MINUTES OF THE ASSEMBLY COMMITTEE ON JUDICIARY Sixty-eighth Session March 1, 1995 The Committee on Judiciary was called to order at 8:00 a.m., on Wednesday, March 1, 1995, Chairman Anderson presiding in Room 332 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Mr. Bernie Anderson, Chairman Mr. David E. Humke, Chairman Ms. Barbara E. Buckley, Vice Chairman Mr. Brian Sandoval, Vice Chairman Mr. John C. Carpenter Mr. David Goldwater Mr. Mark Manendo Mrs. Jan Monaghan Ms. Genie Ohrenschall Mr. Richard Perkins Mr. Michael A. (Mike) Schneider Ms. Dianne Steel Ms. Jeannine Stroth COMMITTEE MEMBERS EXCUSED: Mr. Thomas Batten STAFF MEMBERS PRESENT: Dennis Neilander, Research Analyst OTHERS PRESENT: Mary Lardini, President/Nevada Apartment Association David Frazza, Executive Director/Nevada Apartment Association Eleanor Couch, former rental property owner, Las Vegas, NV Shelly Price, District Manager/OLEN Co. Niel Dexter, Vice President/TYDE Development Co. Nancy Paolini, Executive Director/Project Restart Lt. Phil Galeoto/Reno Police Department Doug Dickson/city of Las Vegas Stephanie Tyler/city of Sparks Jan Gilbert/League of Women Voters Holly Gregory, Vice President/West States Property Management Debra Ramon, Property Manager/MacGregor Inn Jon Sasser/Nevada Legal Services Ernest Nielsen/Washoe Legal Services Bobbie Gang/Nevada Women's Lobby Chairman Anderson asked for Committee introduction on B.D.R. 43-452 B.D.R. 43-452 - Authorizes residential confinement as a punishment for certain convictions of driving while license is suspended, revoked or restricted. ASSEMBLYMAN HUMKE MOVED FOR COMMITTEE INTRODUCTION OF BILL DRAFT REQUEST 43-452. ASSEMBLYMAN SANDOVAL SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY BY THOSE PRESENT. ASSEMBLYMAN BATTEN WAS ABSENT AT THE TIME OF THE VOTE). Prior to roll call Chairman Anderson referenced a subcommittee established while in Las Vegas pertaining to A.B. 152, Mr. Schneider's bill which required arbitration of certain claims relating to residential property. He added Mr. Sandoval's name, making it a subcommittee of two. ASSEMBLY BILL 134 - Revises provisions governing short-term tenancies. Vice Chairman Buckley informed the committee she was an attorney with Nevada Legal Services and had represented tenants on eviction matters but presently was on an unpaid leave of absence. She testified she had no pecuniary interest in A.B. 134 and no attorney-client relationship with tenants at the present time and therefore had no conflict of interest. However, having lobbied against A.B. 687, a predecessor to this bill, she would abstain from voting. She noted she would be in accordance with the applicable statute participating in discussion to the extent that it was accepted. Assemblyman Carpenter of District 33 stated he was a co-sponsor of A.B. 134 along with Speaker Hettrick. He affirmed there was no question that the rights of property owners and rights of tenants was a contentious issue. He noted A.B. 134 of this session and A.B. 687 of the last session, which the Governor vetoed, was a well reasoned approach to balance the needs of competing interests. He testified A.B. 134 as written was constitutional because of the large number of court decisions in regard to landlord/tenant laws and with the assumption the Legislative Counsel Bureau would not draft such a bill without the constitutional test. Mr. Carpenter noted there were extreme positions taken on both sides of the issue. It was not right to throw a tenant out without written notice or a fair hearing, nor was it right to have property owners bear the greater burden of the homeless dilemma. He stated many people take a proactive stance in regard to the homeless in devoting time and energy to their plight. Many property owners fall into this category and often landlords were willing to work with their tenants in cases of emergency or unforeseen circumstance. Landlords do not want to contend with the "Professional Freeloader" who takes advantage of the landlord and the system. Under the present law if a person is on a tenancy for a month or a week, he must be given a notice and cannot be evicted for at least five days plus twenty-four hours, so in the best case scenario a weekly tenant would be entitled to six days of free rent. Mr. Carpenter said the charge given to the legislators would be to balance the needs of competing groups, to minimize the suffering of the truly homeless and not to offend property owners so badly they become callous to the needs of others. He asserted when tenants try to do their best, landlords will work with them. He maintained professional renters were coming in and taking advantage of the system and he believed this would be corrected with A.B. 134. Mary Lardino, President/Nevada Apartment Association, in support of A.B. 134, testified that passage of A.B. 134 would help minimize the abuse of the professional renter in using the system to live off others with no intention of paying rent. The bill would not, however, prevent the professional renter from being coached on all the loopholes in the system allowing at least two weeks free rent even though an eviction had already granted by the court. She explained a professional renter as an individual who used various resources in an attempt to remain in an apartment for an extended period of time rent free. She noted they were a small segment of the population but did cause significant financial stress to the owners. Typically a five day eviction notice takes at least fifteen days before a renter would be moved out of an apartment, even in cases where a resident did not file answer to the eviction in order to obtain a court hearing. Reducing the eviction notice to two days for weekly renters would still take five or more days before a renter would be moved from the apartment. Mr. David Frazza, Executive Director/Nevada Apartment Association, speaking on behalf of A.B. 134, referenced a calendar illustrating the length of time an eviction typically takes place in Las Vegas today. He said there were numerous ways an eviction process could be extended and testified as to many delays in the system. He noted the two day bill would cut the landlords' rent income losses by about 50 percent. A copy of the magazine entitled "Nevada Property Management" is submitted as (Exhibit C) and can be viewed in the Research Library. Ms. Lardino, emphasizing the financial burden placed on owners of rental properties, called attention to the following facts from a recent Census Bureau Residential Financial Survey: More than one third of all rental properties have negative cash flows; Among properties with one to four units, 54% have negative cash flows; Many rental properties have mortgage interest rates substantially higher than current market rates; The survey shows that l0% of all first mortgages on rental properties carried rates of l2% or more; Investors in rental housing can lose money in any location with generally only half to two thirds registering a capital gain. Ms. Lardino stated the cost of maintaining affordable housing is substantial and sometimes devastating to an owner. She noted Clark County has 340 properties of 100 units or less and over 3000 properties of less than 100 units. Ms. Lardino stated the vast majority of rental property owners were represented by citizens such as Ms. Eleanor Couch who she then introduced to the committee. Eleanor Couch, former rental property owner, urged committee support of A.B. 134. She cited a case of a professional renter and submitted a copy of the court transcript of eviction proceedings. See (Exhibit D). She noted that despite winning the case, she sold her rental property due to the stress of the court case as it had become a financial burden on personal savings. Mr. Manendo requested of Ms. Lardino a copy of the Census Bureau Residential Financial Survey for the committee. Ms. Lardino declared it had been reported if A.B. 134 was passed, it would create an increase in the number of homeless in Nevada. She said the Nevada Apartment Association took offense to this unfounded remark as they are one of the largest organizations in the state most actively involved in direct personal assistance to the disadvantaged. For evidence of their involvement see (Exhibit E). Ms. Lardino presented a two minute video tape which illustrated a program providing shelter to persons whose homes had been lost and/or damaged in a catastrophe. Ms. Shelly Price, District Manager/OLEN Co. testified her company had ten rental properties in Las Vegas. She indicated they currently were running canned food drives in an ongoing effort to give back to the community. Last year, she indicated, 12,000 cans were given to the Salvation Army along with toys and clothes. Mr. Neil Dexter, Vice President/TYDE Development, commented his company owns and operates a 90 unit weekly apartment complex and a 118 unit weekly apartment complex. He indicated that to accommodate the high transient population in Las Vegas, 11,000 apartments had been built to serve the short-term rental needs for people not being able to afford more than weekly rent. He indicated five day notices had resulted in great losses and noted if A.B. 134 was passed, his losses would be cut by about 50 percent. Mr. Dexter further testified his tenants who have been served with five day notices were then coached by others on how to abuse the system. Ms. Steel wondered whether other tenants' rents had to be increased in order to recoup yearly losses and Mr. Dexter answered in the affirmative, saying it was an increased burden on responsible individuals. Responding to Mr. Manendo's inquiry as to weekly charges, Mr. Dexter quoted between $140 and $195 per week which included furniture, cable TV, utilities and hook ups. Ms. Lardino commented if landlords were not following current legal procedures to obtain evictions or in the management of their rental properties, the Association encouraged legal action be brought against those owners. Mr. Anderson brought to the committee's attention testimony on A.B. 134 from Linda Houghton (Exhibit F). Letters received in opposition to A.B. 134 included Christ Church Episcopal, Las Vegas, Bonnie Polley/deacon, Economic Opportunity, Clark County, Michael J. Pawlak, HELP of Southern Nevada, Judith Heirton/Lutheran Society, Lloyd Retke/Salvation Army of Clark County and Major Jim Sullivan of the Salvation Army. Ms. Nancy Paolini, Executive Director/Project Restart, testified in opposition to A.B. 134. Project Restart, formed in the Washoe County area, helped to identify "freeloaders and system abusers" and worked with Truckee Meadows Human Services Association in aiding with the basic needs of families such as affordable housing, emergency service and intervention for homeless people. From 1989 to 1992 Ms. Paolini was Nevada's representative on the Coalition for the Homeless and has been actively involved in helping the homeless for six years. She stated the passing of A.B. 134 would directly impact an increase in homelessness as the bill would not allow time needed to prevent an eviction. This, in turn, would create an increased burden on the general taxpayer. She indicated families, including many small children, were a large part of weekly rental motel users due to minimal amount of affordable housing. A.B. 134, according to Ms. Paolini, was directed to the professional freeloader and emphasized this represented a very small percentage of renters and was certainly not the rule. She urged the committee not to pass laws directed at the minority at the expense of the majority who are very vulnerable families, working and attempting to give back positively to the community. Mr. Humke commended Ms. Paolini on her work with the homeless and questioned what responsibility the private sector landlords held, and were property owners the guarantors along with the city, county, and private nonprofits in preventing additional people from becoming homeless, to which Ms. Paolini responded she would like property owners to become partners in that effort by identifying needy families beforehand and providing information for agency contact in order to avoid eviction. Lt. Phil Galeoto of the Reno Police Department appeared on behalf of Barbara McKenzie of the legislative team and testified the City of Reno Council had not made a decision for or against A.B. 134. However, the city of Reno opposed A.B. 687 of the 67th session. Doug Dickerson of the city of Las Vegas appeared on behalf of Mayor Jan Jones and registered her opposition to A.B. 134. Mr. Humke requested of Lt. Galeoto to bring to the attention of the City of Reno Council that the specifics of A.B. 687 which was vetoed in the 67th session had been taken care of and that "the flaws pointed out by the Governor in his veto message have been cured in this bill." Stephanie Tyler, representing the city of Sparks, said she would take a request for a formal vote of the City Council back to the city of Sparks. However, she was directed by the Sparks City Manager to state opposition to A.B. 134. Mr. Schneider advised Ms. Tyler the goal of A.B. 134 was to shorten the time, to help the indigents, but also to eliminate people who were professional skippers. Ms. Jan Gilbert/League of Women Voters, stated A.B. 134 would have an impact on the homeless as well as women and children and urged committee opposition to the bill as written and to refine it so as not to hurt the working poor in the community. Holly Gregory, Vice President/West States Property Management, speaking in support of A.B. 134, stated they were primarily affordable housing builders, developers and property managers. She noted they managed roughly 2,000 affordable housing units. They also had a 200 unit motel in Reno recently converted to an SRO (single room occupancy), rents being mandated by HUD, currently running between $94 to $101 per week. She noted in that unit they were running between ten and twenty evictions per week for non-payment of rent. Debra Ramon, Property Manager/MacGregor Inn, testified in support of A.B. 134 and gave an explanation of an eviction process using an eviction chart. She emphasized the great costs involved which could eventually include late rents, court fees and damages to the property. Questions by committee members were directed toward Ms. Gregory and Ms. Ramon. Ms. Gregory said they experienced constant turnover, and feeling tenant retention was something to be worked on they added free coffee, sports videos, etc., to make people feel at home. She noted payment pledges were available and all tenants were aware of this help. Responding to Mr. Goldwater's inquiry as to the number of professional renters, Ms. Ramons replied ten to twenty per week with three out of ten "taking them to the cleaners" with rent, eviction fees, and "damaged" as well as "stolen" property. Mr. Goldwater wanted confirmation that costs of an eviction would not change with the passage of A.B. l34. Ms. Gregory verified the remark; however, for example, if a tenant was paying $92.00 and management was paying $56.00 for eviction and the tenant was there for three or four weeks, it would cost management money. Jon Sasser of Nevada Legal Services testified they were a private, non-profit corporation providing free legal assistance to low income Nevadans in civil cases with offices in Las Vegas and Carson City. Handouts pertaining to his testimony opposing A.B. 134 were distributed to committee members. See (Exhibit G). Ernest Nielsen of Washoe Legal Services stated his agency provided free legal services to many tenants in Washoe county. For the purpose of describing the nature of costs and expenses related to weekly motels in Washoe County he submitted a letter from Ann Harrington, Executive Director of Affordable Housing Resource Council. See (Exhibit H). Mr. Nielsen added most evictions he sees are illegal evictions. Bobbie Gang/Nevada Women's Lobby, in opposition to A.B. 134, urged the committee, when trying to find a balance or solution to problems that had been stated, to seriously consider the low income women and their families. Mr. Anderson appointed a subcommittee for A.B. 134 consisting of Assemblyman Goldwater as Chairman and Assemblymen Carpenter, Stroth and Anderson serving on the same. The hearing adjourned at 10:30 A.M. RESPECTFULLY SUBMITTED: ______________________________________ Christine Shaw,Committee Secretary APPROVED BY: Assemblyman Bernie Anderson, Chairman _______________________________________ Assemblyman Humke, Chairman Assembly Committee on Judiciary March 1, 1995 Page