened the hearing on A.B. 290.

 

ASSEMBLY BILL 290:  Revises provisions relating to osteopathic medicine. (BDR 54-570)

 

R. Bruce Bannister, D.O., Vice President, State Board of Osteopathic Medicine:

We are here in support of A.B. 290.  We consider these to be maintenance changes, which allow the board to continue to serve its purpose in a fiscally responsible way.  There are three changes we have been working on for about 6 years.  They are licensing requirements, investigational procedures of complaints, and our fee structure.  I have distributed our “Information and Background on Assembly Bill 290, Executive Summary” (Exhibit E) outlining the proposed changes.

 

Chairman Townsend:

On lines 14 and 15 of A.B. 290, on page 1, it is stated, “Appoint an executive director who is entitled to such compensation as determined by the board.”  Do you only have a part-time executive director at this time?

 

Mr. Bannister:

We currently only have a part-time executive director. 

 

Chairman Townsend:

It appears you are attempting to upgrade your requirements for applicants in section 6.  All items appear to be appropriate.  In the area of your licensing fees, an area that gets all our attention, how much are your licensing fees now?

 

Mr. Bannister:

Our licensing fee presently is $100 per year.  It may be the lowest in the world, at this time. 

 

Chairman Townsend:

If we raise your licensing-fee cap to $500, will we get complaints from members in the osteopathic community?

 

Mr. Bannister:

I am one of those members of the osteopathic community, and even after the increase in the licensing fees, those fees are still lower in cost than fees in most other states.  We are a small group.  We have a letter of support from the Nevada Osteopathic Medical Association (Exhibit E), and a copy of a statement of endorsement from the Nevada Medical Society (Exhibit E).

 

Senator O'Connell:

I noticed you are no longer going to have staff from the Office of the Attorney General doing your investigating.  Are you now going to have a board member doing investigations?

Mr. Bannister:

We are going to have a board member do some of the initial legwork, so we can hopefully sort out some complaints, which can be handled without the involvement of the Office of the Attorney General staff. The Office of the Attorney General is overburdened with minor complaints, and we want to eliminate as many of them as we can.

 

Senator O'Connell:

Is that the reason for this change of the investigation process?

 

Mr. Bannister:

Yes.  We have been bogged down with additional costs for the services of the Office of the Attorney General.  That is another reason for our request to raise our licensing fees. 

 

Senator O'Connell:

What is the cost for the services of the Office of the Attorney General?

 

Trey Delap, Administrative Assistant, State Board of Osteopathic Medicine:

It is currently $78 per hour for the service of the Office of the Attorney General.  We budget about $15,000 per year for their services.  One of the problems we have encountered in the past couple of years is an incredible turnover in the southern district of the Office of the Attorney General.  Within the past year, we have had four different deputy attorneys general assigned to our board.  Each time a new deputy attorney general is assigned to our board, a reorientation must occur, which causes delays of hearings and other actions.  These changes would allow the board to have more autonomy investigating claims, which is important because we are a peer-review group.  These changes would be more efficient for us and increase due process for the complainant and the physician as well. 

 

Senator Carlton:

I noticed under section 6 of A.B. 290 you changed “is” and put “he is” in.  Can you tell me the reason for that?

 

Mr. Delap:

That is legislative language from the Legislative Counsel Bureau, I believe.         I think, in this law, “he” is inclusive of “she.” 

 

Senator Carlton:

It does not seem to make much difference, but as we always know, they put in what they need to put in.  Under section 6, line 11, it reads “Has graduated from a school of osteopathic medicine before 1995 and has completed:” It seems to me 5 or 10 years from now, if this language is still in there, the only doctors we are going to have will have graduated before 1995.  Anyone who graduates after 1995 is going to have a problem.  Can you explain that language to me?

 

Mr. Bannister:

The way it is written allows any osteopathic physician, who did the appropriate training available at the time of his graduation, to be recognized for that.  In 1995 the board changed the directive to state you had to complete a 3-year residency in order to be board-certified.  The purpose of that language is to not discriminate against anyone who graduated before that time, while also holding them to the 3-year residency requirement. 

 

Senator Carlton:

I am still a bit confused.  When I read this section, it is not clear to me at all.

 

Mr. Bannister:

I agree with you.  We have gone over that section several times, and it has come to my attention how it would work.  The Legislative Counsel Bureau has modified the section, putting it into appropriate format, but it reads differently from how I originally drafted it.

 

Senator Carlton:

I understand what you are trying to do, but what we are doing is not clearly stated in the bill.  I understand the stipulation is listed afterwards, but it is not made clear about how they are joined together.  If this actually occurred in 1995, and here we are in 2001, why are we only now addressing this issue?  This is confusing.

 

Mr. Bannister:

I think it is written appropriately, trusting the modification made by the Legislative Counsel Bureau.  In section 6, subsection 4, paragraph (a), subparagraphs (1) and (2) apply to those who graduated before 1995, while section 6, subsection 4, paragraph (b), applies to everybody else.  It has to do with the appropriate interpretations of those areas of the bill. 

Scott Young, Committee Policy Analyst:

I think part of the confusion arises because of the “or” language on line 21, and you really have three avenues by which you can qualify.  The first two do not have an “or” between them, but because of the semicolon at the end of line 16, you pick up the “or” at the end of line 21, and that indicates paragraphs (a), (b), and (c) are actually three separate methods by which you can achieve licensure. 

 

Senator O'Connell:  

One thing occurs to me, since so many other boards are fanatic about this, on page 2, line 11, it states “from a school,” and does not specify it means a school in the United States.  Is that somewhere else in your language?  Is that an important issue for you? 

 

Mr. Delap:

Actually there are no foreign osteopathic medical schools.  Osteopathic medicine schools are found only in the United States.

 

            SENATOR O’CONNELL MOVED TO DO PASS ON A.B. 290.

 

            SENATOR RHOADS SECONDED THE MOTION.

 

            THE MOTION CARRIED UNANIMOUSLY.

 

*****

 

Chairman Townsend opened the hearing on A.B. 310.

 

ASSEMBLY BILL 310:  Makes various changes to provisions governing landscape architects. (BDR 54-576)

 

Mary C. Walker, Lobbyist, Board of Landscape Architecture:

We have before you today A.B. 310, which makes various changes approved by the Nevada state Board of Landscape Architecture.  I have distributed four letters of support to the committee (Exhibit F.).  The bill enhances the professionalism of the industry by enabling the board to establish continuing professional education.  It also encourages new recruits to the professional landscape architecture industry.  The state of Nevada currently has a shortage of landscape architects in both southern and northern Nevada.  Assembly Bill 310 will help resolve that shortage by making testing requirements easier for the new applicants.  Many new college graduates in the landscape architecture field, for one reason or another, decide to pursue other careers, after college.  Assembly Bill 310 will help entice new graduates to remain in the field by providing a career path for them through the landscape architect intern program.  Assembly Bill 310 also allows the new graduate to pay the licensing fees over time, rather than all at once, in order to make the entrance into the field easier for the applicant.  There is no increase in fees associated with this bill; however, we do establish the new landscape architect intern fee, but it does prorate the fees to the benefit of the applicant.  It also provides other housekeeping amendments, which provide consistency with other design professions and provide requirements currently in the Nevada Administrative Code, placing them in the Nevada Revised Statutes in order to provide clarity and consistency.  We have met with some legislators regarding this bill prior to coming before you.  Senator O'Connell had indicated she questioned our planned changes to the subpoena-power issue.  Originally, we considered revising the subpoena power part of the bill, but upon further discussion with the Legislative Counsel Bureau and the Office of the Attorney General, we have decided not to change anything regarding that issue. 

 

Chairman Townsend:

Is there a promise you are not going to be back with a bill this size, in 2 years, again, when there are all these changes you want to make?

 

Vern L. Krahn, President, Board of Landscape Architecture:

I will go off the board, but, as far as I am concerned, we are done for a while.    I only have 2 more years remaining in my tenure on the board.  My intention is to not come back with anything of this magnitude. 

 

            SENATOR AMODEI MOVED TO DO PASS A.B. 310.

           

            SENATOR SHAFFER SECONDED THE MOTION.

 

            THE MOTION CARRIED UNANIMOUSLY.

 

*****

 

Chairman Townsend opened the hearing on A.B. 335.

 

 

ASSEMBLY BILL 335:  Requires commissioner of financial institutions to take certain actions against unlicensed persons who engage in activities relating to collection of debts for which license is required. (BDR 54-782)

 

Assemblyman Lynn C. Hettrick, Douglas, Carson City (part) Assembly District No. 39:

Assembly Bill 335 came about at the request of the gentlemen here with me today.  This bill imposes a requirement for the commissioner of financial institutions to conduct investigations, issue orders to cease and desist, impose fines, bring suit against unlicensed persons who engage in activities relating to collection of debts for which a license is required, and other appropriately‑related matters.  There is a situation where new collection agencies are coming to Nevada and going into business without paying a license fee, which is required by law.  The existing licensed businesses operating in our state are competing with the unlicensed debt-collection businesses.  The licensed businesses are forced to charge more for their services to recover the cost of their business licenses, causing unjust competition for them.  This bill is intended to alleviate that issue by allowing the licensed debt-collection business owners to bring complaints to the financial institutions commissioner.  The commissioner would then investigate the complaint and take appropriate action.  The fine imposition is mandatory in this bill.  I would like to bring to your attention section 1, subsection 3, paragraph (b), which states, “Enter into a written consent agreement . . . . ”  On the Assembly side, we discussed this with the Office of the Attorney General, and this provision was not included in the bill, originally.  The Office of the Attorney General informed us we would need to attach a fiscal note, unless we added the written consent language.  We did that, and believe it will drop the requirement for an attorney general’s office staff person to 10 percent (full-time equivalency) of an attorney general, and it is our policy to absorb that cost.  We have that in the written testimony; in fact, the Assembly Committee on Ways and Means decided there was no fiscal impact.  In section 2, the bill now designates as “gross misdemeanor” any violations of these provisions.

 

Senator O'Connell:

How has this worked before?  What investigative power do they now have to ferret that out? 

 

Jim Knasiak, Legislative Chairman, Association of Nevada Collectors:

Presently and in the past, the Division of Financial Institutions has supposedly had their hands tied, because, originally, chapter 649 of NRS gave them very little power to proceed, according to Scott Walshaw (L. Scott Walshaw, Commissioner, Division of Financial Institutions, Department of Business and Industry).  What has been happening is an unlicensed collection agency has solicited business in Nevada, thereby breaking the law.  Unless a licensed collection agency reported the unlicensed collection agency as unlawfully practicing business in Nevada to the Division of Financial Institutions, nothing could be done to stop them.  Even when the unlicensed business was reported, the Division of Financial Institutions found it difficult to proceed in attempting to file any cease and desist action, because they wanted proof.  The industry’s position is, it is not our responsibility to provide the proof.  We are not the regulators; however, we attempted to do that.  Occasionally, when the proof was supplied, the Division of Financial Institutions sent out cease and desist letters to those businesses.  Some of those businesses may have complied, but those of whom we have been able to notify the division, have not complied.  They have continued to operate illegally in Nevada.

 

Senator O'Connell:

How many of those unlicensed collection agency businesses are there now in Nevada?

 

Mr. Knasiak:

In the past 2 years, the Division of Financial Institutions has probably sent out at least four or five cease and desist letters.  The difficulty now is that we have advanced electronic methods of accessing clientele in Nevada and that number is growing all the time. 

 

Senator Amodei:

I support the bill also.  I have a concern, though.  I have had some experience with the Division of Financial Institutions regarding other matters, and it has come to my attention they are understaffed.  I would like the opportunity to speak with the commissioner in this regard, on the record.  We have had the Division of Financial Institutions in front of us already a couple of times, in other areas, mortgage-related areas, and they have indicated to us that they do not have the manpower or authority to deal with that issue.  I do fully support what you are trying to do.  I think the commissioner of the Division of Financial Institutions needs to come here and say, just like the attorney general said,
“We will go get them.”  I would not want you to need to return here in 2 years, saying, “We sent these letters in, and they have not done anything because they say they are understaffed.”  I normally would not say it, but I have heard them state several times this session they have understaffing problems.  I think the commissioner needs to be on the record, responding to some specific questions, he plans to do this, since he is enthusiastically asking for it.  

 

Senator O'Connell:

I wonder if we can request the budget of the Division of Financial Institutions?    I cannot think of anything more important.

 

Chairman Townsend:

I would like to have Ms. Batjer and Mr. Walshaw come to our work session on this matter.  We are glad to process your bill, Assemblyman Hettrick.  That is not at issue.  Most of the committee members have encountered problems, over the years, with the Division of Financial Institutions, and because of that experience, our patience is starting to wear thin. 

 

Assemblyman Hettrick:

I serve on the Assembly Committee on Commerce and Labor and we see exactly the same situation.  I agree with Senator Amodei, and I would be happy to hear them say, indeed, they can process them.  The folks who are turning in these people have done the investigative part of the process.  They only need the services of the Division of Financial Institutions to send letters to the unlicensed debt collection agencies.  I fully support inviting the commissioner to the work session to let him personally respond to this issue. 

 

Chairman Townsend:

When we process these bills, we will take care of that business.  We will not take them to the floor until Monday. 

 

Mr. Knasiak:

Senator Amodei is right.  We have had this problem for a long, long time.  We have been trying to address this issue with the Division of Financial Institutions for a long time.  We have heard about the inability to handle such things due to understaffing.  Those of us who are licensed, and who play by the rules, have been doing this for so long now there is a tremendous frustration in our organization.  We employ many people in the state of Nevada and consumers have no method of redress for unlicensed people.  We do everything we can in the community to provide that and make that happen; so, it is a totally frustrating situation for us.  I want to let you know this.  At our last meeting, just last week, many of our members felt like, “If we can not get action, we should try to approach the state, somehow, to sunset chapter 649 of NRS because it is useless.”  It is simply causing all of us to pay for things which are not happening.  Consumers are having problems.  We provide money into a trust account.  What about those unlicensed debt collectors, who do not pay?  We do not know what to do about that anymore.

 

Chairman Townsend:

When I first read your bill, Assemblyman Hettrick, I did not know if it belonged in the Senate Committee on Commerce and Labor or the Senate Committee on the Judiciary, because I thought it was going to be a violation of the federal Racketeer Influenced and Corrupt Organization Act (RICO), based on this collection issue.  I reconsidered, following further thought on the matter. 

 

Rod Barbash, Chief Executive Officer, Collection Service of Nevada:

We must pay state licenses, corporate filing fees, certified managers fees,     CPA fees, audit fees, and city licenses.  It costs us between $5,000 and $6,000 per year to pay these various fees.  We have these unlicensed agencies coming from out of state and they pay no fees, whatsoever.  They solicit the accounts on a contingency basis, and we just cannot compete.  I agree with everything that has been said.

 

Chairman Townsend:

The $10,000 violation fee will get their attention.  More important is       Senator Amodei’s point.  We will process this bill, but I want representatives from the Division of Financial Institutions and the Office of the Governor to engage in dialogue regarding this issue.  No agency has enough staff.  Whatever we have to get done, we get done.  The division needs to learn that.  The division has worn thin on us, and I think it is probably the same on the Assembly side.  We have seen a great deal of this type of problem for old, established Nevada businesses which have played by the rules for years.

 

            SENATOR O’CONNELL MOVED TO DO PASS A.B. 335.

 

            SENATOR SCHNEIDER SECONDED THE MOTION.

 

            THE MOTION CARRIED UNANIMOUSLY.

 

*****

Chairman Townsend closed the hearing on A.B. 335 and opened the hearing on

Senate Bill (S.B.) 274.

 

SENATE BILL 274:  Revises provisions governing rights and duties of contractors and subcontractors under contracts or subcontracts. (BDR 54-593)

 

Chairman Townsend reviewed Amendment No. 589 to Senate Bill 274 (Exhibit G), pointing out the various changes, section by section.

 

Richard Peel, Construction Coalition:

There was one additional change we had requested.  Maybe the Legislative Counsel Bureau felt it did not need to be made.  If that is the case, I will defer to their experience.  At section 5, subsection 3, paragraph (b) (Exhibit G), there are two “or’s” on the third line.  We are suggesting that those two “or’s” be replaced by the word “and.”

 

Chairman Townsend:

“Give a reasonably detailed explanation of the reason the contractor or higher-tiered subcontractor will withhold that amount, including, without limitation, a specific reference to the provision or section of the subcontract, and any documents relating thereto, and the applicable building code, law, or regulation with which the subcontractor has failed to comply . . .” Is that the section you are talking about?

 

Mr. Peel:

Yes, it is on the third line.  It has changed.  I misread it.  I apologize.

 

Chairman Townsend:

Section 6, subsection 1, “If a contractor or higher-tiered subcontractor fails to: (a), (b), (c)”; subsection 2, “If a subcontractor stops work pursuant to paragraph (a) or (c) of subsection 1 . . .”

 

Mr. Peel:

There is one more change on section 6, subsection 2 (Exhibit G).  The second to the last line should read, “the subcontractor shall not terminate the subcontract and shall resume work.” 

 

 

Chairman Townsend:

I want to tell you the importance of this.  If they cannot clean this up, you will need to do that on the Assembly side, because we are not going to stop this bill for any reason.  If it is a technical reason or if it is a policy reason, we will make that decision. 

 

Chairman Townsend continued his overview of the proposed amendment section-by-section.

 

Renny Ashleman, Lobbyist, Southern Nevada Homebuilders Association:

If we are on page 7 (Exhibit G), subsection 5, paragraph (d), I reviewed this language yesterday, and now that I see it in context, I have a slight concern with it.  It says, “At any action brought to recover the amount described in this subsection, the trier of fact may award reasonable attorney’s fees” basically to either side.  My concern is, if somebody stopped work or terminated without reasonable cause, but did not sue for the money, does this language get triggered or not?  That is the question that has me concerned.  I think it should read, “At any action brought pursuant to the subject matter of Senate Bill 274, the trier of fact . . .” and then I think we will be all right.  Otherwise, it looks like it only concerns collection efforts, and that would not be the intent. 

 

Chairman Townsend:

Do you have a slight recommended word change?

 

Mr. Ashleman:

I would say, “Pursuant to the section, the trier of fact may. . .”

 

Chairman Townsend:

So, you would like to strikeout, “to recover the amount described in this section”?

 

Mr. Ashleman:

Or, Mr. Haney has this suggestion, which might be better:  add, “Any action brought to enforce the rights or obligations in the subsection.”  That should do it.

 

Chairman Townsend continued his review of Amendment No. 589 (Exhibit G) from section 7 through section 11.

 

Mr. Ashleman:

On page 16, (Exhibit G) section 11, subsection 4, paragraph (d), we would have the same problem.  I do not need to go into that again, but in the first paragraph, we will need to make the identical change we did on page 7, in section 6, subsection 5, paragraph (d).

 

Chairman Townsend summarized the changes to section 12 from proposed Amendment No. 589 (Exhibit G).

 

Senator O'Connell:

What will be the effective date?

 

Mr. Ashleman:

I would have some concern there would be problems in having people adjust to this.  I must admit I have not really thought it through, but, it seems to me, you really need some noticing period to let people know they have this law to comply with.  We are talking about the difference between July 1, 2001, and October 1, 2001.  I think we really should use the standard date.  I do not have a strong feeling about it, but you have thousands of contracts that are affected.  I think it would be important to give people time to know what they will be dealing with next. 

 

Senator O'Connell:

Then you think the October date would be best?

 

Mr. Ashleman:

That would be my feeling on it.

 

Steve G. Holloway, Lobbyist, Associated General Contractors:  

We have no objections to the October date.

 

Chairman Townsend:

Ms. Grein (Margi A. Grein, Lobbyist, Executive Officer, State Contractors’ Board), do you think there is a responsibility by the State Contractors’ Board to do public notices? 

 

Margi A. Grein, Lobbyist, Executive Officer, State Contractors’ Board:

No.  I do not.  We will notice them, in our normal course of events, on the Website and in our newsletter.

Chairman Townsend:

It will take a day or so to process the bill out of the Senate.  Can you put the information on your Website as soon as possible after that? 

 

Mr. Meder (John L. Meder, Committee Policy Analyst), when we finish here, please go to counsel and find out if the suggested changes are tough.  Because if the answer is no, I would like to get the changes done.  If the answer is yes, then I prefer to get it out of here. 

 

Chairman Townsend closed the hearing on S.B. 274, and opened the hearing on S.B. 421.

 

SENATE BILL 421:  Makes various changes to provisions governing common-interest communities. (BDR 10-446)

 

Chairman Townsend reviewed the “April 20, 2001 Proposed Amendment to Senate Bill 421” (Exhibit H), pointing out the various changes, section by section.

 

Chairman Townsend:

Page 14, line 15, paragraph (A) states, “A person who is engaged in community management for a common-interest community on October 1, 1999, and is granted an exemption from the requirements of subsection 2, by the administrator upon demonstration that he is qualified and competent to engage in community management for a common-interest community.” That is an exemption, right?  Is it a new exemption?  Can you tell us who it would be?

 

Karen D. Dennison,   Lobbyist, Lake at Las Vegas Joint Venture:

This exemption is identical to the exemption for community managers, which you will find at page 36, lines 1 through 16 of this bill.

 

Chairman Townsend:

So we moved it?

 

Ms. Dennison:

We put it in both places.  A community-managing agent supervises community managers. 

 

 

Michael E. Buckley, Lobbyist, Howard hughes corporation:

In section 25, some language Bill McGrath drafted should have been included as a new subsection 3.

 

Chairman Townsend:

The new proposed subsection 3 to section 25 says, “Except as otherwise provided in Nevada Revised Statutes (NRS) chapter116.3105, the provisions of subsection 1, do not prohibit (a) any contract between the association and the declarant or the payment of any consideration for any goods or services furnished by the declarant to the association or (b) the declarant from serving as a member of the executive board or as an officer of the association.”  So that means if the declarant has not turned the complaint over to the association, they retain their rights, is that the way you see it?  Is that the goal?

 

Mr. Ashleman:

That is correct.  It would appear they would have a conflict; however, they would be representing themselves, so there really wouldn’t be one there. 

 

Chairman Townsend continued to point out the various changes contained in the proposed amendment to S.B. 421 (Exhibit H), section-by-section.

 

Chairman Townsend:

The language on page 17, section 27, subsection 2, regarding notices to the persons affected, says, “. . . and to each unit’s owner whose unit or limited common element is the subject of the action . . . “  If the association brings the suit, then is not every unit in the association affected, whether, in fact, the defect is in their unit or not? 

 

Mr. Ashleman:

No.  What we have tried to do with this language is make the differentiation between, for instance, the sidewalks.  The sidewalks do not affect the limited unit.  That is the reason for that language.  The fact you may be sitting in your condominium and the roof belongs to the association; it is still your roof.  We believe what this language does is differentiate. 

 

Chairman Townsend: 

Then I am not reading it right.  Let me tell you what I think it means.  If there are 4 units out of 50 that have an alleged constructional defect, and an association chooses to sue, and I am the guy on the end unit, I would like to know that decision has been made.  It is an association decision that has been entered into, although my unit may be perfect.

 

Mr. Ashleman:

We may be talking about different sections of it.  I am talking about the permission section, where I have to individually give permission on my unit, as opposed to the overall section, where the majority does.  I misunderstood your question.

 

Chairman Townsend:

I am talking about, “If an action is brought by an association,” on page 17, section 27, subsection 2,“ . . .the attorney representing the association shall provide to the executive board and to each unit’s owner whose unit or limited common element is the subject of the action or claim . . ..”  In other words, if they only found three or four units that had a defect, and I’m the guy on the end, and I got the real perfect one, but my association is in litigation, do I not have a right to know that and what the issues are?  You may have covered it, because the issue is each unit is going to be affected by the litigation; therefore, it is going to be noticed. 

 

Mr. Ashleman:

We are trying to make the distinction between the common elements, which really do not affect the unit’s owner in any material way, and those that actually do have some affect.  That is what we are endeavoring to do with this language.  We could always notify everybody.  That is one way to achieve your policy objective.

 

Chairman Townsend:

This is not you notifying them.  This is the attorney notifying them.

 

Mr. Ashleman:

I understand that.  We could have the notice go to everyone.

 

Chairman Townsend:

Is my title clouded if my association enters into a broad-based suit for constructional defects, whether I have one or not?

 

 

Mr. Ashleman:

I do not know if your title is clouded, but your ability to resell, without some economic loss, may very well be affected.  That is a good point.  Under existing law, there would not be much question you would always be notified.  I do not have any objection at all, concerning the wider notification.  We were trying to accommodate the feelings of other individuals involved, but there are certain kinds of suits for which you would not have to notify everybody.

 

Chairman Townsend:

This one is specifically in relation to a constructional defect.  This is, “The attorney representing the association shall provide to the executive board . . . ” and I would think you would simply say, on line 15, “ . . . the executive board and to each unit’s owner.” 

 

Senator O'Connell:

My point is the same one the chairman has just expounded upon.  The concern is broader because of what the seller of each unit must declare.  The sellers have broken the law, under the real estate law, if they are trying to sell their home and that information is not given to the prospective buyer. 

 

Mr. Ashleman:

That was the balance we were trying to reach.  You did not want them to have to declare something that really did not affect them.  It is really a policy decision, not a drafting decision.  We made the draft based upon the suggestion by some people suggesting you ought not to have these notices all tied up with every unit, every time anything happened. 

 

Senator O'Connell:

If there were an extra assessment over and above your regular dues, then the new or prospective buyer would have to be involved with that assessment, would they not?

 

Mr. Ashleman:

I think, under the other things you have to disclose, you have to disclose assessment that would be passed on anyway and it would not be a problem.

 

Chairman Townsend:

I would recommend on page 17, section 27, subsection 2, on lines 16 and 17, you strike, “whose unit or limited common element is the subject of an action or claim.”  So it would read, “the attorney representing the association shall provide to the executive board and to each unit’s owner, a statement that includes in reasonable detail.”  One of the statements made here, and I felt the person from Terra West, and the other representatives in southern Nevada who manage these properties had the same idea, is they are having a tough time getting participation.  The second you get a notice your association is in litigation, you may have lived there 20 years and never even talked to your neighbor, my guess is, you are going to get very involved.  I think you owe it to people.  When car companies have a recall, they do not recall the vehicles only in the south.  They recall all of them, whether in fact, there may have been a problem or not.  They recall them all and deal with it.  Everybody gets noticed, and I think that is the goal here. 

 

Michael E. Buckley, Lobbyist, Howard Hughes corporation:

I have a question on section 27, subsection 2, as to when notice has to go out.  I assume it would go out prior to the action being commenced or something like that, but it does not really say when it has to go out.

 

Chairman Townsend:

There is an inference if an action is brought, it would be after the filing.  Is that an unfair assumption? 

 

Mr. Buckley:

When I first read it, I thought it would be important to making the decision; on the other hand, in section 27, subsection 2, paragraph (d), where it says, “The location of each defect . . . “ which you might not know until the end of the lawsuit.  I am not quite sure when it has to go out. 

 

Chairman Townsend:

Under the current proposal, you actually have to have the appropriate vote in order to proceed with litigation, as opposed to the prior language, “the safety and welfare without a vote of the association members.”  This does say once the vote is taken, and the association brings an action, then you make the notice.  That is what the language says to me. 

 

Mr. Buckley:

It is fine with me, as long as we are clear.  It would seem to me, if all the units’ owners were going to be voting on it, there would need to be some kind of disclosure to the units’ owners about what is going to happen.  

Chairman Townsend:

Then all you have to do is take subsection 2, substitute the language, “if the action is brought,” and change it to say, “before an action is brought“ Subsection 1, paragraph (b) says, “Upon a vote of the units’ owners to which at least a majority of the votes of the members of the association are allocated . . .“ and paragraph (c) says, “Upon a vote of the executive board . . .“ 

 

Mr. Ashleman:

In section 27, subsection 2, paragraph (d), it says, “The location of each defect within the unit or common element:”  We might want to add, “if known.” 

 

Chairman Townsend:

So it should say, “The location, if known, of each defect . . .?“

 

Mr. Ashleman:

Right.  They should know the defects, damages or injuries to the unit, limited common area, or common element before they bring the suit. 

 

Chairman Townsend:

On page 24, section 35, subsection 2, line 22, of the proposed amendment to S.B. 421, dealing with the fine imposed, “but in no event may the cumulative total amount of the additional fine exceed $1000 per calendar year for each different continuing violation.  Any additional fine for each different continuing violation may be imposed without notice and an opportunity to be heard.”  Please think that through, I want to make sure this is the language we want to use. 

 

Senator Schneider:

On page 24, subsection 2, line 24, it says, “Any additional fine for each different continuing violation may be imposed without notice and an opportunity to be heard.”  It seems to me there should be some notice given. 

 

Chairman Townsend:

Do we have the notice of the fines in another section, which says, “Before we fine you, you are in violation of something; therefore, you are officially noticed,
and you have a right to request a hearing, or you are going to be fined, if you do not correct it”?

 

Mr. Ashleman:

The idea is you notice them once and they get a hearing, or they do not get a hearing, depending upon the request.  If they continue to violate beyond that, you do not have to keep giving them hearings on the same issue.  All we changed was our description of what it is, so it would be consistent throughout the paragraph. 

 

Chairman Townsend:

We are trying to resolve any misunderstanding about what a violation or a different violation is.  A different violation does not mean you are not mowing the lawn and then you are parking an RV.  It is each one separately.  Maybe that is a better term.

 

Mr. Ashleman:

We debated that for 30 minutes, whether the best term to use would be “separate, kind, or type.” 

 

Chairman Townsend:

Page 25, line 40, reads, “All persons entitled to vote at any meeting of the units’ owners at which a quorum is present, may remove any member of the executive board with or without cause, other than a member appointed by the declarant.” 

 

John L. Meder, Committee Policy Analyst:

On page 21, line 26, section 33.3, subsection 2, paragraph (d) (Exhibit H), contains the language Senator Rhoads requested.

 

Chairman Townsend:

Page 21, in the proposed new section 33.3, subsection 2, paragraph (d), reads, “Unless a majority of the units’ owners otherwise elect in writing, a common interest community located in a county with a population less than 35,000, which was created before January 1, 1992 and has less than 50 percent of its units put to residential use.” 

 

Chairman Townsend:

Senator Schneider made a comment this morning about the debate we had regarding A.B. 74.  It was rather insightful.  It was the fact that the issues faced by residents in the rural communities are so substantially different from the ones we face in the more urban areas.  On the one hand you could look at A.B. 74 and say, “Are you guys out of your minds?  Why are you doing that?  We don’t have those problems.”  Yet, you are sitting in Las Vegas with a front‑page news story on just exactly that problem.   It makes it tough.  We have to differentiate and that is important. 

 

Chairman Townsend:

On page 27, (Exhibit H) in the new section 39, “Nevada Revised Statutes 116.31065 is hereby amended to read as follows: The rules adopted by an association . . .“ Section 39, subsection 6, paragraph (a), states, “The association has mailed the person alleged to have violated the rule written notice that . . . ”  Subparagraph (1) reads, “Specifies the alleged violation and any required corrective action:”  Subparagraph (2) states, “Affords him a reasonable opportunity to cure the alleged violation prior to the imposition of a fine.”  Subparagraph (3) states, “Informs him of his right to a hearing on the alleged violation before imposition of the fine.”  Paragraph (b) states, “At least 30 days before the alleged violation, the person alleged to have violated the rule was given written notice of the rule or any amendment to the rule.”  This section contains the notice provision.  In other words, here is the violation, you have 30 days to clear it up, request a hearing, pay the fine, or do whatever.  Is that satisfactory to you? 

 

Senator Schneider:

Ms. Berman (Assemblywoman Merle A. Berman, Clark County Assembly District No. 2) notified me she is going to add an amendment to this bill, on the Assembly side.  The amendment would probably fall into this section.  Guests of people who live in these gated associations can be cited for parking on the wrong side of the street, or speeding, and the unit owner is liable for the violation.  Even though he may have no previous knowledge the incident occurred, the unit owner must still pay the fine. 

 

Chairman Townsend:

Page 31, section 41, subsection 7, paragraph (a), sub-paragraph (4), reads,     “. . .  Any unit owner may audio record a meeting of the executive board except for executive sessions, provided that members in attendance are notified in advance of the intent to audio record the meeting.” How do you define, “notify in advance”?  The subject is secret recording.  If you walk up to the podium to address them, you can say, “I am going to record this.”  Then you would put your tape recorder up there.  Is that what you are saying?  You are not talking about a 30-day notice for someone who intends to record a meeting, are you?

Ms. Dennison:

No, the intent was it be announced at the meeting.  Perhaps the word “announced” would be more appropriate than “notified.”

 

Chairman Townsend:

A lot of people are not going to decide to do that a month in advance.  I think we need to say if they intend to testify and record it, they need to announce it. That is all. 

 

Mr. Ashleman:

The best way to state it is, “members in attendance are notified,” then strike, “in advance.“

 

Chairman Townsend:

Yes, that is a good idea.

 

Chairman Townsend:

Page 41, section 49, subsection 1, paragraph (b), states, “The association has provided written certification to the ombudsman, on a form prescribed by the administrator that notices have been given in accordance with NRS 116.3116, subsection 2, paragraphs (a) and (c).”  Section 49, subsection 1, paragraph (c), states, “Not less than 30 days have elapsed after mailing the notice of delinquent assessment pursuant to subsection 1, paragraph (a).“ 

 

Tami DeVries, Legal Administrative Officer, Real Estate Division, Department of Business and Industry:

I have one correction.  On line 8, (page 41 of Exhibit H) it should read,    “Nevada Revised Statutes 116.31162, subsection 1, paragraphs (a) and (c).” 

 

Ms. Dennison:

I would like to clarify what this section is about.  Basically, before a notice of default and election to sell is recorded and mailed, which commences the foreclosure proceeding, certain things must be done.  One thing that must be done is to mail the notice of delinquent assessment to the owner.  Another thing to be done is to notify the ombudsman, under section 49, subsection 1, paragraph (b).  We have provided the notices must have been given 30 days prior to the recordation of the notice of default and election to sell.  We have covered the pre-lien notice.  The pre-lien notice is, in a way, the notice of delinquent assessment.  There is then a 30-day period before you actually start your foreclosure.  In section 49, subsection 1, paragraph (d), line 22, we have changed the “60 days” to read “90 days.”  We have given an additional         30 days, after the notice of default is recorded, before the notice of sale can actually be published. 

 

Mr. Buckley:

I believe section 49, subsection 3, paragraph (c), lines 35 through 37, on page 41 should be removed.

 

Eldon Hardy, Ombudsman, Ombudsman for Owners in Common-Interest Communities, Real Estate Division, Department of Business and Industry:

This notice gives us the opportunity to help the homeowner resolve this before the process starts. 

 

Chairman Townsend:

Absolutely.  Your role in this mechanism is so vital . . . the need for you to understand the law, not only what we are writing here, but what is in the     NRS 40.430 regarding foreclosure, and other related chapters, as well as your ability to improve the lines of communication among all the parties.              Ms. Dennison, do you see Mr. Buckley’s concern?  We have two separate triggers in conflict here.

 

Ms. Dennison:

Yes.  Also, I am wondering about the wording.  I have not had a chance to thoroughly digest this yet.  If the intent is that both the notice of delinquent assessment and the ombudsman be notified prior to the notice of default going out, then on page 41, line 10, we need to say, “not less than 30 days have elapsed after mailing the notice of delinquent assessment pursuant                  to subsection 1, paragraph (a), above and the mailing of the written    certification to the ombudsman, pursuant to section 1, paragraph (b), above.”                Michael (Mr. Buckley), do you have an opinion on that?

 

Mr. Buckley:

There is some confusion about how this actually works.

 

Chairman Townsend:

As long as the concept is there, the Legislative Counsel Bureau will provide the necessary language.  Let us not over think this issue. 

 

Ms. Dennison:

We need to clarify the concept. 

 

Pamela J. Scott, Lobbyist, Howard Hughes Corporation:

Maybe I am misunderstanding the concept.  To me the concept of this is we file our notice of delinquent assessment, which basically is a lien.  We have to give 30 days between that notice and a notice of default.  I do not think the ombudsman wants to be notified of every notice of default.  They want to be notified of a notice of sale.  That is where I do not think the language is clear enough. 

 

Chairman Townsend:

The ombudsman needs to be noticed if they are in default, so he can let them know they are at risk.  If you just say, “Now we are going to sell,” there are no other options, at that point. 

 

Ms. Scott:

The notice of sale comes 90 days after the notice of default. 

 

Ms. Dennison:

It does say that.  Perhaps every notice of delinquent assessment does not need to go to the ombudsman; there are so many of those.  Many delinquent assessments are cleared up prior to the actual start of foreclosure.  The way the language reads now would be correct.

 

Chairman Townsend:

On page 47, we are removing section 55.  Is that correct?

 

Mr. Meder:

We eliminated sections 15 and 16 earlier, which makes section 55 unnecessary.

 

Chairman Townsend read text on page 51, lines 11 through 15, the new section recommended by Caughlin Ranch Homeowners Association, of the proposed amendment (Exhibit H).

 

Michael Trudell, Manager, Caughlin Ranch Homeowners Association:

On line 13, page 51, instead of “conveyance,” it should say, “convey common elements“ or “transfer of common elements.”  On line 19 of page 51, it should read, “reserves required,“ not “reserves study required.” 

Chairman Townsend continued to review the proposed amendments to S.B. 421, page by page.

 

Chairman Townsend:

We will leave out the preamble on page 52, which begins on line 38.  I have a concern.  The issue of term limits for association board members is important.  In one case, the entire board was replaced at one time.  None of the incoming board members had knowledge of reserves, financing, or fees.  I have had a recommendation we institute a staggered system for the association board members, or this problem will continue. 

 

Ms. Dennison:

If we can return to page 24, section 36, subsection 2, just below that would be a good place to insert that staggered term language. 

 

Chairman Townsend:

I would like the board to determine just how to time the staggering process.  Would that process be included in the bylaws?

 

Ms. Dennison:

Normally, the boards are elected by secret ballot during the annual meetings.  I would imagine they would stagger them every year.

 

Chairman Townsend:

Can you have an election where only half of the new board members begin their terms immediately, and the other half begin at a later time?

 

Senator O'Connell:

You also have to consider the possible removal of the entire board. 

 

Chairman Townsend:

That is a homeowner decision.  They definitely have the right to do that. 

 

Mr. Buckley:

We also need to exempt the declarant members, in the language.

 

 

 

 

Chairman Townsend:

John (John L. Meder, Committee Policy Analyst), can you tell the Legislative Counsel Bureau we need language which deals with staggered terms, period, and to exclude the declarants?

 

Mr. Buckley:

I guess if the term were for 1 year, then under the staggering provision, the terms would need to be amended in the bylaws.  I am not quite sure how that would work. 

 

Chairman Townsend:

We will leave the specifics of the staggering provision up to the individual associations.

 

Chairman Townsend continued to review the proposed amendments to S.B. 421 and read text on page 56, lines 17 through 25 (Exhibit H).

 

Senator O'Connell:

On page 56, line 24, I would like to add the word “actual.”  I would like it to read, “. . . elements on an actual, reasonable and uniform basis . . . “

 

Mr. Ashleman:

The word “actual” is fine as far as I am concerned.

 

Chairman Townsend:

Why do we want to do this with homeowners associations?

 

Maddie L. Fischer, Lobbyist, American Consulting Engineers Council of Nevada:

We had originally offered this amendment to S.B. 516 (tab I in the Work Session Document of April 19 and 20, 2001 (Exhibit C.  Original is on file in the Research Library.), and tab D in the Work Session Document of April 24, 2001 (Exhibit C.  Document filed with April 24 minutes.).  It was actually at that hearing you suggested we bring it up for consideration in S.B. 421.  That is why we are here now.

 

            SENATOR O’CONNELL MOVED TO ADOPT THE PROPOSED             AMENDMENT BY THE AMERICAN CONSULTING ENGINEERS Council             of Nevada TO SENATE BILL 421. 

 

            SENATOR AMODEI SECONDED THE MOTION.

 

            THE MOTION CARRIED UNANIMOUSLY.

 

*****

 

Ms. DeVries:

I want to make sure we discuss the impact of the fiscal note on the bill, before you vote on it.

 

Chairman Townsend:

How much more than $20,000 is this going to be?

 

Ms. DeVries:

It will be about $400,000. 

 

Chairman Townsend:

Do you have a fiscal note prepared you could share with us? 

 

Ms. DeVries:

Joan Buchanan has it (Exhibit I) I believe.  Do you want me to go through that with the committee?

 

Senator O'Connell:

If you would just summarize the amended fiscal note (Exhibit I), it would be helpful.

 

Ms. DeVries reviewed the amended fiscal note to S.B. 421 (Exhibit I) and pointed out the changes. 

 

Ms. DeVries:

The Office of the Attorney General has submitted a supplement to our fiscal note, which should cover the issue of the cost of staff from the Office of the Attorney General.

 

Senator O'Connell:

Is this the deputy attorney general who would be representing the commission?

 

 

Joan Buchanan:

The deputy attorney general would represent the ombudsman’s office as well as the commission staff.  When a hearing is held, there must be an additional representative to the commission. 

 

Senator O'Connell:

Did we talk about an independent attorney?  One who would be separate from the attorney general’s office? 

 

Senator Schneider:

Yes, we did.  We decided that would be very cost-prohibitive.

 

Ms. Buchanan:

The Office of the Attorney General performs many services that would not be provided by an attorney who has just completed law school.  We see the position of the deputy attorney general as supporting and advising both the ombudsman and the operations of the commission staff.  The options are, do we want an attorney from the Office of the Attorney General staff, or do we want an independent counsel?

 

Chairman Townsend:

The problems regarding the staff attorneys at the Office of the Attorney General have already been articulated today.  That office, through no fault of its own, has a staff continuity problem.  I think you would want an attorney who has some institutional memory to utilize in problem solving for your agency. 

 

Senator O'Connell:

Maddie (Ms. Fischer), can you give us an approximate figure of about how much it would cost to hire an independent counsel?

 

Chairman Townsend:

Margi (Ms. Grein), can you tell us approximately how much money you spend on independent legal counsel fees at your agency?

 

Ms. Grein:

We pay about $150 to $160 per hour.  We employ two firms, and we also use a different firm on certain cases.  We send out RFPs (requests for proposals) and we receive at least fifty responses from qualified individuals each time. 

 

Chairman Townsend:

Approximately, how much is in your reserve?

 

Ms. Buchanan:

About $680,000 right now. 

 

Chairman Townsend:

That amount is different from the amount you told us last time.  Does anybody know if that different amount is factual? 

 

Mr. Hardy:

The latest quote I have is $684,000, but that is projected to increase dramatically, because we have found many unregistered homeowners associations.  We have the potential to increase our reserves when those associations pay their registration fees. 

 

Chairman Townsend:

How long did it take you to accumulate the $680,000?

 

Mr. Hardy:

It took about 2 years.

 

Chairman Townsend:

If we are conservative, that would be about $340,000 per year in increased revenue.  If we are equally conservative, and we only take it up a handful of dollars, and we get to $400,000 per year in increased revenues, you can cover this budget and still have a reserve without increasing the current fee you charge?

 

Mr. Hardy:

Yes.  We feel that would be true. 

 

Ms. Buchanan:

Would you like us to take that approximate amount of $114,000, and put that into our budgeting for independent legal counsel? 

 

Chairman Townsend:

Yes.

 

Ms. DeVries:

Does that also take into consideration the secretarial staff for that attorney?

 

Ms. Buchanan:

Sure.

 

Chairman Townsend:

You will need to present a well-prepared budget.  I will speak to the Fiscal Analysis Division (Legislative Counsel Bureau) and the Senate Committee on Finance regarding the exemption.  This bill will need to be out of this house by May 2, 2001.  You will need to present your budget, based on what we proposed, to the Senate Committee on Finance, the first week of May.

 

Ms. DeVries:

We can do that. 

 

Chairman Townsend:

If I can be helpful to Senator O'Connell and Senator Schneider, I will be, but we will probably go with you to explain the purpose of this to the committee.  We need your proposal to be as accurate as possible.

 

Ms. Buchanan:

The Department of Information Technology must approve the information specialist positions, which are included in our proposal.

 

Ms. Buchanan continued to review the budgetary items on the reserved usage note, line-by-line.

 

Senator O'Connell:

What kind of interest are you accruing on this money right now?

 

Ms. Buchanan:

That money is earning a rate of interest per the State Treasurer’s Office.

 

Senator O'Connell:

That is not a suitable rate of interest.  That is only 4 percent.  We will need to address that issue.  We will talk to the Senate Committee on Finance about investing the money differently, to achieve a better interest rate.

 

Senator Schneider:

Is the money deposited in a Nevada bank?

 

Senator O'Connell:

It is on deposit in the State Treasurer’s Office. 

 

            SENATOR O’CONNELL MOVED TO AMEND AND DO PASS S.B. 421.

 

            SENATOR SCHNEIDER SECONDED THE MOTION.

 

Mr. Meder:

Ms. Dennison suggested we include a mailing of a certificate to the ombudsman.  Is that to be included?

 

Chairman Townsend:

I believe your recommendation was to remove lines 35, 36, and 37.  Is that correct?

 

Ms. Dennison:

That is correct.  We are removing lines 34, 35, 36, and 37, only.  Did you get the correction of the citation that Ms. DeVries gave you on line 8?

 

Chairman Townsend:

Yes, we did that correction per NRS 116.31162, in subsection 1, paragraphs (a) and (c).

 

            THE MOTION CARRIED.  (SENATOR CARLTON VOTED NO.)

 

*****

 

Chairman Townsend opened the hearing on S.B. 216.

 

SENATE BILL 216:  Makes various changes pertaining to contractors who             engage in repair, restoration, improvement or construction of residential             pools and spas. (BDR 52-1037)

 

Chairman Townsend:

There seems to have been a terribly unfortunate chain of events which caused many homeowners to suffer foreclosures and bankruptcies.  We want to make sure this never happens again.  Our goal is for you to tell us anything else that needs to be defined jurisdictionally:  fines, authorities, and responsibilities for your separate entities, including the State Contractors’ Board ensuring what has occurred does not happen again.  I can tell you whether you are right as lawyers, or not does not sell in southern Nevada with the people who have a problem.  You may be right legally, and that may stand up legally, and this guy may get off the hook legally, but the people who are victims are not buying it.  Our job is to say, “What did we do wrong in writing this?  Where did these conflicts occur?”  That is our job, so you need to tell us.

 

Ms. Grein:

Here are some jurisdictional matters.  The State Contractors’ Board will generally receive the initial complaint against a contractor for violating chapter 624 of NRS.  Conducting criminal investigations is defined under NRS 624.165 for construction fraud.  Unlawful contracting is under NRS 624.700.  Unlawful advertising is under NRS 624.720.  Once personnel of the State Contractors’ Board conduct the initial investigations, the cases are filed with the appropriate jurisdictional agencies.  Regarding the Cascade Pools case, the State Contractors’ Board initiated the investigation, and it resulted in the license being revoked in June of 2000.  In light of information obtained during the investigation, possible violations of various state and federal criminal statutes, outside the jurisdiction of the State Contractors' Board, were uncovered.  On March 24, 2000, a representative of the Office of the Attorney General attended a meeting with State Contractors' Board staff and Mr. Majeroff (Owner of Cascade Pools), wherein initial facts of the case were identified.  On March 27, 2000, the Office of the Attorney General advised the State Contractors' Board, by facsimile, nothing in the case would fall under the jurisdiction of the Office of the Attorney General.  The State Contractors' Board staff continued with the investigation.  On June 8, 2000, the State Contractors' Board filed a request for prosecution with the Clark County district attorney’s office.  The board believed probable cause existed to charge Mr. Majeroff with multiple violations of chapter 624 of NRS, and recommended the following prosecution:  20 counts of obtaining money under false pretense; 20 counts of deceptive trade practices; 20 counts of false advertising; 2 counts of offering false instruments for filing with the Secretary of State’s office.  The Clark County District Attorney reviewed the case and initiated additional investigation into the matter.  The State Contractors' Board staff has been working with the Clark County district attorney and has been assisting them with the investigation.  We have provided the results of our investigation to the Federal Bureau of Investigation (FBI) and the Internal Revenue Service, which has conducted a tax fraud investigation.  The FBI presented the case to the United States Attorney, who declined to prosecute.  We are now in the process of presenting the case to the U.S. Postal Inspection Service for investigation of possible mail fraud. 

