MINUTES OF THE meeting

of the

ASSEMBLY Committee on Commerce and Labor

 

Seventy-Second Session

March 26, 2003

 

 

The Committee on Commerce and Laborwas called to order at 2:09 p.m., on Wednesday, March 26, 2003.  Chairman David Goldwater presided in Room 4100 of the Legislative Building, Carson City, Nevada, and, via simultaneous videoconference, in Room 4401 of the Grant Sawyer State Office Building, Las Vegas, Nevada.  Exhibit A is the Agenda.  Exhibit B is the Guest List.  All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

 

Note:  These minutes are compiled in the modified verbatim style.  Bracketed material indicates language used to clarify and further describe testimony.  Actions of the Committee are presented in the traditional legislative style.

 

COMMITTEE MEMBERS PRESENT:

 

Mr. David Goldwater, Chairman

Ms. Barbara Buckley, Vice Chairwoman

Mr. Morse Arberry Jr.

Mr. Bob Beers

Mr. David Brown

Mrs. Dawn Gibbons

Ms. Chris Giunchigliani

Mr. Josh Griffin

Mr. Lynn Hettrick

Mr. Ron Knecht

Ms. Sheila Leslie

Mr. John Oceguera

Mr. David Parks

Mr. Richard Perkins

 

COMMITTEE MEMBERS ABSENT:

 

None

GUEST LEGISLATORS PRESENT:

 

Assemblywoman Genie Ohrenschall, Clark County, District No. 12

Assemblyman Mark Manendo, Clark County, District No. 18

Assemblyman Garn Mabey, Clark County, District No. 2

 

STAFF MEMBERS PRESENT:

 

Vance Hughey, Committee Policy Analyst

Wil Keane, Committee Counsel

Diane Thornton, Senior Research Analyst

Corey Fox, Committee Secretary

 

OTHERS PRESENT:

 

George Flint, Private Citizen

Steve Ray, Stateline Homeowners Association, Tahoe Shores Mobile Home Park

Mike Ingenluyff, Resident, Tahoe Shores Mobile Home Park, Stateline Homeowners Association

Thelma Clark, AARP

Karl Braun, Nevada Association of Manufactured Homeowners

Marshall Schultz, President, Renters Information Center

Sara Jones, Administrator, Nevada State Library and Archives

Gary Reese, City Councilman, Las Vegas

Fernando Romero, Commissioner, Clark County Housing Authority

Richard Bianco, Citizen, Las Vegas

Joe Guild, representing Mobile Home Community Owners

Renee Diamond, Administrator, Division of Manufactured Housing

Teresa Maloney, Owner, Lucky Lane Mobile Home Park, Reno

Marolyn Mann, Executive Director, Manufactured Home Community, Owners Association

Richard Denison, Resident, Jaycee Mobile Home Park, Las Vegas

Ron Teti, Chairman, Residents Council, Jaycee Mobile Home Park

Laurie Licata, Residents Council, Jaycee Mobile Home Park

Brian Sagert, Housing Authority, City of Las Vegas

Andy Belanger, Las Vegas Valley Water District, Southern Nevada Water Authority

Jim Avance, Nevada Manufactured Housing Association

Larry Matheis, Executive Director, Out of State Medical Association

Bob Ostrovsky, representing Nevadans for Affordable Health Care

Marie Saldo, Sierra Health Services

Helen Foley, representing Pacific Care

Woody Thorne, Executive Officer, Public Employee Benefits Program

Phil Nowak, Division of Health Care Financing and Policy

 

Chairman Goldwater:

We will open up the subcommittee on Commerce and Labor because we have so many people waiting.  I believe everyone is present today.  A quorum is not present.  We will start as a subcommittee.  We have five bills on the agenda; we will open with Ms. Ohrenschall’s bill, A.B. 184. 

 

Assembly Bill 184:  Creates state board to review certain increases in rent relating to manufactured home parks. (BDR 10-386)

 

Assemblywoman Genie Ohrenschall, Clark County District No. 12:

As primary sponsor of Assembly Bill 184, I would like the opportunity to provide some introductory remarks about the legislation before we get into the more meaningful legislation and the more meaningful experiences of the people here. 

 

As you know, we are in general times of economic crisis, which are very difficult, particularly on the elderly.  Many residents of manufactured home parks, or elderly persons, are single because their spouses have died.  Most rely on their social security stipends to pay their living expenses.  They have worked hard all of their lives and were told that manufactured home living was a good investment.  They thought it was.  Because the line gets blurred when you buy a mobile home, you somehow get the feeling that you are getting an interest in the land that is under it, even though you are really not.  They bought the homes and had them placed in parks, where the rents were originally as low as $50, only 15 years ago.  Today, you will not find rent like that.  They felt that rent, along with the house payments, on the actual unit itself, from $300-$700 if they were buying a new unit, and considerably lower if it was an older one, was something that would be affordable for them for the rest of their lives; they would not have to worry. 

 

Well, in the last several years, these residents have seen the lot rents escalate.  Most rents have increased approximately $75 or more a year, to the point where, in many parks, the rents are over $500 a month – quite a distance from the $50 that they started out with. 

 

It is important to note that residents are only renting the space where the manufactured home is parked.  A lot of them did not fully realize the implications of that.  Now, you may ask the question, why doesn’t the renter move if the rent becomes unreasonable?  That is the thing to do, right?  The answer is that it can cost up to $8,000 to move a manufactured home, if it can be moved at all; older homes will not be accepted by newer parks, which can create a problem by itself. 

 

Assembly Bill 184 attempts to address the critical problem facing many individuals on fixed incomes.  I would like to briefly walk you through the most significant provisions of the bill. 

 

Section 5 of the bill creates the Manufactured Home Park Rent Review Board within the Manufactured Housing Division.  This Board consists of five voting members, who shall each serve a term of three years.  The administrator of the housing division will appoint two members, representing landlords, that is, the park owners: two members representing tenants; and an economic expert on rent at manufactured home parks.  The administrator shall serve ex-officio as a non-voting member of the Board. 

 

Section 7 of the bill provides that a landlord cannot increase rent, unless the amount of the rent will be $350 per month or less after the increase, or the Board has approved the landlord’s application for rent increase.  Subsection 4 of Section 7 specifies that in reviewing an application for rent increase, the Board must consider the operating expenses of the park, the current rent charges, the debt service, and a reasonable rate of return for the park owners.  We realize that this is a business and park owners are entitled to make their profit.

 

Section 8 requires the administrator to adopt regulations to carry out these provisions.  Section 9 stipulates that the landlord may not charge a fee in order to circumvent provisions of this bill; that is, calling something a “fee” instead of a “rent increase,” when in fact it may be a rent increase. 

 

That is a basic review of the contents of the bill that are the most significant.  I have brought along with me, for some background information, an excerpt from the magazine put out by the Nevada Association of Manufactured Home Owners that has information from the Manufactured Housing Division, Nevada Parks Report 2002 (Exhibit C).  It includes information such as how many empty spaces, or homes for sale, are in the major parks that exist in southern Nevada.  It also includes information as to the rents that had been charged at the end of the previous year, 2002, in some of these major parks.  You can see $503, $525, $488… Sums around $500 are fairly common.  These are just the parks that we have been able to get information on because parks are not really that open and generous with giving this information.  Certainly, these rents are high.  I am happy to answer any questions the Committee may have.  To guide this along, as my next witness, I would like to introduce to the Committee Mr. George Flint.

 

Chairman Goldwater:

The only question that I have is on Section 11 of the bill.  Why is the State Library and Archives portion in the bill?

 

Assemblywoman Ohrenschall:

We have a representative from the State Library and Archives who will [discuss] that information in a little bit.  Apparently, that is the accepted way to not make it cost an “arm and a leg” for an organization like this, which is not being paid a stipend to meet, because this organization would not, and there is a way.  Basically, some benefactor, whether it be some member of this Committee or somebody who lives in a park, would buy a copy [of the report] and donate it to the library, and then the library would lend it to the board that would meet only certain times and would not necessarily have a big space or area where it would keep its own records.  It is another one of those things that they do in government that, to be honest, I do not fully understand, Mr. Chairman. 

 

George Flint, Private Citizen:

I am here as a private citizen, but I am probably more passionate on this particular issue than I possibly am on those issues that come before my paid clients.  On the offset, Mr. Chairman, let me thank this Committee for the support that you have traditionally, through the years, shown for this problem and this need.  Going back to 1991, this often boiled down to the Joe Guild/George Flint dog and pony show.  As much as that is the case, I would like to say that we always seem to win over here and lose over there, so it becomes a draw and thus a “no win” for these nice people.  Today, I hope simply, without leaning on any of you, particularly you, Mr. Chairman, to set a bit of a stage for some of the people who will speak after me that have this major problem to contend with, that hopefully this bill, or some modified version of it, can address. 

 

Before I go further, however, I want to say about my good friend Mr. Guild, since he will have last word today, that I told him I would try to be sick on Wednesday.  I woke up this morning feeling the best I have in about six years.  Number two, I also want to say about my good friend, that he has worked hard, representing the park owners, to attempt to influence his client not to abuse this system, and to some great degree, he has succeeded, but he does not have full control or influence over his clients, any more than I do over mine.  Number three, Mr. Guild also worked very hard, along with several others and myself, to create a subsidy program in lieu of a rent justification bill.  That rent subsidy program has helped at times; however, I constantly hear about it being on the verge of bankruptcy and a $600 rent with a $100 subsidy still leaves a lot of people in jeopardy.

 

Chairman Goldwater:

Can I stop you for just a second?  Let’s note for the record that a quorum is present and we are back to the full Committee of Commerce and Labor.  Sorry for the interruption.

 

George Flint:

The last thing that I care to say about my good friend is that he said last time we debated this issue that “George Flint really shouldn’t have any gripe about the rent he pays, because he has a million-dollar view.”  Joe is right.  I do have a million-dollar view, which I pay $568 a month for.  But I am not here for myself, Mr. Chairman, I am here for the thousands of other people that maybe do not make six figures a year.  I do not have to live in a mobile home park, in a rental home park.  I do it by choice and when I dress in all black, I am not here to celebrate Halloween. 

 

Having said that, and thank you for your courtesy and indulgence, Mr. Chairman, I want to point out that Barron’s magazine within the last few months has printed and said that the ownership of a rental park is the best investment in the United States today.  I like to call it the best “cash cow” investment.  This is a bit crude and I probably will get my hand slapped, and you might even stop me, Mr. Chairman, and that is all right.  The way the law reads now, for rental parks, by owning one, you really have a license to steal, because every three months you can raise the rent and there is no limitation on it. 

 

I think that the ranking members have commented to me through the years that, “Should we start telling anybody what their property is worth, or what their product is worth,” is certainly true and, generally well intended.  But, when anybody abuses other people, I think that the public policy writers have to look at that public policy and they have to say, “Maybe there is an abuse that we need to address, even though, in reality, the good old fashioned system says that whatever the market will bear is the proper approach.”  This gentleman to my left’s predecessor, the late Bill Hettrick, came to me one time with tears in his eyes and told me about two constituents of his in southern Nevada who, after they paid their rent each month, they were a couple in their seventies, had $35 a month left to live on, and they had figured out how to do that.  They did it with macaroni and subsidy cheese. 

 

I buried a lady two months ago who I have referred to before this Committee for ten years.  Her name was Helen.  Helen died at 88, 80 percent blind, but she still did $100 a month in sewing out of her home, in order to be able to deal with the $568-a-month rent.  So, you should ask, at that point, why in the heck didn’t she move?  My good friend [Mr. Guild] has alluded to the cost to move a double-wide home through the years.  Seventeen years ago, when I moved my double-wide from Verdi to Reno, it cost me $16,000, and it is not a palace, it is a 24’ by 60’ home.

 

[Mr. Flint, continued]  There is a section of the law, it is not in this bill, but it is in [Nevada Revised Statutes] 118B that allows mobile home renters and parks to ask the ownership to sit down and talk to them.  You have to have 25 percent of the renters in the park and then a committee of five is chosen.  They meet with the owner to discuss their frustrations and concerns.  We thought we had an answer to the abuses that were going on in our park.  We did that and the owner met with us.  The next day, he raised our rent to $600 per year, per unit.  Then he took me aside and said, “You seem to be the visible one here, at least the biggest guy in the room, so let me tell you something, George.  I will be happy to meet with you people anytime, but be prepared for a $50-a-month rent increase per house if you want to talk to me.” 

 

This gentleman on my left has gone from door to door and he has seen these abuses that I am not going to spend a lot of time talking to you about today, except that I want to tell you what the worst one of all is.  That is the young couple, or the old couple, or the couple that comes out from Michigan to enjoy Las Vegas and fall in love with the Las Vegas Valley, start looking for an investment and they get around to maybe looking at a mobile home park.  So, they show up and they sit down with the realtor and the owner and they finally come up to the conclusion that this won’t quite pencil out.  They then say to the realtor that this is not going to pencil.  And, what does the owner and the realtor say?  That is no problem.  You just raise the damn rents $100 a month each.  And it has consistently happened.  We had a member of the Assembly that voted for this particular concept one year and blew me right off the chair.  It was former Assemblyman Dean Heller.  I said to the now-Secretary of State later, “You, as a conservative Republican, would vote for this bill?”  He said, “When I went door-to-door, George, running for election in Carson City, the number one complaint in the mobile home parks was on this issue.”  He said, “I had no choice but to vote for it.” 

