Assembly Bill No. 588

Assembly Bill No. 588-Committee on Government Affairs

June 11, 1997
____________

Referred to Committee on Government Affairs

SUMMARY--Limits circumstances under which local government may provide certain public services. (BDR 20-1512)

FISCAL NOTE: Effect on Local Government: No.

Effect on the State or on Industrial Insurance: No.

EXPLANATION - Matter in italics is new; matter in brackets [ ] is material to be omitted.

AN ACT relating to local governments; limiting the circumstances under which a local government may provide certain public services; and providing other matters properly relating thereto.

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

Section 1 Chapter 244 of NRS is hereby amended by adding thereto the provisions set forth as sections 2 to 11, inclusive, of this act.
Sec. 2 As used in sections 2 to 11, inclusive, of this act, unless the context otherwise requires, the words and terms defined in sections 3 and 4 of this act have the meanings ascribed to them in those sections.
Sec. 3 "Existing provider" means a provider of a public service that is not a political subdivision of this state.
Sec. 4 "Public service" means any service or public utility set forth in NRS 244.187.
Sec. 5 1. Except as otherwise provided in subsection 2, a county shall not provide a public service that displaces, competes with or supplements a public service provided by an existing provider on October 1, 1997.
2. A county may provide such a public service if:
(a) The county is specifically authorized to do so by law; and
(b) Before the county provides the public service, it demonstrates through a process of open competitive bidding that it will be able to provide the public service at a higher quality and in a more cost-efficient manner than the public service is being provided by the existing provider.
3. A person evaluating bids submitted pursuant to such a process of competitive bidding shall:
(a) In evaluating the quality of the public service provided by the various bidders, compare the:
(1) Financial ability of each bidder to provide the public service;
(2) Standards and policies of each bidder concerning the provision of the public service, including, without limitation, the time it takes the bidder to respond to requests from its customers;
(3) Managerial personnel of each bidder, including, without limitation, the qualifications and experience of that personnel;
(4) Ability of each bidder to meet or exceed standards of the industry relating to the provision of the public service; and
(5) Ability of each bidder to provide state-of-the-art systems in such areas as are relevant to the provision of that public service, including, without limitation, technology, training, communications, dispatch, accounts receivable and tracking of performance.
(b) In evaluating the cost-efficiency of the various bidders in providing the public service, ensure that the cost to the county includes:
(1) The marginal cost of existing facilities and support services available to the county.
(2) The cost of the interest on the working capital needed to support the requirements for cash flow of the county, including, without limitation, the amount of interest the county will lose on the cash reserves that must be withdrawn for working capital and the interest the county must pay on any borrowed money.
(3) The cost of insuring any risks created by the provision of the public service by the county.
(4) The cost of all utilities, personnel, equipment and supplies necessary for the provision of the public service, and the cost of the land upon which any necessary facility or office will be located, regardless of whether the county has previously employed the personnel or acquired any of those items for other purposes.
(5) An adjustment to account for the amount that an existing provider must pay for franchise fees and taxes.
Sec. 6 A bid submitted by a county pursuant to this section must be accompanied by a written confirmation of the reasonableness of the business plan of the county, including, without limitation, projections regarding uncollectable debts and contractual allowances. The confirmation must be prepared by a person who:
1. Is qualified by education and training to determine the reasonableness of the business plan; and
2. Has no personal, business or contractual relationship with the county.
Sec. 7 A person who:
1. Prepares documents relating to bids;
2. Reviews and evaluates the credentials of a bidder; or
3. Provides technical support or consulting assistance to a reviewer of bids,
must be qualified by education and training to perform those duties and shall not have a personal, business or contractual relationship with any of the bidders.
Sec. 8 1. If a county is declared to be the successful bidder to provide a public service, an annual audit must be performed by a certified public accountant who has no personal, business or contractual relationship with the county.
2. The audit must include, without limitation, an evaluation of the costs incurred and revenues received by the county that are related to its provision of the public service.
3. The results of the audit are a public record.
Sec. 9 If:
1. A county is declared to be the successful bidder to provide a public service; and
2. The results of the annual audit show that the county, in providing that public service, incurred an operating loss or realized a reduced profit equal to or greater than the difference between the price bid by the county and the price bid by the bidder who would have been declared the successful bidder to provide that public service but for the bid of the county,
that unsuccessful bidder may, under the terms of his original bid, assume the responsibility of the county to provide that public service.
Sec. 10 If a contract between a county and a provider of a public service, or a franchise granted by a county to a provider of a public service, contains a provision allowing the county to perform a financial or performance audit of the business of the provider of the public service, the audit must be conducted by a person who:
1. Is qualified by education and training to conduct the audit; and
2. Has no personal, business or contractual relationship with the county or the provider of the public service.
Sec. 11 On or after October 1, 1997, a county shall not require an existing provider to donate real or personal property to any entity in lieu of or in addition to the fees imposed on the existing provider for a business license, franchise or right of way over streets or other public areas.
Sec. 12 Chapter 268 of NRS is hereby amended by adding thereto the provisions set forth as sections 13 to 22, inclusive, of this act.
Sec. 13 As used in sections 13 to 22, inclusive, of this act, unless the context otherwise requires, the words and terms defined in sections 14 and 15 of this act have the meanings ascribed to them in those sections.
Sec. 14 "Existing provider" means a provider of a public service that is not a political subdivision of this state.
Sec. 15 "Public service" means any service or public utility set forth in NRS 268.081.
Sec. 16 1. Except as otherwise provided in subsection 2, a city shall not provide a public service that displaces, competes with or supplements a public service provided by an existing provider on October 1, 1997.
2. A city may provide such a public service if:
(a) The city is specifically authorized to do so by law; and
(b) Before the city provides the public service, it demonstrates through a process of open competitive bidding that it will be able to provide the public service at a higher quality and in a more cost-efficient manner than the public service is being provided by the existing provider.
3. A person evaluating bids submitted pursuant to such a process of competitive bidding shall:
(a) In evaluating the quality of the public service provided by the various bidders, compare the:
(1) Financial ability of each bidder to provide the public service;
(2) Standards and policies of each bidder concerning the provision of the public service, including, without limitation, the time it takes the bidder to respond to requests from its customers;
(3) Managerial personnel of each bidder, including, without limitation, the qualifications and experience of that personnel;
(4) Ability of each bidder to meet or exceed standards of the industry relating to the provision of the public service; and
(5) Ability of each bidder to provide state-of-the-art systems in such areas as are relevant to the provision of that public service, including, without limitation, technology, training, communications, dispatch, accounts receivable and tracking of performance.
(b) In evaluating the cost efficiency of the various bidders in providing the public service, ensure that the cost to the city includes:
(1) The marginal cost of existing facilities and support services available to the city.
(2) The cost of the interest on the working capital needed to support the requirements for cash flow of the city, including, without limitation, the amount of interest the city will lose on the cash reserves that must be withdrawn for working capital and the interest the city must pay on any borrowed money.
(3) The cost of insuring any risks created by the provision of the public service by the city.
(4) The cost of all utilities, personnel, equipment and supplies necessary for the provision of the public service, and the cost of the land upon which any necessary facility or office will be located, regardless of whether the city has previously employed the personnel or acquired any of those items for other purposes.
(5) An adjustment to account for the amount that an existing provider must pay for franchise fees and taxes.
Sec. 17 A bid submitted by a city pursuant to this section must be accompanied by a written confirmation of the reasonableness of the business plan of the city, including, without limitation, projections regarding uncollectable debts and contractual allowances. The confirmation must be prepared by a person who:
1. Is qualified by education and training to determine the reasonableness of the business plan; and
2. Has no personal, business or contractual relationship with the city.
Sec. 18 A person who:
1. Prepares documents relating to bids;
2. Reviews and evaluates the credentials of a bidder; or
3. Provides technical support or consulting assistance to a reviewer of bids,
must be qualified by education and training to perform those duties and shall not have a personal, business or contractual relationship with any of the bidders.
Sec. 19 1. If a city is declared to be the successful bidder to provide a public service, an annual audit must be performed by a certified public accountant who has no personal, business or contractual relationship with the city.
2. The audit must include, without limitation, an evaluation of the costs incurred and revenues received by the city that are related to its provision of the public service.
3. The results of the audit are a public record.
Sec. 20 If:
1. A city is declared to be the successful bidder to provide a public service; and
2. The results of the annual audit show that the city, in providing that public service, incurred an operating loss or realized a reduced profit equal to or greater than the difference between the price bid by the city and the price bid by the bidder who would have been declared the successful bidder to provide that public service but for the bid of the city,
that unsuccessful bidder may, under the terms of his original bid, assume the responsibility of the city to provide that public service.
Sec. 21 If a contract between a city and a provider of a public service, or a franchise granted by a city to a provider of a public service, contains a provision allowing the city to perform a financial or performance audit of the business of the provider of the public service, the audit must be conducted by a person who:
1. Is qualified by education and training to conduct the audit; and
2. Has no personal, business or contractual relationship with the city or the provider of the public service.
Sec. 22 On or after October 1, 1997, a city shall not require an existing provider to donate real or personal property to any entity in lieu of or in addition to the fees imposed on the existing provider for a business license, franchise or right of way over streets or other public areas.
Sec. 23 Chapter 269 of NRS is hereby amended by adding thereto the provisions set forth as sections 24 to 33, inclusive, of this act.
Sec. 24 As used in sections 24 to 33, inclusive, of this act, unless the context otherwise requires, the words and terms defined in sections 25 and 26 of this act have the meanings ascribed to them in those sections.
Sec. 25 "Existing provider" means a provider of a public service that is not a political subdivision of this state.
Sec. 26 "Public service" means any service or public utility set forth in NRS 269.128.
Sec. 27 1. Except as otherwise provided in subsection 2, an unincorporated town shall not provide a public service that displaces, competes with or supplements a public service provided by an existing provider on October 1, 1997.
2. An unincorporated town may provide such a public service if:
(a) The unincorporated town is specifically authorized to do so by law; and
(b) Before the unincorporated town provides the public service, it demonstrates through a process of open competitive bidding that it will be able to provide the public service at a higher quality and in a more cost-efficient manner than the public service is being provided by the existing provider.
3. A person evaluating bids submitted pursuant to such a process of competitive bidding shall:
(a) In evaluating the quality of the public service provided by the various bidders, compare the:
(1) Financial ability of each bidder to provide the public service;
(2) Standards and policies of each bidder concerning the provision of the public service, including, without limitation, the time it takes the bidder to respond to requests from its customers;
(3) Managerial personnel of each bidder, including, without limitation, the qualifications and experience of that personnel;
(4) Ability of each bidder to meet or exceed standards of the industry relating to the provision of the public service; and
(5) Ability to provide state-of-the-art systems in such areas as are relevant to the provision of that public service, including, without limitation, technology, training, communications, dispatch, accounts receivable and tracking of performance.
(b) In evaluating the cost efficiency of the various bidders in providing the public service, ensure that the cost to the unincorporated town includes:
(1) The marginal cost of existing facilities and support services available to the unincorporated town.
(2) The cost of the interest on the working capital needed to support the requirements for cash flow of the unincorporated town, including, without limitation, the amount of interest the unincorporated town will lose on the cash reserves that must be withdrawn for working capital and the interest the unincorporated town must pay on any borrowed money.
(3) The cost of insuring any risks created by the provision of the public service by the unincorporated town.
(4) The cost of all utilities, personnel, equipment and supplies necessary for the provision of the public service, and the cost of the land upon which any necessary facility or office will be located, regardless of whether the unincorporated town has previously employed the personnel or acquired any of those items for other purposes.
(5) An adjustment to account for the amount that an existing provider must pay for franchise fees and taxes.
Sec. 28 A bid submitted by an unincorporated town pursuant to this section must be accompanied by a written confirmation of the reasonableness of the business plan of the unincorporated town, including, without limitation, projections regarding uncollectable debts and contractual allowances. The confirmation must be prepared by a person who:
1. Is qualified by education and training to determine the reasonableness of the business plan; and
2. Has no personal, business or contractual relationship with the unincorporated town.
Sec. 29 A person who:
1. Prepares documents relating to bids;
2. Reviews and evaluates the credentials of a bidder; or
3. Provides technical support or consulting assistance to a reviewer of bids,
must be qualified by education and training to perform those duties and shall not have a personal, business or contractual relationship with any of the bidders.
Sec. 30 1. If an unincorporated town is declared to be the successful bidder to provide a public service, an annual audit must be performed by a certified public accountant who has no personal, business or contractual relationship with the unincorporated town.
2. The audit must include, without limitation, an evaluation of the costs incurred and revenues received by the unincorporated town that are related to its provision of the public service.
3. The results of the audit are a public record.
Sec. 31 If:
1. An unincorporated town is declared to be the successful bidder to provide a public service; and
2. The results of the annual audit show that the unincorporated town, in providing that public service, incurred an operating loss or realized a reduced profit equal to or greater than the difference between the price bid by the unincorporated town and the price bid by the bidder who would have been declared the successful bidder to provide that public service but for the bid of the unincorporated town,
that unsuccessful bidder may, under the terms of his original bid, assume the responsibility of the unincorporated town to provide that public service.
Sec. 32 If a contract between an unincorporated town and a provider of a public service, or a franchise granted by an unincorporated town to a provider of a public service, contains a provision allowing the unincorporated town to perform a financial or performance audit of the business of the provider of the public service, the audit must be conducted by a person who:
1. Is qualified by education and training to conduct the audit; and
2. Has no personal, business or contractual relationship with the unincorporated town or the provider of the public service.
Sec. 33 On or after October 1, 1997, an unincorporated town shall not require an existing provider to donate real or personal property to any entity in lieu of or in addition to the fees imposed on the existing provider for a business license, franchise or right of way over streets or other public areas.