MINUTES OF THE SENATE COMMITTEE ON GOVERNMENT AFFAIRS Sixty-eighth Session May 3, 1995 The Senate Committee on Government Affairs was called to order by Chairman Ann O'Connell, at 2:05 p.m., on Wednesday, May 3, 1995, in Room 227 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Senator Ann O'Connell, Chairman Senator Randolph J. Townsend, Vice Chairman Senator Jon C. Porter Senator William J. Raggio Senator William R. O'Donnell Senator Dina Titus Senator Raymond C. Shaffer GUEST LEGISLATORS PRESENT: Assemblywoman Chris Giunchigliani Assemblyman Mike Schneider Assemblyman Doug Bache STAFF MEMBERS PRESENT: Dana Bennett, Senior Research Analyst Teri J. Spraggins, Committee Secretary OTHERS PRESENT: Mary Henderson, Government Affairs Director, Washoe County Charlie Joerg, Lobbyist, Nevada Manufactured Housing Association Paul Mouritsen, Research Division, Legislative Counsel Bureau Marvin Leavitt, Legislative Coordinator, Clark County Bob Hadfield, Executive Director, Nevada Association of Counties Madelyn Shipman, Assistant District Attorney, Washoe County Michael Pitlock, Executive Director, Department of Taxation Senator O'Connell opened the hearing with a bill draft request (BDR). BILL DRAFT REQUEST 32-758: Expands exemptions for paying back taxes and assessments when local government is acquiring tax delinquent property. Mary Henderson, Government Affairs Director, Washoe County, testified that the intent of this bill is to allow Washoe County to acquire property through tax-delinquent property. She said they pay the delinquent taxes on it to themselves. She said the bill adds exemptions to the open spaces currently provided. SENATOR TOWNSEND MOVED FOR COMMITTEE INTRODUCTION OF BDR 32-758. SENATOR SHAFFER SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS TITUS, O'DONNELL, AND RAGGIO WERE ABSENT FOR THE VOTE.) ***** BILL DRAFT REQUEST 24-774: Eliminates restrictions on sale of lists for registered voters. Mrs. Henderson stated this bill was requested by Washoe County's Registrar's Office. She said there is some question about what the current statutes say about releasing lists of voters. She said this would allow members of the public to obtain copies of the voter registration lists. SENATOR TOWNSEND MOVED FOR COMMITTEE INTRODUCTION OF BDR 24-774. SENATOR PORTER SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS TITUS, O'DONNELL, AND RAGGIO WERE ABSENT FOR THE VOTE.) ***** BILL DRAFT REQUEST 43-1587: Puts HUD building code on equal basis with Uniform Building Code. Charlie Joerg, Lobbyist, Nevada Manufactured Housing Association, testified on this bill draft request. He explained this bill draft request was in regard to a zoning issue. He said it adopts provisions that would allow manufactured housing to be placed on single family residential lots. He said the bill is patterned after several western states' provisions. He stated there are discriminatory practices in housing and they would like to address the issue. Senator Shaffer asked if these codes were comparable. Mr. Joerg stated the HUD [Housing and Urban Development] code would be on equal basis with the Uniform Building Code (UBC). SENATOR TOWNSEND MOVED FOR COMMITTEE INTRODUCTION OF BDR 43-1587. SENATOR SHAFFER SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS TITUS, O'DONNELL, AND RAGGIO WERE ABSENT FOR THE VOTE.) ***** BILL DRAFT REQUEST 22-1588: Prohibits local governments from discrim-inating against manufactured housing. Mr. Joerg explained this bill addresses chapter 489 of the Nevada Revised Statutes (NRS). He explained this bill belonged in the Senate Committee on Commerce and Labor. He told the committee this bill will prohibit discriminatory practices which currently exist against HUD code homes. He told them he will provide them documentation which shows that HUD code is equivalent to the UBC code and they should not be treated differently. SENATOR TOWNSEND MOVED FOR COMMITTEE INTRODUCTION OF BDR 22-1588. SENATOR SHAFFER SECONDED THE MOTION. A quick discussion was held regarding the last two bill draft requests to determine which testimony belongs with which bill draft request. THE MOTION CARRIED. (SENATORS TITUS, O'DONNELL, AND RAGGIO WERE ABSENT FOR THE VOTE.) ***** ASSEMBLY BILL 171: Authorizes the use of straw and solar energy under building codes. Assemblywoman Chris Giunchigliani stated this bill amends chapter 278 of the NRS to add a section to NRS 244.368. She said that directs local building officials to accept alternative energy sources such as solar and straw bale for construction. She said the 1994 UBC code has been amended to refer to the model energy code. She provided some sections of the code to the committee (Exhibit C). She said section 105 is a paragraph with general permissive language regarding alternative and renewable energy sources. She stated this would have the building officials use both of those codes in order to incorporate in building codes to allow for this type of construction. She said builders in the state have problems finding approval for these projects. She reminded the committee that Nevada is very conducive to solar energy. She said it is not an issue of heat, it is an issue of the number of bright days needed to make passive solar energy panels work in this state. Ms. Giunchigliani stated straw bale construction is seen as a renewable energy source in the United States. She explained it had been around as a building construction material for hundreds of years. She cited it as an insulator for both heat and cold. She stated it was fire retardant. She said the straw that is used is normally straw which is thrown away. Ms. Giunchigliani stressed that Assembly Bill (A.B.) 171 asks the building officials to officially recognize solar energy and straw as viable sources and that people can apply for their permits when they begin construction on these types of projects. She explained the longer implementation time will allow time for the Uniform Building Codes to be drafted. She referred the committee to her handout (Exhibit C). Senator O'Connell stated she wanted to build an adobe type home, but could not because of an earthquake fault line. She told Ms. Giunchigliani this is why adobe homes are prohibited in the Las Vegas area. Assemblyman Mike Schneider told Senator O'Connell it depended upon the area where the home was being built and the fault lines. He said he is aware of one built in the Los Angeles area 5 years ago by a movie star. He said it can be done, it is a matter of working through the zoning process to get the permits. Senator Shaffer explained as long as the builder is in seismic zone 2, the adobe home can be structurally built. Mr. Schneider testified straw bale construction homes began in Nebraska in the late 1880s. He stated the homes are still standing and are in use. He cited a company in Tucson, Arizona which is giving seminars in building straw bale homes. He said he called them, enrolled in one of their seminars, and learned how to put up straw bale houses. He testified these houses are stronger than stick-built homes. He said the insulation factor runs R-55 to R-60. He explained that the bales are stuccoed on both sides, and plastered on the inside. He said there is no mice or rodent problem because the stucco is stuck to the bales. He testified there is no crawl space for rodents to get into and live in the bales. He said all the homes being built in the southwest are in Arizona, New Mexico and California, in areas where the counties do not have any building codes and the people are "free spirits" about building them. He said New Mexico and Texas are now issuing permits and codes for the construction of straw bale homes. He showed the committee a video on straw home construction. After the video, the committee had questions for Mr. Schneider. Senator Shaffer asked if Mr. Schneider had spoken with the building departments about getting permits. He asked if there was a problem getting permits? Mr. Schneider responded that there have been problems, the building department laughs at the people. Senator Shaffer asked if they had plans, designs, and structural calculations with the plan, is the permit still refused. Mr. Schneider responded that it has been refused all over the state. He said there are women in Douglas County who just got a course approval at the community college to teach a class in straw bale housing. He said the university system approved the course, but they cannot get a building permit for it. Senator Shaffer stated he was a building official for 15 years. He stated any time someone had an architecturally approved stamp on it, he said he had the option of accepting it, if it was a unique design. He wondered if the plan checker would have problems trying to figure out how to verify it. Mr. Schneider says everyone thinks of the three little pigs, and it is easier to reject it than to get into a controversy over it. Ms. Giunchigliani explained to use solar passive panels in their home, they had a fight to get the plans approved. They had to keep changing the plans, which cost more money, because there was a lack of understanding about radiant heat versus other forms of heat. She said after they had gone through every form of approval, the building department said, "Wait, you do not have any heat in the house." She said they explained, that was the whole point, it would be heated through a wood stove and tiling in the floor. She said it took months to get them to close on the plans. She said she understands that committees do not want to mandate laws, but these alternate house building forms are being recognized and there should be uniformity across the state as far as developing and determining what codes are standard and recognized within the industry. She said these uniform codes would protect the building officials. Senator Shaffer stated the Indians have an advantage on the reservation. He said they just built a museum out of tires outside of Fallon. He said they may want to try to build one on a reservation to prove that it can be done. Senator Titus said she supports anything that uses renewables, and saves energy. She stated the head of the building and safety division in Henderson called her and he is concerned about this law. He said the building department is allowed to approve these houses on a one-by-one basis. He said the technology is so new that he would like to look at each plan individually. Mr. Schneider said it was the building department's job to look at the plans for each house individually. He said the house plans have to meet all the UBC requirements. He said they are not asking for anything that will not meet all of the codes. Senator Titus asked if Mr. Schneider would not accept the argument that the building department can already do this under section 105 of the UBC. Mr. Schneider said the building department can do it, but they will not do it. He told the committee he had the head of the Carson City building department ask for money to educate his staff on how to approve plans for these renewable resources. He said other types of technology, which renew resources, are coming on-line. He said if a builder comes in with a plan to build 8,000 identical tract homes, the building department approves those plans right away. He said if the plan is a little unique, the building department does not want to be bothered. Senator O'Connell testified that Santa Fe will not allow any construction other than straw bale homes. She said whatever the plans are, they must be straw bale homes. She also noted that it is difficult to get approval to build there. Mr. Schneider reminded the committee that straw bale homes can withstand snow and heat. He said Austin, Texas has approved some of these homes. He said he can bring in zoning and plans from other cities. He said there is material and data for the different building departments. Senator O'Connell stated her hometown is Albuquerque, New Mexico and these are the kinds of homes built there. She said Senator Neal was stationed at Kirkland Air Force Base and he is familiar with these kinds of homes. She explained Senator Washington was also born in Albuquerque and he is familiar with this construction. Ms. Giunchigliani said if the committee looks at section 105, the language is permissive. She said the Carson City head of the building department said he thought the bill was introduced because someone in Reno was turned down. She said it is time the State of Nevada moved in this direction. She said the language includes using the standards from the UBC and the model energy standards to develop their codes. She said the building departments are free to use all pieces necessary to develop their standards. She said they are not directing that. Senator Porter asked about expansion, contraction, moisture and allergy problems. Mr. Schneider stated the straw bale walls are put up and the roof is put on. It sets for 3 weeks. During that 3 weeks, the interior wiring and plumbing is installed. He said this 3-week period allows for settling. He said it is settling at about 1/2 inch for a 10-foot wall. He said the chicken wire goes up after that, and then the stucco is blown on with a gun. He said "It is really in there tight." He said water will damage any house if it gets to interior walls. He said where the windows are, there is plastic on the interior around the straw to protect against leaking. Senator Porter asked if there was moisture in the straw. Mr. Schneider explained the bales are dry. He said they are not using green alfalfa bales, they use straw. He said straw can be rye grass, rice, wheat, weeds, etc. He said when it is dry, it is baled. Senator Porter stated there are some combustion problems with hay, he asked if there were problems with straw. Mr. Schneider said this is not a problem because the walls are sealed. He said it is fire retardant. He said the University of Arizona did a 3-hour fire test where they tried to torch a stucco house. He said after 3 hours the bale was barely burnt. He said to build an adobe house will cost a fortune, anywhere, even in Albuquerque. He said the costs are running close to $200 per square foot for adobe. He said it is very expensive. He said a straw built house can be built for less than half of the price of adobe, and it looks the same. He said the difference cannot be determined. He said there is a preventive measure on these houses. He said a 4-inch additional base sets the bales up where any water on the floor cannot get to the bales of hay. Mr. Schneider told the committee the bales come in two- or three-string bales. He said all the baling machines are uniform in size. He said the three-string bale is the best. He noted the houses are bullet proof. He also noted the houses are soundproof. Senator Titus stated this seems like a good project for the University Environmental Studies Program involvement. Mr. Schneider stated he has spoken with the university and is looking forward to working with them. He said he is going to build a custom home for the marketplace out of these materials. He stated he wanted to look at building low-income housing with these materials. He said he thought he could get people on welfare to come and build their own homes that they are going to live in. He said the bales of hay are stacked on rebar. He said on the inside when wires are run, a channel is cut in the straw with a weed-eater or a chain saw and the wires run through it. He said it is very easy material to build with. He said people can build the houses themselves. He stated his goal is to get it into low-income housing. Senator Porter asked if there was a problem with cows coming up and eating the house. Mr. Schneider explained there was about a 10 percent nutritional value from straw, so it is not fed to cattle. He said the cattle would come eat alfalfa if it was baled, but not the straw. Assemblyman Doug Bache stated when this bill was heard on the Assembly side, the committee members asked the same questions. He said they were satisfied with the answers. He suggested a special pilot project could be building schools in White Pine County. He said this is not the original bill, there have been amendments to the bill by the Assembly. Senator O'Connell closed the hearing on A.B. 171 and opened the hearing on A.B. 48. ASSEMBLY BILL 48: Provides for establishment of funds for extraordinary repair, maintenance or improvement of certain buildings of local government. (BDR 31-402) Mr. Bache explained this bill came from an interim study also. He said the bill, with amendments, establishes a fund for extraordinary repair, maintenance or improvement of certain buildings of local government. He said the bill was amended from all local governments, but due to testimony, it was amended to be mandatory in counties with a population of 100,000 or more, and permissive in counties with a population of less than 100,000. He testified the counties were concerned that building funds would be tied up in some of the smaller rural counties. He said some protections were amended into the bill. He explained how any revenue left in the fund from selling a project would go back into the fund and reduce the district funding debt. Paul Mouritsen, Research Division, Legislative Counsel Bureau, provided a section by section analysis of the bill to the committee. He defined extraordinary expense. He stated sections 3, 4, and 5 deal with funds from bond proceeds. Marvin Leavitt, Legislative Coordinator, Clark County, stated local governments have had a concern for a number of years that during difficult fiscal times, there may be strains on budgets. He said one of the things local governments do not do is maintain the infrastructure with long-term maintenance, the kind outlined in this bill. He said this bill is a start at a formalized program where the revenue cannot be used for any other reason and provides the mechanism for using bond proceeds and extra money. He said as the state continues to grow and the facilities continue to age, maintenance will be a future problem. Bob Hadfield, Executive Director, Nevada Association of Counties, stated substantial growth is taking place, and preservation of older facilities is important. He said prior to this bill, there was no mechanism which adequately provided for local governments to set aside funds for this specific purpose. He said this bill provides the mechanism to set aside funds and develop those resources and plan for the orderly maintenance of those facilities and the repair of mechanical systems which do not go out very often, but when they do, they can be very expensive. He said these projects can have a huge impact on a general fund of a government entity that has not prepared properly for that type of extraordinary maintenance. He said this measure provides for that opportunity and it has adequate safeguards and plans for the money. He noted the amount of money listed for the larger counties to get it started when they begin to build buildings. He emphasized this is good public policy. Madelyn Shipman, Assistant District Attorney, Washoe County, testified Washoe County supports this bill. Senator Raggio asked about the mandatory funds for Washoe and Clark counties in section 3. He asked if the local government built a capital project on a "pay-as-you-go" basis, unbonded, what would happen? Mr. Mouritsen responded that this bill does not address this scenario. Senator Raggio stated this does occur, so how would the bill address unbonded projects? He said if they built it without bonds, are they exempt from contributing to the fund. Mr. Mouritsen stated the subcommittee never addressed the issue if money should be set aside. Senator Raggio suggested if the language is mandatory, it should apply to every project, even though the project is not bonded. He said the language needs to be more specific. He asked if money came from a tax windfall and was used for capital improvement, how would revenue flow into the discretionary fund in section 5? Mr. Leavitt said revenue in section 5 could conceivably come from any source and is not restricted in its use. He said it may come from any fund which is not restricted and has an available surplus. Senator Raggio asked if there was a cap on the amount of discretionary funds? He asked if an arbitrator who was negotiating with employees would look at those funds and say they could not be excluded from determining if the management could pay. He said any revenue could be put into this capital fund. Mr. Leavitt responded that a plan has to be established and has to provide for the long-term maintenance of these facilities. Mr. Leavitt explained the bill to the committee. He said the plan will provide direction for how the revenue will be spent. He said they had looked at putting a cap on the revenue, but he said an entity may not be able to put any money in for 5 years. Then, he stated, a windfall of taxes from growth might be difficult to put into the fund if there is a cap. Senator Raggio stated if the plan includes all of the maintenance over a period of time, this could be a large amount of money. He reiterated this money needs to be exempt from negotiations. He asked if this is the purpose of the language in sections 3, 4, and 5? Mr. Leavitt stated this is one of the basic intents, to protect it from any other use. He said it is not looked upon as an annual maintenance budget. He said this is for extraordinary items, like a repaving or resurfacing of a street. Senator Raggio stated he had seen projections for Washoe County to the year 2015, and it was in excess of $200 million. He said Washoe County has been unable to do this because money keeps getting diverted. Mr. Leavitt said at the onset it would be impossible for any county to have the funds to adequately provide for long-term maintenance. He cited examples of extraordinary expenditures. He said this fund will enable counties to not have to take large amounts of funds out of their annual operating budgets. Discussion ensued to make sure that the funds could not be diverted to anything other than extraordinary repair, maintenance or improvement. Madelyn Shipman, Assistant District Attorney, Washoe County, testified this was the intent of the language in the bill. She told the committee that Washoe County needs to build another fire station but does not have the money to do it all at once. She said they wanted to set aside $100,000 per year until they had enough funds. She said they were concerned that there was not adequate protection to protect the funds from collective bargaining. Senator Raggio stated the language of the bill must include that 1/2 of 1 percent of the total cost of any project, bonded or unbonded, must be set aside to this fund for future purposes. Ms. Shipman explained they have never had an arbitrator determine that those funds could be used for collective bargaining. Mr. Hadfield testified there was discussion that once this fund was created, it could in fact be taken away during the collective bargaining process. He said they were concerned and wanted the audit and audit report included in the funding so everyone understood how the money was being used. He said this is not an attempt to pigeonhole money, but was a commitment to take care of the facilities that counties have. He said that is the sole purpose of this bill. Senator O'Connell asked Mr. Mouritsen if the language to protect the funds could be tightened with a statement of intent. Mr. Bache responded subsections 3, 4 and 5 of section 5 address the issue that the funds would be protected. He said the establishment of the plan would be a protection for the money. He said he was comfortable that the bill would not allow excessive money to be set aside with no revenue left over for collective bargaining. Senator O'Connell asked if a statement of intent in the bill would be agreeable with the Assembly? Mr. Bache stated he felt it would be. Senator O'Connell closed the hearing on A.B. 48 and opened the hearing on A.B. 50. ASSEMBLY BILL 50: Authorizes medium-term financing for municipalities in lieu of short-term financing. (BDR 30-404) Michael Pitlock, Executive Director, Department of Taxation, testified in favor of A.B. 50. He said when dealing with the White Pine County School District, one of the driving factors behind their financial difficulty was a $950,000 lease that was entered into. He said based upon the current statutes, there is no requirement for them to come to the Department of Taxation for approval of the lease, although it was similar to short- term financing. He said it appears that A.B. 50 will allow the Department of Taxation to close that loophole and provide some reporting requirements and approval authority for similar transactions that may happen in the future. Mr. Pitlock stated the statutes treat leases in different ways, depending on whether they have non-funding clauses or not. He said an amendment will be drafted to provide intent language that would single out transactions like that $950,000 lease and require local governmental entities to come to the Department of Taxation and provide the same kinds of information that they are required to provide for short-term financing under the current statute. Senator O'Connell asked if this bill will address the issue. Mr. Pitlock responded this bill would have made them more aware of the $950,000 lease under the short-term obligations statute. He said there should be limits on the dollar amounts of the leases. He said there should not be a burdensome system where a local government entity has to come to the Department of Taxation for a lease on a copier. He said in a transaction of almost $1 million for a school district the size of White Pine County, there must be a mechanism to inform the Department of Taxation of these kind of transactions. Senator O'Connell stated the committee will hold the bill to allow time to draft the amendment. Mr. Bache explained the bill. He said the bill deletes some obsolete language and from section 7 to the end of the bill, it changes short-term financing to medium-term financing. Senator O'Connell asked for an explanation of the change from short term to medium term. She asked if the bill eliminates short-term financing altogether. Mr. Leavitt explained the financial markets consider short-term financing to be under 1 year. He said what local government entities have always called short-term financing, 5 or 10 years, the financial markets call medium-term financing. He said short-term financing is thought of in the financial market as financing for inventory or short- term operating capital. He said the changing of the term refocuses why the bill was changed from chapter 354 of the NRS to chapter 350. Mr. Mouritsen added some history of the bill. He explained short-term financing was approved in 1953 in Nevada. He said it was only used in circumstances of dire financial emergency. He said it was strictly short-term, with repayment under 1 year. He said it was a budget balancing process. He said over the years the term of the financing was extended and the purposes for which it can be used were also expanded. He stated now it is used as a medium-term vehicle to finance capitol projects. He said there is a 10-year limit, providing the assets have a useful life of that length of time, otherwise there is a 5-year limit. Mr. Mouritsen explained the Assembly changes to the bill. He testified section 2 is cross-referenced to Nevada Revised Statutes 254.618, and subsection 3 was repealed. He said it applies to school districts with less than 100 pupils, which is only Esmeralda County. He said it allowed Esmeralda County, when it goes to acquire medium-term financing, to post that in three conspicuous places in the county, rather than publishing it in the paper. He said the Assembly did not feel this was adequate notice and wanted Esmeralda County to conform with the rest of the state. Senator O'Connell asked how much money this will increase their budget. Mr. Mouritsen stated he did not know how much this would change the budget. Senator O'Connell asked if the Assembly felt the people would see the ad more than the notices? Mr. Bache responded when this section was deleted, there was concern that the ad would be a standard process for all counties. He said they did not feel the expense was so great that Esmeralda County would have problems. Senator O'Connell stated there is a bill in the Assembly which eliminates some of the county's requirements to publish items. Mr. Bache stated the bill is still in committee because it requires work. Mr. Leavitt stated the Nevada Administrative Code, when dealing with short-term financing, has specific language relating to resolutions and publishing requirements. He said the form, the dates, and the language are clearly outlined in the administrative code. He stated there is no problem with any entity in the state doing this and not conveying the information which needs to be conveyed. Discussion ensued regarding the parts of the bill which the Assembly deleted before it passed out of the house to the Senate. Ms. Henderson testified she was in agreement with the bill. She said Washoe County supports the bill. Senator O'Connell closed the hearing on A.B. 50 and opened the hearing on A.B. 49 ASSEMBLY BILL 49: Revises provisions relating to alteration of boundaries of certain districts for support of public parks. ASSEMBLY CONCURRENT RESOLUTION 38 OF THE SIXTY-SEVENTH SESSION: Directs Legislative Commission to conduct interim study of laws relating to financing of infrastructure which accompany residential, commercial and industrial development in Nevada. SENATE BILL 307 OF THE SIXTY-SEVENTH SESSION: Provides for creation and financing of park districts by counties. Mr. Bache testified A.B. 49 came from the Assembly Concurrent Resolution 38 of the Sixty-seventh Session interim study which dealt with changing boundaries of park districts. He testified the county commissioners can alter the boundaries by ordinance. He explained this bill changes that procedure to provide another alternative. The alternative is a unanimous petition of property owners in the affected area could be used to include them in the district, or resolution by the county commission and submitted to the ballot of the next general election. Senator O'Connell reminded the committee this bill came from the 1993 session which had the emergency park tax. She told the committee this is an amendment. She stated the way the bill was written last session, the county commissioners could change the park boundaries and tax residents who had not voted on the issue. She stated the language to correct this situation came from the interim committee. Mr. Mouritsen provided some history of the bill. He said this bill intends to require that they go to the people again with a vote. He said the language in subsection 3a to allow for a unanimous petition would help a developer who wanted to include a park area in a development project. Hearing no further testimony, Senator O'Connell closed the hearing on A.B. 49 and adjourned the hearing at 3:40 p.m. RESPECTFULLY SUBMITTED: Teri J. Spraggins, Committee Secretary APPROVED BY: Senator Ann O'Connell, Chairman DATE: Senate Committee on Government Affairs May 3, 1995 Page