 

Having said that, let me also say, please, that if you process this bill and if you pass this bill out in one of its various forms, and I believe you probably will, you need to do one more thing.  I am your “old dad” talking to you now.  You need to prioritize it enough in your minds and in your agendas that you will help us when it goes to the other house, because the closest we have ever come, after we got it out of this house, is that we lost it in 1993 by one vote in committee, and in 1991 we lost it by one vote on the Floor of the Senate, to a Democrat, by the way, who had promised me that he would support me.  When Gene Porter, now Judge Porter, had Ms. Buckley’s position, he and I took a trip to Las Vegas to visit all of those people on the screen [those testifying in Las Vegas].  Five hundred people filled the room on this issue.  I have never seen any legislator more dedicated to try and get this basic concept passed into law.  As the majority leader, he had a certain [influence] late in the session in the other house, but that did not get the bill passed.  I am challenging each one of you that supports this bill to decide in your mind, for your constituents’ benefit, to prioritize some of your effort enough that you will also work with us, and I know you are busy, that you will help us with the members on the other side, because the people in Nevada, the 30,000 that live in rental parks, have come before this Legislature year after year and this house has always supported them and it dies over there. 

 

[Mr. Flint, continued]  Finally, there is one new circumstance that concerns me.  The park I live in, which has about 250 units, presently has 17 vacancies.  Last month it had 12 and in December it had 8.  The vacancy factor is increasing because the economy is bad and people that bought the houses on little or nothing down are walking away from them.  I live every day with the fear that as the vacancy factor falls, or as it increases rather, that ownership, which, by the way, lives in California, will probably figure out that the only way they are going to keep their cash flow that it needs to be is to lay new rent increases on the rest of us because those businesses have a set figure that they expect to make.  I think the economy alone is going to drive several rent increases on the renters over the next few months and few years.  I alluded, and then I am finished, Mr. Chairman, to having met with the owner of our park.  I really tried to reason with him and I tried to explain the concerns that we had and he said to us, the five of us, but mostly to me, he said, “We own three parks in Nevada and five parks in California.  We cannot raise our rents in California without going through a process like this one.  So, as a result, we exploit our parks in Nevada to create the money we need to keep our return at the level we desire to be.” 

 

Chairman Goldwater:

Mr. Flint, we give you a little bit more latitude because you are up here for all 120 days and this is the only day that you testify.  Mr. Flint, we appreciate your testimony and also the respect that you have shown the people, the legislators to your left and your right, which are Mr. Manendo and Ms. Ohrenschall, who have long been advocates for the rights of mobile home owners.  Also, Ms. Buckley has been a very effective advocate for the rights of mobile home owners.  Assemblyman Manendo?

Assemblyman Mark Manendo, Clark County, District No. 18:

I am lending support for Assembly Bill 184.  This is my fifth session, the same as you, Mr. Chairman, in this legislative body, and time and again we come before this Committee talking about this issue.  This issue does not go away because this issue has a face.  The faces, some of them are in Las Vegas.  A lot of those faces are from my District No.18, and I am glad that they are there in support of this legislation that my colleague from District No. 12, Ms. Ohrenschall, has submitted. We, over the last few sessions, with the leadership of Barbara Buckley, our majority leader, have developed a working relationship with the park owners that we have not had in past years.  We are grateful for that and we want to thank them for that.  Hopefully we will continue those relationships; there are a lot of issues that everybody agrees upon.  This issue, it seems, cannot come to any consensus.  I am hoping one day that we possibly can.  I do not know if that day is today, but it would be nice. 

 

Something has to be done.  To go door to door in your districts, those of you who have manufactured home parks in your district, and to meet the people who are struggling, have their homes for sale, and you do not meet the people at the doors because they are vacant.  They are gone.  They abandoned their homes.  No greater loss could anybody have than to lose your home, and that happens time and time again.  There are also a lot of empty spaces, and in a lot of those cases the people have abandoned their homes [and the homes have just been taken out] and they are waiting to have a family move in.  Families are not moving in.  It is sad because these people need some help.  We need to do something.  If you pass A.B. 184, we think that this is a good start.  We need to do something for our citizens. 

 

Chairman Goldwater:

I think it would be appropriate, since the folks in Las Vegas took the time to come down, to read their names into the record.  Then, hopefully they have elected a spokesman to come forward.  Let me start:  Mary-Ann Newberry, Gary Newberry, Arthur and Crystal Montez, Barbara and Jorge Sanchez, Elfried Arnhold, Dian Cultrera, Tony Cultrera, Mary Hammond, Donald C. Hammond, Donald J. Hammond, Miguel Baeza, Terrie Rideout, Patricia McWhorter, Miguel Diaz Elizondo, Gordon H. Smith, Caron Haggert, Max Heeman, Linn Billingsley, Barbara Ginoulias, Mike Longi, Denise Lahan, Jennifer Kruleski, Marcia Forkos, Judy Brandt, Julie Breslin, Doug Bache, Albert Kalin, Kathryn Kalin, Nancy A. Russo, Edna Blanchetto, Anthony R. Cultrera, Kathy M. Ragan, Susie Martinez, Marie Lizotte, Lorraine Dooling, Mr. Dooling, Fernando Romero, Yasmin Garcia, Ardonia Torres, Lisandra Hernandez, Stuart Anderson, Marie Manendo, Barbara Bartley, Tony S. Beltran, Stephen Zambrano, Richard Bianco, Mary Stanley, Carl S. Stanley, Helen Hackett, John Hackett, Helen Nelub, Helen Miller, Don Brooks, Gilda Sinishauser, Stella Dalley, William Farmer, Jane Pickering, Howard Maskin, Grace Kelly, Joseph H. Lisolde, Barbara Clark, Jim Bustte, Clara Lawson, Ula E. Franke, DeLoris Poorman, Harry Poorman, Lillian DeBolt, Sylvia Franks, Angelo Gugliano, Anthony Gugliano, Bill and Ellen Brant, Jim and Erna Kelley, Joan Andrew, George Pickering, Paula Branson, Richard Sherman, and Ginger Smith.  I am sure that I butchered far too many of your names and I apologize for that and am very sorry.  I think it is very important that we recognize your presence and acknowledge your presence and thank you very much for coming down.  Note that you are very well represented and have effective advocates. 

 

Assemblywoman Ohrenschall:

I would like to call eyewitnesses to a current situation that is happening up here in northern Nevada by the shores of Lake Tahoe, where one never thinks of having disputes and foreclosures and rental evictions [and someone by two residents who wish] to testify.  Then, very brief comments by Thelma Clark and Karl Braun, representing the Nevada Association of Manufactured Homeowners, and we will try to keep it as short as we can.  All of these people have a different aspect to testify to, if we may. 

 

Steve Ray, Stateline Homeowners Association, Tahoe Shores Mobile Home Park:

I am speaking in support of A.B. 184 on behalf of the Stateline Homeowners Association, representing the Tahoe Shores Mobile Home Park in Stateline, Nevada.  We are a small community located on the southeastern shore of Lake Tahoe comprised of low- to middle-income families, many casino workers, and low-income elderly and disabled.  This may be one of the last few remaining communities in our area where a working family can still afford to buy a home.  That is, until early last year, when a developer bought our property for the express purpose of closing the park and building condos.  He notified the homeowners in July of his intent and included in the notice that the space rent would be increased by a whopping $100 per month, plus an added water charge that was historically paid for by the landlord, 30 percent. 

 

Imagine getting a notice tomorrow that your mortgage payment went up 30 percent.  Now, imagine how you would feel if your income were fixed because of age or handicap.  Imagine what that would do to your budget, because that is exactly what it did to ours.  Together, my space rent soared from $547 to over $700 per month, making this, to my knowledge, one of the most expensive mobile home parks in the state of Nevada. 

 

The repercussions are devastating.  Many of us in the park are not able to afford the space rent, period.  We warned the park owner that people might be made homeless over this.  For many, like myself, the news gets even worse.  Our life savings is invested in our homes, which only holds its value as long as the park is stable and affordable.  With that gone, our home values and our life savings hit rock bottom.  Many tears were shed at our homeowners meetings because of something like this.  People are losing everything.  Now that our homes are made nearly worthless and unmarketable, the developer strategy becomes clear.  For those trying to escape an uncertain future, but unable to sell their home on the market, certainly unable to move it, and now unable to afford the space rent, the only remaining option left is to be taken by the owner one more time.  That is that he buys the homes out for pennies on the dollar.  We have lost about 20 homes this way and it continues. 

 

[Mr. Ray, continued]  No Nevada mobile home owner should have to endure this purposeful exploitation we are facing.  We know that this is just the beginning.  There is no limit to the amount of rent increase, only to how much more we will be able to withstand.  Unfortunately for us, the NRS is quiet on this issue.  For the record, we are not here questioning the right of the owner to develop the property as he sees fit, although naturally we oppose his plans in order to save our homes.  The issue here is this:  should a park owner profiteer from the vacuum in NRS to impose unrestrained rent increases on those held captive by the high cost and limited relocation options of moving a home?  We did not think so.  We saw relief from the Douglas County Commission in the form of a rent ordinance, which the Commissioners initially supported, but then later rejected subsequent to the developer’s private lobbying effort, which we suspect may have included the threat of a lawsuit by the park owners association.  The Commissioner’s may have simply been unwilling to test uncharted waters, trying to narrow the focus of the broad authority given to counties by the NRS. 

 

A.B. 184 presents a sensible and balanced approach to correct this.  It does not unduly interfere with the normal commerce of park owners asking for a reasonable return on investment, yet it ensures that park residents are entitled to equal consideration in cases where a park owner would choose to use rent as a weapon against those who are defenseless.  In closing, if you are asked why this bill is needed, please remember the people of Tahoe Shores Estates, and the ugliness of corporate greed that is strangling our community.  We deserve better, and so do all Nevadans.  We are here to ensure that this happens to no one else, by please passing A.B. 184. 

 

Mike Ingenluyff, Resident, Tahoe Shores Mobile Home Park:

I wanted to add that A.B. 184 is the only mechanism that any residents of a mobile home park would have, as Mr. Ray had mentioned.  We had gone to the county commissioners.  Basically, what we learned through this entire process was that no county in the state of Nevada, in essence, even has the authorization to pass any kind of rent control, as you are probably fully aware of.  There is virtually no mechanism for residents to seek any kind of redress in the event that they are being harmed.  It is quite obvious through their egregious actions what the current owners are doing against the people in our park.  There is no place that we can go to even seek redress.  I sat down and talked with Mr. Hendrick, who was nice enough to give me 30 minutes of his time, and we discussed this issue at length.  I even pursued an option that Mr. Hendrick had suggested to me, which was to seek redress through the court system.  I talked to an attorney who simply told us that Nevada laws are structured.  The owners are doing nothing illegal, everything they are doing is aboveboard, and we have no place to go.  A.B. 184 is the only option that 70,000 residents of the state of Nevada, who live in mobile home parks as renters, have.  It is the only thing that we would be able to do. 

 

Assemblywoman Ohrenschall:

Mr. Ray has a slightly broader copy of his remarks, which include other facts, with enough copies for the Committee that he would like permission to have distributed to the members (Exhibit D). 

 

Thelma Clark, American Association of Retired Persons:

I am here on behalf of AARP and they support this bill 100 percent.  They wanted me to tell you that they support this bill all over the United States, not just in Nevada, but any other state that wants a bill like this, they would support.  We do have 258,000 members in Nevada and about 3 percent of them need this bill. 

 

Assemblywoman Ohrenschall:

I would like to call Karl Braun, representing the Nevada Association of Manufactured Homeowners. 

 

Karl Braun, Nevada Association of Manufactured Homeowners:

This is my third session up here on this same issue and I really would just like to discuss two things, briefly.  One, I had heard in the previous sessions that this is the land of free enterprise; supply and demand will dictate what the rental costs in mobile homes will be.  That is an argument that I have heard several times.  If you look at page 4 of my handout (Exhibit E), in the columns on the right-hand side, second to the last column, you will see that these are – by the way, these numbers come from the Manufactured Housing Division Annual Report; it is generated from reports from each park owner in the state, given to them in July of each year – empty spaces went from 3,971 in 2001 to 6,558 this year.  That is out of a potential 35,000.  The average rent for all parks in the state went from $337 a month in 2001 to $373 per month in 2002.  That is an increase of about $50 a month.  My only problem with these numbers is that I do not see the laws of supply and demand coming into play.  We have a more than adequate number of spaces available.  I am paying $513 a month until July 1, when I go up to about $535 a month, so why don’t I move to a cheaper park?  I got the quote; it would cost me $7,500 to move my home across the street to an adjoining park that would charge me $380 monthly rent.  That is a huge difference, but that would take me roughly five years to recoup my moving cost before it would do me any good.  Who is to say that the owner of my current park will not buy the park next door in the next five years?  It is not, to me, a viable alternative. 

 

[Mr. Braun, continued]  The second and last thing that I would like to say is that we have repeatedly titled our legislation “rent justification,” and Joe Guild has repeatedly identified it as rent control.  I would only like to say that if this is a rent control bill, it would not involve a Committee and it would say that mobile home park rents would be $350 a month, period.  That would be the ceiling.  Rent justification is saying, if the rent is over $350 a month, please justify to this small group why you have to increase your rents.  I have to add one more thing that I overlooked.  The state of Massachusetts has a rent justification board.  Last year, they met a total of 42 hours for the entire year, to review rent justification requests.  It is a very simple procedure.  The park owner comes in, provides them with financial information of increase costs, and if they are verified, then they get their increase in rent.  Thank you.  [Chairman Goldwater thanked him.]

