MINUTES OF THE SENATE COMMITTEE ON JUDICIARY Sixty-eighth Session June 8, 1995 The Senate Committee on Judiciary was called to order by Chairman Mark A. James, at 8:10 a.m., on Thursday, June 8, 1995, in Room 224 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Senator Mark A. James, Chairman Senator Jon C. Porter, Vice Chairman Senator Maurice Washington Senator Mike McGinness Senator Ernest E. Adler Senator Dina Titus Senator O. C. Lee GUEST LEGISLATORS PRESENT: Assemblyman John C. Carpenter, Assembly District No. 33 STAFF MEMBERS PRESENT: Allison Combs, Senior Research Analyst Judy Jacobs, Committee Secretary OTHERS PRESENT: Holly Gregory, Co-owner, Weststates Property Management Group Debra Ramos, Property Manager, MacGregor Inn Mary Lardino, President, Nevada Apartment Association, Inc. David M. Frazza, Executive Director, Nevada Apartment Association, Inc. L. Niel Dexter, Owner, Ty-De Development Co. Nancy Paolini, Executive Director, Project ReStart Phillip A. Galeoto, Lieutenant, Police Department, City of Reno Jon Sasser, Coordinator of Litigation and Training, Nevada Legal Services, Inc. Harvey Whittemore, Lobbyist, Citibank (NV) NA, Nevada Bankers Association Kenneth T. Scruggs, Lobbyist, Household Financial Group, Ltd. Mary F. Santina-Lau, Lobbyist, Nevada Check and Credit Card Investigations May Shelton, Director, Washoe County Social Services Lucille K. Lusk, Lobbyist, Nevada Concerned Citizens Helen A. Foley, Lobbyist, HELP of Southern Nevada, Displaced Homemakers Jolene B. Rose, Deputy Director, Department of Business and Industry Senator James appointed Senator Lee and himself to a subcommittee to commence the hearing on Assembly Bill (A.B.) 134. ASSEMBLY BILL 134: Revises provisions governing short-term tenancies. Assemblyman John C. Carpenter, Assembly District No. 33, testified A.B. 134 will provide that a person on a week-to-week tenancy may be evicted according to certain procedures within 3 days. He explained the 3-day provision only applies to tenants who have rented property for less than 45 days; those who have paid rent for 45 days or longer are subject to eviction only after a 5-day termination notice. Mr. Carpenter noted the bill contains provisions to protect tenants. If the landlord is unable to serve the tenant in person, he must mail the notice to the tenant and then take the notice to a sheriff or constable to serve. He explained when the tenant signs the rental agreement, part of it will be an explanation of the procedure for eviction, which he asserted is an important part of the process. Mr. Carpenter noted a similar bill was passed by the Legislature, but vetoed by the Governor, during the last legislative session. He stated A.B. 134 is a compromise reached by a subcommittee appointed to resolve the matter. Senator James asked for an explanation of the difference between the 1993 bill and the present measure. Mr. Carpenter recalled the earlier eviction procedure would have applied to tenants who had rented property up to 120 days, rather than 45 days, and service by a constable or sheriff was not included in the earlier bill. He added the notice regarding the eviction process to be included with the rental agreement is a new provision. He offered the opinion the Governor will approve the present measure. Senator James inquired if a member of the Governor's office testified at Assembly hearings on the matter. Mr. Carpenter acknowledged none had, but he indicated members of the Assembly have had other conversations with the Governor on the matter. He conjectured if a measure like A.B. 134 is not approved by the Legislature, many landlords will discontinue weekly tenancy and return to day-to- day tenancy which allows them to evict non-paying tenants immediately. Senator James reviewed the various provisions of A.B. 134. Senator Lee declared he is a landlord, but said he has no leases for periods less than 6 months. Holly Gregory, Co-owner, Weststates Property Management Group, indicated her company manages 2,000 affordable housing units throughout the state. She said her company manages the largest single room occupancy (SRO) complex within the state with 200 units that rent for $92 per week. She distributed a sheet outlining the eviction process (Exhibit C) and costs that must be used each time a non- paying tenant must be evicted. She asserted many people can be considered "professional tenants" who "really know how to work the system." She indicated her company must handle 10 to 20 evictions per week at that property, which is costly. Although she offered support for most of the bill, she pointed out the provision for a sheriff or constable to service notice will add substantially to the costs. Debra Ramos, Property Manager, MacGregor Inn, elaborated upon the description of an eviction given by Ms. Gregory. She said by the time the entire process takes place as many as 45 days may have gone by since the first filing for a tenant who may have only paid for a week of occupancy. Ms. Gregory interjected the tenant may have paid $92 but has retained occupancy for 45 days, with a cost of eviction of $56, plus the utility bill for the entire tenancy period. She expressed gratification that the law is moving towards a 3-day pay or vacate statute. She stated the property she manages limits tenancy to two persons per unit, because if there are more than two people in a small unit many fights occur. Senator Lee asked how much money the landlord will actually have lost if the eviction procedure takes a full 45 days. Ms. Ramos responded many of the evictions with which she has been involved amount to $600 to $700 per unit when rent, utilities and cleaning are considered, but not including costs for damages. She estimated the cost of many evictions at $1,000 by the time damages are included. Mary Lardino, President, Nevada Apartment Association, Inc., offered support for A.B. 134 as written before it was amended in the Assembly. She pointed out the bill will not affect the vast majority of renters, but only those who have abused the legal system in order to gain additional time in a rental unit without paying rent. She concurred those individuals can be considered "professional renters." Testimony continued to be heard by the full Senate Committee on Judiciary with the arrival of Senators Washington and McGinness. Ms. Lardino stated responsible renters who abide by the leases they sign will not be affected by the bill. She declared opponents of A.B. 134 assert passage may increase the number of homeless, with which she voiced disagreement. She declared the Nevada Apartment Association and its members advocate assistance to the homeless, as set forth in her written statement (Exhibit D). She reported members are active in a summer-long food drive to assist the homeless, and in 4 years over 100,000 food items have been collected to assist the food bank of the Las Vegas Salvation Army. Ms. Lardino added the association organizes two events to support battered, abused and neglected children at Child Haven, and the association works closely with law-enforcement agencies to insure safe, crime-free neighborhoods for residents. She said a disaster emergency relief program for apartment residents who have been displaced due to fire has been developed by the association in conjunction with the American Red Cross. She noted the national American Red Cross is considering use of the Nevada program as a pilot for a nationwide emergency relief program, as outlined on Exhibit E. According to Ms. Lardino, A.B. 134 began as a 2-day eviction bill, but was amended to a 3-day pay or quit bill by the subcommittee. She said the industry is satisfied with the 3-day period, but it objects strongly to the requirement that notices must be served by the sheriff or constable. Ms. Lardino stated an average of 25 notices each week to be served through the constable's office will cost a Las Vegas property owner from $375 to $625 each week, or $1,500 to $2,500 per month, depending upon the location of the property due to mileage charges. She pointed out that estimate does not include the additional fees incurred by the owner if there is a court challenge. If a resident files a frivolous answer to the eviction, she said, the landlord must pay a $34 court filing fee, and if the eviction is granted there is an additional $46 fee for the constable to perform the actual lockout. Added to lost rent and damages, such costs can be staggering to the owner, she asserted. Senator James pointed out the services of the constable are not always necessary, that the bill provides for other means of service. Ms. Lardino responded that is provided personal service is successful. She said if the tenant fails to answer the knock on the door, she has no other recourse but to use the constable and incur extra fees. Senator James surmised if less personal service is amended into the bill, any relaxation of the provision may result in defeat of the entire bill. Ms. Lardino declared if the bill is going to mandate constable service, the association will not favor passage of the bill, because the process will cost too much. She acknowledged the association realizes the bill may not pass as requested. Senator James noted opponents may not approve passage of the bill, either. Ms. Lardino voiced objection to another amendment recommended by the subcommittee regarding the issue of how many days pass before a tenant is considered to have permanent tenancy. She said the original request made by the association was for 90 days, but the bill has been amended down to 45 days. She requested an amendment to 60 days. She said the 1993 bill that was vetoed by the Governor had a 120-day provision. Ms. Lardino declared: Basically, our position is that we're willing to accept the 2-day [notice] changed to a 3-day. We are willing to compromise on the issue of the 90-day permanent tenancy time frame, but we're requesting that that be 60 days versus the 45 days that the Assembly passed. And as far as the issue of the constable's office serving, all weekly rental facilities are one-stop drop stations that are authorized by the ... federal government, and ... to require the constable to serve these notices, we feel, is saying the federal government, in a sense, has made a bad judgement call in allowing these ... weekly rental communities to have this privilege. Ms. Lardino pointed out a member of the Assembly made a verbal commitment to assist with the introduction of an "occupancy standards" bill. She stated for various reasons that commitment was not completed. She requested an amendment (Exhibit F) be made to A.B. 134 to include an occupancy standard of two occupants per bedroom, excluding children under the age of 6 months. She noted that will allow anyone starting a family to have a reasonable amount of time to relocate, and it will protect owners and managers from potential lawsuits that could be filed for not enforcing the current Housing and Urban Development (HUD) recommendation (Exhibit G) of two occupants per bedroom. Rather than contributing to the homeless situation, Ms. Lardino said, the association wants to assist in providing adequate housing for such individuals. She noted owners and managers are generally willing to work with tenants who need extra time or assistance to pay rent. It is the resident who has no intention of paying or of obtaining assistance from the various agencies that provide help, she said, who the association is attempting to stop. She cautioned there is a serious risk that developers and owners will elect not to provide affordable housing if A.B. 134 fails to pass as proposed. Senator Washington asked Ms. Lardino to again explain the HUD recommendations and the association proposal regarding occupancy, which she did. David M. Frazza, Executive Director, Nevada Apartment Association, Inc., explained that it is necessary to enforce the HUD recommendations to provide protection to the owner. However, he said, the landlord is torn between fair housing regulations or being in violation when a child enters the picture. He declared the association wants a law which will provide clarification or definition and will not place the landlord into an uncertain area if three persons are allowed to occupy a single bedroom, or five in a two-bedroom unit. He noted the proposed amendment in Exhibit F is similar to law just passed in Oklahoma. In response to another question by Senator Washington, Mr. Frazza said a short- term lease may include weekly rentals, 6-months tenancy, or even tenancy up to 1 year. L. Niel Dexter, Owner, Ty-De Development Co., declared he has owned weekly rental units for 5 or 6 years, and he lives with the dilemma previously expressed regarding the number of occupants per room on a daily basis. He stated there is a great need for temporary housing to accommodate the stream of people moving into Nevada. He pointed out temporary housing takes the burden off the hotel industry and leaves those rooms available to tourists. Mr. Dexter asserted many of those moving in, who come from states which have 3-month eviction laws, are educating local people that they can get by without paying rent while awaiting eviction, especially if it is contested. He noted many are able to get extensions or rehearings which then extends the time they retain occupancy without payment of rent. He said there are approximately 11,000 such units in southern Nevada that are zoned for residential occupancy and cannot be converted to daily tenancy. Mr. Dexter pointed out all the bills for which the landlord is responsible go on while the tenant pays nothing. He asserted not only does misuse of the tenancy law result in a burden on landlords, it also places a burden upon the judicial system. He stated the solution for the development industry is to build daily housing so that people can be locked out if they fail to pay rent, but the landlords of existing units do not have the luxury of being able to convert to commercial motel property. He pointed out these landlords are not in the business of evicting people, they are in the business of providing affordable housing to those who cannot pay a month's rent or deposits and can only pay for a week at a time in accordance with when they receive their paychecks. Mr. Dexter said any provisions of the bill, including the 45-day notice, are preferable to the existing statutes except for personal service by a constable. He noted landlords are entrusted to deliver mail to tenants, so they should be entrusted with notice by certified mail. He pointed out the tenant can refuse to sign the notice, even if the landlord comes face-to-face with him, and according to A.B. 134 the landlord will then have to employ the services of the constable. Senator James stated the landlord is only obliged to deliver the notice to the constable if the landlord is attempting to provide proof to the court to issue an order under Nevada Revised Statutes (NRS) 40.253, subsection 6. He noted subsection 6 only applies if the tenant submits an objecting affidavit. Mr. Dexter responded: But they always do. That's been our dilemma. In the last 5 and 6 years ... the way that ... professional renters have popped up is tough. From a business aspect, everybody knows to put on their answer `Will pay at such and such a time.' The judges even accept, `No, I can't pay my rent, but I would like to talk to the judge about it.' Then they buy another 4 or 5 days, or even a week ... and quite simply don't show up for court. Mr. Dexter declared there have been many times when tenants have retained occupancy rent free for 2 or 3 weeks due to delays in judicial proceedings and then failed to show up for court. He asserted the landlords are being treated unfairly in such situations. Mr. Frazza interjected the bill came about to ease a financial burden on landlords of weekly rental units, and now the bill, as amended, will drive the costs higher and in practice it will take longer to remove non-paying tenants than under current statutes. He stated the provisions of the bill will drive up costs by another $300 to $600, which he attributes to the provision requiring mandatory constable service. Senator James asked if it would be better to leave the statutes alone, because A.B. 134 probably stands no chance of passage if it is amended again as proposed. Mr. Frazza responded without the mandatory service it is a good bill. Mr. Dexter indicated his approval of the original bill and a willingness to compromise by extending the notice time from 2 to 3 days and reducing the tenancy period to 45 days. Mr. Dexter noted paid occupancy of short-term rental units was 92.5 percent 5 years ago, but now only 81 percent of the occupancy is paid, even though the units are 96 percent full. Senator James reiterated his reluctance to amend a bill which may be rejected in the Assembly or vetoed by the Governor. He suggested the parties meet in a subcommittee in an attempt to find a workable compromise. Senator Lee asked if there is a way to track those people with a history of failing to pay their rent, and if the landlord can refuse occupancy to such people. Mr. Dexter replied that is possible if the landlord pays out another $15 for a tenant tracker system, although not all landlords subscribe to the service. He indicated the time lapse between notice and when the person actually moves is not always reported to the tracker, either, and many people move during the 5-day period. He said short of keeping some sort of blacklist, which he feels may not be legal, there is no protection for the landlord. He pointed out motels do not have such screening, and these properties fill the gap between a motel and an apartment where landlords generally charge $25 to receive a tenant's credit record. Mr. Dexter explained screening is done to some extent through a process in which the landlord verifies the person has a job and is truthful as to his last location. Nancy Paolini, Executive Director, Project ReStart, opposed A.B. 134. She declared, "The issue of the professional renter is clearly an exception, and laws are not typically designed to be for the exception, but for the norm. Most of the individuals who rent in ... the weekly rental units are responsible individuals who do not have access to affordable housing." Ms. Paolini acknowledged Nevada has the fastest growing population in the nation, many of the jobs that support those individuals are low-paying, and of necessity those people must avail themselves of weekly rentals. She asserted the bill can be extremely detrimental, and it could increase homelessness, which then will place a burden on all taxpayers, not just property owners. She said a study made in New York by the National Coalition for the Homeless indicates intervention in the prevention stage costs less than 20 percent of what is required after a person becomes homeless. Ms. Paolini offered to work with property owners to make lists of resources available to families in trouble. She said Project ReStart has a variety of programs on money management, life skills training, literacy, and job skills. Senator James asked for her opinion on occupancy standards. Ms. Paolini replied: The occupancy standards could be very disastrous in many cases. If you limit the standards of two adults ... per room, with the exception of an infant under 6 months [of age], it could have a very damaging effect on families who are trying to stabilize and then to move on, because we do not have adequate affordable housing at this point. We know that subsidized housing is ruled by HUD standards. There's nothing we can do with that.... Phillip A. Galeoto, Lieutenant, Police Department, City of Reno, stated the police department is not against the aims of the property owners, but it has concern with some provisions of A.B.134. He suggested the problems in Las Vegas may differ from those in Reno. Lt. Galeoto explained a significant portion of landlord-tenant problems in the Reno area occur in older hotels which frequently have weekly tenants, many of whom live there for several weeks or indefinitely. He declared the majority of calls the department receives are seldom in apartment buildings, they are in the older hotels. Lt. Galeoto noted when he teaches classes at the police academy on how to deal with civil problems, primarily tenant-landlord, he instructs policemen their responsibility is to avoid any involvement in disputes over money. He said the two reasons for responding to calls are to keep the peace and to provide information in order to reduce the heat of the moment. Lt. Galeoto surmised if the time in which people have to resolve issues is reduced, and there is a lack of information, people are less able to understand. He said at one time the police department distributed a brochure called the Tenant-Landlord Handbook, containing pertinent information, but production has stopped due to lack of funding and it is no longer available to police officers. Lt. Galeoto said a typical response to a landlord-tenant problem requires two police officers and 30 to 60 minutes. He calculated each call costs the city a minimum of $40. He charged the time to respond also impacts other police services. Senator Washington asked if the Lieutenant was advocating the 5-day notice period. Lt. Galeoto replied, "That is what we were referring to." He said the police officers speak with both sides, because often the landlords do not understand their obligations or their rights under the tenant-landlord act. He stated: When we explain to them that there's enough time here to work that out, typically what happens ... we seldom go back to those calls. What we are concerned about is we will begin to return more often because there is less time to work the problem out. Lt. Galeoto said residence-hotels are fairly common throughout Reno and the older areas of Sparks. Senator Washington observed there are several motels closing down, and he wondered if that was related to the problem. Jon Sasser, Coordinator of Litigation and Training, Nevada Legal Services, Inc., agreed there may not be a way to pass the bill and satisfy either side. He presented the committee with an outline of his argument on the matter (Exhibit H) and an outline of the process under A.B. 134 (Exhibit I). He voiced concern that the mail may not arrive within the 3-day notice period and it may arrive after the time when the tenant has been put out of the premises by the court, giving the tenant no reasonable time to respond. Mr. Sasser asserted there are also technical flaws in A.B. 134. He pointed out the bill does not provide for informing the tenant when he has to file his papers in court, nor that the time starts running on the date the papers are delivered to the constable's office. He said the tenant is never informed of that time. He indicated other flaws are outlined in his written argument. Senator James opined there is a problem, because there is a potential for abuse, just as there is a potential for people to abuse existing procedures. He invited Mr. Sasser to work with others on a subcommittee to be chaired by Senator Porter. Senator James closed the hearing on A.B. 134 and opened the work session on S.B. 192. SENATE BILL 192: Makes various changes related to provisions pertaining to sexual deviants. Senator James pointed out the Assembly amended the measure with a conflict amendment. He stated the conflict with S.B. 61, which has already been passed into law, was resolved. SENATE BILL 61: Requires person in custody to sign waiver of extradition proceedings as condition of release. SENATOR TITUS MOVED TO CONCUR IN THE ASSEMBLY CONFLICT AMENDMENT TO S.B. 192. SENATOR ADLER SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Senator James turned to consideration of S.B. 541. SENATE BILL 541: Provides confidentiality for certain documents of financial institutions. Senator James said: There were two things. First of all, this privilege has to set forth both the holder of the privilege and the fact that it can be knowingly and intentionally waived, which is like any privilege.... So that [it] would be admissible, for example, if it was a document that they wanted to bring in. Under this they wouldn't even be able to admit into evidence if they wanted some exculpatory document to come in. But otherwise it could be a knowing waiver. Senator James declared subsection 2 should read: A document prepared for or created by a committee to review compliance is confidential and privileged, and, ... unless the privilege is voluntarily waived by the financial institution, is not subject to discovery or admissable in evidence. SENATOR TITUS MOVED TO AMEND AND DO PASS S.B. 541 AS STATED. SENATOR McGINNESS SECONDED THE MOTION THE MOTION CARRIED. (SENATORS PORTER AND WASHINGTON WERE ABSENT FOR THE VOTE.) * * * * * Senator James opened the work session on A.B. 361. ASSEMBLY BILL 361: Clarifies that Indian children are exempt from application of certain provisions governing child custody, adoption, termination of parental rights and placement in foster care. SENATOR ADLER MOVED TO DO PASS A.B. 361. SENATOR LEE SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS PORTER AND WASHINGTON WERE ABSENT FOR THE VOTE.) * * * * * ASSEMBLY BILL 469: Allows certain relatives of victim of murder to request to be notified of and attend execution of death penalty. SENATOR LEE MOVED TO DO PASS A.B. 469. SENATOR McGINNESS SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR WASHINGTON WAS ABSENT FOR THE VOTE.) * * * * * SENATE BILL 393: Revises provisions governing contents order granting limited right to custody of child or for visitation of child. SENATOR ADLER MOVED TO DO PASS S.B. 393. SENATOR McGINNESS SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR WASHINGTON WAS ABSENT FOR THE VOTE.) * * * * * SENATE BILL 516: Revises provisions governing credit cards issued by financial institutions. Senator James recalled the committee had questioned certain aspects of the bill and had decided on amendments. He noted a change was considered for section 15, subsection 4. He asked Mr. Whittemore to propose new language. Harvey Whittemore, Lobbyist, Citibank (NV) NA, Nevada Bankers Association, stated there is agreement on the amendatory language regarding the adverse affect which appeared in the original bill draft. He said he already provided other amendments to the committee in typewritten form. Senator James pointed out those were technical amendments to change the financial institution to a holding company. Mr. Whittemore agreed there was nothing substantive. Senator James explained, "We wanted the cardholder to get notice of a change in the card terms that would adversely affect credit, not just one that would cost him additional money. So this would be one that would reduce the credit limit or whatever else, they get notice of that." Kenneth T. Scruggs, Lobbyist, Household Financial Group, Ltd., interjected if a customer is given 30-day notice prior to reducing his credit limit, he may run up his credit line to the maximum during the period, which will have an adverse affect on the institution. He stated he has no objection to giving notice, but for a decrease or cancellation of a credit line the notice should be given as of the time the decision is made, not ahead of time. Senator James responded, "It would indicate that an issuer may change the term or conditions for the use of a credit card, and we take out `without prior notice.' Or we leave in `with prior notice unless the change will adversely affect ... or increase the cost to the cardholder.'" He opined that would give notice. He continued, "If the change will increase the costs, you have to give a 30-day notice." Mr. Scruggs approved the suggestion. Senator James declared that decreasing or removing the credit line will adversely affect the cardholder, but will not increase the costs, and therefore no notice will be necessary. The 30-day notice, he explained, will only apply if there is to be an increase in costs. Such notice will apply to increased finance charges or penalties, or removal of insurance from airline flights or automobiles. Senator McGinness asked for a definition of "notice." He suggested a person on vacation may not learn his limit has been cut until too late to react. Mr. Scruggs responded that when the person attempts to use the credit card and is denied, that may provide notice. Because the concept is new, he said, that should be determined. Senator James suggested inclusion of the word, "written." Senator Adler proposed using the judicial presumption that 3 days after the notice is mailed, there is notice. Mr. Whittemore interjected that would include "written," which will allow the company to pursue its policy with respect to providing notice, and gives the individual the opportunity to adjust accordingly. Senator Porter noted cancellation is different from an increase in interest. Mr. Whittemore argued increases in cost will be provided with 30-day notice, whereas the customer will receive written notice of cancellation of credit, not 30-day notice. Senator Adler pointed out there may be problems in the casino industry in cases where a customer runs up large gaming debts on a credit card. Mr. Scruggs interjected a stop is often put on a credit card if the customer begins to use it in a place or manner different from previous usage until the company is able to investigate and be sure it is really the customer. He conjectured that may be an adverse action that will be barred by the provisions of the proposed amendment. He declared that is why he supports inclusion of increased costs to the customer in the definition of adverse actions. He noted customers occasionally change payment habits very quickly, so the company attempts to react as quickly as possible. When asked by Senator Porter what he deems a reasonable period of time, Mr. Scruggs responded: If you're not increasing the cost to the consumer, if you're not unilaterally changing ... the price he's paying for the product, I don't see that you have any responsibility to ... warn him priorly that the situation is going to change. We enter into an agreement that as long as it works for us and it works for him, the agreement stays the same. But either party ought to have the option of changing that agreement when they want to, as long as it doesn't cost the other party money. Senator Porter agreed, but indicated people will have the expectation of being able to charge items, and some sort of notice should be given in a reasonable time. Mr. Scruggs replied that is a marketing tool, and it provides a constraint upon the issuer to refrain from unilaterally changing conditions. The companies want items charged, but putting into law procedures which are used in the normal course of business will create problems, he asserted. Senator McGinness agreed a person making payments as usual will not be subject to having the credit line reduced or cut. Mr. Whittemore interjected the action will not come as a surprise to a person who has abused the credit card. Senator James inquired if the committee was in agreement to approve prior written notice of adverse changes, and 30-day notice of changes which will increase costs. Mr. Whittemore stated the fundamental question is whether it is appropriate to use prior written notice in all cases for an adverse change. He said there is a notice provision in most credit card agreements that requires the issuer to abide by the provisions of the contract. Senator James agreed it is always possible to contract for greater notice. Mr. Scruggs declared the problem is not with giving reasonable notice, the problem is providing the correct steps so the issuer will have limited liability. Senator James proposed the inclusion of "prior written" regarding the notice. Once the notice goes out, he said, it will be presumed to have reached the customer in 3 days. Senator James noted there is a similar provision in paragraph 4 section 15 of S.B. 517. SENATE BILL 517: Revises provisions governing retail installment sales. He asked how one could justify changing the date when charges for late payment begin without giving notice. Mary F. Santina-Lau, Lobbyist, Nevada Check and Credit Card Investigations, explained the language came from regulations in the truth-in-lending statutes. She said, "A change for a late payment, documentary evidence or exceeding an agreed- to limit, again, it goes with regulation Z." Upon questioning by Senator James, she indicated the provision is consistent with regulation Z. Senator James concurred. Ms. Santina-Lau called attention to page 5, lines 18 and 19, section (e). She said the request is being made to delete the section because national stores preprint all statements and each state makes the determination regarding payment of unpaid balances. She noted none of her own credit cards contain that statement regarding unpaid balances. Senator James agreed many people are unaware that they can prepay the principal and avoid interest charges. He asked why it should be a problem to retain that language. Ms. Santina-Lau responded, "The reason is that when they looked at it and they looked at all of their statements ... they did not have it on there, on their statements nationally, but it is in their contract that it can be done, and it is understood that it can be done." Senator Washington asked why the companies do not include that provision on their statements. Ms. Santina-Lau pointed out the statements include the minimum charge and the balance, which gives the option for the customer to pay either way. She guessed other states may have experienced lawsuits because the statement was not included. Senator James opined the statement should be in the law. He declared it is important for people to know they may prepay as well as what interest they will be charged. SENATOR ADLER MOVED TO DO PASS S.B. 517. SENATOR WASHINGTON SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATOR ADLER MOVED TO AMEND AND DO PASS S.B. 516. SENATOR PORTER SECONDED THE MOTION. Senator James clarified that the bill should say "the change will adversely affect or increase the costs" on page 3, line 3. He said, "You've got `prior,' and we're going to put the word `written' into it between `prior' and `notice' on line 2." Senator McGinness voiced concern that the word "prior" may give the cardholder the opportunity to use it for 3 days. Senator Adler stated if they run up the credit line with the idea of filing bankruptcy, it will be dischargeable. Senator James pointed out it will not state how long "prior." Mr. Whittemore advocated including the word "prior." Senator James stated, "The motion would be to have prior written notice." THE MOTION CARRIED UNANIMOUSLY. * * * * * Senator James called a recess at 9:55 a.m. and noted the meeting will reconvene at the call of the chair. Senator Porter reconvened the meeting at 11:20 a.m. and requested consideration of A.B. 308. ASSEMBLY BILL 308: Authorizes dissemination of records of criminal history to certain agencies which provide protective services to children. May Shelton, Director, Washoe County Social Services, stated Washoe County Social Services is the designated agency for child protective services and child welfare in Washoe County. She explained A.B. 308 was requested by the Washoe County Grand Jury because a 3-year old was beaten to death in Nevada by her stepfather and her body was dumped in a ravine in California. When her agency was requested to investigate, they learned they were not privy to records of criminal history because the Nevada Revised Statutes has a list of those who may receive the information when requested, but Washoe County Social Services was not specifically listed. Ms. Shelton called it ironic that any reporter for electronic or printed media has access to the information, but social services does not. The grand jury proposed the amendment to address the situation. She stated it will be particularly helpful to obtain information when the agency wishes to place a child with a relative who is not licensed in the foster parent program. She declared it is preferable to place children with relatives whenever possible. She urged the committee to pass the measure. Senator McGinness asked if the bill might have helped the situation she cited. Ms. Shelton responded she did not have access to some information given the grand jury because their proceedings are secret. Senator McGinness asked if the stepfather had been granted custody. Ms. Shelton replied the child was living with her mother, stepfather and grandmother. She opined the police would have given social services the information had they been legally able to do so. Senator McGinness asked if the bill will allow social services to check the background of a man whom the mother remarries. Ms. Shelton responded it will give that authority. Lucille K. Lusk, Lobbyist, Nevada Concerned Citizens, voiced her support for the bill. Senator Porter closed the hearing on A.B. 308 and opened the hearing on A.B. 410. ASSEMBLY BILL 410: Revises provisions regarding filing fee for divorce. Helen A. Foley, Lobbyist, HELP of Southern Nevada, Displaced Homemakers, declared she was helping the two organizations on a pro bono basis. She declared: The state of Nevada has identified a large group of women, small group of men, who, because of death, divorce or disability of a spouse have been left without the means to support themselves and their families. By legal definition, these individuals are classified as displaced homemakers. Ms. Foley pointed out the 1989 Legislature established a five-member state board, which serves without compensation, for the education and counseling of displaced homemakers. In 1991, she said, the Legislature established regional centers to aid displaced homemakers. Ms. Foley provided the committee with several sheets of information (Exhibit J. Original is on file in the Research Library.). She called attention to the map therein which indicates who represents displaced homemakers in each of the various areas of the state. She said Job Opportunities in Nevada (JOIN) represents some of the rural areas, HELP of Southern Nevada represents that area, and some programs are managed by community colleges, specifically Truckee Meadows Community College and Western Nevada Community College. Ms. Foley explained funds collected for the program are turned over to the state job training office and then are disbursed back to the counties of origin. She stated the cost is approximately $89 per person, used primarily for women and a few men who do not qualify for social services, and many of whom are unskilled. The average age is 42 years, she said, so few of them have children to support, because most of their children are over 18 by that time. Ms. Foley pointed out there are hidden barriers of discrimination. She said lower income families have very few assets, and they are very fortunate if they have a car. She added any who have a car with any value over $1,500 do not qualify for most social service programs. Ms. Foley asserted many of these people are victims who may have stayed in bad marriages because they were afraid of having to be on their own. Many have no sense of self-worth, she said, and feel they have nothing to offer employers since they have not previously held paying jobs, yet many of them have actually done volunteer work, have worked with their children in the Parent Teacher Association (PTA). Ms. Foley declared HELP and Displaced Homemakers attempt to catch such women at the point of their divorce, build up their self-esteem, help them learn how to write a resume, help them get job interviews, and get them into the work force before they fall under the responsibility of the state of Nevada. She said HELP has worked very closely with major employers across the state, sponsors job- training fairs and keeps track of jobs that are available. According to Ms. Foley, the women involved learn quite a bit, such as how to dress for an interview, how to write a resume, what information to have available to fill out job applications. Ms. Foley informed the committee no individual receives any money from Displaced Homemakers. Nonprofit organizations raise money to buy bus tokens for the women until the time they get their first paychecks, or they are provided with loans to attend cosmetology or other schools. She stated when there are four or five seats in computer word-processing schools in southern Nevada, they will fill those additional seats free of charge with the displaced homemakers. Ms. Foley estimated approximately $2.1 million is saved each year just for food stamps by moving these women moved into employment. In response to a question by Senator Porter, Ms. Foley said the remainder of the funding comes from private individuals, and there are various fund-raising efforts. She noted the Atlantic Richfield Company (ARCO) recently made a donation of $4,000 to purchase gas coupons, and Caesar's donated funding for bus tokens. She said funding from the state is used for a trainer to put on seminars and to make video tapes in cooperation with the Nye County Chamber of Commerce for special seminars in some of the rural areas. Ms. Foley read a letter to LaVerne Batts, who puts on seminars for the Displaced Homemakers in southern Nevada, from Sandy Elman (Exhibit K). In her letter Ms. Elman attributes her success in finding a job at age 61 to the training she received from Ms. Batts. Ms. Foley noted the Assembly gave unanimous support to A.B. 410. In the absence of further testimony, Senator Porter closed the hearing on A.B. 410 and opened the hearing on A.B. 343. ASSEMBLY BILL 343: Revises provisions governing certain conduct of developers of subdivided land. Jolene B. Rose, Deputy Director, Department of Business and Industry, explained the only authority the Real Estate Division has to address violations or infractions of NRS chapter 119 is a cease and desist order which goes through a hearing process prior to going to court, after which a conviction can result in a fine of $10,000 per violation and which becomes a gross misdemeanor. Ms. Rose stated A.B. 343 was amended to allow an easier process for the division to levy fines for minor infractions, which she asserted will "get the developer's attention." She indicated the measure will allow for settlement without the expense of going to court, and which will benefit the developer as well as the Real Estate Division. Ms. Rose noted section 1 provides the authority to levy the fine and impose conditions. Section 6, she said, defines the procedure in lieu of a cease and desist order. She declared the State Contractor's Board and Associated General Contractors have reviewed the proposal and voiced no objections to the bill. Senator McGinness asked if it will be kept secret if a developer continues activities which are not in compliance, or if there is a point at which the Real Estate Division will no longer accept such conduct. Ms. Rose responded, if a developer enters into a settlement agreement and then violates it, the matter will no longer be confidential. She explained the division has the option to refuse a settlement and can pursue it through other legal means, so no developer could hide behind the provision of the bill. She noted the bill primarily will apply to minor situations, such as commencing sales prior to registration of the project. Sometimes, she said, they do not know they are supposed to register the project. There was no further business to come before the hearing, and Senator Porter closed the hearing at 11:50 a.m. RESPECTFULLY SUBMITTED: Judy Jacobs, Committee Secretary APPROVED BY: Senator Mark A. James, Chairman DATE: Senate Committee on Judiciary June 8, 1995 Page