MINUTES OF THE SENATE COMMITTEE ON GOVERNMENT AFFAIRS Sixty-eighth Session June 16, 1995 The Senate Committee on Government Affairs was called to order by Chairman Ann O'Connell, at 3:50 p.m., on Friday, June 16, 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 Barbara Buckley, Assembly District 8 Assemblyman Michael Schneider, Assembly District 42 STAFF MEMBERS PRESENT: Dana Bennett, Principal Research Analyst Teri J. Spraggins, Committee Secretary OTHERS PRESENT: Chuck Gardner, Attorney, Aztec Inn, Las Vegas Harry Pappas, Business Owner, Las Vegas John Linetti, Concerned Citizen, Las Vegas Bob Broadbent, Director Aviation, McCarran International Airport, Las Vegas Randall Walker, Deputy Director, McCarran International Airport, Las Vegas John Lafront, Concerned Citizen, Las Vegas Darren Mack, Property and Business Owner, Reno Doug Bennington, Attorney, Maddux-Saint Aubin, Reno Paul Cox, Concerned Citizen, Reno Bruce Morris, Owner, L & M Inc., Las Vegas Gary Hayes, Attorney, Las Vegas Billie Perone, Concerned Citizen, Las Vegas Lucille Lusk, Lobbyist, Concerned Citizens of Nevada Robert Shell, Senior Right-of-Way Agent, Department of Public Works, Clark County Joan Mack, Concerned Citizen, Reno Chris Jensen, Concerned Citizen, Las Vegas Don Schlesinger, Attorney, representing Mr. Morris and Mr. Linetti, Las Vegas Anita LaRuy, Lobbyist, City of North Las Vegas Kerry B. Lyman, Redevelopment Specialist, City of North Las Vegas Don Snyder, President and CEO, Fremont Street Experience, Las Vegas Sandra Landeck, Real Property Agent, Sparks Redevelopment Agency, City of Sparks Barbara McKenzie, Legislative Coordinator, City of Reno Madelyn Shipman, Deputy District Attorney, Washoe County Kurt Fritsch, Assistant City Manager, Henderson Tom R. Skancke, Lobbyist, Las Vegas Convention/Visitors Authority, Las Vegas John Baretta, Concerned Citizen, Reno Daryl Drake, Concerned Citizen, Reno Bill Austin, Concerned Citizen, Reno Senator O'Connell opened the committee hearing on Assembly Bill 532. ASSEMBLY BILL 532: Requires governmental bodies to provide monetary payments for dwellings and business establishments destroyed by governmental acquisition of real property. Assemblywoman Barbara Buckley, Assembly District 8, testified that this bill addressed acquisition of private property by government. She noted for some reason, government decides to acquire private property by eminent domain. She stressed this bill does not affect government's right to use the power of eminent domain, it will assist that person with obtaining a replacement home or business. She explained that constituents brought situations during the Fremont Street Experience redevelopment project to her attention. Ms. Buckley stated there is nothing in state or federal statutes to protect the displaced person. She cited examples of business expenses which businesses incur when they must move. She stressed, "We need to use the power of eminent domain to ensure that when progress occurs, it needs to be done fairly. Being done fairly means assistance with moving expenses and obtaining a replacement dwelling or business." Ms. Buckley told the committee whenever federal funds are used in a project, the Federal Uniform Relocation Act (FURA) applies. She said the state also followed the FURA. She stated there are higher benefits in the FURA than are listed in the bill, however, the FURA does not address the business expenses. She stated the bill applies only to local government use of eminent domain. She provided a section-by-section analysis of the bill (Exhibit C). Senator O'Connell asked why they did not include businesses in the section regarding replacement value? Ms. Buckley responded that provision was supposed to be in there, but during the writing of the bill it did not make the final version. She stated an amendment is forthcoming to allow the same replacement provisions for businesses as well. She continued her section- by-section analysis. Senator Porter asked Ms. Buckley to explain the fiscal note. He asked what the impact was, and how much would they impact the state? Ms. Buckley stated that to the best of her knowledge there is no fiscal impact on the state. She said the fiscal note was placed on the bill at the beginning of the hearings when there was some concern that state agencies would be subject to the act. She told the committee that state agencies follow the FURA and therefore are expressly exempted from this bill. She reiterated there is no state fiscal impact. She noted the impact is on local governments because if they use eminent domain, they must pay the moving expenses, and replacement dwelling or business expenses. She stressed the impact will vary depending upon the size of the project and the number of people to be displaced. She cited that owner-occupied businesses or dwellings, where a willing purchase agreement has been reached, are not included in this bill. Senator O'Connell asked if the fiscal impact would come from the redevelopment plan funds or if it would come from the general operation budget of the local government. Ms. Buckley responded they reference this on page 6, section 16, paragraph 2 of the bill. She said it stated that a local government entity may obtain reimbursement from a private entity to cover all or any part of the expense incurred by the local government. She cited the Vegas World acquisition of the business and tenants from their home. Vegas World paid the moving expenses and so the City of Las Vegas Redevelopment Agency was not out any "out-of- pocket" expenses of its funds. Senator Raggio asked how the bill would handle a business lease? He said most leases have a clause that in the case of eminent domain the business who is leasing the property would not participate in the acquisition expenses. Ms. Buckley responded that under this bill the small business owner would be eligible for moving expenses, and assistance in obtaining a replacement business site. She said they would not be eligible for an allocation of the fair market or appraised value of the property that the owner receives. It would not change that. She said the business owner would be eligible for assistance to their new site. She stressed that if a government entity purchases a property, but has no immediate plans for the property, they do not displace the business owners. They would allow the business owners to remain and conduct their business until the lease runs out. She stated this is not "displacement" and the business owner would not be eligible for any benefits. She stated they have clarified this in the amendments. Senator Raggio noted there is no cap on the amount of funds. He asked how practical it is to determine what would be owed by an entity to the individual. He said he could foresee difficulty in determining comparability of the new premises, dwellings or buildings. He asked how they might resolve this. Ms. Buckley stated that having the property appraised and negotiations would determine comparability. She emphasized she does not know any way to improve on that situation. She said the bills would be actual reimbursable costs as proven by receipts. She stressed the bill is to prevent small business owners or home owners from being "out-of-pocket" because of a displacement at which they were not at fault. She stated the two-tier scenario where the displaced person accepts a predetermined flat fee, or provides receipts and is reimbursed works well. She cited examples. Senator O'Donnell asked Ms. Buckley to provide an example of an amount of money that would exceed the $7,500 for moving expenses? Ms. Buckley responded that this provision was added because many individuals familiar with relocation projects told her that they pay more money through the federal statutes than she had listed in the bill. They told her that these amounts would be hurting small business and home owners through the amounts in the bills. She said she does not want anyone hurt through this bill. She wants to ensure that there are standards so that people who are displaced receive reimbursement. She said there could be extraordinary circumstances, length of time in the business, good will built up, location accessability, and other factors. Senator Townsend asked if local government has the right to do these provisions now, and they have not done it, have there been lawsuits due to the lack of action? He asked for cases and results. Ms. Buckley stated there is one entity who feels they cannot do it now, and that is Clark County, based upon an opinion from their district attorney's office. She said the rest of the entities feel that they can do it, and many have adopted guidelines for displacement cost in their redevelopment agencies and plans. She cited examples of renters who have no recourse. She said there have been lawsuits regarding the amounts of business appraisals. She clarified that some renters have been left with no money and no basis upon which to file. She stressed this bill will ensure that they have something. Senator Porter asked Ms. Buckley about the 60-day notice of proposed acquisition. He asked what the intent is for the 60 days and when should it begin. Ms. Buckley stated when the government entity decided that it would like now to have the property, it would give a 60-day notice. On the date that it gave the notice, the 60 days would begin to lapse. The notice would tell the person who to contact for an explanation of the benefits. Senator Porter suggested that they should clarify the guidelines for the notice. Ms. Buckley responded that she is trying to establish minimal standards to make sure that the displaced person or business receives at least 60 days. She opined that public notice, followed by a public hearing and then the 60-day notice would be even better. She stressed that she wants to make sure that the displaced person got at least 60 days. Senator Porter asked about the actual costs based on receipts submitted by the person who has been displaced? He said he was sure people would not abuse the ability to turn in a receipt, but asked if they should define this section better to protect both the individual and the agency. Ms. Buckley responded this would be fine and could be addressed in the amendments. She reminded the committee the other advantage of the two-tier system of actual costs and a one-time payment is that there are individuals who cannot front the costs. She said being able to collect the flat sum allows them to have the money to move. Senator Porter stated the definition of "business" should be "licensed business." Ms. Buckley agreed that they should include it in the amendments. Assemblyman Michael Schneider, Assembly District 42, testified next on the bill. He described the events of last session where his business was displaced while session was ongoing. He said that moving a business in 30 days is impossible. He said when moving a business there are "horrendous expenses" and cited telephones, computers, yellow-page ads, stationery, individual offices, moving furniture, etc. He stated: We are talking tens of thousands of dollars just to move the package. The most important thing for a business is the phone number. If you do not have that phone number out there, and that phone number changes, you are out of business. To relocate a business in that short of a time is an unfair burden placed on the business community. I am very pro economic development. Like on the Desert Inn flyover, where you are going to have a project that is going to benefit an entire community, I think the community has to participate in helping those people who are displaced. A $100 million project, and you sell the bonds on that project, I do not think $2 million to $5 million to handle displacement of businesses is a real burden. I think it can be put into the bond. I think all of the business people here would appreciate that. I know when you get in Las Vegas, it is going to come to a point where we have to put an expressway in diagonally across the town. It happened in Phoenix, where Phoenix grew so big, and they just took the map and drew a line diagonal across the town, and put an expressway right through the town. They took out housing developments, shopping centers, office complexes and eventually that is going to happen in Las Vegas. We can see it with the expansion of roads already. I think we have to get ready and prepare for that. Otherwise, we are going to displace a lot of businesses and home owners and create eventual lawsuits for ourselves. Senator Porter suggested there should be caps on moving expenses in the bill. Mr. Schneider stated there will always be an angle or a hole for people who are trying to cheat. He said they will endeavor to make the bill as foolproof as possible. He said usually people who purchase office buildings purchase them as investments. He said they look for the stability of the tenants in the building, and they want those tenants to stay. He said 60 days is also short notice to relocate a business. He suggested 90 to 120 days for business people. Senator Porter asked Mr. Schneider about renters and home owners. Mr. Schneider explained most private sales of apartments are to investors who are seeking stability. He explained it is possible to close the purchase of a house in 60 days. Chuck Gardner, Attorney, Aztec Inn, Las Vegas, asked the committee to look at the 60-day written notice of acquisition. Exhibit D was entered into the record. He said they listed acquisition on page 1 of the bill. He said usually a right-of- way agent goes out and purchases the property. He said he thinks acquisition is akin to the final order of condemnation. He opined that the 60-day notice in the bill should be 60-day notice of the proposed displacement. He suggested that displacement, not acquisition be used in the bill. He stated he believes there is proper purpose for redevelopment. He said during the Aztec Inn case, private enterprise was using a redevelopment authority of the city to carry out its objectives. He discussed public use. Harry Pappas, Business Owner, Las Vegas, addressed eminent domain. He gave the committee a history of how eminent domain has affected his family's business. His family has owned property on the Las Vegas Strip, near Fremont Street for 50 years. The value of the property and the business have increased over the years. He said the property is valuable as a casino/hotel property because of its location. He declared that the City of Las Vegas has "stolen the property." He questioned the legitimate use of eminent domain. Mr. Pappas cited roads, schools, public buildings, libraries and parks as legitimate purposes of eminent domain. He said transferring one person's private property to another private person or entity for profit use is an illegitimate use of eminent domain. He said the City of Las Vegas took his family's property to increase the profits of the downtown Las Vegas casinos and the bank account of the City of Las Vegas. He cited eminent domain as a "sophisticated land-grabbing tool." He said they took his property because the downtown casino profits were sagging, the City of Las Vegas determined that help was needed. He said: In other words, the Pappas property and business were fed to some of the wealthiest corporations in Nevada, to some of the wealthiest men in Nevada, and to some of the wealthiest families in Nevada. Take the little person's business and property and give it to the wealthiest people and largest corporations in the State of Nevada. Is this justice? Is this fairness? Mr. Pappas outlined the criteria for an area to be considered in economic decline or blight. He insisted none of the criteria was met. He said he was told that the city needed parking space. He asked if it was parking for city hall, or if it was for private profit use, such as additional parking for casinos. He told the committee the city has 6 acres of raw property which they can use for parking structures which are less than 200 feet away from his family's property. He said it is hard to understand how the city could take his family's choice property and location and turn it into a parking garage. "One of the most valuable, potential casino sites in Las Vegas. Yet they have raw land, 200 feet away, 6 acres of it, that is not going to be zoned which would have been ideal for a parking garage." Mr. Pappas told the committee his property has six retail stores. He asserted that the property is as valuable as property on Rodeo Drive in California. He said since the property is zoned for gaming, it is potentially more valuable than that. He said when his mother asked to be compensated for the business, she were told by the city officials that "they did not have to give her anything . . . You have had the property long enough, give it up." He asked why they had to give up their property? John Linetti, Concerned Citizen, Las Vegas, testified next. He provided a history of his business and the effect of eminent domain on the business. He asked the committee to pass the bill and treat people fairly. Bob Broadbent, Director Aviation, McCarran International Airport, Las Vegas, explained McCarran's position during land acquisition. He said they have met most of the requirements listed in the bill and opined that they have done more. He stressed they do not object to properly paying displaced people. He said they have purchased all kinds of properties and cited some of the difficulties in moving businesses. He provided possible amendments to the committee (Exhibit E). He said they follow FURA guidelines when they are using federal monies or if they think they will get federal monies for part of a project. He said they have received more than $30 to $40 million of federal monies for land acquisition and relocation of displaced people. He said $2500 to relocate a person in a studio apartment is excessive. He testified about how he and his people handle relocation of displaced persons or businesses. Senator Porter asked Mr. Broadbent if he could explain the differences between the FURA and the proposed bill. Mr. Broadbent explained his amendments come from the FURA. He said displaced people and business need to receive fair compensation, but there has to be limits on the compensation. Senator Porter asked if recent tort cases have affected the federal standards? Mr. Broadbent responded negatively. He said they get two appraisers to appraise land, homes and businesses. He said if the owner gets an appraisal that is higher, they have a right to go to court. The value should be based on fair market value. Randall Walker, Deputy Director, McCarran International Airport, Las Vegas, said part of the bill is broader than the FURA, and some things are more specific. He said the committee would have to look at it on a point-by-point basis. John Lafront, Concerned Citizen, Las Vegas, stated support of A.B. 532 and requested to go on the record as opposed to the use of eminent domain in the transfer of property from one private owner to another. He said the bill provided a framework, and hoped it will provide future protections for displaced persons. Darren Mack, Property and Business Owner, Reno, testified that his business on Virginia Street is in a proposed redevelopment district in Reno. He said his parents and grandparents acquired the property in 1958 and built a successful business. He said most of the people in his area have had multi-generational businesses for 80 years. He said they support this bill as the first move in being able to protect their interests. Doug Bennington, Attorney, Maddux-Saint Aubin, Reno, introduced Paul Cox, Concerned Citizen, Reno, to the committee. Mr. Cox said his family owns Old Reno Casino. He provided a history of the business and the eminent domain or condemnation situation that they are facing. He said moving the business would result in a 300 percent increase in rent and a decrease in revenues. He stressed that the 300-room requirement for new casinos inhibits the relocation of his business. Bruce Morris, Owner, L & M Inc., Las Vegas, explained the location of his businesses in Las Vegas. He said renters currently receive no compensation when moving. They are only compensated if the property owner, who has been compensated under eminent domain, wants to share. Gary Hayes, Attorney, Las Vegas, representing Billie Perone, Concerned Citizen, Las Vegas, told the committee that he gets phone calls from soon-to-be-displaced residents. He said they are victims of progress. He said the expansion of the convention center displaced several apartment houses and since there is no state law requiring moving and compensation expenses, these people were forced from their homes and were not compensated. Mrs. Perone told the story of her displacement to the committee. She said that she was forced to relocate to an apartment which costs $100 more a month. She explained that three men from a church came to move her. She said she is 81 years old, had no money, and was not compensated for her loss. Lucille Lusk, Lobbyist, Concerned Citizens of Nevada, stated it is their opinion that the use of eminent domain has become twisted. She said the proper use was for roads, schools, military uses, etc. and was a necessary power. She said eminent domain is now being used to take property from one private owner and give it to a "government-favored" property owner. She stated, "We see this as the worst possible thing that government can do. We supported the necessary limited power of eminent domain. The abuses that are taking place are unconscionable." Ms. Lusk said they are concerned with page 4, lines 1-3, where the home owner must have owned and occupied the dwelling from which he was displaced for not less than 180 days before the government body began negotiations to obtain the property. She cited examples of young families who have purchased a property and then are told 30, 60, or 120 days later that their property is taken through eminent domain. She declared those young families are unable to pay for moving and replacement costs. She asked the committee to address this issue and to pass this bill. Robert Shell, Senior Right-of-Way Agent, Department of Public Works, Clark County, testified he favors A.B. 532 when they initially heard it. He said that support came with reservations. He said he was seeing the FURA imposed on every day departmental activities. He explained he is acquiring more than 400 parcels of land for the current project, and another division is acquiring many hundreds more parcels. He asked to be a part of any effort to amend and to pass the bill. He told the committee he initiated the public relocation assistance program for McCarran Airport. Joan Mack, Concerned Citizen, Reno, provided a history of her family business to the committee. She stated that eminent domain is Robin Hood's theory in reverse, taking from the poor and giving to the rich. Chris Jensen, Concerned Citizen, Las Vegas, stated support of the bill. She said business expenses should be added to the bill. Don Schlesinger, Attorney, representing Mr. Morris and Mr. Linetti, Las Vegas, stated he has been representing clients affected by the Fremont Street Experience. He said they do not question the right of the government to acquire property through eminent domain. Compensation to the displaced person or business must become law. He stressed that Nevada law is silent on this topic. He declared that they must mandate that local government do this, because they will not voluntarily compensate people. He said the amendments are appropriate. Anita LaRuy, Lobbyist, City of North Las Vegas, stated opposition to the bill. She introduced Kerry B. Lyman, Redevelopment Specialist, City of North Las Vegas. He read written testimony (Exhibit F). He stated, "Why should Carson City pass statewide legislation that ignores local realities? Current legislation which allows local agencies to set their own relocation policies is sufficient. At most, I would support statewide legislation that requires local agencies to adopt local relocation policies, but I really do not think that is even necessary." Don Snyder, President and CEO, Fremont Street Experience, Las Vegas, read from a written statement (Exhibit G). He stated, "The positive benefits of redevelopment justify the difficult decisions that must be made." Sandra Landeck, Real Property Agent, Sparks Redevelopment Agency, City of Sparks, testified next. She said in 1993 Sparks adopted a relocation policy and moving benefit package for a project which was just completed. She said they acquired 34 properties, and relocated 105 tenants. She said only eight were owner-occupied properties. She said although they did not have to adopt a policy, they felt that they should. They looked at Las Vegas's relocation policies and fashioned theirs after those. She said in any governmental action, there are always people who are displeased. She stated opposition because of the broad base of the bill. Barbara McKenzie, Legislative Coordinator, City of Reno, stated she provided opposition testimony when they heard the bill in the Assembly. She provided specific examples of how Reno has helped to relocate displaced people and businesses. She said there are no caps in this legislation. She debated the equity of the bill and the use of taxpayer dollars. She noted, "If you are going to consider this bill further . . . " Senator O'Connell stated, "I need to make all of you aware that this bill is definitely going to be considered further. You will all be welcome and have an invitation to take part in it; but we are going to seriously consider this bill." Madelyn Shipman, Deputy District Attorney, Washoe County, stated they have never had to use eminent domain. She said they oppose the bill because there is a lot of growth in the unincorporated areas. She said the bill requires every governmental agency to develop a plan, and this places a serious burden on all the agencies. She said the language in the bill is ambiguous and is a "broad brush." She said the county did not oppose the bill when they heard it in the Assembly because they were unaware of the bill. She provided a letter explaining the differences between the federal law and this bill (Exhibit H). Kurt Fritsch, Assistant City Manager, Henderson, provided information about the possible impact of A.B. 532 (Exhibit I). Tom R. Skancke, Lobbyist, Las Vegas Convention/Visitors Authority, Las Vegas, stated they did not oppose the bill when they heard it in the Assembly. He said their board took the position last Tuesday to oppose the bill. He said this bill increases the cost of conducting business to government entities. He noted this bill will affect the planned expansion projects. The cost to implement those projects will increase, which directly affects the taxpayer. He asked to be included in the future work on the bill. John Baretta, Concerned Citizen, Reno, stated he is a member of the citizen's advisory committee to the Reno development authority. He explained they are working on a redevelopment policy and stated that redevelopment policies should be left with the local entities. Daryl Drake, Concerned Citizen, Reno, testified local jurisdictions have not attempted to establish eminent domain policies, nor relocation polices. He asked the committee to leave the process of determining relocation policies up to the local entities. He said they could best determine market conditions in the community. Bill Austin, Concerned Citizen, Reno, stated each governmental entity has different needs, different citizens, and different costs. He stated he was concerned with the lack of the cap, and with some of the definitions of the bill. He said Reno has a relocation policy and does not need this bill. He suggested that home rule should take care of this problem, which should not be solved at the state level. Senator O'Connell closed the hearing on A.B. 532 and opened the hearing on Senate Bill 446. SENATE BILL 446: Revises provisions for failure to report certain campaign contributions and expenditures. (BDR 24-1100) Senator Titus told the committee that she has a replacement amendment for Amendment No. 678 for this bill. She explained the new amendment tightens the language of the bill. Senator O'Connell explained to the committee that they have already voted on this bill and on Amendment No. 678. She told the committee they need to rescind the motion on the Amendment No. 678, and replace it with the amendment Senator Titus has. SENATOR SHAFFER MOVED TO RESCIND THE MOTION ON AMENDMENT NO. 678 TO SENATE BILL 446. SENATOR TITUS SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS RAGGIO AND TOWNSEND WERE ABSENT FOR THE VOTE.) ***** SENATOR O'DONNELL MOVED TO AMEND S.B. 446 WITH AMENDMENT NO. 905. SENATOR SHAFFER SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS RAGGIO AND TOWNSEND WERE ABSENT FOR THE VOTE.) ***** Hearing no further testimony forthcoming on any of the bills, Senator O'Connell adjourned the committee meeting at 6:51 p.m. RESPECTFULLY SUBMITTED: Teri J. Spraggins, Committee Secretary APPROVED BY: Senator Ann O'Connell, Chairman DATE: Senate Committee on Government Affairs June 16, 1995 Page