 

Assemblywoman Ohrenschall:

Mr. Chairman, I would like to point out that also present in the audience is Mr. Bob Varallo, who is the current president of the Nevada Association of Manufactured Homeowners.  In deference to the Chair’s request and that we not be repetitive, Mr. Varallo will not speak at this time, but he will be available if anyone needs his expertise.

 

Chairman Goldwater:

Yes, Mr. Varallo is a constituent of mine.  Mr. Varallo, you are a valued constituent.  Thank you for being up here.

 

Assemblywoman Ohrenschall:

With the Chair’s permission then, on to the last two people that I will call.

 

Marshall Schultz, President, Renters Information Center: 

You have all seen me here before, so we can pass on a lot of my introduction.  My organization, which represents a number of tenants in mobile home parks, strongly urges the passage of A.B. 184 for all of the reasons you have already heard from all of the testimony; I do not have to repeat any of it.  There is written testimony (Exhibit F) that will be distributed if it has not been already.  I would like to add a couple of things.  I went to a Douglas County meeting last fall regarding Tahoe Shores that Mr. Ray and Mr. Ingenluyff spoke about.  I attended the meeting, at Stateline, at which the park owners’ representative would not answer any direct questions.  Whether he did not have the answers or he simply did not want to, who knows.  The attempt by the Douglas County Commissioners to perhaps impose a rent control ordinance on the Tahoe Township failed, but it certainly brought the “creatures out of the woodwork.”  I suspect every landlord association in the state of Nevada got on those owners and told them to work something out with those tenants, but I have no proof of that, of course. 

 

The real question here is, in my mind, do we as a nation still believe that owning a home is a basic part of the American dream?  Do we still believe that a man’s home is his castle?  And do we still believe that no matter how poor or shabby that home might be, everyone has a right to live in peace and safe from predators?  I think that is really the bottom line, and I think this Committee and this Assembly will probably agree with that.  In some cases, the Government needs to step in to regulate business.  It does in every other form of business and as Mr. Flint suggested a little bit ago, perhaps you can exert some influence over the other house of the Legislature.  [Chairman Goldwater thanked him.]

 

Assemblywoman Ohrenschall:

I would like to call Ms. Sara F. Jones, who is State Librarian and Division Administrator, to shed light on that earlier issue concerning Mason’s Manual.  [Chairman Goldwater thanked her and asked for clarification of Section 11 of the bill.]

 

Sara Jones, Administrator, Nevada State Library and Archives:

The Nevada State Library and Archives is a division of the Department of Cultural Affairs.  I wanted to say as a private citizen, I certainly commend the efforts of this bill.  It certainly seems that it is very needed.  As the State Library and Archives Administrator, I have a small item to bring to your attention.  A.B. 184 includes provisions for the Nevada State Library to hold copies of a specific title in the bill that is titled “Mason Title for Parliamentary Procedure,” and to ensure that the State Library would loan the title to the newly created Manufactured Home Park Rent Review Board, for their use, to title “Mason’s Manual for Parliamentary Procedures,” mentioned on page 2, lines 39-44 and page 3, lines 1 and 2.  A thorough search by the reference staff of the State Library found no book by that title; however, we believe the title that is properly to be referred to is Mason’s Manual for Legislative Procedure.  We are confident that that is the book that they did, indeed, mean to call out, in that it is the parliamentary procedure at the Nevada State Legislature, and is already a part of the Nevada State Library’s collection.  We are asking today, to respectfully ask the sponsor of the bill that this specific requirement could be removed from this actual bill, because we would normally just have this item with no question.  It is provided to you as the state Legislature and to any agency that should need it.  I have prepared testimony (Exhibit G), but I know you have a lot to do, so I will move quickly.  The other piece that is important is on page 8, lines 24 and 25, that says we would specifically loan this to the Rent Review Board.  That is already normally in the scope of our business.  What we do is, both have reference titles for use in the library, and we loan them.  I have already ordered two copies of this.  It costs $60 per copy.  It is well within our budget to manage, so we are happy to do this and happy to support state agencies in any way that we can.  Thank you.

 

Assemblywoman Ohrenschall:

Mr. Chairman, I would defer to the preference of the Committee and the Chairs, whether to remove that one passage. 

 

Chairman Goldwater:

By reading the names in Las Vegas, I am quite certain that I left out a number of very important people.  Would those in the audience in Las Vegas, who are here in support of A.B. 184 please stand up and wave to us here in Carson City and indicate your support.  I know that Councilman Gary Reese is there.  If he would like to come up and say a few words, as well as Fernando Romero, I know that he is also there.  We will hear Councilman Reese and then Mr. Romero.  Councilman Reese, welcome to the Assembly Commerce and Labor Committee.  We look forward to your words. 

 

Gary Reese, City Councilman, Las Vegas:

Chairman Goldwater, thank you very much for this opportunity to speak.  I have been very active the last three sessions of the Legislature trying to get legislation like this passed.  We have been able to get it through the Assembly and it seems like we get stymied every time on the Senate side.  This is something that is very important to me.  My mother has lived in a mobile home park since 1973 and her rent is just atrocious.  I cannot see the benefit that she has received from the extra rent that she pays for her space.  I would be very remiss if I did not mention that I have met with different mobile home parks and I think that everybody in this room is just a very small body, compared to those people that are affected by this continual rent increase.  Any time that we can further reduce the cost I think it is prudent that we at least attempt to do this.  So, I am very much in favor of A.B. 184, and Thelma, if you can hear me, would you please tell them to support us?

 

Chairman Goldwater:

Thank you very much, Councilman Reese, I do not see any questions for you.  Mr. Romero, welcome.

 

Fernando Romero, Commissioner, Clark County Housing Authority:

I am the Commissioner of the Clark County Housing Authority.  It seems very coincidental and ironic that I just came from a meeting where a mobile home park that we support and manage, the Jaycee Mobile Home Park, which we took over as far as management is concerned in 1993, had their rent at $180 a month for all of these years up until 2001.  At that point, management came to us and said that they wanted to raise the rent by $20.  We tried to fight it, but nonetheless, we saw the justification in it, so they went up to $200.  That was in 2001. 

 

Today, management came again and wanted to raise it $10 more.  We asked for management to justify the reasons for that and they said that it was to put money into an account so that they could invest in other mobile home parks and also to pay some of the costs that they have to pay the Housing Authority in order to help them out in that payment.  Now, mind you, that was $200 that they wanted to add $10 to. 

 

We were totally opposed and I am totally opposed.  I am appalled to know that people in this room and in Carson City are paying $500 plus for just the mere and pure simple reason to park their home in a lot.  To me, that is just not right.  It is ludicrous.  It is incredible that individuals are paying that kind of money plus whatever their monthly payment is on the home itself. 

 

Mr. Chairman, Assemblywoman Buckley, Assemblywoman Ohrenschall, and Assemblyman Manendo, and other members of the Committee, I urge that you support the citizenry here in what they request, that they not be forced to pay more than the going rate.  Again, I think even $350, as is obvious by today’s vote, which I took at today’s meeting that I was talking to you about, in and of itself, is too high.  So, please support our citizens.

 

Chairman Goldwater:

Ms. Ohrenschall, thank you very much for your effective advocacy on behalf of people in mobile home parks.  I know if we can pan back out to the Committee, we can wave to all of our friends out there.  You can see that we are all here, heard every word that you said, understand your support, and appreciate you taking the time to come down and see your government at work. 

Assemblywoman Ohrenschall:

Thanks to the members of the Committee and thanks to the audience, both here and down there.  Reminder to the audience down there that we do have one more mobile home bill that is on this agenda that could affect all of you in your parks.  If you could stay for it, it might be good for you to stay.  Thank you.  I have nothing further on this particular bill.

 

Richard Bianco, Citizen, Las Vegas:

[Spoke on behalf of the more than 200 people in the hearing room of the Grant Sawyer building.]  Bear one thing in mind, Mr. Chairman, and I appreciate you taking this time.  The county and the city, under zonings for affordable housing, set up mobile home parks.  Mobile home parks, charging $500 a month rent now, is no longer affordable housing.  Something has to be done, more so in the rollback tradition, to start at $350, than the rent justification of the bill.  We appreciate your efforts to at least listen to us and set this board up, but do not make it a “paper board” like they have in Massachusetts, as the other gentleman was saying.  We have to have “teeth.” 

 

We do appreciate your time, and over 200 people here on short notice to come to this particular meeting shows you how serious it is.  This affects, mostly, Mr. Chairman, senior citizens.  They only make about $1000 a month on an average from the Social Security.  They are paying more than $500, just in rent.  These people have pilfered and actually, excuse my language, raped this community and mobile home parks.  We need you to do something about it, now.  Thank you very much.

 

Joe Guild, Mobile Home Community Owners:

Both of the people up here with me, Marilyn Mann, Executive Director of the Mobile Home Owners, and Teresa Maloney, a mobile home park owner in Reno, will say a few brief things as well.  We have passed out to the Committee a fact book and some of you who have sat on this Committee before have seen this before.  It is updated.  It does, I believe, give the factual case against the failure of rent control everywhere it has ever been tried.  I commend that to your reading, at your leisure.  I am here every day, if you have any questions.  If you do happen to read it, I would be happy to answer any of those questions on this issue. 

 

This is the 18^th year that I have represented this client.  As far as I can tell, I think every session since 1977, the Legislature has considered some form of a rent control bill, and this is rent control, just by what others have asserted to you.  I think that Nevada has, in its wisdom, rejected this idea, because of the failures elsewhere.  It is costly and we show that in this booklet.  Maintenance becomes deferred.  The housing base gets narrowed.  There are just a number of reasons and I will not go through all of them. 

 

[Mr. Guild, continued]  Let me look at the bill first with you.  Page 2, line 27, Section 6 of subsection 5, talks about how the Administrator of the Division of Manufactured Housing shall provide the assistance to carry out the duties of this Board.  I just note that section to point out that the bill does not have a fiscal note attached to it, but I believe upon further analysis the bill would result in a cost to the state, and the Committee might take a look at that. 

 

Section 7, page 3, you have limited the review authority to rent increases of over $350 per month.  Currently, there are about 102 parks in the state of Nevada that have rents in excess of $350.  So, I wonder about the justification, to use that word, for limiting it.  I hope the people in the audience in Clark County realize that if your park is charging less than that amount, you are not subject to the strictures of this bill. 

 

Lines 25 through 27, page 3, I believe that provision of the bill conflicts with NRS 118B.150, which requires a 90-day notice currently under the statute for any increase in the rent, so the Committee might look at that as well if it is seeking to process this bill. 

 

Finally, just a general comment about the actual practicality of this bill.  I just don’t believe this would work.  You have a board set up from conflicting entities.  I do not see how a landlord could ever sit on this board and agree to not increasing the rent.  The other members of the board, by majority vote, would agree to increase.  It does not make any sense to me, the way it has been set up, but that is my own personal opinion.  As to some of the comments in testimony that were made prior to me in favor of this, by the way, I must reveal to the Committee that the Tahoe Shores Mobile Home Park that was referenced earlier by some people is one of my clients.  Some of the things that were alleged to the Committee I take [inaudible] to, did not quite work out that way, from my point of view.  That is not the way that it happened and the residents of that park knew full well what the owner’s intentions were.  We are talking about a mobile home park that sits on the shores of Lake Tahoe, whose highest and best use is probably not its current use, and there are provisions in the law to compensate residents if the owners of that park choose to change its use. 

 

Chairman Goldwater:

Mr. Guild, our expert in that matter would like to question your assertion.  Ms. Buckley, please.

 

Assemblywoman Buckley:

I just wanted to stop you right there because there are some holes in the wall, as you well know, in 118B, that provides compensation for moving, but there are holes in it, in a situation like Lake Tahoe, when there are no other manufactured home communities to which to move.  I just think it is not accurate to say that they will just be taken care of, because I think the law does not take care of those residents, and that is why we will be looking at, in another bill, to fix that, which I think the parks have said is only fair.

 

Joe Guild:

I do know the details of the situation and that law says that an owner of a mobile home, in a mobile home park, the owners of which are changing the use of that park, has to have their mobile home moved within 50 miles, so it does not talk about basin boundaries or anything like that.  If there is no ability to do that then there will be compensation.  In this particular case, I just wanted to point out to the Committee that residents of the park are being offered, in my opinion, adequate compensation for their residences.  [Chairman Goldwater asked what that offer was.]  I am not at liberty to say, because it is a private treaty contract between the individual owner of the mobile home and the park owners.  I just did not want to let the assertions to the Committee go by without some response. 

 

Back to, and there is going to be a bill that will come before this Committee that the park owners have agreed to the provisions of, which will help to tighten the law a little bit, like Ms. Buckley says.  I appreciate the comments, just as an editorial aside real quickly.  I do appreciate some of the comments of some of the prior speakers considering the efforts that my client and representatives on behalf of the tenants have made over the last, I think it is now six years, which originally were at the request of then-Majority Leader Perkins, to get together and see if in the interim things that we agreed on could not be worked out.  I think that program has been highly successful and goes a long way to pointing out that in this industry there are more things to agree on than to disagree on. 

 

One of the prior speakers talked about the average rent for all parks being increased.  I think his numbers were from 2000-2002, the average rent for all parks increased from $337-$373.  I do not know if he was looking at the same numbers that I have, but on page 13 of the packet that we gave you, (Exhibit H), there are several pages of statistics from the Division of Manufactured Housing, which indicated that over a 12-year period, I am just going to give you one example, Mr. Chairman, and you can read the other examples for yourself on page 13, but in the 12-year period for double-wide mobile homes, in all Nevada averages, the rent increased by $104, for an average of 52 percent over the 12-year period.  I do not know what figures the prior speaker was looking at, but here are the actual pages of statistics from the Division of Manufactured Housing, on pages 11-13 of the material that we gave you.  You can review those for yourself and draw your own conclusions. 

 

[Mr. Guild, continued]  To Mr. Romero and the Jaycee Parks situation, I would just say that Jaycee Parks is a quasi-municipal entity.  There is no debt service.  They are not subject to the same constraints that a privately owned and operated enterprise would be, so it is like comparing apples and oranges.  The only other thing that I would add is to just admonish the Committee to, if they are interested in reading how this failure has occurred, I would point them, in rent control, to one article in our packet, the city of Westminster in California, page 19 of the packet (Exhibit H).  It is an article by a former city council member and mayor of the city of Westminster.  It is only a three-page article, but it points out that if you go down the rent control road, you should be prepared for a lot of unintended consequences, expenses, and considerations that might not have been brought before this Committee today.  With that, I will turn it over to Ms. Maloney, who is the park owner from Reno, for a few additional remarks. 

 

Chairman Goldwater:

Mr. Guild, we have a quick question, if you do not mind, from Ms. Giunchigliani, please.

 

Assemblywoman Giunchigliani:

Thank you.  Joe, when you started, you said the maintenance gets deferred.  Can you point me to what section that would be affected by? 

 

Joe Guild:

What I meant by that… there is a study in the packet done by the National Multi Housing Council, it is on page 4-8, and on page 5, there are a couple of paragraphs that are summarizing studies from New York by the Rand Corporation, studies of Los Angeles, whose rent control law, and Boston that conclude, and this is not the only material available, that the housing base does experience a deferred maintenance in a rent-controlled situation.

 

Assemblywoman Giunchigliani:

And I would understand that if it were a full rent control bill, but I do believe that there is a difference in the semantics that are used here.  It is rent justification and I think if the landlord comes in and properly says, “We have these maintenance items, it cost me this much, I need to do this.”  I am doing landscaping, not to have them go down to Home Depot and buy a couple of pansies and plant them and then decide, “Now I am going to raise your rent by $20 per person.”  That is not landscaping, and I think that is the proper way that this bill at least establishes an opportunity to make their case, or not.  Maybe this is the session, we have heard this bill every session, and we voted it out.  Why not let it pass… maybe put a sunset on it and see how it works and whether or not it has been reasonable on behalf of these individuals ability.  Maybe it is time that we go to an initiative, if we do not deal with it.  I do not know, but something needs to happen. 

 

Joe Guild:

Well, it goes without saying that I certainly respect Ms. Giunchigliani’s opinion on things, but I do disagree with her.  I have neglected to add one thing, if I could real quick.  The lobbyist for the Nevada Association of Realtors had another bill.  He wanted me to express to the Committee that the Nevada Association of Realtors is opposed to this bill.  He could not be here; he was in another Committee. 

 

Assemblywoman Buckley:

It is no secret that I support the bill.  The one thing that I think is misleading in the statistics that you give about the lower rent increases, is that it factors in a lot of the rural parks and it factors in a lot of the Nevada family-owned parks.  By and large, the Nevada family-owned parks and the parks in the rural communities do a really good job.  They treat their tenants really well.  Their rents are low.  Mostly, it is the out of state corporations that just do not care and give these $50 rent increases, or give them every single year.  You know, I knock door to door when I run for reelection and I knock on many mobile home park doors.  If they had the kind of rents in your table, they would not be bringing up rent justification to me, believe me.  If they had some of the landlords that I have met over the years, from the rural communities and owned by Nevada families, they would not see a need for the bill.  I just wanted to put that on the record. 

 

Joe Guild:

And I do not disagree with Ms. Buckley about the anecdotal isolated situations.  But, on page 11 of the handout, we do have the Clark County averages broken down and if you look, I mean, I hate to disagree with people whom I respect and admire, but over the course of the last 12 years in Clark County, the state‑wide average is a 52 percent increase.  The Clark County average is a 56 percent increase.  So, I know there… [Chairman Goldwater asked where Mr. Guild gathered this data.]  This is from the Division of Manufactured Housing, State of Nevada statistics.  It is right out of their office.  I have not changed one number.  Thank you again, Mr. Chairman, unless there are any questions, I would refer to the others.

Chairman Goldwater:

Can we please have Renee come up to the table?  Renee, just to the integrity of the data, can you tell us how these are collected?  Are they stated rents from landlords, or are they stated rents from tenants?

 

Renee Diamond, Administrator, Division of Manufactured Housing:

The data is collected annually in July.  As the park owners receive a form from us, they state what their rents are, for singlewides and doublewides and how many spaces are occupied and unoccupied.  Along with that, they pay their fee to the Division that funds the budget that is the landlord tenant budget, which handles NRS 118B.  [Chairman Goldwater asked if it were audited at all.]  No, it is not.  It is self-stated by the park owners.  There does have to be a notarized copy sent to us and there is a statement about it being truthful. 

 

Chairman Goldwater:

I do appreciate that and where that data comes from.  Joe, further testimony?  Ma’am, welcome.

 

Teresa Maloney, Lucky Lane Mobile Home Park, Reno:

I am proud to say, thank you, Ms. Buckley, I am one of those people.  I am a second-generation Nevadan.  My father built that mobile home park in 1972.  We, as children, have been operating it since 1995, and are trying very hard to fulfill his desire that his grandchildren have that park.  Here is my concern.  I get calls from those out-of-state reps, those “bad guys,” so I am not sure I agree, on a daily basis, asking to purchase our park.  Soon, that might become a very attractive discussion.  The more regulation, the more bureaucracy, the more we have to deal with these things, you are making it harder and harder for we small business people to continue to do business.  I did not really come here to talk about the problems.  Others have done an admirable job of that.  I just am not convinced that this space rent issue is the problem.  I think it is a symptom of a larger problem. 

 

I would suggest to you that the solution is in the encouragement of the development of new parks.  My family has a lot of land, much of it bare, and we have looked for a long time to develop new parks, because I think that is the solution.  Two things stop us from doing that.  One is the specter of rent control and not being able to have a reasonable rate of return on our investment.  The other is zoning challenges in the local entities; the counties and the cities are not always welcoming of our ability to develop parks.  I do not know how many parks have been developed, but I think the space number is about the same in the state of Nevada, 30,000, for the last however many years.  And, if we open our eyes to this, I think if we could get those zoning changes, and we Nevadans could begin to develop new parks, we solve all of the problems.  There is additional revenue to the Division for it to be able to operate.  There is additional revenue to the lot-rent subsidy program, which we can grow and expand, which I clearly support; my family has created its own lot-rent subsidy program.  There is additional tax revenue to the cities and counties, because we are paying greater property taxes, and there is competition.  I truly believe that competition will drive the marketplace.  If a new park opens up and is offering 200 mobile spaces at $285 to fill that new park, rents will, I think, hit their appropriate level.  I would be open to any questions at this time. 

 

Chairman Goldwater:

I appreciate your testimony.  It was excellent testimony.  Thank god we do not do zoning up here.

 

Teresa Maloney:

But we need you to encourage them to take a look at it. 

 

Marolyn Mann, Executive Director, Manufactured Home Community, Owners Association:

We represent approximately 60 percent of the spaces in Nevada, and I would just like to focus on one thing that we did not discuss too much earlier, which is to remind you of our rental assistance program.  Our lot-rent subsidy program is the only mandatory program of its kind.  It is funded entirely by park owners, who assess $12 per space, per year, and since 1992 we have contributed over $3.5 million to help residents remain living in their homes that they could not otherwise afford.  In conclusion, I just want to ask you to please not confuse perception with reality.  We hope you see the harm that any type of price controls would bring to our state.  Positive action to encourage the development of more parks and housing will do more for residence than any other use for the power of government. 

 

Chairman Goldwater:

I do not see any questions for you and I appreciate all of your testimony.  Ms. Ohrenschall, again, thank you for presenting this bill to our Committee. 

 

Renee Diamond, Administrator, Division of Manufactured Housing:

I did write on the list that I needed to testify.  [Ms. Diamond read from prepared testimony (Exhibit I).]  I will not comment on the social and policy impact of this bill, only on the fiscal impact on the Division of Manufactured Housing.  Currently there are 102 Nevada communities, 46 of which are north and rural, with rent over the $350 threshold.  There are 14,594 residents in the homes represented.  As rents increase, the number of parks exceeding the $359 rental fee in the bill will also change monthly.  In order to follow the requirements of this statute to mail notices, holding, probably multiple meeting monthly, due to the geography and location requirement, investigate data, and administer the Manufactured Home Park Rent Review Board, with its statewide meetings and decision-making capacity, the Division would require a totally new investigative and fact-finding structure within its Landlord/Tenant area of authority in NRS 118B.

 

This would require the following new employees:  Program Officer, grade 31; Administrative Assistant I, grade 23; Compliance Investigator I, grade 28; 205 Administrator time; half-time Deputy A.G.; Board per diems, travel, and space/operating.  Although a fiscal note was not requested, I submitted an Unsolicited Fiscal Note, which amounts to $212,148 in 2003-2004 and $212,139 in 2003-2005, with $424,279 as the Effect on Future Biennia.  Since there is no increase in funding provided for the Division’s self-funded Budget Account 3843, and there is currently not a large enough reserve to pay for this new program, I must respectfully decline to support this non-funded new mandate. 

 

Assemblywoman Ohrenschall:

All that I can say is that for every bill that I have introduced, I have requested a fiscal note.  I heard this witness say that none was requested.  Along with all of my other bills, it may not have come yet, but that is all I can say.

 

Chairman Goldwater:

OK, thank you. 

 

Renee Diamond:

Mr. Chairman, through you to Ms. Ohrenschall.  I did not mean to impugn that she did not request the fiscal note.  There is a new process of requesting fiscal notes by e-mail to division heads.  There was no formal request, so when I saw the bill and realized the costs attached to it, there is a process through the e‑mail state Web site for fiscal notes to do what are called “Unsolicited Notes.”  That is how it happened.  I certainly do not mean to say that she did not ask for one.

 

Assemblywoman Ohrenschall:

Nor have I seen Ms. Diamond’s figures, so I cannot comment on them.

 

Chairman Goldwater:

Thank you.  I appreciate your testimony.  [Someone in Las Vegas asked if she testify on behalf of some of the citizens in Las Vegas to make some of their concerns known.]  Unfortunately, I am going to have to close the hearing because we have four other bills on the agenda and I will lose Committee members if I do not get to those bills.  They have to be heard along with the rest of them.  I appreciate it, and if you put your concerns in writing and send them to me, we will make them part of the record.  With that, we will close the hearing on A.B. 184 and open the hearing on A.B. 230. 

 

Assembly Bill 230:  Revises provisions regarding mobile home parks. (BDR 40-202)

 

Assemblywoman Barbara Buckley, Clark County, District No. 8:

For those that did not get to rebut, let me just say that there are a few of us legislators up here who will do that for you.  So, do not worry.  Assembly Bill 230 revises the Board of Directors for non-profit mobile home parks.  This bill was inspired by my experience with the Jaycee Mobile Home Park in Las Vegas that was mentioned earlier.  It is a private nonprofit mobile home park that is just beautiful.  It was built through obtaining a piece of land from the BLM that I believe the congressman at the time, Bill Bray, shepherded through, who Mr. Goldwater and Ms. Diamond worked for.  There were a number of people, who worked very hard to make it a model park, and the partnership was unique and wonderful because it consisted of elected officials, individuals from financial institutions, and most importantly, the residents themselves.  They were always to be guaranteed seats on the boards and it was going to be a true model for the country, and it is, in its physical description and nature. 

 

I walk and knock on all 466 doors every election cycle and there are some beautiful homes in there and some wonderful people.  It got away from its basic mission by shutting out the residents and not listening to them.  That is the long and short of it.  We could go on for hours and hours and I have heard those hours and hours from all of the residents when I go over to the clubhouse.  They have tried, in vain, to try to make things better for them.  I have tried on their behalf.  Always know that when I get unsatisfactory answers and even when they try to post a notice of this hearing and allow people to come and it got torn down, I know that there are some problems.  What this bill does, because we, of course, have to affect everybody equally, it tries to reinvigorate boards of directors by trying to get more interested people, who have things to give by serving on the board.  So, that is what it does in a nutshell.  It says that the board of a directors of a mobile home park, owned, or at lease by a non-profit organization, must have 1/3 members residents, 1/3 members of the board, and 1/3 members appointed by the governing body of the local government.  That was to make sure, there were concerns about one group over taking it, and that is what that one part of the bill does in a nutshell. 

 

[Assemblywoman Buckley, continued]  I do have an amendment for this to make it clear that it does not apply to co-op parks.  Our legal counsel already has that language ready to go, because co-op parks are 100 percent resident participation.  I wanted to make that clear, because we do have such a park up here in northern Nevada.  The second part of the bill I added on behalf of our very good friend Thelma Clark, who has been a mobile home advocate for many years. 

 

Basically, what the issue is, is a couple of sessions ago we asked that individual water meters be set at mobile home parks to encourage water conservation.  Unfortunately, there really are not any new parks being built anyway, as we already heard.  Second, when you have a park like Thelma’s, the housing authority owns it, and they want to expand, but they already have a master meter, so it would be too expensive for them to expand the park; again, this is a nonprofit park for seniors.  It would be too expensive if we did not fix this provision.  I understand that the water authority has some objection to it, but they failed to come to me and tell me about it.  I only just heard of it through Thelma, and they have an amendment, which guts it, which I do not support.  With that, I am happy to take any questions. 

 

Chairman Goldwater:

Looking out for the mobile home owner again, eh, Ms. Buckley?  Questions for Ms. Buckley.

 

Assemblywoman Buckley:

We, Mr. Chairman, had a number of residents from the Jaycee Mobile Home Park, who signed in with their support, but they have selected a representative to be more efficient.  They could go on for hours and hours, but they will not, because they know that we do not have the time and they trust me to convey that to all of you, and I appreciate that from all of them. 

 

Chairman Goldwater:

And you have done so throughout the years and I appreciate that.  Shall we go to their representative?

 

Assemblywoman Buckley:

Yes, I believe Mr. Ron Teti and Mr. Richard Denison are the representatives.

 

Richard Denison, Resident, Jaycee Mobile Home Park, Las Vegas:

I have been living in the Jaycee Mobile Home Parks since its inception.  I am here to advocate Barbara’s bill, A.B. 230.  I have a prepared statement and I would like to read it to hopefully cut down on the time (Exhibit J).  The United States has always stood for the ideals of democracy.  Barbara Buckley’s bill, A.B. 230, which makes changes to the Nevada Revised Statutes, is an attempt to assure these ideals apply to the operation of non-profit mobile home parks. 

 

[Mr. Denison, continued]  The original intent of the Las Vegas Jaycees Mobile Home Community Park was to offer to low-income seniors an opportunity to live their remaining years with a degree of dignity in an affordable park.  It was a worthwhile project and the residents applaud and appreciate the efforts that created this park.  However, over time, the management has been taken over solely by the Jaycee Trustees, with only one park resident as a Trustee.  The decisions made regarding the quality of residents’ lives are virtually without their representation.  We have many good things to say about the Trustees.  They are volunteers and must be given credit for doing their best, as they see fit. 

 

Barbara’s bill, in my opinion, will help in many ways.  It will take the burden of the Trustees making decisions based on only limited experience with seniors and broaden the input by drawing from many other sources.  Most importantly, it will give the residents of the park a feeling of truly participating, which gives us 1/3 of the vote, which is something that we do not have now.  I strongly encourage the passing of A.B. 230.  Thank you.

 

Ron Teti, Chairman, Residents Council, Jaycee Mobile Home Park:

The statements that Mr. Denison made are all true.  The problem really lies in the fact that we are the sole providers for that park.  We receive no sustenance from anyone.  Every bill and every payment that has to be made out of their part comes out of our pockets.  We, as residents have no say in how that money is spent, or we have no knowledge of what is being done with it, or how much money is there.  Just briefly, a recent occurrence was that we found out Mr. Margolin, and his board, had over $75,000 set aside, in private accounts, to cover the Harmon Avenue through.  It was blocked by the waterways.  We also found out, through the engineer, that that fund, to put Harmon all the way through, came from the flood control.  The park did not have to contribute anything to that structure.  Nonetheless, the more than $75,000 was supposedly put back into our accounts, but yet we have no idea as to where it went and what is being done with it.  Thank you so much for your time. 

 

Laurie Licata, Residents Council, Jaycee Mobile Home Park:

I will make this short and sweet.  I 100 percent back up Assembly Bill 230. 

 

Chairman Goldwater:

Thank you so much.  We appreciate your brevity.  Ms. Buckley, anything else?

Assemblywoman Buckley:

Yes, if we could have Brian Sagert with the Housing Authority of the City of Las Vegas.  He will add a little bit more detail into the second section. 

 

Brian Sagert, Housing Authority, City of Las Vegas:

I appreciate the opportunity to speak before you today regarding A.B. 230, specifically the provision dealing with the individual water meters for mobile home parks.  The Housing Authority is the largest provider of low-income and affordable housing in the state of Nevada.  The provision that is currently in NRS 461A.230, which requires the installation of individual water meters, constrains the Housing Authority’s initiatives to develop an extension to our current mobile home park.  I have prepared my written testimony, which I would like, upon your permission, Mr. Chairman, submitted to the Committee (Exhibit K), as well as for the record, which details what I will say here today. 

 

In our initial projections on what this extension would cost us, we obtained quotes from the Las Vegas Valley Water District on what the cost would be to individually meter our 58-space proposed extension.  The price that we received, which is Exhibit B (Exhibit K) in this package that you will be receiving, was quoted at a little over $168,000.  That was just for fees alone and does not include the construction cost associated with individually metering 58 new lots.  An estimate of that was around $75,000. 

 

Based upon our projected total development cost of the product of a little over $2 million, the fees associated with individually water metering these spaces, represented a cost of more than 10 percent of the total development cost.  The tenants at the current Housing Authority, Rulon Earl Mobile Home Park, there are 71 spaces, and we have been fortunate to be able to provide rents from 1999 until, actually today, of $185 for a single space, and $205 per month for a double-wide space.  We have been able to maintain that cost, that affordability to our clients that we serve, and we would like to continue to do that.  In order to do that, we need to make sure that when we develop something that we are able to… cost, obviously determines what we have to charge for rent.  The lower we keep the cost, the lower we are able to provide affordable rents.  Basically, you will see the rest of the details in the brief.  Again, I would certainly appreciate your support to amend this bill to remove that requirement of individually water metering mobile home parks.

 

Chairman Goldwater:

That is a pretty self-explanatory brief and very thorough.  I appreciate the work.  Ms. Clark, do you have something briefly?

Thelma Clark, American Association of Retired Persons:

Not unless you have some questions.  I have been working with Mr. Sagert for the addition of my park, because it is vacant land behind us, and we have had people back there with cocaine and the whole nine yards.  So, we would like to have it built up. 

 

Assemblyman Beers:

I am trying to do the math if you will just bear with me real quick, on the number of thousands of dollars per lot that it.  You may already know the answer.

 

Brian Sagert:

It was roughly a little over $3,000 per lot.

 

Assemblyman Beers:

And, perhaps, the question I have in that area is for Ms. Diamond, who I trust will be up talking to us.  We have discussed this in previous sessions, but certainly this fee is one of the things that prevent more parks from being built, and in fact we have not had many parks built in Clark County in a long time.

 

Assemblywoman Buckley:

Just to comment on that quickly.  At one point, we went to the County Commission and said, for affordable housing, let’s define it, it is 100 percent medium income or below, like this.  Have some sort of staggered fee, because that is exactly right.  You are prohibiting development of affordable housing.  [Mr. Beers asked what the County Commission’s response was.]  When we presented it, they were considering some really steep increases and they tabled it and said that they liked the idea.  The water authority delayed some of their increases on prices, because they put mobile home parks with master meters on the golf course because they are master meters.  So, we have tried over the years to educate, but we are still nowhere near what we have to be.  These fees are pricing out affordable housing for people who need it.

 

Assemblyman Beers:

Ms. Buckley, there currently is a board of directors in this mobile home park.  Are their duties elucidated in a document? 

 

Assemblywoman Buckley:

Yes.  Generally, they are.  They are governed under the nonprofit statutes set forth in NRS, and generally the articles of incorporation and bylaws mirror what is set forth in NRS.  But basically you have one person as the whole board.  There has been trouble… The bylaw said there would be 12 members.  Well, at some point there were 3.  The residents could not get any new blood, new involvement.

 

Assemblyman Beers:

My concern was not over the proposed composition of the board in your attempt to revitalize it.  That is commendable.  I was concerned that there is nothing here describing what the duties of the board are.

 

Assemblywoman Buckley:

Yes, covered in our NRS chapter on nonprofit, they are required to cover those certain things in the articles and bylaws.

 

Thelma Clark:

In our park, the Housing Authority requires us to have… they call us a resident council, and we are now a HUD park.  They borrowed the money and built our park.  We do not have any HUD money or any government money, but we do have a resident council in our park and there are six members.  We must go to the Housing Authority’s, pre-board meeting once a month and report what we are doing in our park. 

 

Chairman Goldwater:

Thank you very much; we appreciate it.  You mentioned there was a representative of the water district here. 

 

Andy Belanger, Las Vegas Valley Water District, Southern Nevada Water Authority:

We do have concerns with the bill.  We have been trying to work them out with Ms. Clark and Mr. Sagert before we brought them to the Committee.  We thought that we had come close to an agreement, but apparently we have not.  I apologize for not speaking with the Majority Leader concerning this bill.  Our concern is that during a period of drought, which we are in currently in southern Nevada, we are concerned about removing the requirement on master meters.  It is documented that parks that use master meters use more water than parks that are individually meters, because the individual people are not able to see the water that they personally use.  Our concern is that removing this section would increase water use in southern Nevada.  It is something that we are concerned about during a period of drought.  We have suggested to the Housing Authority and to Ms. Clark that a better alternative would be to put something into statute that said that public housing authorities would be exempt from the provisions of Section 3.  The wording of that has not been finalized, but we hope that we can work with the sponsor of the bill and with the interested parties to support something along those lines, rather than a wholesale exemption of this or removal of this statute. 

 

Chairman Goldwater:

I recommend that you discuss this with the Majority Leader; she is as much of an expert as there is.  Hopefully policies will remain consistent.  We hate to see water use being granted to very large developers for a variety of things, and then not be able to develop a mobile home park or affordable housing. 

 

Assemblyman Beers:

This was implemented in October 1, 1995.  How many parks have been built since that time that have the individual meters that you can use to compare against the master metered parks?

 

Andy Belanger:

I am not sure if any parks have been constructed since October 1,1995, with individual meters.  I can surely find that out.  What did happen was there was a pilot project, where they took two parks that were on master meters and converted them to individual meters.  From that study, they showed that the water use actually declined by about 7-12 percent on the parks that were individually metered.

 

Assemblyman Beers:

I guess as a matter of policy, a 7-12 percent decline in water utilization to me does not seem to be worth it, given the fact that this provision in here, as I can tell, has effectively shut down the creation of additional units of this affordable housing.  I guess that is a policy issue that the Committee is going to need to hear.  Could you get us a written, with the Chair’s permission, paragraph on the study and what you know about it and when it was in quantifying the percentage?  [Mr. Belanger indicated that he would.] 

 

Chairman Goldwater:

That would be great.  Further testimony on A.B. 230?

 

Thelma Clark:

We are a senior park.  We have a rock in the yard.  We do not have any grass, and we do not use a lot of water.  That is all that I want to say, thank you.

 

Chairman Goldwater:

Yes.  That was my point.  I do not know how many golf courses have been approved in southern Nevada, but it is a lot.

 

Marshall Schultz:

The sponsor of this bill, A.B. 230, Ms. Buckley, mentioned that there is a park in northern Nevada that is about to be totally owned by the tenants themselves.  They are already a nonprofit co-operative corporation and they have not yet taken title, but that is supposed to happen in about three weeks.  [Chairman Goldwater asked Mr. Schultz if he heard Ms. Buckley ask for that particular amendment already.]  Yes, she did, I just want to support that.  That is all that I am here for.  I have full support on this whole bill because fully tenant-owned parks need to be occupied and operated by the tenants. 

 

Chairman Goldwater:

We will close the hearing on A.B. 230 and we will open the hearing on Ms. Ohrenschall’s other bill, which is A.B. 352.

 

Assembly Bill 352:  Revises provisions relating to sale of older mobile home. (BDR 43-970)

 

Assemblywoman Ohrenschall:

Assembly Bill 352 clarifies what disclosures must be made on a contract for the sale of a mobile home in a mobile home park.  Current law requires that there must be full disclosure presented in writing on an offer to buy, sell, or lease a mobile home.  However, the law does not state what should be included as part of the full disclosure.  This bill asks for the disclosure of four basic elements.  It should be readily available to a buyer of a mobile home.  These four disclosures simply ensure that the buyer is knowledgeable about his or her purchase. 

 

The disclosures are:

 

• The lot that the home is on is not included in the purchase, so that he understands that he is not buying any interest in the real estate by moving a mobile home onto it.  In the past, there have been situations where people have not fully understood that. 
• A statement advising the buyer to seek legal advice, and where advice is available and where it can be obtained for free, if it can be. 
• When the home was last maintained, and any maintenance or cleaning that the home may, at present, require. 
• For the contract to be signed, a disclosure of any elements of the home’s construction that do not meet current standards, or of any elements of the home’s connection to utilities that do not meet current standards. 

 

Further, the disclosure must specifically include how the home does not meet the standards so that the person who is buying the home could understand it.  This disclosure must be made if the seller is the owner of the park and if the home was constructed before 1975.  These are the homes that bring the greatest difficulty in being transferred anywhere, if someone needs to move.  These are also the homes that have been most subject to quick, shall we say, cosmetic repairs, that make it look better than it is, then resell to someone that does not really know what they are doing. 

 

[Assemblywoman Ohrenschall, continued]  I urge your support on this, for instances of fairness, in addition, I would urge the Committee, because of… well, I guess it was a mistake in the printing, returning, if the Committee so deems desirable to restore to the bill, one more section that had been entered in originally, by means of amendment.  I have the amendment here (Exhibit L).  Basically, the amendment, which was meant to be a part of the original bill, requires additionally that the landlord shall prepare an annual statement, which would contain the following information: The net profit earned by the landlord for the preceding year; the landlord’s rate of return for the mobile home park for each of five preceding tax years, if the landlord owned the park for the five preceding years, or else for the number of years that he did own the park; the number of years the landlord has owned or leased the mobile home park; then, not later than May 1 of each year, the landlord would post a copy of such a statement in a conspicuous and readily accessible place within the community park access, and mail or have delivered a copy of this to each tenant of the park, and obtain tenant signature acknowledging receipt.  Additionally, one copy would be submitted to the Division of Manufactured Housing, which would keep it simply for information-gathering purposes.  The landlord shall provide a current version of the annual statement to each prospective member of a park, coming in.  That is that same statement would be made available to somebody thinking about buying and looking through the park. 

 

Chairman Goldwater:

Questions from the Committee?  Do you believe this bill would encourage the development of future parks?

 

Assemblywoman Ohrenschall:

Yes, Mr. Chairman, I do, because most of the problems that have occurred have occurred among older parks and among older units.  Particularly, in southern Nevada, I would not name the park, but there is one that is not licensed to sell used homes.  Very frequently, they buy homes from tenants who either are leaving or are in estate sale, and then does the so called “quick cosmetic” turnover, finds somebody to buy it.  They will tell the person, “Look, you can buy this home and own it, free and clear, for $5,000 or $10,000.”  The person thinks, “What a deal.”  It is already on place on the land, so it never occurs to the person to separate the land payment from the house payment, or even to have the house looked at that closely.  That is where problems begin.  These same people, who lose everything in buying something that is not an investment, may not even be a safe place to live, would have to, perhaps, get together with several others, or perhaps look to other forms of income that could come in from help for people who are seniors and need the help.  They might be able to go and look at a newer park and that would stimulate the desire for increase in newer parks, and I think it would stimulate growth of the industry. 

 

Assemblywoman Ohrenschall:

I have Mr. George Flint, if the Chair would allow.

 

George Flint:

I like Section 1 of this bill, Mr. Chairman; I think it is a good little bill.  I am going to give you one story and that will be all.  Then I will be out of here, and I thank you for your patience with me.  East of the home that I live in, and I have lived in a mobile home park for 26 years, a rental park, is a small home that has had seven buyers in 15 years, because not only is it what we call in the trade, an older home of a tin can, but it is a can of worms.  There is a mobile home sales organization in Reno that advertises on radio, television, and in the newspaper, and they just do a wonderful job of exploiting the selling of older homes.  People are looking for affordable housing and people are terribly naïve, particularly if it is their first home.  Most of these sales have been to young couples, with little babies that are just finding a place beyond renting.  My lovely wife, and a few of you know her, Ms. Betty, she goes over and she meets these people when they buy this home, I think number eight is getting to move in now.  In every single case, they say to Ms. Betty, “We did not know what we were buying.”  This, Section 1, as it exists now, would help young couples not fall into that trap.  I like this bill; I like Section 1, and, Mr. Chairman, I would encourage you to give it serious consideration.  Thank you.

 

Assemblywoman Ohrenschall:

Thank you and the Committee in listening to all of it.

 

Renee Diamond:

I have a few observations and remarks on A.B. 352.  Section 1, subsection 1 and 2, page 1, can easily be accommodated on the Division’s newly mandated Used Home Sales Contract Form that was recently adopted through regulation by the Division (Exhibit M).  This would require a new hearing to amend the contract with its attending costs in printing and mailing, but the Division could absorb that nominal cost of approximately $1,000.  However, subsection 3, “the disclosure of last maintenance,” et cetera, could be a problem where a home has been acquired through a lien sale or repossession.  The previous owner might not be available for such information. 

 

Subsection 4, requires disclosure of elements of construction or connection to utilities of a home built before 1975 that does not meet current standards, required by statute at the time of sale.  If the arbitrary date of a 1975 was meant to include homes constructed before the federal HUD code went into effect, the proper date that should be amended in would be June 15, 1976, which is the correct date that the HUD construction code was adopted. 

 

[Ms. Diamond, continued]  I also have doubt whether the landlord/sellers could be aware of construction standard issues that are from pre-HUD homes, which is often difficult to access and, in any case, many of the elements of construction, although not the current standard, were the approved standard at the time the home was manufactured.  Disclosure of substandard utility connections should probably apply to all homes sold in a park, not just those constructed at a pre-HUD date. 

 

As a final note, I must point out that private party sales of homes in manufactured home communities represents a large number of sales.  We can require those we regulate to make disclosures, but we cannot regulate private-party sales by owner.  The majority of owner sales consist merely of an exchange of money and ownership certificate with no written contract. 

 

Marolyn Mann, Executive Director, Manufactured Home Community Owners Association:

I just wanted to tell you that we had no problem; in fact, we support Renee Diamond’s testimony on this bill, as we saw it.  We did not know that there was an amendment.  Needless to say, we do not feel that we can support the amendment.  Thank you.

 

Chairman Goldwater:

Yes, I anticipated that.  We will close the hearing on A.B. 352 and we will open the hearing on A.B. 212.  We will have the hearing on A.B. 212.

 

Assembly Bill 212:  Revises provisions relating to Account for Education and Recovery Relating to Manufactured Housing. (BDR 43-462)

 

Renee Diamond, Administrator, Division of Manufactured Housing:

With me at the table is our Deputy Attorney General, Ned Reed, who has joined me here today for any technical explanations you might require.  I am here today with the Division’s bill, A.B. 212.  This bill makes certain changes to the Recovery Fund statutes in response to issues that have been brought to the attention of the Division and our Deputy Attorney General through the processing of claims against the Recovery Fund.  For the new members of the Committee, I will remind you that the Recovery Fund relating to manufactured housing is a segregated account, funded by the licensing of dealers, manufacturers, servicemen, installers, salesmen, and responsible managing employees.  A claim from the Fund is to reimburse a consumer for fraud or deceit committed by a licensee of the Division in connection with the sale of a manufactured home.  The amount reimbursable per occurrence is $25,000 with a $100,000 maximum per licensee, and is subject to a court order directing the Division to make payment. 

 

[Ms. Diamond, continued]  Section 1, page 2, lines 14 and 15, increases by $50 the amount paid into the Recovery Fund upon initial and renewal of licenses by salesmen and responsible managing employees.  This fee increase was a negotiated amount with the Nevada Manufactured Housing Association Board, and attached to your handout is their letter supporting the increase, (Exhibit N).  The projected revenue increase for our Budget Account 3847, the segregated budget, is $12,100 in fiscal year 2004 and $9,400 in fiscal year 2005.  The disparity is because licenses are issued for a 2-year period.

 

Section 2, page 2, line 32 asks that the Administrator be named as a party in the court in which a judgment is entered.  This would give the Division advance notice of the elements of a case.  Line 34, page 2, adds the words “the unpaid” to the current language, which is “actual damages.”  This would clarify that if partial recovery of funds for damages occurs, the recovery account would only pay for the unpaid portion.  Lines 36-38 clarifies the statutory dollar limit per transaction, in a case where there might be multiple judgments relating to the same transaction, obtained against a licensee or multiple licensees, so that we would pay only once.  Lines 39-42 deletes the word “licensee” and then inserts a list that relates to the status of persons licensed pursuant to this chapter.  We think this clarification encompasses all the legal entities that a licensee may use. 

 

Page 3, subsection 4 limits a licensee’s ability to collect from the account for damages related to his capacity as a licensee.  We think this again preserves the original intent to relate the account to a consumer’s loss, not any other parties.  Subsection 5, lines 34 and 35, exclude awards for attorney fees, interest or costs.  This is done to preserve the entire award for the consumer, as was intended by the drafter’s original language. 

 

Section 3, page 3, lines 41 and 42 is language to ensure that the division has the opportunity to defend on the merits of the cases which may involve a licensee, who may be long gone and resulted in a default judgment.

 

Section 4, page 4, lines 9-11 inserts permissive language that would allow an Administrator to appeal an order directing payment from the account.  Let me relate again that these changes, with the exception of the fee increases, are a result of actual experiences with claims against the Recovery Fund and are clarifications necessary to better manage this responsibility.  Thank you for your attention. 

 

Assemblywoman Buckley:

I am sorry, maybe I missed it.  Are you running out of money?

 

Renee Diamond:

Do you mean on the Recovery Fund in general, or just the specific contributions by the licensees?  [Ms. Buckley indicated to the Recovery Fund, in general.]  No, we are not; we have plenty of money in the Recovery Fund.  [Ms. Buckley asked why they wanted to raise the fee in that case.]  The fee for salesman and responsible managing employees – currently that fee is $25 and $50, which is much lower than every other licensee pays into that fund.  Very often, it is the salesman and responsible managing employees, who cause the claim against the account.  This is an increase of $50.  The fee has never been raised since it was originally imposed.

 

Assemblywoman Buckley:

But, if we have enough money, why do we need to raise the fee?  I know that it is lower than the other one, but we could reduce the other one.

 

Renee Diamond:

The problem is that the account has a statutory limit of $500,000, and then the money is used toward education of these same licensees.  It is my belief that paying $25 by a serviceman, when he is licensed and when he renews his fees, is not a significant deterrent.  I am not doing this just to… it will not change the Recovery Fund bill because it is a minute amount of money.  The reality is that it was meant to send a message to salesmen and responsible managing employees and repeat that message every two years, that you are contributing to this Fund and are responsible, then, if you commit fraud and deceit for claims against the Fund.  The industry did not oppose it. 

 

Assemblywoman Buckley:

So, turning to page 3, lines 34-36, why are we restricting interest costs, attorney’s fees, if there is enough money in the Fund?

 

Renee Diamond:

There is a statutory limit of $25,000.  Many of the claims are for amounts larger than that.  If you then add attorney’s fees, interest and costs, what you do is reduce the amount of award to the citizen and consumer for whom the Fund was established.

Assemblywoman Buckley:

Because, then, they are doing a pro rata with the $500 total aggregate? 

 

Renee Diamond:

No, there is… I am sorry.  There is only a $25,000 limit per each consumer who has been harmed.  The $100,000 is per licensee.  If a dealer commits a massive fraud, they are limited by $100 and any number of applicants is subrogated.  If costs and attorney’s fees further dilute that amount of $100,000, or even $25,000, we think that it does not meet the intent of the bill, which is to make consumers either whole, or close to it. 

 

Assemblywoman Buckley:

I will ask one more question and then I will stop.  If, in the past, that has hurt consumers by not having enough to recover by virtue of the $100,000 limit and there is enough money in the Fund, why don’t we raise that amount, so that when there is wholesale fraud, consumers are able to recover?

 

Renee Diamond:

We have not had a case where there has been wholesale fraud, but the contemplation of a maximum amount per licensee was established with that in mind.  At the time the Fund was established, which is some time ago, $100,000 may have seemed like a reasonable amount, but now, when homes are more expensive, particularly new homes, that is less than a reasonable amount.  However, at the current funding levels, per licensees, the number of licensees times the dollar amount that are contributed to the Recovery Fund, we are just below the statutory limit on the Recovery Fund of $500,000.  There are only a finite number of dealers and service people contributing to this Fund, so making the awards larger will not necessarily mean that there is enough money in the Fund. 

 

Assemblyman Beers:

Has the Fund ever hit the statutory maximum; has it ever built up to the $500,000?

 

Renee Diamond:

Yes, it was $500,000,and then we had a series of hits against the Recovery Fund and it dropped below that.  It is on its way up again.

 

Assemblyman Beers:

What is the most that a licensee has ever had in awards, for that one licensee?

Renee Diamond:

If my memory serves me and I will definitely drop you a note about this, as well as the other Committee members, I think the highest amount we ever paid on a single licensee was about $95,000, just below this.  My memory fails me in being able to tell you how many people it was subrogated.  I do not know, Ms. Buckley, it might have been something that came from Nevada Legal Services, but I am going to send you a memo about that.

 

Assemblyman Beers:

And, I guess with it getting that close to the cap, I would also ask for you to look a little deeper into that case and see if the awards were moderated in any way because of that cap.  Or, did they just happen to come up just short, just by luck?

 

Renee Diamond:

Part of what the statute says is that if the total aggregate of the number of claims exceeds the $100,000, then they will be subrogated based on their loss.  I am not a lawyer, in any way, so I do not quite understand the language.  But, the one case that came up to $100,000 was done that way.  Each person received a reduced amount, below their court ordered damage, because they could not go over the $100,000, by statute.  If we take $500,000 as the cap in today’s society, if a number of dealers committed fraud, we would say, then, that only five dealers could wipe the Fund out.  I do not know if that helps answer Ms. Buckley’s question.

 

Assemblyman Beers:

It sounds like it may be time to increase that cap.

 

Renee Diamond:

Well, let me just say that if you increase the cap – I certainly have no problem, I think that the Recovery Fund is, next to the lot run subsidy, among the best things that we do.  If you increase the cap, you would have to increase the contributions.  The only thing that I can say to you is that the current licensees have dropped in number because of the depression in the manufactured housing industry.  We have fewer installers, fewer salesmen, and fewer dealers.  Last year, I think we had only eight dealers in Nevada left.  Manufacturers have gone out of business.  They pay $1,000 every time they license in Nevada toward the Recovery Fund.  As that pool diminishes, less money is paid in and just increasing the dollar amount to those people, who are already harmed by the depression in business, is a policy decision that I am not capable of making. 

Assemblyman Beers:

Is your sense that the depression in the industry is worse in Nevada or the same as the national situation?  Because not every state, I presume, is requiring individual water metering in an exorbitant individual water-metering rate. 

 

Renee Diamond:

The situation with the water meters is related to the parks built, as opposed to, what I was just referring to, which is the number of homes sold.  The number of homes in Nevada is currently down about 40 percent.  We are self-funded agencies, so as the depression occurs in the industry, the funds to our Division go lower and lower.  I laid people off, I did all kinds of closing of offices, trading in of Xeroxes and things to reduce my cost, but the reality is that I now have one person doing titles, one person doing education and recovery.  I cannot really do any more with this little bit of money.  The Recovery Fund works very well in the majority of cases where there is not a huge outlay of money.  It works fine.  People make claims against it, and I am going to send you that record.  All I can say to is that if you decide that the Recovery Fund level has to be increased, then I would urge you to increase the amount of money contributed by those persons who contribute to the Recovery Fund when they license and when they renew every two years.  They are already hurting, too.

 

Assemblyman Beers:

Yes, I guess if we could get new parks built, which appears to be a local problem to Nevada, and maybe it is not… Are new parks not being built in other states, as well?

 

Renee Diamond:

No, many other states, Texas, I think, Michigan, Ohio, have a huge number of parks being built.

 

Assemblyman Beers:

So, other states are constructing them?  We are not?

 

Renee Diamond:

Yes, New Mexico.  No, we are not.

 

Assemblyman Beers:

Presumably, it is because of the water-metering issue?

 

Renee Diamond:

Well, among other things.  There is a developer who wanted to put a park in, who bought land, who started with a park and now converted it to apartments.  He told me that it is the infrastructure costs of water meters and other things, but it is also the cost of land, in southern Nevada particularly.  You are competing with developers and homebuilders and all kinds of other people for the limited amount of expense of land that there is.  So, it is not just water meters.  Water meters are symptomatic of other issues. 

 

Assemblyman Beers:

Presumably, if we did manage to get some built, then you would have more money coming into this fund because you would have more salesmen and more dealers and et cetera?

 

Renee Diamond:

If the business revitalizes, and it has gone through downturns, historically in the past, similar to the housing industry, which when I came to Nevada in 1972, in southern Nevada, in the 1960s they had gone through a downturn in homebuilding.  This industry will recover one day because this is affordable housing.  It is at least 20 percent less expensive than a similar-sized built house.  The reality is that our fees are mostly paid when the industry, as a whole nationally, recovers, and more companies come into Nevada and create dealerships and other things.  An individual park opening up pays into our landlord/tenant fund.  It does not increase the Recovery Fund or the general operating account, the 3814 budget of the Division.

 

Assemblyman Beers:

But, it would result in a lot of homes being sold?

 

Renee Diamond:

It is true.  “If you build it, they will come.”  Again, we talk about the competition in industry, depending on the cost of those spaces, certainly.  And, in the case of parks, like Thelma lives in, those are nonprofit parks.  The majority of the homes in those parks, as they add spaces, are not new sales.  They are people making the commitment to move from a park that they cannot afford into a park that has rent fixed by a nonprofit status.  So, those do not really relate – those kinds of sales do not really help us in any fiscal way. 

 

Assemblywoman Buckley:

Ms. Diamond, when you get a chance, could you send to us how much you think this will raise the current balance in the Fund and whether any companies have gone belly up, so that you can give us some sort of an assessment of how many future claims might be coming soon, and your recommendation as to whether we should take a little bit of leeway and look at either the per claim or aggregate, and what you think would be reasonable in light of all that?   I would appreciate that.

 

Renee Diamond:

Thank you, I would be happy to do that.  It is easy to get and you will have it in a few days.  I will, when I go back on Friday, send you as much as I have.  If I miss something, would you just remind me?  [Ms. Buckley indicated that that would be no problem.]

 

Jim Avance, Nevada Manufactured Housing Association:

It is my clients that will be paying this increased fee.  It seems like every client I have is paying increased fees, somewhere in some committee that I am in front of.  We recognize very much, Mr. Chairman, and members of the Committee, the need for the Division.  We also recognize the need for this Fund and we are very happy to support the Fund.  Our Board of Directors has voted, overwhelmingly, to increase the fees, and we have been discussing it with Ms. Diamond for a year, so it is not coming to us as any surprise. 

 

Chairman Goldwater:

Any further testimony on this bill?  We will close the hearing on A.B. 212.  We will take a five-minute break and then we will get to Mr. Mabey’s bill afterward. 

 

Chairman Goldwater:

Dr. Mabey, I really appreciate your patience.  Welcome back to Commerce and Labor and we look forward to your testimony on Assembly Bill 269.

 

Assembly Bill 269:  Requires certain health care plans and insurance policies to provide, under certain circumstances, coverage for medical care if confirmation of coverage and prior authorization is obtained. (BDR 57-813)

 

Assemblyman Garn Mabey, District No. 2:

A.B. 269 is an issue that has been ongoing in medical offices for many years and now that I am an Assemblyman, I thought I would try to address it.  I will explain what A.B. 269 does.  If you are a patient and you go to your doctor’s office, that doctor will usually – and should – check to see if you are eligible.  If you are eligible, and that would be determined by contacting the insurance company in some way, either through a phone call or e-mail or through a fax, then if you provide the care, and there was no prior authorization needed, then this bill would require the insurance company to pay the doctor. 

 

Now, there is another possibility that perhaps the procedure requires a certain amount over a limit.  For example, if you need a surgery, that surgery may need to be prior-authorized.  In this bill, if a prior authorization is obtained and the patient is eligible and the physician provides the care, then the insurance company would be obligated to pay.  Currently, what will happen is you will go through all of those steps, then the insurance company will turn around and it could be months later, even six months later, even a year later, decide that that person was not really eligible.  They will not pay you, or if they paid you, they want your money back. 

 

[Assemblyman Mabey, continued]  For example, I have given you this insert (Exhibit O), this is a patient.  I know the insurance company name is here, it happens throughout, so I am not trying to pick on anyone, and I will not mention any names in particular.  This person came in to see me on 9-16-03, and you can see that by the date to the right-hand side, that on 10-21-02, they issued a check for me for $54.00.  Now, on the second letter, they sent me a letter on December 10, 2002, or three months after I performed the care asking, and I will say we are “requesting” a refund for you for an overpayment of $54.00 that was made by… I will leave the company out… regarding services provided on September 16, 2002, by myself.  The overpayment was included.  Then it gives the check number.  The overpayment was the result of payment made for services provided to the patient after their coverage ended on August 31, 2002.  So, now I am in a position three months after I performed the care of trying to find this patient and asking her to pay me.  Personally, I do not feel that that is correct. 

 

I have researched… sometimes, they will catch it sooner and they will not pay you.  In this case, what they will do, is instead of asking me for the $54.00 back, another patient will have had services performed and they will deduct the funds from that patient and not pay me for taking care of that person.  To me it would be the same as if you sold 100 shares of IBM today at $100 and they put $10,000 in your account.  Next week, you sold 100 shares of another stock, and they came back and said, “Well, you know the person that you sold the $10,000 did not pay, so we are going to subtract the same funds out of your account.”

 

Chairman Goldwater:

They do that all the time in my business.

 

Assemblyman Mabey:

Well, that has never happened to me.  Every time that I have sold shares in a company, then that was between the market maker and the buyer of the stock.  I researched the NRS and I know that there are problems, but I think the problems are mainly between the insurance company and the employer.  They will mention probably a grace period, but, and I have given you a handout of NRS 689A.070 (Exhibit P) regarding a grace period.  It says, “grace period.”  A grace period of, and in most cases it would say 31 days, “will be granted for the payment of each premium falling due after the first premium, during which grace period, the policy shall continue in force, a policy in which the insurer reserves the right to refuse any renewals shall have at the beginning of the above provision.”  The way I read that is there is a grace period; even after the policy they may have not made the payment, but the policy still should remain enforced.  That is basically what I am saying.  Thank you.

 

Chairman Goldwater:

I think we have a lot of sympathy for providing service and getting the rug pulled out from under you.

 

Larry Matheis, Executive Director, Out of State Medical Association:  

I think Dr. Mabey has presented the essential case and it is a continuation of the issues that this Committee of this Legislature has been addressing for half a dozen years, especially under the new leadership of the Assembly Majority Leader, the issues of a radically changed coverage system and getting it compatible with the radical changes in the medical care system and making sure that both are working for one end.  That is to make sure that patients get the care that they need when they need it, and that the imbalance that has occurred, especially into the mid-1990s, made the system work for a lot of people, but not for patients.  Through a series of actions, what we are trying to do is rebalance that for physician’s interests are best served when their patients’ interests are best served.  I am absolutely convinced of that. 

 

When you adopt policies that aim at making sure that patients are receiving the care that they need, in this case, the coverage system has a problem.  Its interests are not necessarily the same as the patient’s interest.  So, there are these extra bites of the apple that are sort of built in to the complicated structures of the coverage system.  If you are approved… If a doctor gets approval to do medical service, because it is medically appropriate, and the person has coverage, the common sense thing is, that once that service is delivered, then it will be compensated for, at whatever the appropriate rate is. 

 

But, there are times, too many times, when later on there is a second bite of the apple, and we do not cover that benefit in that circumstance, that person was not actually covered at the time you provided it, we did not know it when we approved it, or whatever.  Well, it was a medically necessary service.  If a health care system that we have constructed, with all of these complicated players in it, is not there to make sure that a medically necessary service is provided to a medically needy patient, when they are there, then our system is a failure, no matter who looks at it. 

Chairman Goldwater:

Then the system is a failure because that is not the way that the system is set up. 

 

Larry Matheis:

This would correct one of the glitches that work against the patients right now.

 

Chairman Goldwater:

Let me ask you this, Mr. Matheis and Dr. Mabey.  Are you finding this to be a problem, mostly with private insurers and health maintenance organizations, or are you also seeing this as a problem from our state and government delivered health insurance benefit plans?

 

Assemblyman Mabey:

I think it happens with most insurance companies.  I personally, because of the way the Medicaid switched to the HMO, I do not see any Medicaid patients except on a rare exception.  [Chairman Goldwater asked if he saw Medicare patients.]  No, I do not see that as often.  [Chairman Goldwater asked why he thought that was.] 

 

Larry Matheis:

I think because Medicare hit this brick wall about ten years ago in which they were sending out notices to patients after the care was delivered with the explanation of benefits.  It was medically unnecessary; in fact, in most cases, not only couldn’t they show that it was not medically unnecessary, they were medically necessary and they just did not want to pay for it.  They were linking the medical necessity and the coverage of benefits, and what happened is, because that is the promise of Congress, [they heard] a lot of complaints by a lot of seniors.  That inspired Congress to look closely at that, redefine how Medicare does that, and Medicare actually, in terms of the movement of claims and the appeals mechanism whenever they do make a medical denial, has gotten a lot smoother.  They just do not pay enough.  But, in terms of addressing this, it is because as a governmental system, they actually had to be more accountable quicker when the patients got into this, and were saying, “Wait a second, this says that my operation was not medically necessary.  I was sick.  Why was it not necessary?”  Over the last decade, they no longer send out, with the explanation of the benefits, that this was medically unnecessary.  The get a complicated explanation of the coverage system. 

 

Chairman Goldwater:

So, the main problem is?

Assemblyman Mabey:

Mr. Chairman, let me try to answer that.  Also, Medicare patients, once they are Medicare, are Medicare patients.  It is not like they are changing insurances.  For example, if you are an employee, you have an insurance through a certain company, but you may change insurance.  Or you may leave that job.  But, once you are Medicare, usually at 65 years of age, then you are going to stay that way, so I think that is the reason why the eligibility problem does not crop up.

 

Chairman Goldwater:

Actually, when I worked for the Medicare Task Force in the First Lady’s Medicare Task Force, the eligibility under Medicare was a problem with providers because there are so many different levels of eligibility.  There is part A, part B, supplemental, managed cares, etc.  That actually was an issue, but evidently Mr. Matheis testified that they have come to grips with those issues over time.

 

Larry Matheis:

They have worked at that end of it.  They have worked at the back end of it.  The only problem now is that they are so underfunded that now it is unattractive for a different set of reasons. 

 

Assemblyman Mabey:

I do not want to make this sound like it is just for doctors.  Certainly, I feel we should be reimbursed, but oftentimes the patient is put in a difficult situation.  They find out months later that, through whatever reason, they were not eligible, and now they have a bill that may be $50, like in this case, which they probably could afford, but it may be into the thousands of dollars.  If they would have known that it was not going to be covered, then they would not have had the procedure performed. 

 

Chairman Goldwater:

Are you finding this to be a problem in the majority of cases, as eligibility-related or medical-necessity related?

 

Assemblyman Mabey:

Mainly, I find that it is an eligibility problem.  They will go backwards and find out that the person was not actually eligible at the time of the procedure, so that is why it is being denied.

 

Larry Matheis:

I think that you will find that it is slightly different depending on the specialty and the type of services that they provide as to whether or not it will tend to be a problem of the necessity and whether it is a covered benefit or whether it is an eligibility question.  [Chairman Goldwater asked if the provisions of HIPAA (Health Insurance Portability and Accountability Act) would make this more of a problem in the future.]  I think that the provisions of HIPAA will make everything more of a problem. 

 

Chairman Goldwater:

Any other questions for these witnesses?  I appreciate it.  Ms. Saldo, please and thank you for your patience. 

 

Bob Ostrovsky, representing Nevadans for Affordable Health Care:

If I might indulge the Chair and the Committee, I would like to go first.  It is an employer’s coalition with over 300 employers and about 110,000 employees.  I will provide a list of our membership, the names of the companies that are represented in that coalition (Exhibit Q), and we are concerned about health care costs.  We oppose this measure, and let me tell you why.  We would also be happy to work with the subcommittee, so we do not stretch this out too far. 

 

The problem, and I think clearly, the Chair identified this.  There is a difference between prior authorization of something and then a future denial saying we did not really mean to authorize that.  That is an issue.  I think the larger issue is eligibility.  What happens, the employer’s point of view is that, if I have an insurance program for my employees, and I do in my business, I have a 30-day grace period, in which… I also have an add-and-delete report, which I send to the insurance company, which says that I added this employee and I am adding the premium.  I deleted this employee because I no longer work here.  There is a lag between the time an employee leaves the employment of a company and that information reaches the insurance company. 

 

What frequently happens at the end of the month for a little business like mine that has a few employees, and I personally do all of the paperwork.  When I was a human resources executive on the Strip and had 30,000 employees that were my responsibility, we actually had an online computer system to our administrative service contractor, in a self-insured environment where we tried to do the add-and-deletes daily.  Even in that situation, the human resource department may not know about a termination for two or three days before the termination even reaches the HR department, from the department. 

 

I will give you an example.  An employee no calls/no shows on the 29^th of the month.  The supervisor calls the employee at home, no answer.  You do not know where the employee is.  It may be two or three days before the supervisor decides that this employee is gone.  Let me tell you, in my experiences as gaming executive that is not an uncommon occurrence, in that industry.  So, we get the termination report, dated the 3^rd of the month, saying that this employee last worked on the 28^th of the month, which now becomes the termination date, and they have lost eligibility as of the end of that month, or the day that they terminated, depending upon what the policy is of the employer, and the contractual relationship with the insurance company.  Now, if that employee goes to the doctor, or had pre-planned a procedure to be done, that employee may go, and have the procedure done.  Then, when it gets to the insurance company, they find out some time later, as the doctor had pointed out, a month or two later, a letter comes and says that the employee was not eligible because the employee was not covered.  I do not know how to close that gap.  It is a very difficult problem of processing information in an environment where humans deal with information.  I will give you two examples and then I will defer.

 

[Mr. Ostrovsky, continued]  I am in the unfortunate situation where my wife had nine separate visits to a surgery center last year.  Every time that I went, they had a pre-authorized form.  They also had a form that said if the insurance company does not pay, you are responsible.  In that case, this particular surgery center actually took a credit card imprint and said that if they do not pay, I am going to put it on your credit card.  So, this sort of relationship between providers, whether they be surgery centers, doctors, or whatever, is pretty common.  The little sign in the window that says, “We will bill your insurance, but you are still responsible.”  That is the reason the sign is there. 

 

The second case, I had a case where I went to a doctor, who was on my panel, two years ago.  Almost two years later, I received a bill that said they did not pay.  I said, “Did you bill them?”  And, they said “We are not sure if we billed them, but they did not pay.”  My insurance said that if I do not get a bill within 90 days, I am not going to pay it.  I wrote a check for the doctor and we are pretty upset because they did not bill properly.  It is a complicated system.  I think the insurance industry will speak to that. 

 

All I can tell you is that my employers do not know how to solve this problem right off the bat without enormous additional cost.  If the insurance company pays, they are going to want to collect a premium for the period of time, which the employee was not working.  It will change the contractual relationship between insurers and employers, and between doctors and patients.  It is a complex issue.  I think everyone would like to do that, but there is some point at which the person who is seeking the medical treatment should have some knowledge.  They know that they are not covered.  They know that.  They know they have been terminated and that they have lost their insurance, or can be pretty sure of that.  But, they do not seem to mention that when they enter into the doctor’s office and say “I don’t work there anymore, but I’m gonna get the procedure done anyway.”  In an environment like Las Vegas in particular where there is a lot of employee turnover, employees are fairly mobile and move a lot.  I feel for the doctors in trying to find and locate those people to collect their money.  If they turn it over to collection agency, they are going to give up half of their money.  It is a complicated matter.  We would be happy to serve on the subcommittee you suggested and I do not know what the answers are.

 

Chairman Goldwater:

I do not think of this as an adversary, as most bills are.  I do not think of it as an us-versus-them kind of bill.  It certainly is a system that is broken and not working.  It is just, who is holding up the bag, and I think Dr. Mabey thinks the providers are holding too much of the bag.  Some of us think the patients end up holding too much of the bag.  I know that Marie is about to tell me that the insurer is going to be holding too much of the bag.  You [Bob Ostrovsky] have told me now that it is the employers.  It is tough.  The type of health care delivery system we have chosen in this country by vicious assent is an employer-based delivery system.  That is what we have chosen in most cases.  If it is not Medicare and not Medicaid, it is employer, and these are the things that we have to live with. 

 

I will have to tell you that doctors were as much of an advocate for an employer-based system as anybody else, in my experience.  So, I am not sure if it is an adversarial system or something else.  We just need to talk about it and figure out some policy.  Marie, please. 

 

Marie Saldo, Sierra Health Services:

I think that everybody has really already stated the problem and I do not want to overdo this, but I do want to say one thing.  One, I do not believe that this is about medical necessity.  It is about who is eligible.  So, if can clarify that for the record, then that is fine.  We have a standard of business practice that probably needs to be overhauled.  It has to do with the way we are contracting.  Our contracts with employers allow them grace periods to pay us premiums.  In some instances we are giving almost six months to some employers to give us hires and terminations.  With that being said, and without belaboring this anymore, we would respectfully request that this be put into a subcommittee so that we can really have a dialogue.  I believe that this is across the board.  It is not just insurers that are subject to the jurisdiction of the state.  It is going to be unions and others, as well.  So, if we could get them to the table that would be helpful.

 

Helen Foley, representing Pacific Care:

I echo the concerns that have already been raised, and we certainly do feel some empathy with the doctors, because if this shift took place, and we did not know that someone was not eligible, because we look and see that they are indeed and employee or a member, with XYZ Company, we would not have any way of knowing that they are no longer employed unless the employer told us.  There are some situations, especially with government contracts, where they may have up to six months to tell you “Ms. Smith was not an employee then, and by the way, we want our premiums back for that employee, or that member that was covered six months ago.”  Sometimes with the federal government, you may have a contract, and they will come back a year and a half later and say that this employee was not here.  It might be the first time that you have ever heard of it as the insurer, but that is the way that this system has worked.  So, it does need reform, and we all need to sit at the table and see what we can do.  It is not an easy solution or a quick fix.

 

Woody Thorne, Executive Officer, Public Employee Benefits Program:

We too are in opposition to the bill here, do to the impacts you have heard.  Eligibility is a key element here.  There are many times where PEBP, as the administrator, does not hear from the individual agencies reporting to us, that employees are out on leave without pay, that they have terminated, for up to three and four months.  That makes it very difficult for us to manage when you are dealing with a situation where you have a prescription drug program, with a card.  They go in and present the card, it comes up automatically that they are covered, they are delivered, and we do not have a way to recover that.  In many of the situations… when we look at the terms and in the subcommittee, we can get into more detail.

 

There is a very large difference between precertification, which deals with the medical necessity of the procedure, and eligibility.  We do not preauthorize, per se.  Preauthorization is to approve the procedure for payment.  We precertify the medical necessity.  If we get into a situation where we are going to be required to pick up the tab, it is going to increase the cost of the programs. 

 

The doctor is in a difficult situation, as well.  There was, at the federal level, a system created to supposedly deal with this issue many years ago, and that was COBRA.  When you have a termination, an employee knows that they are terminated; they have the eligibility to continue that coverage on their own.  If they were to take advantage of that, that would provide the coverage that the doctors would need.  The issue we have there is, they have 60 days to make the determination on whether they are going to pick up cobra.  They can wait until the 60^th day and then they have another 45 days before they pay the first premium.  So, if they notify that they are going to continue, you have to provide the coverage.  You may never get the premium for that COBRA and still be providing the services.  So, it is not an easy solution, by any means. 

 

Chairman Goldwater:

No, it is not.  I think most physicians would pay the COBRA if they knew, if they had covered it, to a certain extent. 

 

Woody Thorne:

Yes, and in many cases where you are dealing with surgeries or hospitalizations, that is what it comes down to, when the hospitals will pay a small premium to get that covered. 

 

Assemblyman Beers:

Now, you have a $20-million-whiz-bang payroll system that you should be able to, and this is probably not something that you would do, you should ask personnel.  They should be able to extract for you a weekly, biweekly list of everybody whose employment status has changed.  We should be able to eliminate any lag time in you finding out employment status changes. 

 

Woody Thorne:

Mr. Beers, we would very much like to be able to do that.  What we have is just within the state system.  State employment, we have five major pay centers.  The pay center… the central payroll is by far our largest, but we have not owned the central payroll NDOT, Legislative Counsel Bureau, PERS, for their employees and for retirees.  Then, we have the University Systems, UNLV and UNR.  As we have a mix of systems, we are trying to get into an electronic reconciliation process, but that is still after the fact.  Getting that information on a more timely basis is something that we would very much love to get.  It would be very helpful. 

 

Assemblyman Hettrick:

I understand that and the problems, but how is that they can cut off the paycheck?  They do not keep paying them for two months.  So, they are getting it through somehow, to stop the paycheck. 

 

Woody Thorne:

In many cases you have information going into the pay system and you have a payroll clerk doing that.  You have someone else within the agency who is handling other paperwork, including the in the notification of PEBP that this employee is no longer working there.  That is where the system breaks down.

 

Many times we have, for NDOT or for Corrections, where they have employees scattered out into the rural areas.  They may be working out of a small location where they only have three or four employees, and you have one person doing a full-time job and then handling this on a part-time basis.  They make it so a paycheck is issued, because there are timesheets that have to go in.  If no timesheet goes in on a classified employee, then they do not get a paycheck.  So, we are dealing with a situation of two different systems that are entered. 

 

Assemblyman Hettrick:

I understand that and appreciate that.  I think I am almost thinking as much in terms of the private employers as much as our system, because the private employers are also getting to terminate that paycheck in some fashion, if they know that person is no longer covered.  It seems to me that it is not a perfect system and you point out reasons why it would not ever be perfect.  We ought to be able to get a lot closer then we are getting than having a month or something go by before some kind of notification goes out.  So, I think there is some room to get this thing moved closer and stop part of the problem.  I do not think it is a cure for the whole problem. 

 

Chairman Goldwater:

I think technology is only going to make this problem not quite as bad, but then you have something like HIPAA that is going to exacerbate it to a certain extent.

 

Phil Nowak, Division of Health Care Financing and Policy:

We provided to the Committee members a more detailed explanation of our request (Exhibit R) in the context of this bill, which is in light of our responsibility of provision of services to the Medicaid and Nevada Check Up population.  We request that, as it relates to that part of their business, that the health maintenance organizations with which we contract be exempt from the provisions of this bill.  In brief, for some of the same reasons that have already been presented, but in a very specific respect, circumstances for the Medicaid and population are a little bit different as it relates to eligibility. 

 

As the Committee may be aware, Nevada, under its state plan, determines eligibility for Medicaid recipients on a monthly basis.  So, from the standpoint that it becomes a standard and very important practice on the part of providers to rely upon the issued Medicaid cards, which are, in effect, valid on a monthly basis to verify eligibility at the time service is rendered, in order to avoid some of the issues of ineligibility that are described for, perhaps, more prevalently for private employers.  Secondly, from a purely fiscal standpoint, if its services are rendered after authorization, if authorization is required or at a point that is different than the time when the card was issued, essentially, the state, from either the standpoint of our General Fund, or from the standpoint of Nevada being eligible to access the federal share of Medicaid, essentially does not have the mechanism to do so.  So, it would in effect, put the state in a position of not having enough funding mechanism for those services.  So, for those two reasons, in very brief terms, are the basis for our request to be exempted.

Chairman Goldwater:

Can we ask you to participate in our discussion?  [Mr. Nowak indicated that he would be very happy to.]  I will simply say that it is a sad state of affairs when we are having this discussion over eligibility, particularly in Nevada.  I have long been an advocate for health care for everybody and some day, if that ever is a reality, this will be a completely moot point.  But, because of the pressing issue that are currently facing providers, and the importance of what, I think, is an important public policy, we need to have a subcommittee hearing and keep notes on our progress, and discuss this.  So, I am going to appoint myself, Ms. Leslie and Mr. Beers to sit down with Dr. Mabey, Ms. Saldo, Mr. Ostrovsky, and any other interested party, on a date we will post relatively soon, so we can hash this out and see if we cannot come up with something that is at least progressive.  I will close the hearing for the time being.  Please note that your agendas are getting longer; these meetings are starting to get longer.  We are going to try to weed through the bills as much as we can.  If there is anything in particular that you need to hear, please come see me.  If not, there are going to be some bills that go away.  With that, I will close the hearing on Commerce Today, and thank you for your patience.  [Chairman Goldwater adjourned the meeting at 5:16 p.m.].

 

 

RESPECTFULLY SUBMITTED:

 

 

 

                                                           

Corey Fox

Committee Secretary

 

 

APPROVED BY:

 

 

 

                                                                                         

Assemblyman David Goldwater, Chairman

 

 

DATE: