MINUTES OF THE JOINT MEETING OF SENATE COMMITTEE ON TAXATION AND ASSEMBLY COMMITTEE ON TAXATION Sixty-eighth Session June 29, 1995 The joint meeting of the Senate Committee on Taxation and the Assembly Committee on Taxation was called to order by Chairman Sue Lowden, at 2:30 p.m., on Thursday, June 29, 1995, in Room 119 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. SENATE COMMITTEE MEMBERS PRESENT: Senator Sue Lowden, Chairman Senator Kathy M. Augustine, Vice Chairman Senator Ann O'Connell Senator John B. (Jack) Regan Senator Ernest E. Adler ASSEMBLY COMMITTEE MEMBERS PRESENT: Mr. Bob Price, Chairman Ms. Jeannine Stroth, Chairman Mr. Michael A. (Mike) Schneider, Vice Chairman Mr. Morse Arberry, Jr. Mrs. Maureen E. Brower Mrs. Joan A. Lambert Mr. Mark Manendo Mr. John W. Marvel Mr. P.M. Roy Neighbors Mr. Brian Sandoval Mr. Larry L. Spitler SENATE COMMITTEE MEMBERS ABSENT: Senator Dean A. Rhoads (Excused) Senator Randolph J. Townsend (Excused) ASSEMBLY COMMITTEE MEMBERS ABSENT: Mr. Pete Ernaut, Vice Chairman (Excused) STAFF MEMBERS PRESENT: Ted Zuend, Deputy Fiscal Analyst, Fiscal Analysis Division Kevin Welsh, Deputy Fiscal Analyst, Fiscal Analysis Division Kathy E. Cole, Senate Committee Secretary Nykki Kinsley, Assembly Committee Secretary OTHERS PRESENT: Ken Pollock, Attorney, Capital Asset Research Corporation Mark Schofield, Assessor, Clark County Assessor's Office Carole A. Vilardo, Lobbyist, Nevada Taxpayers Association Chairman Lowden opened the hearing on Senate Bill (S.B.) 338. SENATE BILL 338: Expands authorized uses of proceeds from supplemental vehicle privilege tax. (BDR 32-1888) SENATE AUGUSTINE MOVED NOT TO CONCUR WITH THE ASSEMBLY AMENDMENT TO S.B. 338. SENATOR O'CONNELL SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS ADLER, TOWNSEND, AND RHOADS WERE ABSENT FOR THE VOTE.) ***** Chairman Lowden opened the hearing on Senate Bill (S.B.) 519. SENATE BILL 519: Revises provisions governing taxation of property that is exempt from taxation when it is leased to entity which is not exempt from taxation. (BDR 32- 1926) SENATOR REGAN MOVED TO CONCUR WITH THE ASSEMBLY AMENDMENT TO S.B. 519. SENATOR O'CONNELL SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS ADLER, TOWNSEND, AND RHOADS WERE ABSENT FOR THE VOTE.) ***** The members of the Assembly Committee on Taxation arrived and Chairman Lowden opened the hearing on Senate Bill (S.B.) 578. SENATE BILL 578: Provides for sale of tax liens against parcels of real property. (BDR 32-2149) Ken Pollock, Attorney, Capital Asset Research Corporation, read from his statement (Exhibit C). Mr. Pollock made two points about this bill. One, the bill does not mandate tax lien sales; and the bill is designed to protect the rights of delinquent tax payers and those who pay their taxes on time. He also referred to his handout which included who will benefit from the sale of property tax liens. He handed out a bill analysis (Exhibit D) urging the support and passage of S.B. 578. Assemblyman Schneider inquired of Mr. Pollock, "Where is the profit here? I know you are not doing this because you are `good guys'..." Mr. Pollock asked Mr. Schneider if he was asking with regard to the investor's profit. Mr. Schneider affirmed this to be so. Mr. Pollock then responded that it would be the 10 percent interest that will earn from the date that they acquire the tax lien. The discussion continued between the assemblyman and the witness. Assemblywoman Brower wanted clarification on how the property owners are informed of a lien on their property due to nonpayment of taxes to the county. Mr. Pollock explained the procedure for notification and how there is protection built into the bill to inform the taxpayer of a county lien on their property. Assemblyman Price further questioned Mr. Pollock with regard to notification of property owner of delinquent taxes and then asked if Mr. Pollock's client was aware of another law in Nevada which dealt with the "adverse possession" of property. Mr. Price then explained what the term meant by saying, "That is when someone goes in and pays taxes on a property for a period of time...that they in fact can file legal paperwork and in fact become the owner of the property." Mr. Pollock said they were aware of this and someone else can pay off another person's property taxes. Senator Regan then asked how Mr. Pollock's corporation would pick the county and the properties to pay off. Mr. Pollock referred to statutes in the counties whereby each county can decide to sell off a "block of liens" and sell them all off at once in which case the bidder would take "the good with the bad." He further explained that the county could decide to negotiate with one purchaser "due diligent standards which means it may be in the lien's interest to buy or not". Questions and answers continued between the members of both committees on taxation and with Mr. Pollock. Several points were raised with regard to legal counsel, the Nevada Revised Statutes, and litigation that would occur if this bill passed. Finally, the chairman asked how the county assessors and treasurers felt with regard to this bill. Mark Schofield, Assessor, Clark County Assessor's Office, said he has spoken with other assessors and treasurers and they are "in total support of this bill." He then went on to explain the potential impact of this bill which in Clark County would be $13 million in delinquent taxes. Further, Mr. Schofield related that depending on negotiations between Mr. Pollock's client and Clark County they could buy up those delinquent taxes. If they do, all local governments, including the school districts could benefit from those proceeds that they do not have at present. Senator Lowden asked if the school districts would receive about 40 percent, to which Mr. Schofield concurred. A general discussion ensued between the Clark County Assessor, Mr. Pollock, and the committees. The discussion centered around how many property owners would likely be affected by a tax lien and it was confirmed that in Clark County there are many property owners who are behind in taxes by as much as 3 years. Michael Pitlock, Executive Director, Department of Taxation, said: I have been in contact with Mr. Kern [from Capital Asset Research Corporation] for the last 3 months working on this issue. In the beginning the department had two basic concerns with the concept that had to do with the level of control that the local governmental entity had, as well as taxpayer protections. We have had several discussions with the proponents of the bill over the past 3 months and they have been very accommodating in making sure that as much control over the process as is possible is vested with the county governments and that there are sufficient taxpayers protection, particularly for the elderly. The department supports the bill. Carole A. Vilardo, Lobbyist, Nevada Taxpayers Association, said they were speaking in support of the bill. Further, Ms. Vilardo believes that there are safeguards within the bill for the taxpayers and also views Mr. Pollock's client as a form of a "collection agency" on trying to secure bad debts or delinquent taxes. SENATOR REGAN MOVED TO DO PASS S.B. 578. SENATOR AUGUSTINE SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS ADLER, TOWNSEND, RHOADS AND ASSEMBLYMAN ERNAUT WERE ABSENT FOR THE VOTE.) ***** Chairman Lowden informed Mr. Pollock that he and his client will continue to face further questioning by the Assembly Committee on Taxation in their next meeting. Mr. Price confirmed that the bill would be transmitted to the Assembly's agenda as early as the next day. Mr. Pollock informed the committees that he was very willing to obtain any further information to aid in their decision processes. Chairman Lowden adjourned the hearing at 3:20 p.m. RESPECTFULLY SUBMITTED: Kathy Cole, Committee Secretary APPROVED BY: Senator Sue Lowden, Chairman DATE: __________________________________ Assemblyman Bob Price, Chairman DATE: __________________________________ Assemblywoman Jeannine Stroth, Chairman DATE: Senate Committee on Taxation Assembly Committee on Taxation June 29, 1995 Page