MINUTES OF THE
SENATE Committee on Judiciary
Seventy-second Session
March 3, 2003
The Senate Committee on Judiciary was called to order by Chairman Mark E. Amodei, at 9:00 a.m., on Monday, March 3, 2003, in Room 2149 of the Legislative Building, Carson City, Nevada. The meeting was videoconferenced to the Grant Sawyer State Office Building, Room 4412, 555 East Washington Avenue, Las Vegas, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Senator Mark E. Amodei, Chairman
Senator Maurice E. Washington, Vice Chairman
Senator Terry Care
Senator Mike McGinness
Senator Dennis Nolan
Senator Dina Titus
Senator Valerie Wiener
GUEST LEGISLATORS PRESENT:
Assemblyman John Oceguera, Assembly District No. 16
STAFF MEMBERS PRESENT:
Nicolas Anthony, Committee Policy Analyst
Bradley Wilkinson, Committee Counsel
Jo Greenslate, Committee Secretary
OTHERS PRESENT:
Frank W. Daykin, National Conference of Commissioners on Uniform State Laws
John Sande III, Lobbyist, Nevada Bankers Association
Paddy Ryan, Southern Nevada Multi-Housing Association
Charisse Earhart, Equity Residential and Southern Nevada Multi-Housing Association
Felice Platt, American Utility Management, Southern Nevada Multi-Housing Association, and National Submetering and Utility Allocation Association
David Howard, Lobbyist, Northern Nevada Apartment Association and Southern Nevada Multi-Housing Association
Vicki Young, Marina Gardens Apartments and Northern Nevada Apartment Association
Judy Stokey, Lobbyist, Nevada Power Company and Sierra Pacific Power Company
Dan Musgrove, Lobbyist, Clark County
Jeff Parker, Solicitor General, Litigation Division, Office of the Attorney General
Karen M. Coyne, Lobbyist, City of Las Vegas
Doyle G. Sutton, State Fire Marshal, State Fire Marshal Division, Department of Public Safety
Joe Anelli, Senior Director, Board of Directors, Nevada State Firefighters Association
Chairman Amodei:
We will start the hearing today with Senate Bill (S.B.) 196, which enacts the Uniform Prudent Investor Act and Uniform Principal and Income Act.
SENATE BILL 196: Enacts Uniform Prudent Investor Act and Uniform Principal and Income Act (1997). (BDR 13-1107)
Senator Terry Care, Clark County Senatorial District No. 7:
Senate Bill 196 is comprised of two uniform acts, and last time I testified on uniform acts, I explained what they are, where they come from, and what the conference of commissioners of uniform state laws is, so I will not cover that again. This bill combines two uniform acts. Sections 2 through 14 of S.B. 196, are the Uniform Prudent Investor Act, and sections 15 through 48 are the Uniform Principal and Income Act. To an extent, they touch on related matters, which is why they have been comprised into a single bill. I notice Mr. Daykin has added as a handout the very item from which I was going to briefly summarize (Exhibit C). I will go ahead and do that and then turn it over to Mr. Daykin. My notes indicate 36 states have adopted this legislation and the American Bar Association and the American Bankers Association have approved it. This year it has been introduced in Montana as well as here in Nevada. This is not a field of law in which I practice. Mr. Daykin, in his illustrious career, has probably practiced in every field of law, and has also had the experience of being a uniform law commissioner since 1975, and the head of the Legislative Counsel Bureau for a number of years. I will turn this over to Mr. Daykin, and he can walk you through the bill, section by section.
Frank W. Daykin, National Conference of Commissioners on Uniform State Laws:
Senator Care generously ascribed this to me, but the Legal Division prepared a good section-by-section analysis of S.B. 196 (Exhibit D). I will confine myself to emphasizing just a few points from the analysis and then answer questions. The first point is the reason for combining the two acts into one bill. The Uniform Prudent Investor Act allows a trustee to make a wide variety of investments and not be tied to the old-fashioned legal list. However, once he has done so, particularly under the stock market conditions existing during the years of this bill’s preparation, if he had invested, for example, primarily in growth stocks, a trustee would have derived a considerable appreciation of capital year by year, but little current income. That would have benefited the remainder rather than the income beneficiary. On the other hand, if he had confined himself primarily to bonds, he could have derived a good current income, but only nominal appreciation of capital, and in real terms, the capital would be shrinking due to inflation. Therefore, the income beneficiary would benefit rather than the remainder. Trustees historically tried to solve this problem by allocating their investments between the two types and, depending upon their skill and success, sometimes did a good job and sometimes did not.
What the prudent investor act does is to permit the trustee to disregard that choice and, with the flexibility of the prudent investor act, the trustee could adjust between principal and income. For example, if he had a growth stock that was appreciating rapidly and producing little current income, he could apportion a part of the appreciation to the income beneficiary and part of it to the remainder.
One important point of section 18 of S.B. 196 is that it has been slightly modified from the uniform act by adding to the end of it on page 7, subsection 7 of section 18, “A trustee incurs no liability by choosing not to exercise the discretionary power conferred by this section.” This subsection was added at the insistence of the Bankers Association, which had considerable concern here and in other states, over possible liability to beneficiaries for exercising or for not exercising discretionary power. In California, legislators put into the principal and income act a provision similar to section 7, but about ten times as long. What section 7, subsection 7 does, by simple statement, is assure any bank trustee who has followed the California law will not get into trouble in Nevada. I do not believe it impairs the uniform act because the power is discretionary and not meant to be compulsory. Individual trustees may choose to be more creative in exercising discretion than corporate trustees such as banks. Finally, it avoids the potential for litigation and makes Nevada a good place to administer trusts.
Subject to my observations and the excellent section-by-section analysis, you may note that because of the disagreement over a couple of sections over what we now resolve with subsection 7 of section 7, much of the United States has gone beyond this, we are by no means leading the way. Other states have not reported any difficulty of which I am aware in administering either act. I put them together in S.B. 196 because neither makes much sense without the other.
Senator Wiener:
With regard to the prudent investor rule and distribution for the remainder as well as for the income, we have historically dealt with financial investments by looking at American and world history. There have been a lot of trends and history we can look to, for example, what happened after world wars. A lot of investors looked at history to enable them to make wise investments over a long period of time. We are now entering a period of history with no precedent for investing. Will this act have the flexibility to address what we have not experienced before and not cause problems for those receiving the benefits as well as those making the decisions?
Mr. Daykin:
Yes, it will, because in terms of the fiduciary’s responsibility, section 8 states, “A trustee shall invest and manage trust property as a prudent investor would … .” It gives the fiduciary discretion, and in subsection 2, it emphasizes his decisions must be considered in light of the portfolio he is administering as a whole. He should not be criticized for the performance of one particular stock in a portfolio and ignore the rest.
John Sande III, Lobbyist, Nevada Bankers Association:
We would like a little time to look at this. We are contacting our banks. As was pointed out by Senator Care, there are some changes. It has been adopted by a number of states, but they have made changes to the uniform act to comply with their requirements. If we could have a few days, we should be able to get information, tweak the act a little bit, and get back to the committee.
Chairman Amodei:
I will close the hearing on S.B. 196, and open the hearing on S.B. 194.
SENATE BILL 194: Provides for allocation of utilities by landlord to tenant pursuant to ratio utility billing system. (BDR 10-753)
Paddy Ryan, Southern Nevada Multi-Housing Association:
The officers and members of the Southern Nevada Multi-Housing Association (SNMA) gathered here today appreciate the opportunity to speak on behalf of S.B. 194, proposed by SNMA. The SNMA represents 60,000 multi-housing units in Nevada, and over 50 local and nationally recognized professional management companies. Here to speak on behalf of S.B. 194 is Charisse Earhart, President of the SNMA.
Charisse Earhart, Equity Residential and Southern Nevada Multi-Housing Association:
I appreciate this opportunity to speak on behalf of S.B. 194, submitted by our association. Although the current tax situation of Nevada is the No. 1 issue of this Legislative Session, the water crisis now facing Nevada cannot be ignored. The current drought conditions in the West and corresponding low water flow of the Colorado River have already begun to affect how Nevada deals with available water. In fact, the Southern Nevada Water Authority is currently developing a three-stage drought plan and has significantly increased its conservation initiatives to further promote conservation. It is important for everyone to take an active role in conserving water as well as all utilities.
Senate Bill 194 both promotes resident conservation and allows apartment owners to recoup a portion of their ever-increasing utility costs. Studies have proven when apartment residents are required to pay for their share of utility costs, regardless of the methods by which they are being billed, they do begin to control their consumption. Upon request of both the National Apartment Association and the National Multi-Housing Council, an independent research firm conducted a study to see if residents who were billed separately for water and sewer changed their usage habits. This study showed the residents who were billed separately used 6 to 39 percent less water than when water costs were built into their rent structure. On a typical 300-unit property, when the ratio utility billing system (RUBS) is in effect, the savings can total 1 to 4 million gallons of water per year. The overall impact of RUBS on the apartment industry in Nevada could potentially be huge. We have also taken great care to ensure resident safeguards were included in S.B. 194. Administrative fees are limited to actual costs incurred. At least 10 percent of the total utility bill must be allocated to common area costs and not be passed through to residents. Late fees are limited to a maximum $10 fee, and full disclosure of the RUBS program being used must be outlined in the lease document.
Other states, including Arizona, Oklahoma, and Texas, have enacted other RUBS-related legislation. None of these states has a water crisis more severe than Nevada is now facing. Although some property owners are currently using RUBS, many others are on the sidelines waiting for legislation to be enacted containing RUBS guidelines. All property owners need to participate in empowering their residents to see the financial benefits of utility conservation. Senate Bill 194 is a bill that will protect the rights of both residents and apartment owners and will ensure you have done the right thing for all of your constituents. We must enact legislation now that will continue to assist in future water and overall utility conservation.
Senator Care:
I thought two parties could already do this. In a commercial context, when you get into common areas of maintenance (CAMS) fees, it is similar to S.B. 194. It would seem to me the parties would be free to negotiate whatever terms they wanted in a lease. Unless there is a distinction between commercial and residential, I would question the necessity of the bill.
Ms. Earhart:
There is currently nothing on the books either way to make it legal or illegal on the residential side to bill using the RUBS. However, we believe it will become increasingly important in the future, and we need to enact legislation that protects both parties. We need to create guidelines in which both parties participate.
I would like to introduce Felice Platt, with the American Utility Management Company. She has been instrumental in enacting RUBS legislation in many other states and can speak to specific legislation.
Felice Platt, American Utility Management, Southern Nevada Multi-Housing Association, and National Submetering and Utility Allocation Association:
The National Submetering Utility Allocation Association across the country, since 1998, has been working with legislators to enact legislation both in times of drought and prior to drought situations. It is important we enact legislation to ensure proper rules, procedures, and guidelines are in place, especially in Nevada, where drought is prevalent. Programs and processes are being put into place to ensure we stay on top of the drought situation in Nevada. To that end, it is important to pass legislation before it becomes an emergency situation calling for emergency legislation, which is usually not as clear or codified in time for parties to take necessary action in a timely manner. Also, there are owners in Nevada who have not started utility billing to residents because there is no law in place, and interpretation matters become unclear down the line. This committee should not miss the opportunity to proceed at this point with some kind of program to bill utilities back to residents to ensure owners and tenants form a partnership in the multi-family arena. The savings resulting from programs such as these are tremendous to the State and constituents involved in these programs.
Senator Wiener:
Here in Carson City, I am living in an apartment where I am already assessed monthly for water. I understand the efforts to create awareness, and that RUBS billing creates awareness that might not be there if billed into the overall cost of rent. I am going to give you a scenario, and I would like you to explain to me how the education component works. I am one person in an apartment and pay my ratio billing. Most units house four to six people. Obviously, their water usage is going to be greater than mine. Although I am aware of it, maybe they are not as aware because they might get a break from somebody like me. How do we create awareness that everybody needs to be responsible for his individual water use when it is spread out that way?
Ms. Platt:
Ratio utility billing does factor in the multi-resident scenario. Six people living in a unit will be billed more than one person living in a unit. In turn, awareness does come from actually seeing the bill every month. For parties who do not see the bill, as has currently been the norm, there is no way to encourage conservation. Certainly many owners have taken it upon themselves to try to introduce programs to educate, but until both parties form a partnership to ensure conservation is occurring by residents receiving an actual bill, there is no way to build an awareness. When water usage is included in the rent, parties are just not aware.
By having residents, whether one-person, two-person, or six-person occupants, receive an actual bill for water usage, it does make parties aware there is a cost associated with water usage. Vendors, such as American Utility Management, and other associations to which I belong, have created conservation and awareness programs. For example, on water bills our company produces, we put water tips on the bills to remind people about such things as using the faucet when brushing their teeth wastes tremendous amounts of water. I do not believe people are aware of that fact. Certainly disclosure to residents about water usage is very important and tandem to billing residents for utility usage, and it does create awareness.
Senator Care:
This is not a question. I am not sure if the witness is aware of a bill the Senate passed out unanimously earlier this session, Senate Bill 128, which offers a provision for a tenant, who has either been locked out or had his services cut off, to seek an immediate forum with a justice court judge to determine the validity of the constructive eviction.
SENATE BILL 128:Allows tenant to recover immediate possession of premises from landlord under certain circumstances. (BDR 10‑416)
While S.B. 128 does not go to awareness of conservation, I am wondering if any witness has any idea of how it would play with the provisions in S.B. 194 regarding a civil action.
Ms. Platt:
I have not read S.B. 128. I would suggest the two contradict each other in the sense the idea behind billing for utilities to residents is not about any kind of eviction of the resident as far as rent payment. The rent is treated the same way as paying utility bills. Typically these run in tandem, meaning if the resident does not pay his rent, obviously there are some issues, just as there are issues if the resident does not pay his utility bills. Provisions included in S.B. 194 provide a methodology for pursuing matters against an owner even if the tenant believes these bills are not correct. The idea was planned within S.B. 194 to protect residents by preserving a forum within the bill, for pursuing rights even as far as utility billing goes.
David Howard, Lobbyist, Northern Nevada Apartment Association and Southern Nevada Multi-Housing Association:
I have with me this morning Ms. Vicki Young, who is the president of the Northern Nevada Apartment Association. First, I would like to address Senator Care’s concerns about S.B. 128. Section 2 of S.B. 194 provides that those provisions this bill would create would become part of rent. Line 6 on page 4 of S.B. 194, states, “As used in this section, ‘rent’ includes a charge payable by a tenant to a landlord pursuant to section 1 of this act.” Our association saw S.B. 128 as a remedy requested by the justice court in southern Nevada, and we supported it. I do not see any conflict with this bill if there were an agreement in place that would be part of the process. S.B. 194 would be considered rent, and S.B. 128 would be part of the process when it went to court.
You have heard from people in southern Nevada, and I would like to say we see this as a progressive piece of legislation, out front, getting ready for the future. Drought is something Nevadans are all familiar with. It comes and goes, but usually comes more often. Even this winter, at least in northern Nevada, it is difficult to understand we will be having a drought again. Some day in northern Nevada, we will all have water meters, and we should have a system in place to treat both tenants and owners fairly. I think the conservation message you heard from speakers in southern Nevada speaks loudly. We must make sure people have conservation on their minds. I have seen severe drought in northern Nevada over my 30 years there, and what is curious about it is that it goes in and out of people’s minds all the time, particularly the minds of local elected officials. Having been one in the 1980s, we were all concerned about drought. Then we had five or six wet winters in a row, and concern went away. A measure such as S.B. 194 puts into chapter 118A of Nevada Revised Statutes (NRS), which is the landlord and tenant law, a process that would be ongoing. As Ms. Platt said, other states already recognize this. Maryland and Virginia have both suffered severe droughts for a number of years, and have put similar legislation in place. I suggest you look at this as a piece of progressive legislation. Some owners are already doing this, but this is a way to begin the process. I see this as a piece of legislation that will work hand in hand with water conservation in the future.
Senator Nolan:
On page 2, section 1 of S.B. 194, subsection 4 on line 43 states:
the landlord may not begin to charge a tenant pursuant to a ratio utility billing system for a utility service for which the tenant had not previously been charged pursuant to a ratio utility billing system unless the landlord provides written notice to the tenant not less than 90 days before the beginning … .
I understand that would appear to be a consumer protection area where if the landlord decides to start ratio utility billing, he would have to give tenants at least a 90-day notice. If they are currently billed under some other independent type of metering system, and the landlord decides to switch over to a ratio utility billing system, does that mean the landlord would not be able, for that 90 days, to collect anything?
Mr. Howard:
I do not believe so, Senator. There would have to be some reasonable look at that. You have to pay for what you use. What you are saying is, “If I was on a water meter and paying by water meter, and all of a sudden this system came in, I was going to be billed on a pro rata share with my apartment residents that had changed.” The reason for the 90 days, and I have had discussions with people who believed that may be too much notice, when you renew a lease for a rental, 45 days is usually the time period for that. Ninety days certainly seems to be enough time to give a tenant, and I think that is what was intended here. If this were something the tenant is not going to want to do, he would have ample opportunity to find another place to live and move out.
Senator Titus:
My question is about the “up to 90 percent” of charges that can be passed on to the tenant for the common areas. I want to know what assurance the tenants have the landlord would be conserving. It should work both ways. Could you address that?
Mr. Howard:
I am not sure I can. I would think it would be in the best interest of the landlord to follow the same measures he is asking of his tenants. He has to pay 10 percent of the common area maintenance costs. From a practical point of view, I do not know why landlords would not want to conserve. Do you think there ought to be something in the rental agreement?
Senator Titus:
There needs to be some kind of safeguard. Perhaps you could suggest something appropriate.
Mr. Howard:
Ms. Young just pointed out on page 2, line 23 of S.B. 194, regarding the billing system, it mentions the utility service being metered, the opening and closing of the meters, and the dates of meter readings. It seems to me that would be measured exactly, and whether it is 10 percent, 20 percent, or whatever percentage the landlord would be responsible for, that is where it could be measured. The way I understand your question is, if this system were implemented for tenants, what assurance would they have the landlord would conserve?
Senator Titus:
Yes, if this is going to be passed on to the tenants directly, up to 90 percent, how do we know the landlord is not going to overwater? Are there any checks that could be put into place?
Mr. Howard:
I do not see anything in the bill, but I think from a common sense viewpoint, why would an owner or a landlord put this system into place if it were not over concern for conservation?
Senator Wiener:
A lot of times when allocating an amount of responsibility to other people, there is a need for some type of accounting. I am going to piggyback Senator Titus in a worse case scenario. Regarding the up to 90 percent charge for the common areas, in the case of lavish common areas, how would tenants know they are not paying for water with additional fees? In their bills showing their responsibility for water usage, what accountability is there the billing is for actual water used by the tenant?
Ms. Earhart:
Regarding the 10 percent for common areas, or up to 90 percent of the pass‑through, as far as overwatering and those types of issues, there are local laws in place with regard to conservation and overwatering. There is currently an extensive rebate program in Las Vegas dealing with Xeriscaping, consisting of changing grass to granite with drought-resistant plants, which is advantageous. On the accountability side, parts of the common areas are for residents who enjoy using them. Also, many of the communities that would have RUBS billing would also have laundry rooms, in which residents actively participate in using water. We believe 10 percent off the top is a fair amount of the common area. It is at least 10 percent. In many instances, companies choose to do much less than the allowed 90 percent pass-through.
Senator Care:
Committee counsel found in NRS 118A.160 the rental agreement, defined, means any oral or written agreement. Is it your intention this would apply to any oral or written agreement, or would you require a written agreement?
Ms. Earhart:
We have put into S.B. 194, full disclosure of the specific RUBS program to be used by a particular community would be written into the lease document. In virtually all lease agreements, oral agreements are not allowed.
Chairman Amodei:
Line 13 of S.B. 194, on page 2, talks about an administrative fee in such an amount that does not exceed administrative costs incurred by the landlord. What do you anticipate would go into that?
Ms. Earhart:
I believe that addresses the monthly administrative fee. Generally, it is a small fee to cover such things as the cost of billing, preparing the bills to go out, mailing of bills, and so forth.
Chairman Amodei:
My concern is, I see “administrative fee,” which is a name, and then I see the phrase, “not to exceed actual administrative costs incurred,” but I see nothing indicating what is included in the fee. I am looking for something on the record that would indicate what you are planning to do with the fee. I am mindful of previous testimony that you do not want to get into the utility business, but I would like to flesh out what an administrative fee is and what anticipated actual costs or administrative costs incurred are in the context of the legislation.
Ms. Platt:
When an owner uses an outside company, such as the company I work for, there is a fee associated with doing the billing, and the idea for this specific provision was to ensure owners do not pass back more than the actual fee charged. There have been situations in other states where charges exceeded actual cost. Modeling after several states that have enacted similar legislation, S.B. 194 contains a stop measure to keep any industry, cable, telephone, and utility billing, from making money on the fees. The fee is there to provide customer service, including answering tenants’ questions, record keeping, and so forth. This is also intended to be a measure to ensure owners, as well as billing companies, respond to residents inquiries regarding how their bill is generated, showing them the total bill, and proving the actual resident charges did not exceed the common area provisions as indicated in S.B. 194. Typically, residents do not pick up the entire 90 percent of total charges; landlords and owners typically pick up more than is prescribed.
Chairman Amodei:
In section 4 on page 3, how would a tenant know if a landlord failed to comply? Is there an education element or flyers to be sent with bills so tenants will know what is required of landlords?
Ms. Platt:
It is definitely not a bad idea. The provisions of this statute are trying to put educational elements within the lease, so when residents move in they are clear about the billing practice of the community into which they are moving. Further, there certainly could be information on the bill indicating the process for dispute resolution. That information is typically found within the lease addendum. I believe the committee should keep in mind owners are already participating in this type of billing, and the idea behind this law is to definitely clarify the kinds of questions we are discussing.
Senator Titus:
A lot of my constituents live in apartments. Generally speaking, is this going to make it more or less expensive for them?
Ms. Earhart:
Senator, it would depend on whether the apartment communities you are speaking about are currently using RUBS billing. In the short term, if they do implement, yes, they will have an additional bill. In the long term, they will have to absorb the cost of utilities provided by the owner in their rent payments. We all know water costs are going to go up, so that is going to be built into the rent structure. We want to get to the point where apartment community owners feel comfortable billing it as a separate line item versus just building it into the rent, so the conservation component is there for the resident to see. It would enable tenants to help control their rents instead of allowing the apartment community to bill it into their rent. They do not equate the rising cost of rent to increasing water and sewer costs when those services are included in the same bill.
Senator Titus:
Once apartment owners get the ability to bill water separately, is rent going to go down?
Ms. Earhart:
I cannot answer that. I would assume not.
Senator Titus:
That is what I was afraid of. Also, I think rent prices are based on the amenities included, such as a pool and a laundry room. With passage of S.B. 194, that would be figured into the rent, plus you would be paying extra for water for those amenities.
Ms. Earhart:
Again, I would say we are looking for the conservation component of it, and as water costs increase, it is going to be built in somewhere. We would like to help residents conserve more, because we know the apartment industry in Nevada is a large component. We would like to help tenants manage costs in renting apartments.
Vicki Young, Northern Nevada Apartment Association:
I represent the Northern Nevada Apartment Association, and in response to that last question, at our property, we did institute ratio billing of utilities. We found we were able to stabilize our rents rather than respond to a crisis of large utility bills where the residents are not assisting by being aware and paying their fair shares. Although it was kind of a shock to them at the beginning to have ratio billing, we found water conservation set in immediately. We were immediately aware if they had a leak in their apartment because they certainly did not want it to go on. Our water bill stabilized to where it did not continue to go up every year, and then in the response, if we did not bill for utilities, we had to raise rent. We have not raised rents in the last 6 months due to utility billing.
Senator Wiener:
Let me understand the logistics. Does it come out as a separate billing so they can actually see it as a billing for water or is it part of the rent every month, so their attention is not drawn to their water consumption?
Ms. Young:
Ours is a separate billing we send out ahead. We pre-bill each month for utilities, and it allows each resident to see his share of the utility.
Ms. Earhart:
Senator, one of the reasons we are proposing this legislation is because we want it to be a separate bill and separate from the rent so we can encourage conservation.
Senator Nolan:
With respect to the project you talked about, were your tenants formerly individually billed for their utilities, or were they collectively billed as part of their rent?
Ms. Young:
It was part of their rent.
Senator Nolan:
I understand currently if you are paying rent and utilities are included, the landlord is absorbing those costs and apportioning that out equally to everybody. If all we are saying is we are going to line item that as a separate part of the bill, now they are seeing what all 200 or 300 apartment residents are collectively paying. To me, it would not make sense to go from an individually billed and metered system to a ratio utility billing system because you are already collecting your actual costs from individuals, and the landlord would not have to get involved. If you are taking a bill you currently have in an apartment complex, and the landlord is assuming the costs and passing those costs down through rent, and now he is breaking out a line item for water, power, and rent, and I know I am going to be paying the same amount as the other 400 people in that apartment complex, is just getting a separate bill for utilities what you believe motivates conservation?
Ms. Young:
First of all, we find when the water bill is included in the rent, there is no conservation whatsoever by the resident. Typical human nature is that if you perceive it to be free, you do not believe you are paying for it. However, when you see a bill in front of you showing that water is being used and you have the opportunity to lower that bill, of course, we want a lower bill each month. As far as our billing, a one bedroom does not pay for a two bedroom, and a two bedroom does not pay for a three bedroom. The bills are different based on that ratio.
Senator Nolan:
You currently tag on an administrative cost, because I do not think there is anything prohibiting a landlord from tagging something onto the rent in addition to whatever residents are paying for utilities. Is that correct?
Ms. Young:
There is no legislation to guide us, so we do not tag on any type of cost at this point. We are just recovering utilities.
Senator Nolan:
You, as an individual, but there is no legislation that prohibits anybody from tagging on administrative costs.
Ms. Young:
That is correct.
Ms. Platt:
There are many existing apartment communities that are not metered individually. If an apartment community were individually metered, I cannot ever foresee a situation where an owner would stop having individual units metered, with the measuring of the water, sewer, and so forth. This bill takes into place existing apartment communities that were built over the last number of years that did not have, and were not built with, the capability of being metered or being metered with any sense of accuracy. Therefore, the allocation method is a way, developed by the government many years ago, to ensure both conservation and the most fair, legal, and equitable methodology for billing that creates differences between different sized units. While there can be some like bills between like units and like number of residents, there still will be differentiation between the units with six residents and units with one resident.
The multi-family industry did work with utilities in many places and tried to get utility companies to individually meter units. Most utility companies at this time do not have the infrastructure to support billing individual apartments in a large apartment complex versus billing the owner for the entire water usage. This methodology grew out of the fact local utilities do not have infrastructure to handle the billing, and at the same time, drought conditions and other serious situations with our drinkable water across the country are creating a need to look at large populations that are not motivated to practice conservation. It has been found across the country that multi-family residents do not practice or have the need to practice any type of conservation because it is built into the rent. This situation would typically not occur where there were individual meters in place, or the feasibility of doing so in a new construction situation. It would occur on existing properties to ensure entire communities are concerned about water supply and usage in this State. This issue is critical to Nevada.
Ms. Young:
As a follow up to that last information, on a personal note, having implemented this at our property, when we first made the decision, it was very difficult because there was nothing to guide us other than huge water bills. We have boiler systems on hydronic and steam heating. An example I would like to share is that I could walk my property, and while utilities were included in the rent, during the dead of winter people would be using their heat with their windows open. We had no conservation whatsoever. When we implemented utility billing, every window shut, people called and told us about leaks, and we saw a significant drop in usage, as well as better monitoring by residents of conservation. Ultimately we achieved our goal of conservation.
Judy Stokey, Lobbyist, Nevada Power Company and Sierra Pacific Power Company:
Our concern is, I think most of the comments made today were on water and the drought situation in the south. I am not a water expert, and would like to say if this is going to be specifically water, we take out the other utilities. I am having an amendment distributed (Exhibit E). Our three concerns are in sections 1.1, 1.4, and 1.5. We would like to add to the beginning of section 1, “Where master metering is permitted.” In section 1.4, we would like to add, “Tenant should also be able to clarify billing issues with the governmental agency that has approved the utility rates charged to the landlord for the service.” Right now there is no oversight. I think if there is a problem, it currently ends up in court. We do not believe section 1.5 should be in S.B. 194 at all. Currently, the way it works is the customer is the landlord, and if there is a problem with the tenants, they have to go to the landlord. If for some reason the landlord does not pay or is late on his bill, we do not want to turn off a complete apartment complex, but yet we would not be able to accept payment from individual tenants, because they are not “our customer,” and we would not have any idea of how much power they had used. We agree with conservation and believe it is a great way to hold down utility costs. However, since water is the main issue here, we do not believe all the other utilities should be added. We already have regulations with the Public Utility Commission of Nevada that we deal with on master meter.
Chairman Amodei:
For the record, the proposed amendment received today was by Nevada Power and Sierra Pacific.
The hearing on S.B. 194 is closed. Mr. Anthony, if you could receive an update from the representatives of the Southern Nevada Multi-Housing Association and the power company regarding the proposed amendment and report back to committee for Thursday’s work session, at least for discussion purposes, I would appreciate it.
I will open the hearing on Assembly Bill (A.B.) 26.
ASSEMBLY BILL 26: Provides immunity from liability to certain governmental entities and actors for damages caused by equipment or other personal property donated by any of them to volunteer fire department. (BDR 3‑768)
Assemblyman John Oceguera, Assembly District No. 16:
A large percentage of Nevada’s fire departments, approximately 90 percent, are volunteer fire departments. Caring, concerned Nevada citizens, who have pledged to act on a moment’s notice to combat any emergency that threatens their community or our State, staff Nevada’s volunteer fire departments. These volunteer fire departments can only act within their abilities, which are severely handicapped because they are under-equipped. Why are they under-equipped? Because the secondhand fire protection equipment they would otherwise receive from State agencies or entities or other public political subdivisions, such as large cities or counties, is not being donated. This equipment is not being donated due to a prevalent fear on the part of the donating entity that it would be held civilly liable for any damages caused by donated equipment due to failure or malfunction.
The majority of Nevada’s volunteer fire departments are unable to find or afford good fire control or fire protection equipment. A good community fundraiser on behalf of a volunteer fire department is not likely to raise the hundreds of thousands of dollars it takes to purchase critical equipment. These departments are therefore dependent upon the prospect, however slight, of receiving donations of secondhand equipment from other State agencies or political subdivisions. State entities and political subdivisions want to donate. They have secondhand personal protective equipment, self-contained breathing apparatuses, engines, trucks, and an undetermined amount of miscellaneous items, such as secondhand ladders, axes, chain saws, and so forth. Nevada’s volunteer fire departments want and need to receive this vital equipment.
Assembly Bill 26 removes the prior impediment to effecting donations by providing immunity from civil liability to the donating entity for damages caused by any equipment or personal property donated in good faith. As an act in support of the many volunteer fire departments in our State and the thousands of Nevada citizens who staff these volunteer fire departments, our Legislature should join with other forward-thinking states like Arizona, California, and Texas, that have enacted similar legislation. For the record, the intent of this legislation is to provide immunity to the donator from civil liability. It in no way intends to free the volunteer fire department from its responsibility and liability in maintaining equipment and does not imply any product liability immunity.
Senator Wiener:
The liability for any of these governmental entities currently is $50,000?
Assemblyman Oceguera:
I believe that would be correct.
Senator Wiener:
Would that be per incident, if it were imposed under current law?
Bradley Wilkinson, Committee Counsel:
It is interpreted as $50,000 per cause of action.
Senator Wiener:
Right now we want to get rid of that to create an environment where it would be easier to donate so the liability does not attach. Would the same civil liability protections and caps apply to a volunteer fire department as an agency or public entity?
Mr. Wilkinson:
I do not understand the question.
Senator Wiener:
There is immunity already for agencies and entities of the government of $50,000 per cause of action. Let us say we are waiving that so there is an environment of encouragement to donate without fear of liability attached, even if there is a $50,000 cap for cause of action. Is there a cap on liability for a volunteer fire department; is it treated as a political entity with that kind of protection, as well?
Mr. Wilkinson:
I think what A.B. 26 does is instead of having a $50,000 cap apply, it is a pure immunity so there is no liability.
Senator Wiener:
I appreciate that, and what I am saying is if we were creating that environment of generosity so they would be more willing to donate to a volunteer fire department, would the volunteer fire department enjoy that same immunity protection cap of $50,000 per cause of action? In other words, as the volunteer fire department assumed liability for the equipment, as is, would it have that kind of protection as a political entity?
Mr. Wilkinson:
Let me think about that. I think they would.
Assemblyman Oceguera:
If I could just clarify, I believe they would. I would have to look in the statute, but what is happening now is large counties and entities, such as Clark County or the City of Reno, do not donate anything because they are worried about possible liability. They send used equipment to auction, and a construction company gets all their hoses, or some other company gets their water truck that could be used in Ely or Eureka.
Senator McGinness:
Most volunteer fire departments are a subdivision of a city, county, or township, are they not? In my opinion, they would be covered in that case.
Assemblyman Oceguera:
That would be my thinking as well.
Dan Musgrove, Lobbyist, Clark County:
As a donator of equipment, we would appreciate this and the fact the liability would not be attached to the equipment we would give to these needy fire departments. We rise in support.
Senator Care:
Mr. Musgrove, would the city inspect the equipment before they turned it over?
Mr. Musgrove:
Absolutely. We would inspect it and would not want to give out anything that would be of danger to anybody. It is merely the fact it has probably reached its life with our facility, but probably still has many years of use. We have perhaps upgraded or gone to newer equipment. While still good, the equipment would not meet our needs. That is usually when we look to donate equipment.
Jeff Parker, Solicitor General, Litigation Division, Office of the Attorney General:
I just want to briefly say our office supports A.B. 26. After reading the bill, it is clear it is a simple and straightforward means of getting resources to volunteer agencies, and as Senator Wiener implied, government supporting a beneficial or necessary volunteer function is a social good that should be fostered. In my private life as a private attorney, this scenario happens frequently. I represented manufacturers who wanted to donate similar equipment to government agencies, and because of the fear of liability, it was difficult to do. This statute, at least with respect to government agencies and volunteer fire departments, would ease concern that liability would flow with this equipment. I simply want to say the Office of the Attorney General is in favor of A.B. 26 and supports it.
Senator Wiener:
Mr. Parker, you mentioned private sector donations. I am reading in the language that it would apply only to government donations. The scenario you provided to us regarding donations from the private sector would not be impacted by what we are doing here. The liability would still fall to the donor in that case, is that right?
Mr. Parker:
That is correct. I was only providing an example of donors shying away from donating because of liability fears. Useful equipment that would otherwise go where it was needed would not go because of liability concerns. I did not mean to say A.B. 26 covered my sample scenario in any way.
Karen M. Coyne, Lobbyist, City of Las Vegas:
We stand in support of A.B. 26. Not to take any thunder away from the firefighters, but we do look forward to the protection offered in A.B. 26. Historically, within the city of Las Vegas, when equipment has reached its maximum life cycle in correlation to the number of calls it has run, just because it is no longer suitable for our needs, it could provide smaller jurisdictions with service for months, possibly years. Therefore, we support A.B. 26.
Doyle G. Sutton, State Fire Marshal, State Fire Marshal Division, Department of Public Safety:
I am here to speak in favor of A.B. 26. I prepared a text, but Mr. Oceguera did a fine job of presenting, so to save time, I would just like to say, “Me too.” I would like to provide a little history. When I worked for the fire district in Washoe County for 25 years, I saw a lot of equipment that had useful service left in it cut up and destroyed. It was sold at auction to painting contractors and construction companies. Fire trucks went for hundreds of dollars that had thousands of dollars of value in them. I believe A.B. 26 will prevent that. This bill was originally presented in Texas and was adopted there. Since the bill was presented in Texas, over $8 million in surplus, excess equipment has gone to volunteer departments. Also because of that bill, there is a bill in the United States Senate to pass a Good Samaritan volunteer bill to allow federal excess property to come down to local levels. I think it is a positive bill, which I support.
Joe Anelli, Senior Director, Board of Directors, Nevada State Firefighters Association:
We want to say we are in favor of A.B. 26. It is important that volunteers are allowed the equipment donated to them, sitting at larger municipalities. Budget cuts were mentioned earlier. If there are budget cuts at the upper levels, the smaller communities are going to get it all. They will not then have the money to go out and buy equipment. We are hoping we can get this approved so we can pass equipment on to smaller departments.
Chairman Amodei:
Seeing nobody in the room in southern Nevada, I will close the hearing with respect to A.B. 26 in southern Nevada.
Mr. Wilkinson, in looking through A.B. 26, did I miss the effective date?
Mr. Wilkinson:
October 1, 2003.
Chairman Amodei:
I will close the hearing on A.B. 26.
SENATOR WIENER MOVED TO DO PASS A.B. 26.
SENATOR NOLAN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS TITUS AND WASHINGTON WERE ABSENT FOR THE VOTE.)
*****
Chairman Amodei:
We have one bill draft request (BDR) to introduce this morning, BDR 16-551.
BILL DRAFT REQUEST 16-551: Makes various changes pertaining to duties and authority of State Board of Parole Commissioners. (Later introduced as Senate Bill 232.)
SENATOR NOLAN MOVED TO INTRODUCE BDR 16-551 TO THE COMMITTEE.
SENATOR CARE SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS TITUS AND WASHINGTON WERE ABSENT FOR THE VOTE.)
*****
Chairman Amodei:
We are adjourned at 10:36 a.m., until tomorrow morning at 8 a.m., in room 4100.
RESPECTFULLY SUBMITTED:
Jo Greenslate,
Committee Secretary
APPROVED BY:
Senator Mark E. Amodei, Chairman
DATE: