MINUTES OF THE ASSEMBLY COMMITTEE ON COMMERCE Sixty-eighth Session May 10, 1995 The Committee on Commerce was called to order at 3:37 p.m., on Wednesday, May 10, 1995, by the presiding Chairman, Sandra Tiffany, in Room 119 of the Legislative Building, Carson City, Nevada, and teleconferenced to Room 4401, Grant Sawyer Building, Las Vegas, Nevada. Exhibit A is the Agenda, Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Mr. Larry L. Spitler, Chairman Ms. Sandra Tiffany, Chairman Ms. Maureen E. Brower, Vice Chairman Mr. Richard Perkins, Vice Chairman Mr. Dennis L. Allard Mr. Morse Arberry, Jr. Ms. Barbara E. Buckley Mr. Thomas A. Fettic Ms. Chris Giunchigliani Mr. Lynn Hettrick Mr. David E. Humke Mr. Michael A. (Mike) Schneider GUEST LEGISLATORS PRESENT: Jack Close, Assembly District 15 Mark Manendo, Assembly District 18 STAFF MEMBERS PRESENT: Paul Mouritsen, Research Analyst OTHERS PRESENT: Don Morse, Manufactured Housing Division George Flint, A.G.E. Enterprises Joe Guild, Nevada Mobile Home Park Owners Despina Hatton, Senior Citizens Law Project Mary Jo Wiese, COMMON Marshall Schultz, Skyline Residents' Association Rita Hambleton, AARP Lois Olson, Manufactured Home Owners Association Jack Hurley, Manufactured Home Owners Association Bill Petrak, Former Assemblyman and Proponent of Mobile Home Owners Legislation Cheryl Lawe, Nevada Association of Mobile Home Owners Toni Thomas, Mobile Home Owner Following roll call, Chairman Tiffany asked for committee approval of the minutes of March 27, April 3, April 7 and April 10, and introduction of a number of bill draft requests. ASSEMBLYWOMAN GIUNCHIGLIANI MADE A MOTION TO APPROVE THE MINUTES OF MARCH 27, 1995, APRIL 3, 1995, APRIL 7, 1995 AND APRIL 10, 1995. ASSEMBLYMAN HETTRICK SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. The Chairman then asked for bill draft introductions, as follows: BDR 32-1275, revising provisions relating to the sale of alcoholic beverages. ASSEMBLYMAN HUMKE MADE A MOTION TO INTRODUCE BDR 32-1275. ASSEMBLYWOMAN GIUNCHIGLIANI SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. BDR 57-1931, providing for payment of providers of health care for services in a medical emergency. ASSEMBLYWOMAN GIUNCHIGLIANI MADE A MOTION TO INTRODUCE BDR 57-1931. ASSEMBLYMAN BROWER SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. BDR 53-1859, providing for administration and disposition of medical savings accounts. ASSEMBLYMAN HUMKE MADE A MOTION TO INTRODUCE BDR 53-1859. ASSEMBLYMAN HETTRICK SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. Chairman Tiffany then opened the hearing on A.B. 484. ASSEMBLY BILL 484 - Makes various changes relating to mobile home parks. Coming forward to offer opening testimony was Barbara Buckley, Assembly District 8, prime sponsor of A.B. 484. Ms. Buckley submitted her testimony (Exhibit C) and read her comments into the record. During her testimony, Ms. Buckley also submitted a copy of the Las Vegas Meadows Long Term Lease Agreement (Exhibit D), and discussed the various provisions regarding the increase of rent contained in the document. Referring to page 1 of the bill, Ms. Giunchigliani asked if the bill affected trailers -- as opposed to mobile homes, and whether those with trailers would be excluded from the provisions of A.B. 484. In response, Ms. Buckley said she was not sure, it depended largely on whether the home was movable. She deferred to Don Morse from the Division of Manufactured Housing, who would be testifying later in the meeting. Ms. Giunchigliani also asked if she understood correctly that all mobile homes were exempt from the Homestead Act. In reply, Ms. Buckley said it was her understanding the way the lien statute worked under NRS 108, if a tenant failed to pay their lot rent, a park owner could place a lien on the home and have it sold, as long as the prescribed procedures shown in NRS 108 were followed. Referring to Section 5, Chairman Tiffany questioned what measures could be dealt with by contract and what needed to be dealt with by statute. The Chairman noted testimony from Ms. Buckley had indicated some mobile home owner contracts contained sections which were not legal and would not hold up in a court of law. Ms. Tiffany wondered whether the issues should go through a court of law to decide the legality, rather than addressing the issue legislatively. Ms. Buckley responded if case law and precedent showed certain sections of a contract clearly illegal, and presented on a "take it or leave it basis," these were considered contracts of adhesion. If these contracts caused a person to voluntarily give up a constitutional right, it would subsequently be struck down in court. Ms. Buckley believed there was very little actual remedy for someone on a fixed income and it was a much better solution to include it in NRS 118(B) so anyone, landlord or tenant, could definitely determine their rights. Referring to the language on page 2, line 44, "Authorizes the landlord to violate any ordinance with respect to the tenant's lot ...," Mr. Spitler wondered what prompted the need for this language. Ms. Buckley was uncertain. The provision had been placed in the lease given to her by her residents, and had served to ensure that if Clark County enacted rent control, the lease would say they would not be subject to it. However, as a practical matter, the first paragraph in the lease (Exhibit D), said the agreement would be exempt from any ordinance adopted by any local government which established a maximum amount an owner might charge a resident for rent. Also, Mr. Spitler asked what had led to the threshold of $5,000, as shown in Sections 7, 8 and 9. Ms. Buckley replied she had questioned mobile home movers as to what the average cost and value was for a home which could not be moved, and they believed $5,000 was a realistic average. While Mr. Spitler said he appreciated Ms. Buckley's research, he believed the figure might be too low. Some of his constituents were faced with being moved, and he did not believe $5,000 would help them make the transition. Ms. Buckley pointed out the homes by the airport, which Mr. Spitler had referred to, were subject to the Federal Uniform Relocation Act, however, she agreed with Mr. Spitler and indicated she would be agreeable to an amendment which increased this amount. There were a number of concerns expressed by Mr. Hettrick. He was particularly concerned about: 1. The punitive damages provisions of the bill. He believed it was possible for a tenant to also violate a contract, and if punitive damages were allowed for a tenant, it was only fair to allow it to the park owner. 2. The provisions of the lien. While oftentimes liens were applied to mobile homes, a lien could not be collected on until the tenant either moved or sold the mobile. 3. Page 4, lines 6 through 7. Mr. Hettrick believed provisions were necessary to decide who would determine "irreparable damage." Additionally, in some rural areas, it would be impossible to find a mobile home park within 50 miles of the present location. 4. Line 9, the reference to "age or condition." Who would decide if the refusal was based on "age or condition," and whether that refusal was valid? 5. The $5,000 threshold. Some mobile homes were, in fact, not worth $5,000, or at least, there could be a question of value. Mr. Hettrick did not believe it was fair for the landlord to have to pay the cost of the appraisal in cases of dispute. 6. Refusal and irreparable damage language on page 2, lines 44 through 48, page 5, lines 1 through 6, and page 5, lines 30 through 38. 7. Referring to the language in Section 2, regarding assistance, Mr. Hettrick said he had sympathy for tenants who had problems making their monthly rent, however, he believed the landlord of a long-standing tenant would also be sympathetic, and this provision would unfairly impact landlords. Mr. Hettrick said he would have no objection if the bill provided a provision for repayment. Otherwise, he believed there were other social services who would help the people. 8. The language on page 4, lines 7 through 12, was objectionable, Mr. Hettrick stated, because it would require a landlord to pay for another landlord's refusal. Mr. Allard also voiced a concern with the language of Section 5, regarding the tenant recovering for punitive damages. He remarked there was no language speaking to "knowingly." Ms. Buckley indicated this was already governed in the state punitive damages law. In order to receive punitive damages, the act could not be merely negligent, but rather had to be an intentional act or an act with reckless disregard -- knowing the facts and entering the situation anyway. Responding to remarks made by Mr. Hettrick, Ms. Buckley pointed out in regard to liens on mobile homes, sales were actually executed, and it did not become just a lien recoverable on sale, so the home was actually lost. As for who decided whether the home could be moved and the question of irreparable damage, in most circumstances this was done by an independent, third-party appraiser. As for the "50 mile" language, Ms. Buckley said she was willing to expand this. Referring to Mr. Hettrick's concern regarding the refusal to accept a mobile home, Ms. Buckley indicated it was her understanding that parks set standards based on the age of the mobile home and whether it was built to federal housing guidelines; and these were the standards currently used in refusing to accept certain homes. Also responding to Mr. Hettrick's remarks regarding an emergency fund, she saw seniors as being the background of the community, and a one-shot appropriation was fitting, she believed, to show seniors the Legislature cared about them, even though the provision did not apply strictly to seniors. Referring to Section 10, and the $100,000 provided for in the language, Mr. Spitler said while he realized Ways and Means would be the committee to deal with the appropriation, he wondered if Ms. Buckley saw this $100,000 as being appropriated each year of the biennium, or whether it would be $50,000 each year of the biennium. Ms. Buckley said this would be $50,000 per year, and a one-shot appropriation. Mr. Spitler asked if this would possibly create false expectations the program would continue. Ms. Buckley replied she did not believe this would be the case. In conversations with Renee Diamond, Director of the Manufactured Housing Division, Ms. Diamond had stressed she did not want to see the program continue indefinitely. Whether Ms. Diamond would, in the future, include this amount in her budget, was not determined. Noting most people were there to discuss Section 4, dealing with the long-term lease, Ms. Buckley asked George Flint, representing the A.G.E. Enterprises, owners of a mobile home park in Lockwood, Nevada, to come forward to offer testimony. Recalling past legislative efforts regarding rent justification, Mr. Flint said the committees had recognized abuses and supported justified legislative changes. In the 1991 and 1993 sessions the Committee on Commerce had sent to the floor of the Assembly, measures which were, indeed, rent justification, but measures which the opposition called "rent control." This was not a fair assessment, according to Mr. Flint. Unfortunately, those measures had died in the Senate. A.B. 484 and A.B. 528 addressed many of the concerns of mobile home park residents. Focusing on the lease portion of the bills, Mr. Flint remarked on A.B. 528, page 2, lines 8 through 23. Passage of the rental agreement, Mr. Flint said, would bring badly needed calm to what was currently fear and unrest among mobile home residents. Mr. Flint continued with a review of a steadily increasing rent which he experienced between the years 1985 through 1995 (see Exhibit E), and continued with a philosophical observation on the increases imposed by mobile home park owners. Remarking on the increase in rent, Mr. Flint added that what was also alarming was the ever-increasing cost of moving. In 1985 it cost $9,650 to move. Although the actual cost to have the unit pulled from one park to another was approximately $2,000, the additional cost involved the setting up, i.e., moving sheds, putting up awnings, etc. Oftentimes a resident stayed and endured rent increases, rather than be faced with the cost of moving. Also, sometimes other, less expensive parks were full, and finally, many parks would not take older mobile homes. Continuing, Mr. Flint said some sort of rent stabilization was badly needed, especially in Clark and Washoe Counties, to slow down unexpected and nearly punitive increases, and to give homeowners a better picture of what to expect in the future. The Chairman then asked Assemblyman Jack Close to come forward to discuss A.B. 528 and Section 4 of the bill. ASSEMBLY BILL 528 - Makes various changes relating to mobile home parks. The prime sponsor, Assemblyman Jack Close, Assembly District 15, acknowledged there were similarities in the two bills, but he believed the committee would be able to discern the difference. Mr. Close submitted his written remarks (Exhibit F) and read his statement into the record. The Chairman asked Ms. Buckley and Mr. Close whether it was their desire to process the bills separately or to go into a subcommittee and have one amended into the other. Ms. Buckley said it was only important that the concept passed. She would be happy to move Section 4 of her bill to Mr. Close's bill. Mr. Close echoed Ms. Buckley's comments. While there were great similarities between Section 4 of A.B. 484 and A.B. 528, there were also some major differences which would make it better to discuss the two separately. Ms. Buckley agreed. Clarifying, Chairman Tiffany stated the committee questions should center around Section 4 of A.B. 484. Mr. Fettic questioned the language on page 2, line 15, wondering why it was necessary for a landlord to make an offer every 12 months? Responding, Mr. Close explained the object was to retain the free market aspect, and to keep to the forefront the importance of trying to come to a consensus between the tenant and land owner. Mr. Fettic said he objected to the language, although he understood the intent. He believed that requiring the landlord to make an offer every 12 months, until the tenant finally accepted the offer, could keep the process alive indefinitely. Ms. Buckley agreed and indicated a willingness to look again at the language. The intent, she said, had been to give a tenant the opportunity to accept a long-term lease, if initially that person had turned it down because of some circumstance such as a family problem. While Mr. Fettic appreciated the lease should be available, placing the responsibility on the landlord to offer it each 12 months, was objectionable. When Mr. Close was asked by Mr. Hettrick whether Section 4 of A.B. 484 was identical to his bill, A.B. 528, Mr. Close said, "no." The only difference, however, was on page 2, line 6 where a subparagraph [c] was added. Regarding the issue of Capital Improvement Projects (CIP), Mr. Hettrick asked what would happen if the residents voted against a CIP which was mandated by the federal government, such as for ramps installed to meet the requirements of the Americans with Disabilities Act (ADA). This was further discussed, with Mr. Hettrick posing a number of hypothetical scenarios and pitfalls associated with the provision for approval by tenants of any capital improvement project. In answer, Mr. Close called attention to the language in A.B. 528, page 2, line 4, which offered a provision to deal with capital improvement projects required by a governmental entity. As for the associated decrease in rent after a CIP was completed, Mr. Close believed it was only fair that the elimination of the cost of the CIP would allow the rent to go down, while at the same time, it could only be expected that the rent would rise with the ordinary cost of living. Ms. Buckley agreed the long-term lease concept was not a panacea. While it would allow rent increases, it would also ensure that the rent increase would not be so high it would trap an individual in a certain park. At the end of the five year lease, if the business expenses had gone up dramatically, the rent increase could be passed on. She stressed, this was not rent control. Mr. Allard questioned the consumer price index language, and asked what figures had been used. Mr. Close answered the CIP index used was from a publication entitled "The Consumer Price Index for All Urban Consumers, U.S. City Averages All Items" (Exhibit G). If Nevada was above the average CPI, Mr. Allard opined a small park owner would have a problem with the $25,000 threshold shown on page 2, line 11 of A.B. 528. To answer the question, Ms. Buckley said the Consumer Price Index increase would be a separate item from the improvement items and both could be passed through. Improvements, if they were amenities not currently in the park, would be subject to a vote. She acknowledged Nevada might deviate from the national CPI average, and offered to meet with Mr. Close and Research staff to determine if there was another local model. The intent was to establish fairness for both entities. Mr. Allard did not believe the bill served that purpose. Discussion continued. Mr. Close noted he had a number of leases for property and buildings in which the wording was the same as the lease placed before the committee. It was a standard form which gave the landlord the opportunity to increase the rent according to the CPI. It was not tied to Nevada, or Las Vegas -- it was tied to the United States market. As a business person he had accepted this as a reasonable compromise. Mr. Hettrick agreed with Mr. Close he, too, had leases tied to the CPI, but at the risk of losing the tenant, they did not prohibit him from making pass throughs if necessary, so he was still bothered by the provision. Turning again to the language of A.B. 528, page 2, lines 4 and 5, Mr. Hettrick reiterated his concern, stating the costs of having improvements made always involved ongoing expenses, and the ongoing expenses should be allowed for in the bill. Before finishing testimony, Ms. Buckley indicated she had certain amendments she would like the committee to consider (Exhibit H). Calling for opposing testimony, Ms. Tiffany asked those wishing to testify to confine their testimony to A.B. 484 without Section 4. Opening the testimony in opposition to A.B. 484, Joe Guild, representing the Nevada Mobile Home Park Owners' Association, agreed to not discuss Section 4. Having come into the meeting late, Mr. Guild said he had not been able to hear Ms. Buckley's and Mr. Close's explanatory remarks, but would welcome any clarification as he reviewed the sections of the bill he opposed, as follows: Section 2: Created a temporary rental assistance account for tenants of mobile home parks who could not pay rent because of an illness or emergency. There were several flaws in this, Mr. Guild said. The existing statute, NRS 118(B).213, et seq., held provisions dealing with tenant rental assistance, which was created by the 1991 Legislature for some of the purposes alluded to by Ms. Buckley in support of A.B. 484. While he sympathized with people who were unable to pay their rent, the same held true for someone who could not pay his mortgage. The rental assistance fund already established had specific qualifications and guidelines for which a person could qualify and be decided upon by the Administrator of the Manufactured Housing Division. Although Mr. Guild was generally opposed to the policy posed in Section 2, in particular he questioned the manner in which this was to be administered and who was to decide what "temporarily unable to pay" meant -- what kind of illness, what kind of emergency. Mr. Guild went on to name the deficiencies in funds for administration, and the huge administrative burden added to the Administrator's (Manufactured Housing Division) already heavy work load. Section 5: Mr. Guild noted the language on page 2, lines 39 and 40, clarified in a reasonable way NRS 118(B).050, and he was not opposed to this addition to the statute. Subsection 7 of section 5 of the bill was a typical clause in mobile home park leases and in commercial leases where there were arbitration clauses associated with those leases. Having drafted many mobile home park leases, Mr. Guild maintained he could assure the committee the agreement to waive a trial by jury was never placed in a lease unless there was a consequent provision for arbitration of disputes. He suggested this needed to be clarified. By making this a void part of the rental agreement or lease, it effectively destroyed the right of the parties to enter into arbitration to resolve their disputes. The language of subsection 8 of Section 5, page 2, lines 44 and 45, presented a problem. In California where there was mobile home park rent control, the typical long-term lease contained a clause which authorized the parties to not recognize the rent control ordinances within that jurisdiction. In effect, they could create their own rental system. Also, in most long-term mobile home park leases, the ability to increase the rent was tied to a CPI. Ultimately, Mr. Guild saw the language in this section as removing a protection possibly needed to protect tenants' rights. Section 5, subsection 9, page 2, lines 46 through 48, Mr. Guild said this would make void any provision in a rental lease or agreement that authorized the landlord to increase the rent of a tenant during the term of a lease, once the lease was entered into. This meant a landlord, by statute, could never raise the rent, once the tenant began the tenancy, except as set forth in Section 4. This, he stated, was a rent control clause. Mr. Guild also took exception to the second sentence referring to "punitive damages." He believed this invited litigation. Mr. Guild offered what he considered to be a constructive amendment to Section 7, if A.B. 484 was going to be amended. Chairman Tiffany asked Mr. Guild to provide his suggested amendments to Ms. Buckley for her consideration, and asked him to also copy the Co-Chairmen with those recommendations. Language posed on page 3, line 43, which prohibited a landlord from increasing the rent of a tenant within 180 days after the date on which that tenant refused to enter into a rental agreement or lease with the landlord, was also objectionable to Mr. Guild. He maintained it omitted any reference to the language of Section 4. Even if Section 4 was taken out of the bill and the lease offered by the landlord was refused, it would restrict the landlord from increasing the rent for any reason by 90 days. He believed that kind of restriction was excessive. He cautioned the committee to remember that any action which affected NRS 118(B), caused problems not only in Clark County, but also in rural counties. Mr. Guild believed Section 7, page 4, lines 6 through 14 served to guarantee a value to a piece of property which might be worth nothing, and impossible to sell on-site for any amount of money. Actually, the cost for appraisal might exceed the value of the mobile home, he stated. The same argument was true for Section 8, page 4, lines 44 through page 5, lines 1 through 6, and page 5, lines 30 through 39, Mr. Guild remarked. Ms. Giunchigliani took exception to remarks made that some homes were worth nothing. She stated, "... That bothers me -- the last statement. These are people's homes. How can you say they're worth zero just because the marketplace says that there's depreciation. Their whole life is caught up into something and I guess there has to be some value to it. Now I guess we can debate the issue of whether it's $5,000 or not, but obviously the mobile park owners who own the property think there must have been some value to have charged them rent in the first place. I think that there's a way to be able to get some form of an appraisal that's reasonable ...". Mr. Guild softened his remarks and acknowledged there certainly was some value to every piece of property, but he suggested the legislators be cautious when guaranteeing values to a piece of property. Opposing public testimony was taken from the following: - May Thorpe told the committee she and her husband had owned the Hillside Mobile Home Park for 33 years. During this time they had enjoyed good tenants and a cooperative relationship. She stated they opposed rent control in any form. As for moving mobile homes, she said there were many old mobile homes in their park, and indeed, even an old mobile home on a lot, increased the lot value approximately $1,000 to $2,000. - Ron Gardner, owner of a 42-space park in Reno, could see no need for the bills. Approximately 70 percent of his tenants were senior citizens, and in his four-year tenure as owner of the park, he had never experienced a problem with senior citizens paying their property rent. Mr. Gardner said his problems were with the younger mobile home residents, and if the proposed bills were enacted, he would have a great deal of difficulty. Although he ultimately believed the tenants had rights, he also believed the landlord had rights. Mr. Gardner noted there had been no rent increase in his mobile home park since 1991, and with the federal requirements which had been imposed since that time, his profit margin had eroded approximately $22 per space per month. Testimony in favor of the bills was then called for by the Chairman: Despina Hatton, Attorney for the Senior Law Center in Reno, said her job was to run a legal service program representing Washoe County residents over the age of 60. In her research into the numbers of people who were evicted for non-payment of rent, she had found in Reno Justice Court, alone, the Clerk had seen approximately six evictions per month for non-payment of rent. Along with these were usually requests for liens against the mobile home. On a statewide basis there were 530 liens filed with the Division for Manufactured Housing. About half of those were dismissed, leaving approximately 268 liens in place. As for moving a mobile home, she said it cost approximately $3,000 to move a mobile home if nothing went wrong. Ms. Hatton echoed many of Mr. Flint's remarks regarding the cost of moving and more significantly, the cost of set-up. Also there were restrictions involving the moving of older mobile homes. In such situations there were two choices -- either sell it or abandon it -- either way the individual ended up with no home. She believed the measures contained in the bill would go a long way to providing her seniors financial security not currently enjoyed. Mr. Hettrick discussed with Ms. Hatton the disposition of the liens and how many had been offered for sale. Ms. Hatton said she was not sure, however, the Division was now recording Notice of Sale and so far, in the seven months of this fiscal year, there had been 90 "Notice of Sale" recorded. She ascertained these liens could be satisfied by the tenant and the lien removed, however, once the lien was put into place, additional costs and attorneys' fees were incurred. Mr. Hettrick objected to there being no definition for "illness" or "emergency." He further discussed the issue of a tenant abandoning a mobile home. Rita Hambleton, representing the AARP State Legislative Committee in Nevada and its 175,000 Nevada members, said her organization supported the concepts posed in A.B. 484 and A.B. 528, and felt the bills were necessary. However, listening to some of the testimony offered, Ms. Hambleton agreed amendments were needed in certain sections of the bill. Ms. Hambleton submitted a document entitled "Nevada State Legislative Committee 1995 Position Paper - Senior Housing," (Exhibit I). Assemblyman Mark Manendo, Assembly District 18, also indicated support. He told the committee he had been a member of the Nevada Association of Mobile Home Owners for five years, which gave him an understanding of the problems. He drew attention to the language in Section 2, saying the tenant had to be a resident in the park for six months in order to be eligible for the assistance. Assemblyman Manendo briefly outlined the major goal presented in each section. Mary Joe Weeks, Acting President of the Coalition of Mobile and Manufactured Homes in Northern Nevada (COMMON), declared there was a great lack of mobile home parks in northern Nevada. Ms. Weeks told the committee when she bought her home in 1977, it cost her $16,900. In 1992 when she had another assessment, the mobile had appreciated to $24,000 to $25,000. She made it clear the park owners were not the only owners who had to pay taxes and upkeep; and told the committee a portion of the space rental was allotted to a separate account for maintenance of the park. Ms. Weeks stated the mobile home owners were expected to take care of their property, and likewise, the mobile home park owners should be expected to take care of their property, and part of doing business was maintenance of that property. Marshall Schultz, a mobile home tenant and the President and Founder of Skyline Residents Association, submitted a document entitled "Mobile Home Park Regulations in States Bordering Nevada" (Exhibit J), offered excerpts from the exhibit, and reiterated supporting comments heard from previous testifiers. Testifying from Las Vegas: - Jack Hurley, Vice President of the Nevada Association of Manufactured Home Owners, pointed out when mobile home park fees rose too high, three things could happen. Either the mobile home owner moved his/her home to a less expensive lot, bought a lot of their own, or accepted the raise and consequently had less money to be spent on basic needs such as medicine, food, etc. While many people saw rent control as being the answer, Mr. Hurley said he believed the lease option was a win/win situation and a trend of the times. He expressed his appreciation to Ms. Buckley, Mr. Close and committee members, for their attention to the issue of mobile home park owners and mobile home park tenants. - Bill Petrak, former Assemblyman and proponent of mobile home park tenant legislation, indicated he saw many instances of rent gouging and shabby treatment from mobile home park owners; and went on to describe some of the instances he was personally aware of. A.B. 484 and A.B. 528 would correct these injustices, he stated. - Lois Olson, President of her Manufactured Home Owners Chapter, testified on A.B. 528. She said they were very much in favor of long-term leases with rent raises tied either to the CPI or the Cost of Living Adjustments (COLA). This would allow residents to know not only what present expenses were but also how to plan for future expenses. It would give needed stability to both the park owners and the residents. She said while they were fighting for rent justification, one of the most frequent comments from park owners was, "No, we don't want rent justification, why don't you go for long-term leases, we would agree to that." It now appeared, the park owners were not agreeing to the concept of long-term leases. There were two things which should be taken into account, Ms. Olson said. If the resident sold, the remaining portion of the lease should be transferable; and secondly, with so many out of state owners, the tenants would prefer that leases were drawn up by Nevada attorneys. Ms. Olson also discussed the section of the bill which would prohibit increasing rent to pay for capital improvements. She commented any business would ordinarily have a certain percent of their profit set aside to pay for capital improvements. This was part of the cost of doing business. Mobile home owners paid for all improvements to their own lots, and anything that went into the ground became the property of the park owner. Further, most owners decided what improvements they wished without consulting residents on how the ground rental fees were spent. If the residents had to live on a budget, Ms. Olson said she could find no justification for the owner not having to live within a budget. The percentage of return on a mobile home park was one of the highest in the nation, exceeded only by storage units, and this was upheld by the stock market exchange. She urged the committee to favorably consider A.B. 528. - Cheryl Lawe, Secretary for the Nevada Association of Manufactured Home Owners, suggested the ownership of mobile home parks were large conglomerates, unacquainted with the living conditions in Nevada. She urged passage of both A.B. 484 and A.B. 528. - Toni Thomas, State Treasurer and Office Manager for the Nevada Association of Manufactured Home Owners, told the committee she was also testifying on behalf of the state President, Jeanne Deeg, who was unable to attend due to ill health. As for capital improvements, she said the landowners were always upgrading their property, and lot rents subsequently increased due to the upgrades. She believed most home owners in a manufactured home community asked for improvements such as street repaving or added street lighting. To improve the community's safety and attractiveness by increasing the rent was neither reasonable nor equitable. - Paul Thieland, Director of the Nevada Association of Manufactured Home Owners, said rental agreements of not less than five years would assure prospective residents affordable lot rents. Mr. Thieland reiterated remarks made by previous testifiers. Returning the testimony to Carson City, Donald Morse, an Investigator with the Manufactured Housing Division, submitted his written remarks (Exhibit K). Noting there had been earlier testimony regarding administrative costs for the appropriation on A.B. 484, Mr. Spitler wondered how much Mr. Morse anticipated the agency would need to manage the program if this $100,000 appropriation were to pass. Mr. Morse indicated he had talked to the Administrative Services Officer, Birgit Baker, who had estimated a first year cost of $30,000 and a second year cost of approximately $25,000, which would be subtracted from the noted $100,000 appropriation. Mr. Spitler questioned whether this meant the first year appropriation of $50,000 would be reduced by $30,000 for administrative year costs; and during the second year the $50,000 would be reduced by $25,000. Mr. Morse said he would be happy to supply a more definitive account of this, and Mr. Spitler agreed the agency should provide a complete explanation of why it would cost that much to administer the program, should the appropriation be granted. Additionally, Mr. Spitler questioned how Mr. Morse's agency would have been able to use the money if the committee gave them an additional $100,000 to help with the programs currently operating, and whether it would require over 50 percent for administrative costs. Mr. Morse said, "no," if the $100,000 was put into the low-income trust fund, it would raise the money available from approximately $300,000 to $400,000, but it would be administered by the same people. He also told Mr. Spitler he would be approaching the 1997 Legislature with this amount of money built into their base budget. With no further testimony on A.B. 484, the hearing was opened on A.B. 528. ASSEMBLY BILL 528 - Makes various changes relating to mobile home parks. Assemblyman Close came forward again to briefly discuss A.B. 528. The testimony, he pointed out, had dealt with the issues put forward in A.B. 528. He said he was agreeable to designing amendments to address some of the concerns expressed by committee members. When offered the opportunity to review the language which needed amending, Mr. Close said he would prefer to review his notes and bring the amendments back at a later time. Ms. Tiffany suggested Mr. Close submit some notes to the Co-Chairmen which would indicate whether the two bills could be dealt with in work session or whether the issue should go to a subcommittee for work. Mr. Close agreed to provide this as soon as possible. Ms. Giunchigliani questioned the $25,000 CPI threshhold. Mr. Close said they had many discussions with tenants in mobile home parks, and had tried to determine the number of capital improvements which had taken place over the last several years. He acknowledged this was not a "perfect" number, but rather an average of what they had found. Ms. Giunchigliani believed the language could go towards helping the mobile home park owner as well as the tenants. In cases of dispute, Mr. Close opined, communication between the parties should be improved to overcome many of the hurdles. Joe Guild, Nevada Mobile Home Park Owners' Association, explained the Association and its members were also in opposition to A.B. 528. Referring to the $100,000 appropriation in Section 10, Mr. Guild indicated he would like to work with Ms. Buckley in developing more criteria for the Division of Manufactured Housing to create regulations. He reiterated A.B. 528, was a rent control bill, and this was the position taken by the Mobile Home Park Owners' Association over the many years the issue had come before the Legislature. Section 2 of the bill, would amend NRS 118(B).100, subsection (6), which presently defined what a capital improvement was in a mobile home park. Mr. Guild believed the language of Section 3 of the bill, "... shall offer to enter into ..." was a mandatory lease situation which would require the landlord to offer a lifetime tenancy to every tenant. Although the tenant could refuse continually, the offer had to be made. Thus, the landlord was continually offering to create a tenancy to a tenant he/she may not want to have in the park; and this could serve to create an entirely irrational, illogical situation. Mr. Guild also took great exception to Section 4 of the bill. He said he could not imagine a tenant of a mobile home park -- indeed a majority of the tenants in a mobile home park -- agreeing to increase their rent to pay for a capital improvement in their mobile home park. As for the need for capital improvements, Mr. Guild questioned who created the need. He contended the needs for capital improvements were created by the tenants and their guests. Chairman Tiffany asked Mr. Guild to work with Ms. Buckley and Mr. Close to develop some mutually agreeable amendments, and to get back to the Chairmen so it could be determined whether to bring the bills back to work session or to subcommittee. With no further testimony, the hearing was closed on A.B. 528, and the hearing was adjourned at 6:47 p.m. RESPECTFULLY SUBMITTED: _____________________________ Iris Bellinger, Committee Secretary APPROVED: ________________________________ Chairman, Larry L. Spitler ________________________________ Chairman, Sandra Tiffany Assembly Committee on Commerce May 10, 1995 Page