 

Kimberly Maxson Rushton, Legislative Liaison, Office of the Attorney General:

Similar to the representations Ms. Grein made, you are aware of some initial review by our office, and there was further review required.  Based on that further review, the State Contractors' Board forwarded the case to the district attorney’s office, citing dual jurisdiction.  We represent the Division of Financial Institutions, Department of Business and Industry, which investigated the case, also.  The results of that investigation were turned over to the district attorney’s office, as well.  We are fortunate in Nevada that law enforcement works well together.  We combine our resources, because those resources are limited.  In this instance, with the assistance of the Division of Financial Institutions, it lends itself to creating an additional felony, which was also brought forward to the district attorney’s office.  The representation I wish to make to this committee is the fact we do have a working relationship with all the law enforcement agencies, as well as the state agencies we work with and represent.  Based on that, your intent today is to see where we can go and what we can do to streamline our efforts.  I think a plausible resolution would be we delineate, by statute, who has primary jurisdiction in this area.  In the event a voluminous case occurs, such as the Cascade Pools case, we could enter into a memorandum of understanding with the district attorney to seek their assistance in the matter.  We need to clarify for the record the legislative intent of the statute pertaining to chapter 624 of NRS relating to the State Contractors' Board, and what agency should be the primary agency to provide services. 

 

Chairman Townsend:

The public perception is no agency was taking responsibility in this case.  We are not lawyers and do not practice in this area.  Every case you have is high profile.  Mr. Majeroff got away with real financial rape of these victims.  We want to know what we can do to help you be the pit bull in these cases.  What is it going to take for this to not happen again?

 

 

 

Ms. Rushton:

I think what was presented to you by Ms. Grein really does demonstrate that.  I compliment the State Contractors' Board because chapter 624 of NRS really does provide the board with the authority to determine which agency it should go to.  They have investigatory responsibilities and they do those and do them quite well.  When the board’s investigation determines there was fraud or money obtained under false pretenses, the case is referred to the district attorney.  There were some unique circumstances in this case, which led the victims to search for relief through various agencies.  The Division of Financial Institutions, an agency we represent, conducted an investigation, and worked in cooperation with the Clark County district attorney’s office on the case.  We were aware the State Contractors' Board had investigated the case and had referred the case to the district attorney’s office.  There was confusion as to what agency had jurisdiction to act on this case, in the beginning, but the Clark County district attorney’s office took on the task, realizing the plight of the victims.  I think there is continuity, in terms of where the cases begin and where they end up.  There is consistency, which is provided for in chapter 624 of NRS, but perhaps, greater clarification is needed in that chapter.  

 

Chairman Townsend:

Since this committee wrote the vast majority of chapter 598 of NRS, we understand a little bit of it.  Do you not sense Mr. Majeroff could have been penalized under that deceptive trade provision?

 

Ms. Rushton:

I do not disagree with that.  If you would like a comment on it, I will defer to my counterparts in southern Nevada.  They practice in that area and would be better able to comment on that issue.

 

Chairman Townsend:

Do you think we do not have a strong enough deceptive trade practice act?  We specifically wrote it a little vague so you could omit people who really did not understand and go after the people who were really doing bad things and catch them in the net. 

 

Ms. Rushton:

There have been other cases similar to the Cascade Pools case we did take action on pursuant to chapter 598 of NRS.  This particular case did not fall under that.  If it did, it was slim.  I think the State Contractors' Board and the Clark County district attorney’s office felt it was more appropriate for the case to be handled by them, because there were allegations of fraud, theft and other things normally handled by the district attorney’s office. 

 

Chairman Townsend:

I am not getting a sense you are telling us we need to do something for you.  We know what we have done in S.B. 216, which is prevention for the future, relative to how you build stuff, but it does not mean everybody is going to do it correctly. 

 

Ms. Rushton:

What you have done in S.B. 216 is exactly what needed to be done, in terms of jurisdiction and how these cases are handled.  That is not the problem.  The problem is there is not adequate provision to cover these types of cases.  The case slipped through the cracks, mainly because Mr. Majeroff was not licensed; therefore, the Division of Financial Institutions discovered a loophole in the law.       I think S.B. 216 remedies that.  In terms of jurisdiction, I think chapter 598 of NRS, and chapter 624 of NRS, and the district attorney’s jurisdiction are adequate. 

 

Dan Ahlstrom, Chief Deputy District Attorney, Bad Check Unit, District Attorney, Clark County:

I will tell you very briefly, the witnesses who testified in front of this committee have also testified in front of the Clark County Grand Jury.   An indictment in this case should be forthcoming within the next 2 to 4 months.  The problem, in this instance, resulted from the lack of a performance bond, and pool contractors are allowed to finance mortgage loans.  If you want to prohibit that type of activity, or encourage the use of performance bonds, it is your decision. 

 

Senator O'Connell:

How long did it take to get anybody’s attention on this case?

 

Ms. Grein:

The Clark County district attorney’s office responded immediately, as soon as we presented the case to their office.  We did not ask the Office of the Attorney General again, since they had declined the first time. 

 

 

 

Senator O'Connell:

How much time elapsed from the time the matter was brought to your attention, until the time it was acted upon? 

 

Ms. Grein:

It took about 3 months.

 

Senator O'Connell:

Do we know how much time elapsed, from the time the woman organized the information to present to you, for you to finally present the case to the district attorney’s office?

 

Ms. Grein:

We acted on the case immediately when she presented it to us.  The other victims you referred to did not have complaints on file with us.  I would need to ask Ms. Christina Schofield (one of the victims from the Cascade Pools fraud) to get the exact time frame on that. 

 

Senator O'Connell:

We have invested a large amount of money into the fraud unit at the Office of the Attorney General, and a fraud unit also exists in the district attorney’s office.  How do we separate those two units?  What makes one case go to the Office of the Attorney General and another case go to the district attorney’s office?

 

Ms. Grein:

It is possible the law may need to be clarified as to what case gets referred to what agency.  In construction fraud, the law does not specify.  The law says we “may cooperate with other local, state, or federal investigative and law enforcement agencies and the attorney general and assist the attorney general or any official of an investigative or law enforcement agency of the state or federal.”  Maybe we need to specify who has primary jurisdiction in these cases.

 

Senator O'Connell:

That is the suggestion.  Since the law already states it is the jurisdiction of the Office of the Attorney General, I think it is incumbent upon us, because we did not get any action from the Office of the Attorney General and they said this was not their concern.  We need to be very specific, because it is inexcusable that Mr. Majeroff got away, and homes were being foreclosed on before we were able to stop it here in the legislature. 

 

Senator Shaffer:

Margi (Ms. Grein), do you have a deputy attorney general assigned to your board?

 

Ms. Grein:

No, we do not.  We have our in-house counsel.

 

Chairman Townsend:

I would suggest the parties here and in southern Nevada stay in the room to look at the functional problem with jurisdictional issues.  Let us make it clear, we are not trying to say anyone did anything wrong here, but we do not want to leave a gap where there is any misunderstanding of who has the responsibility to act immediately in these cases. The parties can draw up language to cover our concerns about this, and we will have a clear path of action for the consumer to follow when problems like this arise.  We will talk to the Senate Committee on Finance regarding this.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

There being no further business, Chairman Townsend adjourned the meeting at 10:41 a.m.  

 

 

RESPECTFULLY SUBMITTED:

 

 

 

Lydia Lee,

Committee Secretary

 

 

APPROVED BY:

 

 

 

                       

Senator Randolph J. Townsend, Chairman

 

 

DATE: