MINUTES OF THE ASSEMBLY COMMITTEE ON GOVERNMENT AFFAIRS Sixty-eighth Session April 4, 1995 The Committee on Government Affairs was called to order at 8:00 a.m., on Tuesday, April 4, 1995, Chairman Joan A. Lambert presiding in Room 119 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Mr. Douglas A. Bache, Chairman Mrs. Joan A. Lambert, Chairman Mrs. Deanna Braunlin, Vice Chairman Mr. P.M. Roy Neighbors, Vice Chairman Mr. Max Bennett Mrs. Marcia de Braga Mr. Pete Ernaut Mrs. Vivian L. Freeman Mr. William Z. (Bill) Harrington Ms. Saundra (Sandi) Krenzer Mr. Dennis Nolan Mrs. Gene Wines Segerblom Ms. Patricia A. Tripple Mr. Wendell P. Williams STAFF MEMBERS PRESENT: Ms. Denice Miller, Senior Research Analyst OTHERS PRESENT: Mr. Bob Olsen, President, The Ponderosa County Committee; Mr. Charlie Joerg, the Ponderosa County Committee; Ms. Joy Gumz; Ms. Judy Spees; Mr. Roger Means, Washoe County School District; Mr. Doug Sever, Business Manager, Washoe County School District; Mr. William A. Biehler; Mr. Robert Edwards; Ms. Jennifer Stern; Mr. Ed Beaver, Director of Finance, Reno- Sparks Convention and Visitors Authority; Dr. Winthrop Dale; Ms. Shirley Dale; Mr. Brad Miller; Mr. Herb Jacobs; Ms. Ande Engleman, Nevada Press Association; Mr. James Nakada; Mr. William Seidler; Mr. Don Kornreich (See also Exhibit B attached hereto). ASSEMBLY BILL NO. 332 - Creates Ponderosa County. Assemblyman Pete Ernaut, District 37, left his chair in the committee and testified from the witness table. He said, in 1979, a bill for the same purpose as A.B. 332 was passed by the Assembly but was defeated in the Senate. He indicated, during the last legislative session, he declined to introduce a similar bill but, during the interim between the last legislative session and this session, he discussed with proponents of creating the proposed new county certain requirements which were to be met before he would introduce a bill to do so. He advised one requirement was that the matter be submitted to a popular vote and the second requirement was that an in depth study be conducted as to how the new county would operate, both financially and administratively. Mr. Ernaut introduced Mr. Charlie Joerg and Mr. Bob Olsen. Mr. Bob Olsen, President, Ponderosa County Committee, testified. He advised he was a resident of Incline Village. He referred to a booklet, submitted by the Ponderosa County Committee (Exhibit C), and said it contained both the presentation to be given by the Ponderosa County Committee and a financial feasibility study. Mr. Olsen said when he first heard the idea of forming a county of Incline Village and the Crystal Bay area he wondered why it would be desirable to do so. He indicated the more he thought about the location and life style of the residents and the fact Incline Village and Crystal Bay were isolated from the rest of Washoe County the more he believed creating a separate county was the right thing to do. Mr. Olsen directed attention to page 4 of Exhibit C, on which maps of Ponderosa County, as defined by A.B. 332, and Washoe County were depicted. He advised Ponderosa County would consist of 72 square miles while Washoe County consisted of 6,000 square miles. He contended only a small portion of the 72 square miles which would comprise Ponderosa County was "civilized" and said the remainder of those 72 miles consisted of national forest. He suggested there was little possibility of growth in the Incline Village/Crystal Bay area because it was completely surrounded by national forest. Mr. Olsen explained the difficulties residents of Incline Village and the Crystal Bay area had in traveling to Reno to ascertain what was being done by local government. Mr. Olsen contended there was little room for growth in Incline Village and advised, by the turn of the century, there would be no additional building in Incline Village. He stated rebuilding had commenced and older buildings were being torn down and replaced by "...large mansions." Mr. Olsen said Washoe County issued 1,500 (building) permits each year. He contended if all those permits were for residences, Washoe County would be required to provide more additional school classrooms than Incline Village had had in the past 15 years. He advised, presently, Washoe County had a population of 280,000 and said it was predicted Washoe County would have a population of 400,000 in the year 2015. He stated the population of Incline Village was approximately 8,000 and suggested by the year 2015, the population of Incline Village might reach 9,000 but would probably not exceed 9,000 by much. Mr. Olsen said Tahoe Regional Planning Agency had much control over the economy of the Lake Tahoe Area and over the lives of the residents of that area. He advised residents of Incline Village and the Crystal Bay area had no representative on the board of Tahoe Regional Planning Agency but would have such a representative if their area became a county. Mr. Olsen stated 65 percent of those registered voters who voted in Incline Village and 37 percent of those who voted in Washoe County last November 8th voted in favor of creating a new county. He advised $12,000 was contributed by 76 individuals and businesses to support the effort to create Ponderosa County. Mr. Charlie Joerg, Ponderosa County Committee, testified. Mr. Joerg pointed out, commencing on page 7, the booklet provided by the Ponderosa County Committee (Exhibit C) provided a section by section explanation of A.B. 332. He advised Section 3 of A.B. 332 provided Ponderosa County would have three county commissioners rather than five, the number of commissioners desired. He explained the bill drafter who drafted A.B. 332 advised the law provided counties of the size which Ponderosa County would be have three county commissioners, however, if the county commissioners themselves desired there be five commissioners, they could accomplish that by means of a local ordinance. Mr. Joerg advised A.B. 332, as drafted, did not address some of the issues which would be raised by other witnesses. He suggested representatives of the (Washoe County) school district would express concern about the manner in which A.B. 332 dealt with bonded indebtedness and said that issue would need to be addressed. He advised, under A.B. 332, in its present form, there was some distortion of the manner in which taxes would be distributed among various governmental entities but he was informed that problem could be addressed by carefully crafted language. He indicated some provisions of Assembly Bill 104, which he described as the "fair share bill," needed to be incorporated in A.B. 332. He suggested another issue to be dealt with was that of the Reno-Sparks Convention and Visitors Authority's bonds. He contended the organizers of the effort to create Ponderosa County intended that no other entity be financially affected by creation of the new county. Chairman Lambert pointed out another significant issue was whether the proposed new county would be economically viable over time. Mr. Joerg concurred with Mrs. Lambert's comment and said Ms. Joy Gumz, who prepared the financial feasibility study, would address that issue. Ms. Joy Gumz testified. She advised she was a certified public accountant and provided some of her work history. She stated, as a homeowner in Incline Village, she wished to be certain the information contained in the financial feasibility study (Appendix A to Exhibit C , hereinafter referred to as "the study) was accurate and believed she had made it accurate. Ms. Gumz stated the study (Appendix A to Exhibit C) assumed services (to residents of Ponderosa County) would remain at the level presently provided by Washoe County or would improve. She indicated (with the creation of Ponderosa County) services should be more convenient because the necessity for residents to travel to Reno to avail themselves of services would be eliminated. Ms. Gumz advised, with respect to revenues, the study assumed there would be no change in tax rate. She pointed out the study (Appendix A to Exhibit C) contained both a table and a "pie chart" which showed sources of revenues. She explained those revenues were revenues for both the county and the school district. She said the new county would have its own, separate school district. She indicated the greatest portion of revenues came from property taxes, which she contended were a very stable form of revenue. She explained the manner in which revenues were calculated and advised revenues which had restrictions on their use were excluded. Ms. Gumz discussed a graph of expenditures for both the new county and its school district (contained in Exhibit C). She explained the North Lake Tahoe Fire Protection District and the Incline Village General Improvement District, upon which funds would be expended, were two special districts of Incline Village. She discussed the services provided by those districts. She stated the new county's total expenditures were estimated at $10.2 million and the new school district`s total expenditures were estimated at $9.4 million. She said, "The surplus, as shown on page 11, does include insurance and a five percent contingency reserve." She advised it was estimated Ponderosa County School District would have a surplus of $737,000, which would include an insurance reserve and a five percent contingency reserve. Ms. Gumz explained how she arrived at the estimates contained in the study (Appendix A to Exhibit C). Ms. Gumz said the Kafoury-Armstrong report was often cited as evidence a new county would not be financially feasible. She advised that report was prepared in January, 1993, and was commissioned by Washoe County and a group of local property owners. She declared the report was not valid either in 1993 or at the present time. She reviewed certain items which she contended were omissions from or errors in the report. She advised Mr. Ted Zuend (Deputy Fiscal Analyst, Legislative Counsel Bureau) identified the omissions from the report. She quoted a memorandum from Mr. Zuend, dated February 16, 1993, as saying, "For both the new county and the new county school district revenues would be equal. It appears that revenues and expenditures would roughly be in balance." She further quoted Mr. Zuend as saying, "This suggests the major benefit of forming the county for the citizens of the lake is limited to local autonomy. The flip side of this is, at least in the aggregate, Washoe County and the cities should not be financially harmed by the new county." Ms. Gumz contended the study (Appendix A to Exhibit C) contained proof Ponderosa County was financially feasible. She urged the committee to recommend the Assembly pass A.B. 332. Assemblyman Bennett asked whether the cost of facilities for county government's use was included in the study (Appendix A to Exhibit C). Ms. Gumz replied the cost of rental space was considered and the figures used represented the cost to rent space similar to that used by the justice court, located "...in the building...off of Tahoe Boulevard." She indicated the cost to rent space was considered, rather than the cost to build, because it was difficult to build in the Tahoe Basin. Mr. Ernaut asked whether Ms. Gumz had estimated what the initial property tax rate would be in the new county, and had taken into consideration both how heavily property taxes would be relied upon (to generate revenue) and the question of bond indebtedness to Washoe County. Ms. Gumz replied the property tax rate would be the same as the present property tax rate, which was the rate used in preparing the study (Appendix A to Exhibit C). Ms. Gumz said, "The reason, I think, there's some question about the sales tax versus the property tax is because it's possible, as two U.N.R. professors have documented, it's possible that some money is flowing into the special districts, as a subsidy, and that would have to be examined." Ms. Gumz said she did not assume any increase in property taxes. She said she assumed the assessed valuation of property would increase in 1995 and 1996 at the rate anticipated by the Assessor's Office. Mr. Joerg interjected the current tax rate at Incline Village was $3.06, which he described as being well below the statutory cap of $3.64. He suggested, if there was a need, taxes could be raised. Mr. Joerg advised all financial feasibility studies which were done used the tax rate presently paid by residents of Incline Village and "...it still shows that they have a surplus." Mr. Ernaut asked, "And it's based upon the assumption that you would assume bond indebtedness that you currently have." Mr. Joerg replied affirmatively. He said he believed Appendix A (of Exhibit C) reflected in excess of $2 million for bonded indebtedness in the school district's budget. Ms. Gumz advised the same amount was provided for bonded indebtedness in the county's budget. Assemblyman Neighbors said, for most counties, the biggest percentage of revenue came from "SCCRT" and asked Mr. Joerg why the amount of SCCRT for the new county was so low and whether the new county would be "...an exporting county or... a guarantee county." Mr. Joerg responded the area which would comprise the new county did not have and never would have many retail businesses both because of controls established by Tahoe Regional Planning Agency and because there were insufficient people to support them. He advised, however, properties in the area did have high assessed valuations which was the reason the new county's budget would be based primarily on property taxes which, he contended, would provide a relatively stable tax base. He indicated he did not foresee the new county would ever have a real budgetary problem. Ms. Gumz replied to the second part of Mr. Neighbors' question. She advised it was predicted the new county would be an exporter but would be a very small exporter, exporting at the same rate as Washoe County currently did. Mr. Neighbors commented he saw no reference to roads in the study (Exhibit C) and asked if roads were covered under public works. Ms. Gumz replied affirmatively. Mr. Neighbors pointed out the study (Exhibit C) indicated there would be "...a $50 million growth between `93-'94 and `94-'95 in your valuation." He asked whether that amount was derived from reappraisals. Ms. Gumz responded affirmatively. Mr. Neighbors asked if that meant properties would not be reassessed until three or four more years had passed. Ms. Gumz indicated that was not necessarily the case. She said her property taxes increased even though the county assessor had not come to her property to view it. She explained, if property values rose, property might not be reassessed but the assessed value of property would still increase and property taxes would increase. Mr. Neighbors asked what services the residents of Incline Village and the Crystal Bay area believed the new county could provide better than Washoe County could provide them. Ms. Gumz suggested representation and involvement in local government would be the greatest benefit provided by creation of the new county. Mr. Neighbors asked what position the commissioners of Washoe County had taken with respect to the proposed new county. Mr. Joerg suggested one of the members of the Ponderosa County Committee could best answer Mr. Neighbors' question. Assemblyman Segerblom asked Mr. Joerg whether Incline Village was incorporated. Mr. Joerg replied it was not. Mrs. Segerblom asked Mr. Joerg whether incorporating Incline Village was considered as an alternative to creating a new county. Mr. Joerg replied he believed that alternative was considered but contended all it would accomplish would be to create another layer of government. Ms. Gumz stated incorporating Incline Village would not provide Incline Village with representation on Tahoe Regional Planning Agency's board. She referred to Carson City's having combined county and city government and said it was anticipated such combining of government would occur in Incline Village (if Ponderosa County was created). Mr. Joerg contended one of Carson City's greatest achievements was its consolidation of government and suggested such consolidation of government worked very well in isolated areas, which, he suggested, Ponderosa County would be. Mr. Bennett asked Ms. Gumz whether Washoe County's representative to Tahoe Regional Planning Agency was not a resident of the Tahoe Basin. Ms. Gumz replied she understood there had never been a resident of Incline Village who was a member of Tahoe Regional Planning Agency. Assemblyman de Braga asked whether an argument could be made that creating Ponderosa County would not establish a precedent. Mr. Joerg responded concerns were raised that Pahrump or Laughlin or some other area of Nevada might also wish to create new counties. He advised statute set forth a procedure for creation of a new city and established several criteria for doing so. He indicated, to the extent possible, the proponents of Ponderosa County had followed that statutory procedure. He contended, to the extent they had established a precedent, it was a positive precedent. He suggested the legislature might consider adding to Nevada's statutes a procedure for creation of a new county. Chairman Lambert asked whether research was done regarding the legality of transferring "...the quarter cent sales tax for the Regional Transportation Commission..." to a new county. She asked also whether the Regional Transportation Commission currently provided transit or paratransit services in Incline Village and the Crystal Bay area. Ms. Gumz replied, "I have included the quarter per cent sales tax for mass transit." She advised buses ran in Incline Village. Chairman Lambert asked whether there was a hospital in Incline Village. Ms. Gumz responded there was a 28 bed hospital facility in Incline Village. Chairman Lambert asked what Ms. Gumz anticipated the costs to the new county for indigent medical care and general welfare would be. Ms. Gumz replied she anticipated revenues from property tax would be sufficient to pay those costs. She advised the hospital at Incline Village had a large amount of outstanding bonded indebtedness and questioned whether it made sense to have a 28 bed hospital facility in the remote area of Incline Village. Chairman Lambert asked who owned the hospital in Incline Village. Ms. Gumz replied it was owned by an entity located in Florida and that entity was currently involved in bankruptcy proceedings. Chairman Lambert asked whether Ms. Gumz foresaw the proposed new county would be required to have a hospital district. Ms. Gumz responded she did not. Ms. Judy Spees testified from prepared text (pages 13 and 14 of Exhibit C). She explained the basis for her interest in public education in Incline Village. She contended Incline Village did not receive from Washoe County the kind of educational services which Ponderosa County would be able to provide. Ms. Spees said the concept of an independent Ponderosa County school district raised two main issues, whether Incline Village and the Crystal Bay area could fund such a district and whether better or equal services would be provided. She called attention to a pie chart (on page 18 of Appendix A to Exhibit C). She pointed out the school district's revenues exceeded its expenses by more than 10 percent per year. She indicated the excess revenues were divided between an operating reserve and a capital improvements reserve. She advised the estimated budget for the school district was based on the premise all existing programs would continue. She advised the school district would have 140 full and part time staff positions with employment benefits. She said the budget also provided for additional positions to be added and for lawn maintenance. She indicated the budget was based on the current student population of 1,400 and on a projected growth in that population to 1,500 by the year 2,003. She advised Washoe County served 45,000 students and had an annual growth rate in its student population of more than 1,800 students per year. Ms. Spees advised Incline Village had one elementary school, one middle school and one high school and indicated an additional elementary school might be needed. She said the school district's office would have 19 staff members. Ms. Spees stated the proposed Ponderosa County school district's goals would be to enhance local education by using local funds, to increase services to students who had special needs and to provide funds for occupational education and preschool programs. She advised there was a plan to increase the ratio of students to teachers. Mr. Bennett expressed concern about whether the proposed county would be able, financially, to keep up with growth in its student population. He asked whether Incline Village would be primarily a retirement community and whether its children stayed in the area or left. Ms. Spees responded Incline Village had been, traditionally, a retirement area but suggested people who retired to Incline Village were affluent. She said Incline Village experienced a small growth in its student population but contended she did not believe that growth would necessitate either a new middle school or a new high school. She explained the reason the elementary school was "overloaded" was because an elementary school consisted of more grade levels than did a middle school or a high school. She advised the projected growth in the proposed new school district's student population was only 100 students over the next 10 years whereas the projected growth in Washoe County's student population was 1,800 students per year. Ms. Gumz interjected Incline Village presently had the traditional nine-month school year and suggested, should the student population exceed the capacity of the present schools, "...we could use those facilities, and have students rotate through." Mr. Roger Means, Washoe County School District, testified. He introduced Mr. Doug Sever and advised Mr. Sever would provide most of the testimony on behalf of Washoe County School District while he himself would be available to answer any questions. Mr. Doug Sever, Business Manager, Washoe County School District, testified. He discussed the impact of A.B. 332 on the Washoe County School District. He said two subjects were considered in determining that impact, general operations and debt. He advised Washoe County School District based its information on data for the period 1994 to 1995. Mr. Sever explained the method by which he calculated loss of revenues to Washoe County School District (if the new county was created) and stated the school district would lose $7.2 million in revenues. He advised Washoe County School District's expenditures would decrease by $5.3 million. He explained the impact on Washoe County School District would be the difference between its loss of revenues and its loss of expenditures, which was approximately $1.9 million. Mr. Sever contended the reason for the adverse financial impact was that Incline Village was a very affluent area in terms of assessed property values. He said, "Out of a total of $5.7 billion this year, Incline represents just over $600 million." He indicated the impact would be mitigated to some degree "...through the Nevada Plan formula." He indicated Washoe County School District did not have the means to determine the actual financial impact. He suggested the state's Department of Education would have to make that determination using the "Nevada Plan" formula. Mrs. Lambert advised Mr. Sever that Ms. Jeanne Botts of the Legislative Counsel Bureau's Fiscal Analysis Division had requested that Mr. Sever prepare budgets for both the Washoe County School District and the new school district in order that the impact on Washoe County School District could be accurately determined. Mr. Sever indicated he would be happy to provide those budgets. Mr. Sever stated the other area of impact on Washoe County School District which was considered was debt service. He advised the official statement provided to bond holders said, "No act concerning the existing Washoe County School District bonds or their security may be repealed, amended or modified in such a manner as to impair, adversely, the bonds or their security until all the bonds have been discharged in full or provision for their payment and redemption have been fully made." Mr. Sever stated, except for the debt concerned with an R.O.T.C. building and a modular building, all debt on existing schools in Washoe County would be discharged in the year 1994-1995. He said, under A.B. 332, as presently written, $621 million in assessed valuation would be removed from Washoe County in the coming year. He said, "...anytime you pull assessed valuation out of our debt and put it into another county, someone would have to incur the bill for that and I would guess it would be our citizens down in the valley..." He contended the language of A.B. 332 was very unfair (to Washoe County's citizens). Mr. Sever said another item which A.B. 332 did not address was fixed assets. He advised Washoe County School District owned buses, furniture, office equipment and, perhaps, property which were not bought with proceeds from bond issues, and said those assets would have to be dealt with. Mrs. Segerblom said there was talk Clark County was considering splitting its school district and "...those who moved out would have to still pay the money on the bond." She asked whether that scenario described what Mr. Sever was suggesting would happen to Incline Village. Mr. Sever replied affirmatively. Mr. Ernaut asked Mr. Sever whether he could prepare an estimate of fixed costs which did not result from bond indebtedness. Mr. Sever replied he could provide a rough estimate. Mr. Ernaut requested Mr. Sever to prepare such an estimate and to make it as accurate as possible. Mr. Means advised Washoe County School District's board of trustees had taken no formal position regarding A.B. 332. Mr. William A. Biehler testified by reading from prepared text (page 15 of Exhibit C). He said he and his family had been vacation and weekend residents of Incline Village since 1965 and had lived there, full time, since 1982. He stated two of his grandchildren attended Incline Village schools. Mr. Biehler advised he had worked as a consultant to local governments in California for 20 years and contended Ponderosa County was a viable concept. He said the committee proposed no changes to the two special districts which would be part of Ponderosa County. He stated the committee felt it would be efficient and economical for Ponderosa County to use outside consultants and contractors to meet its intermittent needs with respect to such things as detention of youthful offenders, psychiatrists, special investigators and forensics investigators. He advised it was planned Ponderosa County would have part time positions to deal with certain county functions and would use "telecommuting" whenever it was possible to do so. He said the county would lease space and equipment rather than purchase it. He stated previous studies and, also, a review by Washoe County's administration (of the concept of creating Ponderosa County) were based on the premise the county would hire full time employees and would purchase space and equipment. Mr. Biehler advised the committee assumed most employees of Washoe County's Road Department and Sheriff's Department who worked in the Incline Village/Crystal Bay area would transfer to Ponderosa County. He said the committee estimated, not including positions in its school system, the county would have a maximum of 36 new positions. He explained how individuals would be selected for the positions of County Manager and Data Processing Manager. Mr. Biehler concluded by saying he was convinced Ponderosa County was a workable and desirable concept. Mr. Robert Edwards testified. He stated he was a resident of Incline Village and had a daughter who attended Incline Village's elementary school. He said he was addressing the committee both as a political scientist and as an individual who had training and experience in public administration. Mr. Edwards discussed the transition process involved in creating a new county. He advised the transition process entailed several aspects of which the first was transfer of responsibilities. He said some transfers of responsibility, such as those pertaining to recording of property deeds and to court actions, would have to occur on the new county's first day of business. He suggested cooperation of existing agencies would be required to effect other transfers of responsibilities and advised Sheriff Kirkland had indicated his willingness to provide law enforcement services for the new county during the transition period. Mr. Edwards said another aspect of the transition process had to do with personnel. He stated it was expected the majority of individuals currently employed within the geographical area which would comprise Ponderosa County would choose to remain so employed. He advised it was anticipated "...the full transition of current employment, contracts with the unions, with current seniority, tenure, sick leave benefits and the like all coming with the employee." Mr. Edwards pointed out A.B. 332 required Ponderosa County to reimburse Washoe County for Washoe County's costs to provide all services currently required in the Lake Tahoe Basin to Ponderosa County during the transition period. He indicated those costs should be substantially the same as the amounts budgeted in the financial feasibility study (Appendix A to Exhibit C). He contended the cost of mechanical aspects of the transition process, such as moving records from Washoe County to Ponderosa County, would be minimal. Mr. Edwards discussed some rules and guidelines proponents of creating the new county had established to govern their efforts. He stated they believed the new county must have no financial impact on the remaining portion of Washoe County or on the state and he suggested it would have none, except with respect to one fund which was divided by the number of counties in the state. Mr. Edwards said, "With the amendments, specifically to NRS 387.510, which is the concern raised by the school district -- the bill was drafted in concurrence with that statute and the amendments, as we have acknowledged are necessary, will conclude with a financially neutral position for all concerned." Mr. Edwards said, with respect to SCCRT, Ponderosa county would be an exporting county. Mr. Edwards explained the steps taken to ascertain there was community support for creation of a new county. Mr. Edwards contended it was a fundamental principle of a free people that those people should be able to participate in the governing of their own affairs and stated the best government was the smallest unit of government which was financially feasible. He declared the proposed new county was feasible, would not impact Washoe County, Washoe County School District or the state and had community support. He urged the committee to make a favorable report to the Assembly regarding A.B. 332. Mr. Bennett commented when a new work force was formed, SIIS considered that work force as though it was totally new to its area and had no experience, even if that work force consisted of people who held the same jobs for many years. He advised SIIS imposed its highest risk rate on such a work force. He asked, "Have you got assurances from the SIIS and various other entities that will have a factor on your labor burden that this will not change." Mr. Edwards indicated such assurances had not been received. He advised consideration was given to economic burdens created by employment "...at every level.." and the assumption was made "...that we would be interjected into that as the current employees presently are." Mr. Bennett suggested the question of the risk rate SIIS would establish for Ponderosa County's employees should be investigated. Mrs. Freeman commented the legislature had a responsibility to determine the proposed new county was viable before it passed legislation which would create the county. She indicated she had a number of questions which pertained to low income residents of the proposed new county. Mrs. Freeman asked how many casino-hotels there would be within the county. Mr. Edwards named the casino-hotels in Incline Village and the Crystal Bay area. Mrs. Freeman commented she saw no specific reference in the booklet provided by the Ponderosa County Committee (Exhibit C) regarding the cost to Ponderosa County of providing care to indigents. Mrs. Freeman asked if it was envisioned Ponderosa County would build its own jail. Mr. Edwards advised the Incline Village/Crystal Bay area presently had a class C holding facility and, in time, would be obligated to upgrade that facility but indicated sufficient funds were designated for prisoner housing to allow that to be done on a contract basis. Mrs. Freeman asked whether the social services presently provided by Washoe County were factored into the budget for Ponderosa County. Mr. Edwards replied affirmatively. With reference to Mrs. Freeman's concern regarding costs to the new county to provide care for indigents, Mr. Edwards pointed out Ms. Gumz testified indigent care was "...an off budget item..." and had expressed confidence there were sufficient funds to provide for indigent care. Mrs. Freeman indicated many people who worked in hotel-casinos at Lake Tahoe lived in California because no low income housing was available on the Nevada side of Lake Tahoe. She asked what provisions Ponderosa County could make for people with low incomes. Mr. Edwards indicated attempts were being made to address that concern. He contended there was a full range of housing available in Incline Village. Mrs. Freeman suggested providing low income housing would impact the new county's school district because more children would attend its schools (if such housing was available) and said she was sure that impact had been considered. Mr. Edwards indicated it had. Ms. Jennifer Stern testified. She explained she was an attorney with the firm of Swendseid and Stern. She advised Swendseid and Stern focused its practice primarily on municipal finance. She said Swendseid and Stern rendered the majority of opinions on bonds issued for local governments in Nevada and was bond counsel for the Reno-Sparks Convention and Visitors Authority (hereinafter referred to as RSCVA). She provided some information regarding her professional experience. Ms. Stern stated RSCVA's concern about A.B. 332 focused, mainly, on Section 31. She said Section 31 provided all assets of Washoe County which were located in the territory which would comprise Ponderosa County and which were in use or were for the benefit of residents of that territory on January 1, 1995, would become the property of Ponderosa County effective October 1, 1995. She said Section 31 also provided that Ponderosa County would assume responsibility for payment of those obligations of Washoe County created for the benefit of residents of Ponderosa County. She contended those provisions created a problem with respect to bonded indebtedness. Ms. Stern explained, since 1985, RSCVA had issued over $100 million worth of general obligation bonds. She advised those bonds were additionally secured by pledged revenues which, with respect to approximately $65 million worth of those bonds, included room taxes levied throughout Washoe County and revenues generated by facilities located within the jurisdiction of RSCVA. She said, with respect to $38 million worth of the bonds, the revenue pledged was the amount generated by one percent of the room tax levied throughout the county. She stated, in 1991, the legislature established that one percent of the room tax was to be used specifically for the construction, improvement and debt service of the national bowling stadium. She advised, in addition to the pledged revenues, Washoe County had pledged its full faith and credit as security for the bonds and, therefore, if the pledged revenues "fell short," Washoe County's general fund and tax revenues were available to bond holders for debt service. Ms. Stern said bond holders were advised, in an official statement, that the bonds were secured by the entire assessed valuation of Washoe County and, also, were advised of the amount of revenue generated by room taxes over the previous five years, including room taxes from the proposed Ponderosa County. She stated the bond holders relied on that information when they purchased the bonds. She contended, as presently drafted, A.B. 332 diminished the security provided to bond holders because it removed a significant portion of the revenues and assessed valuation which secured the bonds. Ms. Stern said, if passed by the legislature in its present form, A.B. 332 would create constitutional problems. She advised Article 1, Section 10, of the United States constitution stated, "No state shall pass any law impairing the obligation of contracts." She explained a bond was a contract between the county and the bond holders and contended A.B. 332 would impair the obligation created by that contract. She said Article 1, Section 15, of Nevada's constitution stated no law impairing the obligation of contracts shall ever be passed. She pointed out NRS 356.10 stated the legislature pledged its faith that it would not impair any contracts with respect to bonds. Ms. Stern advised there were court cases in which the court interpreted the provisions she had cited and held municipal bonds constituted a contract. She cited a Washington court case and advised that case held boundary changes which affected the assessed value of property, subject to taxation to repay bonds, were unconstitutional. She advised, if the legislature decided to create Ponderosa County, it must not diminish the security for bond holders who currently held outstanding Washoe County, RSCVA or Washoe County School District bonds. Mr. Ernaut said there was testimony that Ponderosa County had budgeted an amount of money adequate to retire any responsibility it had for bonds and asked whether, given that circumstance, Ms. Stern still believed creating Ponderosa County would be unconstitutional. Ms. Stern responded her contention was, if the legislature was to create a new county, the legislature must provide for outstanding debt service by the same method as that provided by existing contracts. Mr. Ernaut indicated he would like Ms. Stern to provide information concerning the amount of room tax generated by Incline Village properties, the amount of money Incline Village received back from those taxes and "...what justification, legally...that Incline Village in any way, shape or form benefits from the one percent to the bowling stadium" to any subcommittee created to consider A.B. 332. He said he also would like Ms. Stern to provide information as to how much of the money generated by room taxes was spent on advertising. He stated he would also like to know "...is Tahoe still removed as part of the advertising plan..." Ms. Stern responded Mr. Beaver of RSCVA could provide the information Mr. Ernaut requested. Mr. Ed Beaver, Director of Finance, Reno-Sparks Convention and Visitors Authority, testified. He stated Incline Village generated approximately $2 million in room taxes of which: approximately $227,000 was given back to Washoe County; $227,000 comprised the amount which was dedicated to the national bowling stadium; and slightly more than $85,000 was retained by the state, leaving approximately $1.5 million in room taxes which were collected and maintained by RSCVA, of which RSCVA rebated 50 percent to the visitor's bureau at Incline Village. Mr. Beaver indicated he could provide information relevant to Mr. Ernaut's questions regarding the advertising budget. He stated, "We do include them in all of our collateral data, such as brochures, pamphlets. We make available to them any tours that we are on, any promotions we go on and any information we have." He indicated RSCVA's marketing letterhead did not include the word "Tahoe." He advised people on the west coast of the United States differentiated between Lake Tahoe and Reno as destinations and contended that created some confusion. He said, however, in Chicago and areas on the east coast, Tahoe was "...included and marketed as one area." Mr. Beaver stated RSCVA's convention sales bureau provided 335 sales leads to the Hyatt and Cal-Neva, which he said were the two principal properties, at Lake Tahoe, which handled conventions and meetings. He indicated, based on those sales leads, the Hyatt booked 16 meetings, which accounted for more than 5,500 "room nights" and Cal-Neva booked four meetings, which accounted for 775 "room nights." Dr. Winthrop Dale testified. He stated he had owned property in Incline Village for 34 years and had been a permanent, full time resident for 32 « years. He contended A.B. 332 would not better Incline Village. Dr. Dale referred to testimony given by Mr. Olsen regarding how Incline Village's citizens had voted with respect to creation of a new county. He said there were 6,733 registered voters in the Incline Village area of whom only 3,293 voted in the last general election. He indicated, of those who voted, approximately 65 percent voted in favor of creating Ponderosa County, but pointed out that 65 percent constituted only 32 percent of the registered voters in the Incline Village area. He suggested there were many absentee property owners who, although they paid taxes, did not have the privilege of voting in Incline Village because they did not reside there. Dr. Dale expressed the sentiment the present time was a time to consolidate government and to provide for less government rather than to proliferate and duplicate government. Dr. Dale indicated many people complained about the fact property taxes (in Incline Village) were constantly increased. He contended Washoe County was not to blame for such increased taxes and suggested Washoe County's assessor merely followed state law which, he said, required property be appraised at its fair market value. He advised proponents of the creation of Ponderosa County originally said creating Ponderosa County would be an economy measure and would lower taxes. He stated, after conducting extensive studies, those proponents now said, "Well, we can do it for the same tax rate." He suggested creating a new county would create more government and would not lower taxes. Dr. Dale said there were ancillary issues to consider. He referred to an article in the Reno Gazette-Journal, on March 29, 1995, concerning Washoe County seeking assistance to pay for indigent care. He suggested Incline Village was not such an affluent community that it would have no indigents. He advised the hospital at Incline Village was in bankruptcy. He said one proponent of creating a new county had suggested a special hospital district be created to support the hospital. Dr. Dale contended Incline Village could not support the hospital. He asked, rhetorically, how the proposed new county would deal with animal control. He suggested the proposition of creating a new county was not a logical one. Ms. Shirley Dale testified saying only she objected (to A.B. 332). Mr. Brad Miller testified. He said he had resided in Incline Village for 14 years and had resided on the north shore of Lake Tahoe for 25 years. Mr. Miller said he wished to respond to some previous testimony. He indicated proponents of A.B. 332 testified Highway 431 was the only route by which to travel to Reno from Incline Village and the Crystal Bay area during the winter and that, most often, Highway 431 was closed. He declared that testimony was untrue. He stated there was more than one way to travel to Reno from Incline Village and the Crystal Bay area in order to "...attend county business." He advised Incline Village and the Crystal Bay area did have a representative in the Tahoe Regional Planning Agency. Mr. Miller referred to Dr. Dale's testimony regarding the advisory vote. He said some of the voters who voted in favor of the advisory question and to whom he spoke after the election told him they either had not had enough information or had not had enough time to consider the information they had and they wanted the matter submitted to the legislature for determination as to whether a new county was viable. He indicated, if the legislature passed A.B. 332 and the Governor signed the bill, those voters would then have another opportunity to vote on whether or not to create a new county. He contended the outcome of the election held in November, 1994, did not constitute a mandate. Mr. Miller indicated testimony was given to discredit the Kafoury-Armstrong report. Mr. Miller said, when the committee was formed to study the concept of creating a new county, he suggested to the committee that it secure the services of a large (accounting) firm which had liability insurance and an errors and omissions insurance policy in force so that, if that firm made an error, something could be done about it. He referred to the fact the hospital in Incline Village was in serious financial trouble and that the bonds issued for the hospital were in default. He said Washoe County had placed all of its taxpayers at risk by "...supporting that issue" and the proponents of the hospital had nothing to offer the bond holders other than to say they were sorry. He said he would like to see an independent study done by a major accounting firm which had errors and omissions insurance coverage. Mr. Miller said he was somewhat knowledgeable about Incline Village General Improvement District's "...so called high reserves." He contended Incline Village General Improvement District's indebtedness would offset its reserves. Mr. Miller referred to the issue of further taxation within the proposed new county. He advised Incline Village General Improvement District had increased its recreation fee and some of the proponents of the new county were considering creating a special assessment district for transportation. Mr. Miller contended it was conjecture that current Washoe County employees would be willing to transfer to the new county and that the new county would be in a position to be a sales tax export county. Mr. Miller referred to the issue of affordable housing. He indicated there was some affordable housing in Incline Village and the Crystal Bay Area but said, "...that is a matter that needs to be resolved because TRPA has found it useful to stick their nose into things that are, in my opinion, outside of their original scope." Mr. Miller said he wished to make a comment regarding the issue of self- determination. He advised, on March 28, 1995, Washoe County's county commissioners held their meeting in Incline Village. He stated, of the 25 or 26 people who comprised the audience at that meeting, two-thirds were representatives of government agencies and the remainder were members of the general public. He advised the agendas of all the county commissioners' public meetings provided for public comment. He declared, "So, the cry about representation, I think, is a red herring." Mrs. Segerblom asked the distance from Incline Village to Reno. Mr. Miller replied the distance was 25 miles. Mr. Herb Jacobs testified. He said if he was asked whether or not he would like Incline Village/Crystal Bay to be a self-governed entity he would answer "yes" with a reservation. He indicated, in many places, efforts were being made to consolidate government and to improve its service rather than to increase the layers of "governmental red tape." He suggested care must be taken (with respect to creating the proposed new county) not to create such an increase in governmental red tape. Mr. Jacobs referred to previous testimony regarding bonds. He stated, although he was opposed to creation of a new county, he believed there might be a way to deal with the bond issue. He suggested, if an insurance company was to satisfy the bond holders by providing an insurance policy, those bond holders might relinquish their claims on the assets of the proposed new county. Mr. Jacobs suggested the issues to be considered when contemplating creating a new county were: what costs were involved, what risks were involved and what services would be provided or withheld. He said, "...that has to be an absolutely safe bet not a hoped for safe bet." Mr. Jacobs contended few people were truly interested in what would happen if a new county was created. He suggested the motivation to create a new county was based primarily on emotion. He suggested there was an infinite number of unforeseen circumstances which could arise and which could financially impact the proposed new county. Mr. Jacobs stated, in spite of the occasional problems residents of Incline Village had with services provided by Washoe County and with taxes imposed by Washoe County, Incline Village had developed into a world class location. He advised property values had risen both in good times and in bad times and contended that was due, in large measure, to Washoe County and the services it provided to Incline Village. He suggested unforeseen and disastrous problems could arise if a new county was created and contended those problems would be dealt with by reducing services, increasing taxes or appealing to the state of Nevada for assistance. He indicated he would like to see improvement in the relationship between Incline Village and Washoe County but would not wish to sacrifice that relationship, which he described as a successful one, for a relationship with another county. Mr. Jacobs indicated the question to be asked was what cost benefit would be derived from creating Ponderosa County. He said it appeared that benefit was the opportunity to have lower taxes. He made further comments which implied he did not believe that likely to happen. Mr. Jacobs suggested another benefit to be derived from creating a new county was pride in having hometown rule. He said he was in favor of hometown rule if people chose to have such rule and to participate in it and if "...it is a safe bet based on objective research." He indicated the negative results which might arise from creating a new county were: greater taxes, fewer services and a transition period which might contain many unpleasant surprises. Mr. Jacobs stated feasibility studies and real estate appraisals had one thing in common, which was they were ordered by people who an interest in the outcome of those studies and appraisals. He contended the legislature needed to make an objective decision (on A.B. 332) after hearing the testimony of unbiased experts. He proposed a commission, consisting of representatives of Washoe County, Incline Village and the state of Nevada, be appointed to examine the complaints of residents of Incline Village and to determine what could be done to address those complaints. He suggested, if that could not be done, a thorough evaluation of all issues which had been raised and of all things which could occur should be made by an independent, major firm, after which a campaign should be held, during which both those who advocated and those who opposed creation of a new county could address the residents of Incline Village, who could then let their wishes be known to the state. Ms. Ande Engleman, Nevada Press Association, testified. She stated the Nevada Press Association was neutral as to whether or not a new county should be created but wished her to advise the committee of "...the access problems that there have been in Incline Village relating to Washoe County." She said Incline Village's local newspaper, North Lake Tahoe Bonanza, had been in business for approximately 25 years and had a circulation of almost 9,000. She said, in 1984, because that newspaper could not cause Washoe County to notify it of happenings which affected Incline Village, it instituted court proceedings. She said the court found the newspaper was a legally adjudicated newspaper, which complied with all requirements of NRS 238, however Washoe County, more or less, continued to ignore the newspaper. Ms. Engleman advised the Nevada Press Association found, when a local newspaper did not contain information pertaining to its community, no sense of community was established. She said North Lake Tahoe Bonanza covered news pertaining to Incline Village but, in large part, legal notices and governmental information were provided to residents of Incline Village by (newspapers from) Placer County, California. She stated the Nevada Press Association received numerous complaints from citizens about the difficulty those citizens had in obtaining information from Washoe County. Ms. Engleman pointed out the open meeting law required government to provide certain information at no charge but said, as far as Washoe County was concerned, if residents of Incline Village wanted information to be mailed to them, regarding such things as meeting agendas, those residents were required to pay a charge to have the information mailed. Mr. James Nakada testified. Mr. Nakada advised he was testifying as a private citizen and not as either a trustee or member of the Nevada-Tahoe Conservation District. He stated, in 1993, he was a member of the previous committee which attempted to have legislation passed to create a new county. He suggested the present committee had pursued the attempt to create a new county more objectively than had the committee of which he was a member. Mr. Nakada advised approximately 50 percent of the residents of Incline Village and the Crystal Bay area voted in the last election and of that 50 percent two-thirds voted in favor of the referendum. He pointed out the current president of the United States was elected based on less than 50 percent of the total votes which could have been cast. Mr. Nakada declared he was in favor of the creation of a new county. Mr. Nakada referred to Mr. Neighbors' question of what position Washoe County's county commissioners had taken with respect to the proposed new county. He said, in their meeting held during the previous week, the county commissioners stated they were neutral on the subject. Mr. William Seidler testified. Mr. Seidler advised he was a member of the Ponderosa County Committee but was testifying as a private citizen. He referred to the recommendation that a large accounting firm be retained to study the issues involved in creating a new county. He implied audits done by small firms were as good as those done by large firms. Mr. Seidler stated Incline Village had a small sales tax base and contended it was not possible to make accurate projections of revenues from that tax base. He suggested revenue projections based on real property assessed valuations were more reliable. Mr. Seidler expressed the opinion Ponderosa County was a feasible concept which would have little, if any, detrimental affect on the rest of the state. He contended the citizens of Incline Village were in favor of creating Ponderosa County and expressed hope the legislature would be in favor of doing so. Mr. Don Kornreich testified. He said he had lived in Incline Village for more than six years. He stated he had arrived at the same conclusions as those expressed by Ms. Gumz. He suggested the reasons for creating Ponderosa County were that Incline Village and the Crystal Bay area needed more public transportation, more effective erosion control projects and more beautification. He said, if the residents of Incline Village and the Crystal Bay area were able to carry out their plans to control traffic volumes, improve the quality of water entering Lake Tahoe and beautify their community, surrounding areas also would benefit, and he suggested those residents would have a better chance of achieving their objectives if Incline Village and the Crystal Bay area became a separate county than if they remained a part of Washoe County. Mr. Kornreich advised, 15 years earlier, Washoe County built seven miles of pedestrian and bicycle paths in Incline Village but, to date, had budgeted no funds for their maintenance. He indicated residents of Incline Village were very concerned about Washoe County's future ability to provide maintenance for the many assets of Incline Village which its residents planned to build over the next few years. Mr. Kornreich suggested residents of Incline Village and the Crystal Bay area provided services for the benefit of their community for which they did not rely on funds from Washoe County. Chairman Lambert closed the hearing on A.B. 332. Chairman Lambert appointed a subcommittee, comprised of Mr. Ernaut, as Chairman, Ms. Tripple, Mr. Neighbors, Mrs. Krenzer, Mr. Williams and Mr. Bennett, to consider A.B. 332. She requested the subcommittee consider the issues of: SCCRT distribution; fair share taxes; RTC quarter cent sales tax; transfer of assets and personnel; debt; the school district; and the proposed creation of a judicial district. There being no further business to come before the committee, Chairman Lambert adjourned the meeting at 11:00 a.m. RESPECTFULLY SUBMITTED: Sara Kaufman, Committee Secretary APPROVED BY: Assemblyman Douglas A. Bache, Chairman Assemblyman Joan A. Lambert, Chairman Assembly Committee on Government Affairs April 4, 1995 Page