SENATE COMMITTEE ON COMMERCE AND LABOR

MINUTES OF THE

SENATE Committee on Commerce and Labor

Seventy-First Session

March 27, 2001

The Senate Committee on Commerce and Laborwas called to order by Chairman Randolph J. Townsend, at 7:00 a.m., on Tuesday, March 27, 2001, in Room 2135 of the Legislative Building, Carson City, Nevada. The meeting was video conferenced to the Grant Sawyer Office Building, Room 4401, Las Vegas, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Senator 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

STAFF MEMBERS PRESENT:

Scott Young, Committee Policy Analyst

Jude Greytak, Committee Secretary

OTHERS PRESENT:

Pat F. Zenzola, Lobbyist, Household International Incorporated

Robert Barengo, Lobbyist, Nevada Consumer Finance Association

John M. Vergiels, Lobbyist, Nevada Independent Check Cashing Association

Charles W. Joerg, Lobbyist, Nevada Manufactured Housing Association

Gerald Goven, representing Nevada Manufactured Housing Association

Andrew M. Belanger, Lobbyist, Southern Nevada Water Authority

Jon L. Sasser, Lobbyist, Washoe County Senior Law Project

Cynthia Messina, Public Information Officer, Public Utilities Commission of Nevada

Anthony F. Sanchez lll, Lobbyist, Camden Property Trust

David L. Howard, Lobbyist, Silver State Apartment Association

Pat Coward, Lobbyist, Nevada Association of Realtors

Robb Lamb, Concerned Citizen

Senator Townsend opened the hearing on Senate Bill 330.

SENATE BILL 330: Makes various changes relating to financial businesses. (BDR 54-748)

Pat F. Zenzola, Lobbyist, Household International Incorporated and Robert Barengo, Lobbyist, Nevada Consumer Finance Association, approached the microphones. Mr. Zenzola began by stating Household International Incorporated supports S.B. 330 because it would update the mortgage company and installment loan laws to assist in providing more convenient products to customers. He added it would also streamline the licensing process. He noted the bill makes three main changes to the existing statute (chapter 645E of Nevada Revised Statutes [NRS]). The first, he stated, allows the financial institutions division commissioner to issue licenses for out-of-state locations as long as there is an in-state licensed location. He pointed out there are currently 41 states that allow for this kind of licensing. Secondly, he continued, S.B. 330 simplifies the process to relocate an existing licensed business address by requiring a 10-day written notice before relocation. Finally, he said, it removes outdated convenience and advantage requirements, which require the commissioner to notice other licensees when a new license is issued or an existing license is relocated. Mr. Zenzola further stated they worked with Scott Walshaw (L. Scott Walshaw), Commissioner, Division of Financial Institutions (Department of Business and Industry), to address potential concerns, and Mr. Walshaw’s suggested amendments to S.B. 330 have been presented to the committee (Exhibit C).

Mr. Barengo explained S.B. 330 deals with chapter 645E of NRS, which regulates mortgage companies that lend their own money, and chapter 675 of NRS, which is now known as the installment loan act. The bill places the same language in each of those sections. The bill, he continued, outlines the procedures for a change of address, requires 10-day prior notification, and retains the commissioner’s right to approve or disapprove of changes. Also, he added, S.B. 330 allows a licensed mortgage company, as defined in chapter 645E of NRS, or a licensed lender who makes installment loans, as defined in chapter 675 of NRS, to have an out-of-state location licensed by the State of Nevada. Mr. Barengo explained in section 1 of S.B. 330, Mr. Walshaw’s suggested amendments (Exhibit C) would change lines 6-15 on page 1 and lines 1-3 on page 2 outlining the procedure for change of address. He noted this change would not remove the 10-day notification requirement, and would still allow a fine of omission to be charged against a licensee who fails to file according to the law. He continued the change would also allow the commissioner to provide written approval at his convenience. Mr. Barengo stressed the suggested additional language for page 3, section 5, line 31, was an important original request to the bill drafter which had been omitted. He stated the suggested amendment for this section asks for the language to include: “The applicant or a subsidiary or affiliate of the applicant may also apply.” He explained many of these companies have a variety of wholly-owned subsidiaries in their chains, and these are what they would like to include in this bill. Mr. Barengo added that these changes should also be applied to chapter 675 of NRS.

Senator Townsend asked for an example of the term: “affiliate.” Mr. Barengo replied “affiliate,” in this case, refers to a wholly-owned subsidiary, that is a different corporate entity and has a different corporate name.

Mr. Zenzola gave the example that Beneficial is an affiliate of Household Financial Corporation and there are many other licensees, which are all part of the same corporate family (Household International Incorporated). He summarized there is common ownership and control.

Senator Townsend asked Mr. Zenzola to clarify if Household Financial Corporation is the parent company of Beneficial or if they are commonly owned.

Mr. Zenzola answered, “Correct.” Mr. Barengo added Household International Incorporated is the parent and Household Financial Corporation and Beneficial are subsidiaries.

Senator O’Connell asked Mr. Barengo to clarify if the amendments requested by Mr. Walshaw would be an encumbrance to the companies. Mr. Zenzola responded these amendments would be a benefit; the language in the bill would provide a form that would simplify the process for the relocation of offices.

Mr. Barengo stated the amendment would also insert language that would allow Mr. Walshaw authority to audit check-cashing companies. He continued S.B. 330 would provide a vehicle to modify chapter 604 of NRS, which applies to check-cashing companies, while it would not apply to the Nevada Consumer Finance Association; he stated, they have no objection to this change.

Senator Townsend asked if this method is common practice in other jurisdictions and if there are many licensees under this chapter or if Household International Incorporated is the dominant group. Mr. Zenzola replied though there are other licensees, Household International Incorporated is the largest lender regulated in this chapter.

Mr. Barengo explained that companies subject to chapter 645E of NRS are mortgage companies who lend their own money; and companies regulated under chapter 675 of NRS are much smaller. He added there are very few installment lender companies like Household International that are locally owned and operated in Nevada. He noted Old West (Old West Financial Services Incorporated) as one of the locally-owned installment loan companies in northern Nevada and said there are also a small number of others in the south. He explained most installment loan companies operating in Nevada are national operations that would be subject to laws from other states.

Senator Townsend asked whether these locally-owned companies would fall under chapter 645E of NRS or chapter 675 of NRS. Mr. Barengo replied a company who makes installment loans would have to have a license under chapter 675 of NRS if it is making loans on personal property, like auto loans. There are also a number of “payday” loan companies, which are locally owned that would fall under the provisions of chapter 675 of NRS. Check-cashing companies would be subject to chapter 604 of NRS, he said.

Senator Townsend asked Mr. Zenzola if the State is responding to his company’s needs in a timely fashion. Mr. Zenzola responded by stating that the main purpose of S.B. 330 is to improve timeliness in the method of applying for a new license. This bill would simplify the process as much as possible.

Senator Townsend introduced an addendum (Exhibit D) to the proposed amendment (Exhibit C), in which Commissioner Walshaw had incorporated language and citations to revise chapter 604 of NRS to accommodate check cashing businesses and their audits by the Division of Financial Institutions. He noted Mr. Walshaw was unable to attend the meeting.

John M. Vergiels, Lobbyist, Nevada Independent Check Cashing Association, noted Mr. Walshaw wanted to include a revision which would allow him to charge $40 for audits, which was omitted from the original bill.

Senator Townsend asked why Mr. Walshaw had indicated a change on the last page of his suggested changes (Exhibit D) by circling the $50 audit fee and notating, “to be determined.” Mr. Vergiels answered he was not sure why Mr. Walshaw had made that notation. He said he thought Mr. Walshaw had mentioned a $40 amount, and stated he would contact Mr. Walshaw. He further declared those he represents would prefer that the amount remain at $40.

Senator Townsend closed the hearing on S.B. 330 and its amendments, and

opened the hearing on S.B. 345

SENATE BILL 345: Revises provisions relating to provision of water service in certain mobile home parks. (BDR 40-957)

Charles W. Joerg, Lobbyist, Nevada Manufactured Housing Association, recognized Senator Shaffer for drafting S.B. 345. He introduced Gerald Goven, a member of the Nevada Manufactured Housing Association, who developed the Jaycee Senior Mobile Home Park in Clark County. Mr. Joerg stated, in 1995, the Las Vegas Valley Water District (Southern Nevada Water Authority) came before the Legislature to request that all new mobile home parks install individual water meters for conservation purposes. He said both the tenants and the park owners were in favor of this. He continued, the problem occurred when the water district determined there would be a fee for each meter hookup as well as for the master meter. He claimed this expense was prohibitive. He said in 1999, a bill was proposed that would revise these costs. He conceded the Las Vegas Valley Water District had made some adjustments, however, his clients believe these changes were not sufficient. He noted this bill would not require apartment complexes to install individual meters. He concluded by summarizing the intent of this bill is to permit the water district to charge the hookup fee based upon the master meter rate. He added it would still require the developer to install individual meters for conservation purposes. This, he said, would be a cost of approximately $154 for each meter, as opposed to the current $5400 cost.

Gerald Goven, Nevada Manufactured Housing Association, introduced himself as a developer in Nevada since 1986, who has built in excess of 1500 mobile home spaces in the state. He noted he is presently building a park in Pahrump. He also said he is a consultant to a park in Clark County which, he asserted, may be the last one built in Las Vegas if changes are not made to the law. Mr. Goven introduced the water meter connection rate schedule (Exhibit E). He pointed out though there is a need for affordable housing and the affordable housing criteria has a lower rate, master meters are not allowed in Clark County. He noted the master meter rate is in the $1100 range. He said two years ago when this rate increased to $5260, it became a major part of the cost of a mobile home park. He maintained, the original intent of the bill was meant to be a conservation act and not to change the fees. He cited an example from the rate schedule (Exhibit E) where, in the Jaycee Senior Park of 466 spaces, the water fees in 1994 were $98,000, including offsite fees. Two years ago, he continued, that same park’s water fees would have been $2.4 million to build, which would have made it economically infeasible. He noted even today, with the reduced rates, the water fee cost would be over $1.5 million. He concluded by emphasizing there is a real need for affordable housing and urged the committee to “level the playing field.” He interjected very few mobile home parks have been built in the last 5 years.

Senator O’Connell asked what the differences are between hookup fees in Pahrump compared to Clark County.

Mr. Goven answered, in Pahrump, one buys water shares that would cost a maximum of approximately $200 per unit, depending on when they were purchased. He stated the property he purchased in Pahrump included water shares. Mr. Goven said he paid less than $30,000 per acre including water rights, which he said was quite reasonable in comparison.

Senator O’Connell asked if the water district attempted to justify the hookup costs. Mr. Goven replied he has not seen any justification, and added the costs were originally represented at one level, then came in at a lower level, and the final the costs were higher.

Senator O’Connell asked Mr. Goven if this includes sewer hookups as well as water. Mr. Goven answered that these costs only apply to water. He added he believes sewer hookup is around $1350 per unit.

Mr. Joerg pointed out S.B. 345 does not apply to a single-family home, only those placed in a park.

Senator Townsend verified S.B. 345 does not affect apartments, and the statute which deals with apartments is chapter 116 of NRS, whereas chapter 461A of NRS applies to mobile homes. He asked if the language in lines 13-18 of S.B. 345, which was the original language relative to S.B. 95 of the Sixty-Eighth Session, had been meant for conservation purposes.

SENATE BILL 95 OF THE SIXTY-EIGHTH SESSION: Requires state engineer to establish system of credit for conservation of water. (BDR 48-985)

Mr. Joerg replied, “Yes Sir, that is correct.”

Senator Townsend commented the Senate Committee on Commerce and Labor has listened to testimony for many years regarding the problem of mobile home park costs. He added when supplies “dry up,” rent factors will “skyrocket” if the committee cannot protect people from the hurdles that obstruct the construction of mobile home parks.

Mr. Joerg commented this has already begun to occur and that he believes rents are extraordinarily high in Clark County. He suggested the rent-control bills coming from the Assembly are not as good a solution to the high-rent problem as creating a better housing supply.

Senator Schneider stated the Jaycee Park is in his district (Clark County Senatorial District No. 8) and he is concerned about the dissatisfaction of the members of the homeowners association. He asked Mr. Goven to explain how the management of the park is structured. He said he believes a member of the Jaycees (United States Junior Chamber of Commerce) runs the park.

Mr. Goven explained the way the park was structured was a condition of the original Community Reinvestment Act of 1997 loan and that the Housing Authority of Clark County was the operator for the management of the park, not the Jaycees. He stated he put together that agreement. He said later when the loan became permanent, it was possible that the Jaycees no longer felt they were obligated to honor the agreement. He noted the Clark County Housing Authority was the vehicle for that land and it is still titled to them. He added, Clark County later leased the land to the Jaycees for $1 per year based on an act of Congress. He commented this act of Congress was unique and there has not been another like it since. Mr. Goven explained the $6 million package was assembled through six banks with PriMerit as the lead bank. He concluded he believes the Housing Authority still retains the right to manage the park and he has no knowledge that the agreement has changed.

Senator Schneider stated the housing authority is managing the park but the Jaycees are setting policy. He asked if there is a way to change the current management structure.

Mr. Goven replied he was not aware of any way to change the management unless the housing authority was not familiar with the original agreement and had therefore drifted from the arrangement. He added, the county waived the parks and recreation fees on the site and stipulated the park is a senior citizens’ facility for the entire region and not just the residents.

Andrew M. Belanger, Lobbyist, Southern Nevada Water Authority, stepped forward to oppose S.B. 345. He noted he is a management analyst for the Las Vegas Valley Water District and said it has always been the district’s position that all connections to the water district service area should pay the applicable fees. He said district officials do not view mobile home parks differently from other types of connections. He added, they believe mobile home parks should pay their share of the equity in the water system to help pay for the infrastructure such as the pipelines, the pumping stations, and the reservoirs needed to deliver water. He pointed out the connection charges were imposed on a graduated scale to help growth pay for growth. He concluded by stating this is consistent with the message that new connections should be required to pay their part and district officials do not believe it would be prudent to waive these fees for mobile home parks.

Senator Rhoads asked Mr. Belanger if there should be a fiscal note representing the revenues lost if the fees for mobile home parks were reduced or waived. Mr. Belanger replied there probably should be a local fiscal note on this.

Senator O'Connell inquired if the average mobile home connection fee is about $5200, and how that compares to a single-family residence. Mr. Belanger replied single-family residences and mobile homes are similar. He added he would get the correct amounts for the committee.

Senator O'Connell asked if Mr. Belanger could provide a breakdown of these fees, and how are they determined. She also asked if the charge is based upon the square footage of the residence.

Mr. Belanger stated the individual meter installation charge is based upon the meter size in the Las Vegas Valley Water (District) service area. He continued, the smallest meter would have the smallest connection charge. He reported, generally, mobile homes would have the smallest meter size.

Senator O'Connell asked if Mr. Belanger could provide a list of the graduated costs as well as the master meter charge. Mr. Belanger replied he would get those numbers.

Senator O'Connell asked if Mr. Belanger was around when the original bill passed. Mr. Belanger replied he was not working for the water district in 1995, when the bill passed. However, he added, he understood the original bill was meant as a means to encourage conservation.

Senator Townsend remarked the residual of these fees happened to be a rather large revenue source. Mr. Belanger commented they do not view it as a revenue source but rather it is an equity issue. He asserted all those who are required to connect to the system should pay the same fee, and it has never been the district’s position to waive fees or to lower fees in certain cases.

Senator O'Connell requested Mr. Belanger supply the committee with a justification of the costs for the $5200 charge. She remarked that this amount seems extremely high.

Mr. Belanger declared the issue may be that the charges are a combination of water district costs and the regional connection cost the Southern Nevada Water Authority imposes. He added, the regional charges help pay for the regional water delivery system and include the treatment facilities at the lake and the major pipelines that bring water to all the municipal providers in the Las Vegas Valley.

Senator O'Connell asked if the regional system was not funded by the sales tax. Mr. Belanger replied the one-quarter percent sales tax pays only a portion of the cost, roughly 20-25 percent of the overall project. Senator O'Connell asked Mr. Bellanger to also supply the committee with the amount of money that the one-quarter percent tax generates annually. Mr. Belanger replied yes, he would.

Senator O'Connell asked how apartments are charged. Mr. Belanger answered apartments are not required to have individual meters but are master-metered. He continued, they are charged based upon the general amount of water used in the complex and a prorated share is charged per dwelling. He added this is not related to this statute.

Senator Townsend closed the hearing on S.B. 345 and opened the hearing on S.B. 400.

SENATE BILL 400: Requires public utilities commission of Nevada to adopt regulations prescribing procedure to be followed by landlord when landlord pays for service provided by public utility and charges tenant for cost of service. (BDR 58-1076)

Jon L. Sasser, Lobbyist, Washoe County Senior Law Project, came forward to testify in favor of S.B. 400. He explained S.B. 400 relates to what happens when a master-metered apartment landlord does not pay the utility bill and the tenant’s services are terminated. He presented the committee with a prepared statement (Exhibit F) outlining his position based on Public Utilities Commission of Nevada (PUCN) complaint case, Realex Property Management v. Southwest Gas Corporation (Docket No. 00-6021, Realex Property Management Complaint Against Southwest Gas Corporation Alleging Unnecessary Delay in Restoring Service to an Apartment Complex). He noted, in response to the complaint, Southwest Gas Corporation voluntarily implemented policies to address this issue. He maintained these voluntarily implemented policies should be mandated for all utility companies, to protect tenants from harm. He explained these policies include advance door-to-door notification to tenants of possible service interruptions and a prioritized restoration of services if the power were disconnected. Mr. Sasser pointed out the public utilities commission does not have statutory authority to implement these mandatory policies.

Cynthia Messina, Public Information Officer, Public Utilities Commission of Nevada, testified the public utilities commission is neutral on the bill. She stated the fiscal impact for the rule-making process would be between $28,000 and $78,000, depending on the complexity of the small business impact determination. Ms. Messina continued, if they should need to open a docket, it would be late 2001 or early 2002.

Senator Townsend asked Scott Young, Committee Policy Analyst, Research Division, Legislative Counsel Bureau, if the committee is responsible for preparing the fiscal note or if it would be submitted by the agency. Mr. Young replied he will find out.

Anthony F. Sanchez lll, Lobbyist, Camden Property Trust, stepped forward to oppose S.B. 400. As a former counsel to the PUCN, Mr. Sanchez said he believed if regulations are imposed, the fiscal impact on the PUCN will also include oversight costs. He commented the bill is too broadly worded. He continued, S.B. 400 gives the PUCN the authority to impose regulations on landlords, who would pass these costs on to the tenants. He stated Camden Property Trusts owns over 11,000 units in Nevada, which represents over 8 percent of the apartment market. He stated the company passes through water costs, for example. He noted Camden Property Trust instituted a program titled: “The Residential Utility Billing System,” a year ago; under the system guidelines they charge the tenants 50 percent of the total water usage, based on square footage, with the other 50 percent allocated to common area. He commented this program resulted in a 10 percent water conservation benefit. He urged against passage of S.B. 400, commenting that during this current climate of utility deregulation, he would associate this bill with regulating apartment owners. Mr. Sanchez continued, apartment owners are not considered utilities because they do not make a profit on the water but pass through costs. He added, if there are abuses, they may be better addressed by another means, such as an unfair trade practice statute. He stated the industry has been proactive as shown by the response Southwest Gas took to the complaint mentioned in earlier testimony. Mr. Sanchez concluded the bill is overly broad and bureaucratic in a time when government is making an effort to streamline regulations.

David L. Howard, Lobbyist, Silver State Apartment Association, spoke in opposition to S.B. 400. He pointed out they have been working over the last three sessions to find some balance between tenant and landlord. Mr. Howard suggested S.B. 400 represents an open-ended regulation process that would only complicate an already complicated law and he urged the committee to deny the bill.

Pat Coward, Lobbyist, Nevada Association of Realtors, spoke in opposition to S.B. 400, also suggesting the bill is too broad. He commented the PUCN already has ample authority to deal with individual issues. Mr. Coward concluded by stating it would be overreaching to require the PUCN to be involved in a contractual arrangement between the tenant and the landlord.

Robb Lamb, Concerned Citizen, testifying by videoconference from the Grant Sawyer Office Building in Las Vegas, read into the record:

On September 2, 1998, Camden Oasis Properties (COP), an apartment complex corporation, requested an advisory opinion from the Public Utilities Commission [sic] to examine the issue of instituting a system for billing its residents for water, sewer, and trash, Docket No. 98-9007. Consequently, COP attorneys learned that there was no NRS ruling against this form of arbitrary billing. Approximately 6 months into the request, COP withdrew its request and did bill its residents. Initially, it was for water only. This resulted in a tremendous outcry and protest to the PUC [sic] by its residents. COP rode out the storm and then implemented the second part, i.e., billing for sewer. COP is now on its third step, and that is billing for trash removal. The final step is that COP et al. will bill its residents for property taxes. On August 26, 1999, [the] PUC [sic] issued a nonjurisdictional finding regarding the issue because there is no legislation in that regard, Docket 99-7014. Subsequently, many apartment complex companies have followed the example of COP. However, such companies wait for a period of time before implementing the system; i.e., they wait for the storm, if any, to pass before instituting the incremental billing. With such billing increments for the said services, COP et al. conditioned residents to accept the policy without protest and to the concept that it is a standard practice at any and all apartment complexes in Nevada, or will be shortly.

Specifically, Canyon Lake Apartments at 2200 South Fort Apache Road, managed by Metric Property Management, owned by the California Public Retirement System, instituted this arbitrary billing in September 1999. I lived in a three-bedroom apartment with two bathrooms. Except for a dollar or two difference, I was paying the same amount for the water and sewer as were those who lived above me with six adults. When I inquired as to the reason for the similar amount in billing, I was told it was due to the space I had and the fact I had two bathrooms. I told them I could only use one bathroom at a time, but this had no effect. When I requested information on the formula, they would not provide it and I had to pursue it with diligence, as they were not cooperative. The result, thereof, was that after 10 years of residence and [being] a senior citizen, Metric Property Management invoked an eviction without cause order against me. As such, the leases issued by these companies are contractive adhesion, wherein there is only one option: i.e., to move. However, many residents have a problem with their credit ratings and/or limited funds, which prevent them from moving and/or the costs of moving are expensive, traumatic and problematic. This example of profiteering is a blatant demonstration of a corporate [sic] exercising its muscle and the wanton victimization of the residents. An additional hammer is the “eviction without cause.” There is no recourse a resident may exercise other than to move. There must be a level of protection for the resident who is subject to this level of victimization, in fact, these surcharges are subtly introduced, unbeknownst to the resident until he has settled in.

Mr. Lamb continued:

The formula used by Energy Billing System [Energy Billing Systems Incorporated] of Colorado Springs [Colorado], which they all seem to use, as I understand it, is a general formula applied to all properties throughout the United States and not designed for a specific property nor a specified geographic location. And, I have letters attached with the way they do it. The correct, equitable way to bill users of utility services within an apartment complex is to install individual meters, although costly, on each apartment, then charge as to product usage: i.e., the-pay-for-what-you-use format. An alternate, but obviously a flawed, less equitable and openly disputed concept, is to prorate the product usage based upon the number of people staying, registered or nonregistered, in a complex; then bill each by a mathematical formula designed and established for that specific area. This application is rife with inaccuracy because no two individuals use the same amount of a given product. The adoption of proration … of costs for product usage for an apartment in an apartment complex, predicated upon the number of occupants therein, [the] total [of] all bathrooms within, and all the square footage thereof, follows the socialistic precept and does not follow the established practice of [the] pay-for-what-you-use format. This is the most questionable method of billing and is open to numerous legal interpretations and administrative pitfalls.

Mr. Lamb concluded by stating one has to depend on the “corporate” for whatever they are billing and the resident has absolutely no knowledge of that which the corporations implement. He continued the owners specify the billing is based on the lowest 3 months, and they do not charge for irrigation during a certain period. However, he added, irrigation in Nevada is charged year-round. Mr. Lamb said he had owned rental property in the past and accepted these costs as a part of doing business. He stated if he were a landlord who intended to charge the residents, he would pay for the charge of installing individual meters. He stated, though this would be a costly factor, this is “part and parcel” of doing business.

Senator O'Connell asked Mr. Lamb if there is any information in his lease which describes how utilities are charged.

Mr. Lamb replied, “No.” He added leases are contracts of adhesion and they are long and tedious and very few people understand them. He said only after people move in, do they discover the extra charges and by then it is too late. He pointed out it is very expensive to move, three or four thousand dollars. He stated the landlord has the right to evict the tenant “without cause,” which the tenant cannot fight. He emphasized he himself had been evicted without cause after 10 years of residency, after he questioned the landlord’s methods of billing. He noted there were water-usage violations such as water running in the street, but they still required the residents to pay.

Senator Townsend commented he thought the resident paid for utilities separately from the rent.

Mr. Lamb replied that you pay for electricity and heat, but now the corporations add, in order to increase the bottom line, the billing for water, sewer and trash. He suggested the next level they wish to implement is for the resident to pay for the property taxes. He explained if a person is paying $850 per month and the landlord starts adding numerous charges, there is no way for the resident to find out how these charges are being assessed and there is no control, nothing published or available. He asserted people are being victimized by corporations that diminish the services and increase the costs to the residents.

Senator Townsend stated the fundamental question is one of the contents of the contract. He noted no one has a copy of a basic contract from the facility in which Mr. Lamb resided, showing how it was determined what was charged.

Mr. Lamb replied all the facilities are billed out of Energy Billing Systems Incorporated, in Colorado. He said each time one signs a new lease, the corporation would increase that for which you were responsible. The first water fees were added in September of 1999, which, he noted, occurred after 10 years of residency. He mentioned he did not receive prior notification of the additional charges and originally thought the billing was a mistake.

Senator Townsend asked Mr. Sanchez from Camden properties if he wished to respond.

Mr. Sanchez stated Camden Property Trust’s residential utility billing program was only prospective in nature, and did not apply to anyone who had a current lease. He added, residents were given the option of entering into that program at the time of signing a new lease. He suggested Mr. Lamb had made several very broad statements, and mentioned he was not familiar with any residential tax pass-through cost. He noted he did not know the specific complex where Mr. Lamb resided, or have a contract from the facility with him. He noted chapter 118A of NRS specifies that such information would be included in all leases. He expressed he would be surprised if there were the “veil of secrecy” that was indicated by Mr. Lamb’s testimony. He emphasized Camden instituted this program nationwide as a water conservation effort. He said Camden properties worked closely with the Southern Nevada Water Authority and the water district in instituting Xeriscape landscaping. He noted 50 percent of water bills are allocated to nonresidential use. He pointed out, elsewhere around the country, he has seen from 70 to 85 percent allocations for residential use. He reiterated Camden fully discloses all charges.

Mr. Goven read from the first page of S.B. 400, line 14, subsection 2, “’Any written rental agreement must contain, but is not limited to, provisions relating to the following subjects,’ if you go to the next page, line 2, item d [paragraph (d)], ‘services included with the dwelling rental’ and e [paragraph (e)], ‘fees which are required and the purpose for which they are required.’” Mr. Goven asserted this stipulates the charges should be incorporated in the rental agreement, and commented that the majority of landlords are forthright in that area.

Mr. Howard added it is in the best interests of both the tenant and landlord for all charges to be placed in the agreement so there will be no misunderstanding later as to who pays for gas, water or heat.

Senator Carlton stated she has recently become a renter herself and understands the agreement can be confusing. She stressed the more important issue is there are no meters and residents are being charged based on an apartment size rather than on an occupancy basis. She said, at her apartment complex, she is charged for electric and natural gas services, but not for water. She added if she were being charged the same rate for water as a same-sized apartment with six residents, as opposed to her apartment’s two residents, it would not be equitable. She restated the underlying problem is people are being charged without accountability as to how much they are actually using. She also reiterated the contracts are not written to be read by the layperson and when the renters ask the landlord to explain the utility charges, they are told it is only a minimal amount and they are only being required to pay their fair share. She concluded by asking, if the committee is passing a pass-through cost and there is no accountability or way to meter the usage, “is that really the way it should be done?” She then asked Mr. Howard if his company passes the water cost through at 50 percent.

Mr. Howard answered yes, most of his companies pass the water cost through, but he did not know if it was at 50 percent. He also added there are no meters.

Mr. Sanchez answered there are master meters, but the individual apartments pay based on their square footage. He continued, if individual water meters were required, this substantial cost would also be passed on to the renter. He pointed out these costs would be in excess of $1,000 - $2,000 per unit. He added the fundamental difference would be: Does the committee wish to give the Public Utilities Commission of Nevada jurisdiction to regulate apartment companies as utilities, or will you require water meters? He noted these are separate issues and that is why he emphasized the conservation aspects of the program. He agreed that it would be more equitable to base charges on the number of people residing in a particular apartment, but added this would be too difficult to measure on an ongoing basis. He noted when they factor in water conservation, the apartment complex as a whole pays less if everyone conserves. He noted Camden properties is proud of the 50 percent benchmark charge they allocate to the residents as opposed to what they allocate to the common areas.

Senator Carlton stated the cost of water that is not metered to the individual residents is considered part of the cost of doing business for the apartment complex. She explained those costs should be built into the rent structure, and the residents would know ahead of time how much their rent is going to be. She continued, if they are not going to hold each individual apartment accountable for usage, then this cost should be built into the rent structure as it typically has been. She stated all these costs, as in all the other costs of doing business, should be added to the rent so that each renter is aware ahead of time how much money will be needed from the family budget for living expenses.

Mr. Sanchez replied water usage for each complex is different every month. He noted the apartment complex would become a utility if the company constantly charges one amount, and there would be no way to tell if they were making a profit. He summarized if the billing is based on actual usage for that month then the resident would be charged the most accurate amount.

Senator Carlton remarked she and Mr. Sanchez were talking about two different matters and suggested they discuss the issue later.

Mr. Lamb contested the previous statement made by Mr. Sanchez. He asserted if the company reduced its costs by 50 percent in the water maintenance factor, it is increasing its bottom line, so therefore, it is profiting. He continued that water is provided through an allocation vender who is contracted through Energy Billing Systems out of Colorado, which sends each resident a monthly statement. These statements, he continued, reflect charges relating to the residents’ allocation for consumption of water and sewer during the billing period. He added, these charges are calculated by basing 50 percent on square footage and 50 percent on occupancy. He stated occupancy factors are also based on a formula: The first person in each apartment is counted as 1; an additional adult is counted as 0.9; and persons between the ages of two and seven are counted as 0.7. He declared one person living in a 1200 square-foot apartment is penalized when compared to six people living in a three-bedroom apartment. Mr. Lamb said he agreed with Senator Carlton, stating the issue is that people are arbitrarily billed. He added, contrary to Mr. Sanchez’s statement regarding conserving water in the open areas, the irrigation is not well-maintained and the residents are forced to pay for these inefficiencies with absolutely no control or knowledge. Mr. Lamb insisted the complex should, at least, have a posted notice declaring the billing methods.

Mr. Sanchez responded the Southern Nevada Water Authority offers credit if the landscaping practices water conservation. He stated those practices should not be confused with profit motive. He declared when costs are passed through, there is no profit for the company. He also disputed Mr. Lamb’s statement that someone living in a one-bedroom apartment pays the same amount as someone living in a three-bedroom apartment. He noted if the complex chooses water-conserving landscaping, it should be rewarded as any homeowner would be rewarded, and this does not imply that the company is profiting at the expense of the residents.

Mr. Lamb testified he had a water bill in hand and insisted there is only a $3 or $4 difference between it and the bill for the six adults who lived above him. He added, if conservation landscaping were implemented, this would also reduce the cost to the resident due to the fact that he pays 50 percent of the overall cost. He opined the landscaping at his complex was wasteful. He explained if the watering of landscaping were, in fact, conserved, then the company would realize a benefit from its 50 percent portion of the overall water costs. He declared the residents are told what their water charges will be without access to billing information.

Senator O'Connell closed testimony on S.B. 400 and adjourned the committee meeting at 8:17 a.m.

RESPECTFULLY SUBMITTED:

Jude Greytak,

Committee Secretary

APPROVED BY:

Senator Randolph J. Townsend, Chairman

DATE: