ASSEMBLY COMMITTEE MINUTES

MINUTES OF THE meeting

of the

ASSEMBLY Committee on Commerce and Labor

Seventy-Second Session

March 31, 2003

The Committee on Commerce and Laborwas called to order at 2:12 p.m., on Monday, March 31, 2003. Chairman David Goldwater presided in Room 4100 of the Legislative Building, Carson City, Nevada, and, via simultaneous videoconference, in Room 4401 of the Grant Sawyer State Office Building, Las Vegas, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Mr. David Goldwater, Chairman

Ms. Barbara Buckley, Vice Chairman

Mr. Morse Arberry Jr.

Mr. Bob Beers

Mr. David Brown

Mrs. Dawn Gibbons

Ms. Chris Giunchigliani

Mr. Josh Griffin

Mr. Lynn Hettrick

Mr. Ron Knecht

Ms. Sheila Leslie

Mr. John Oceguera

Mr. David Parks

Mr. Richard Perkins

COMMITTEE MEMBERS ABSENT:

None

GUEST LEGISLATORS PRESENT:

Assemblywoman Peggy Pierce, District No. 3

Assemblyman Kelvin D. Atkinson, District No. 17

STAFF MEMBERS PRESENT:

Vance Hughey, Committee Policy Analyst

Diane Thornton, Senior Research Analyst

Wil Keane, Committee Counsel

Patricia Blackburn, Committee Secretary

OTHERS PRESENT:

Stan Olsen, Government Liaison, Las Vegas Metropolitan Police Department

David L. Howard, President, Gallo Nero Strategies, LLC, Northern Nevada Apartment Association and Southern Nevada Multiple Housing Association

Mary LaFrance, Professor of Law, University of Nevada, Las Vegas

Mark Tratos, Quirk & Tratos, Legislative Advocate,

Bob Shriver, Executive Director, Nevada Commission on Economic Development

Michael Alonso, Legislative Advocate, International Game Technology (IGT)

Berlyn Miller, Vice Chairman, Nevada Commission on Economic Development

C. Joseph Guild III, Legislative Advocate, Motion Picture Association of America, Inc. and Manufactured Home Community Owners

Robin Holabird, Deputy Director, Nevada Commission on Economic Development, Nevada Film Office

Rick Loop, Assistant Court Administrator, Eighth Judicial District Court

Patricia Jarman-Manning, Commissioner, Consumer Affairs Division

Gary Vause, citizen

Lillie Englund, Board Member, Southern Nevada Association for the Education of Young Children and Owner and Director Imprints Day School

Sean Gamble, Legislative Advocate, Clark County Health District

Daniel J. Maxson, Clark County Health District

James T. Hogan, Environmental Health Supervisor, State of Nevada, Department of Human Resources

Bob Sack, Washoe County District Health Department

Bob Varallo, President, Nevada Association of Manufactured Home Owners, Inc.

Karl Braun, Nevada Association of Manufactured Home Owners, Inc.

Ernie Nielson, Washoe County Senior Law Project

Chairman Goldwater called the meeting to order at 2:12 p.m. There was no quorum so the meeting was started as a subcommittee because of the need to start the meeting due to the length of the agenda.

Chairman Goldwater opened the hearing on A.B. 419.

Assembly Bill 419: Provides that landlord of dwelling units intended and operated for persons 55 years of age and older may not employ person to perform work on premises unless person has work card issued by sheriff. (BDR 10-833)

Assemblywoman Peggy Pierce, Clark County, District No. 3, introduced the bill. Proposed amendments were distributed to the Committee members (Exhibit C). She explained that Nevada was the fastest-growing state in the nation and that Clark County gained approximately 65,000 new residents each year, a significant portion being senior citizens. It was important, Ms. Pierce stated, that the Legislature take steps to protect the senior population from those who preyed on them. A.B. 419 was one of those steps. This bill would provide that the landlord of an apartment complex intended for occupants 55 years and older could not employ a person to perform work on the premises unless the person had a work card issued by the sheriff of the county. Ms. Pierce told the Committee she would walk them through the bill.

Section 1, subsection 1, of the bill stated that a landlord would not employ any person on the premises of an apartment complex designated for those 55 years of age or older unless that person had been issued a work card.

Subsection 2 stated that the sheriff of a county would issue a work card and that the work card issued would be for five years unless that person moved to another complex not within the same corporation.

Subsection 3 outlined the method required for issuing the work card, including a check of that person through the Central Repository for Nevada Records of Criminal History and submitting fingerprints to the Federal Bureau of Investigation (FBI). It would also allow for a temporary work card to be issued pending the background investigation. No one, she explained, would need to wait to be employed during that period. If the fingerprint return indicated that person should not receive a permanent card, the sheriff would notify the person of the cancellation of the temporary work card.

Subsection 4, Ms. Pierce explained, covered those persons who were not required to obtain a work card.

Ms. Pierce noted that everyone knew family members, friends, or constituents who were elderly. Many of those seniors were cheated, abused, or victimized. This bill would make it more difficult for those who worked at senior apartment complexes to victimize those citizens.

Ms. Pierce referred to the two amendments she had previously distributed. The last sentence of subsection 2 of Section 1 would delete "each year" and insert "five years." It would also add the following language: "If the applicant's employment moves to another property, not within the same corporation, they must update their work card with the sheriff."

At the end of paragraph (b) of subsection 3, Section 1, add: "The sheriff of the county shall issue a temporary work card pending the results of the FBI criminal history."

Chairman Goldwater asked if there were questions from the Committee. He also noted for the record that a quorum was now present.

Assemblywoman Buckley spoke of the evolution in thinking away from the use of work cards. First she stated it went away from the counties, to the state level, now the state wished to get out of that business, asking the employer to do their own background checks. She wondered whether the work card was the way to solve problems or whether the individual entity should be required to do the screening. Ms. Pierce stated she had no preference as to who should do the background check, and would entertain any amendment along those lines.

Chairman Goldwater asked if there were other questions.

Assemblyman Griffin asked if there were ever an exemption or protection offered to a landlord that hired a management company. He wondered if, under Nevada statutes, a management company would be considered the landlord when an out-of-state landlord had hired them.

Stan Olsen, Government Liaison, Las Vegas Metropolitan Police Department, stated he was not an expert, but at least within the Las Vegas metropolitan area, the property manager was considered the landlord. There were, he explained, a large number of out-of-state owners.

Mr. Griffin then asked if it was correct that the manager would be considered the landlord and would be the one responsible for ensuring who their employees were. Chairman Goldwater directed Mr. Griffin to page 2, line 21. Mr. Griffin thanked the Chairman for the direction.

Assemblywoman Giunchigliani asked if property managers had to be licensed; she thought there had been an ordinance passed, at least in the Las Vegas area. Assemblywoman Pierce stated she was not sure. There was, she stated, regulations for running long-term nursing homes, but she was not sure about apartment complexes. Ms. Giunchigliani stated she would check further and let Ms. Pierce know.

Chairman Goldwater asked if there were further questions.

Mr. Griffin noted as a follow-up the bill stated that the property managers had to get the work card; he wondered if the owner of the property would somehow be protected if they were an out-of-state landlord and the property management company did the hiring.

Assemblywoman Buckley stated that Nevada Revised Statutes (NRS) 118A.100 defined a landlord as a person who provided a dwelling unit for occupancy by another pursuant to a rental agreement. That definition, she stated, had been the one to encompass the property management companies.

Assemblyman Hettrick stated that page 1, line 4, said "dwelling units intended and operated for persons 55 years of age and older . . ." He felt that would apply to any apartment building. It was not exclusively limited to ones for people 55 years and older. If the intent was to limit it, it should state that. Also, he continued, because subsection 4(b) dealt with independent contractors, he felt that landlords from now on would hire everyone as an independent contractor and not have to get the background check. Mr. Hettrick stated it looked like a "loophole" to him.

Lt. Olsen stated that he supported the bill and wished to clarify a few points. He noted Metro had experienced some problems in the past in regard to work cards versus the employer doing background checks. Some apartment complexes were less than honest in the manner of hiring their employees. He gave examples of what some employees had done to tenants, such as lock out people, throw out the tenant's property, and leave property in the street. If the requirement were on the apartment complexes, he felt there would be problems. It could also be costly for the employers to get their own FBI records. Lt. Olsen stated it would be preferable to issue work cards. He asked Mr. Hettrick to restate his concerns so that he could address them.

Mr. Hettrick reiterated that line 4, page 1, would include every apartment building, as all apartment buildings could be intended to operate for persons 55 years and older. It was not limited. Every apartment everywhere would have to have the work cards for all employees. He felt it needed to be clarified. His second concern, Mr. Hettrick explained, had to do with independent contractors. It appeared that everyone would hire independent contractors to avoid having to deal with the work cards.

Lt. Olsen stated that it was meant to apply to apartment complexes that exclusively rented to people 55 years of age and older. With regard to the independent contractor section, he stated there could be a possibility of that happening; however, he felt that most of the companies in Las Vegas, at least, were large companies that had regular employees and did not think it would be a large issue with them.

Mr. Hettrick stated that on the first issue, it was not clear; he thought any apartment building could rent to persons 55 years of age and older. He explained that to his knowledge there were no apartment buildings that said no one over 55 years of age could rent there. On the other issue, he stated he agreed with Lt. Olsen about the large companies not having a problem, but any smaller employer might hire workers as independent contractors to avoid getting the work cards.

Chairman Goldwater asked if there were other questions and there were none. He thanked the witnesses and asked for other speakers.

David Howard, President of Gallo Nero Strategies, LLC, representing the Northern Nevada Apartment Association and the Southern Nevada Multiple Housing Association, stated that on first reading of A.B. 419 they had been opposed. He needed more clarification. He felt there was some merit to the bill but commented that some concerns had already been pointed out, and he thanked Assemblyman Hettrick for his statements. Mr. Howard explained he was more concerned with subsection 4, line 23, which appeared to mean that anyone hired to do repairs in the complex would have to have a work card. The bill would be better, he stated, if it could be clarified. If the regulations concerned the "on-site" person who had the keys, they would not object to this bill. If everyone that came to the complex to do work, plumbers, carpenters, and painters, had to have a work card, he believed it would not work. He appreciated the exemptions listed on page 2, line 21, and would not have problems with this bill. Mr. Howard stated that officially they were opposed to the bill but were willing to work with Ms. Pierce.

Chairman Goldwater thanked the speaker. He stated that Mr. Howard had always worked in good faith on landlord-tenant issues and he appreciated that. Mr. Howard spoke to the 55 years of age and older portion and stated he was not sure everyone of that age necessarily needed protection.

Chairman Goldwater asked if there were other questions or any other speakers and there were none. He closed the hearing on A.B. 419 and asked that Mr. Howard work with Assemblywoman Pierce and Mr. Olsen and report back to him and Vance Hughey when resolution had been reached so that it could be placed in work session and voted on. Ms. Pierce stated she would get back to him as soon as possible.

Chairman Goldwater opened the meeting on A.B. 81.

Assembly Bill 81: Authorizes award for treble damages, attorney’s fees and costs in certain civil actions relating to marks. (BDR 52-366)

Assemblyman John Oceguera, Clark County, District No. 16, introduced A.B. 81. He explained that Nevada law defined a "mark" as any trademark, trade name, or service mark entitled to registration whether registered or not. NRS 600.430 made it unlawful for any person to manufacture, use, display, sell, counterfeit, or imitate any marks. The owner of the mark could bring suit to enjoin the unauthorized use of that mark and could obtain an order requiring the defendant to pay all profits derived from that wrongful act and all damages suffered by reason of that wrongful act. The owner might also obtain an order requiring the defendant to deliver to the court for destruction, any counterfeits or imitations in his possession or control. A.B. 81, he stated, sought to amend NRS 600.430 to include an award for treble damages suffered by the owner of a registered mark by reason of a wrongful act of an infringer. This bill also sought to amend NRS 600.430 to authorize an award of costs and attorneys' fees to the prevailing party in an action to enjoin the allegedly wrongful use of a registered mark. Those amendments, Mr. Oceguera explained, would align NRS 600.430 with remedies that were available in federal court and many other states, including California, Florida, Kentucky, and Utah, for alleged violations.

Mr. Oceguera noted that he would like to propose the intellectual property chapters of NRS be amended to include a uniform definition of the term "intellectual property," and that the civil remedy provisions within those Chapters also be amended to authorize the courts to make an award of treble damages as well as awards of attorneys' fees and costs. He explained he did not have that amendment at this time, but based on prior conversations with the Legal Division he was confident Mr. Keane would devise an amendment. He stated he had experts who were willing to answer any questions. He stated he had been handed a proposed amendment that changed page 1, line 8, from "wrongful" to "willful."

Chairman Goldwater thanked Mr. Oceguera for the presentation and asked if there were questions from the Committee.

Assemblyman Brown stated he had some reservations about the treble damages on intellectual property. He wanted to differentiate between inadvertent and intentional. Mr. Oceguera stated that would be covered by changing "wrongful" to "willful." Mr. Brown stated he believed "willful" would be better. He asked about the "counterfeit and imitation" portion and asked if some of those items could be collector's items. He wondered if someone might inadvertently buy one and turn around to sell it and not be aware it was counterfeit. Mr. Oceguera stated he was not sure of the answer. He also noted that there was no definition for "intellectual property" and one would have to be specified.

Mr. Brown asked when was the effective date and if it could be retroactive. Mr. Oceguera stated that was a good point, and they would need to address it.

Chairman Goldwater asked if there were any speakers in Las Vegas and Mr. Oceguera introduced them.

Mary LaFrance, Professor of Law, Boyd School of Law, University of Nevada, Las Vegas (UNLV), spoke on her own behalf as an academic. She wanted to comment on the proposed change of the word "wrongful" to "willful." That was, she stated, a significant change in the statute and suggested that that change not be made, at least with respect to the recovery of profits derived from the defendant's wrongful acts. The difference was that willful implied intentionality. There were, she stated, infringements where the acts had not been intentional. The word "wrongful" seemed to cover those situations. She explained that the "willful" language would be appropriate for the treble damages remedy and that standard was used in other jurisdictions. Her suggestion was to retain the "wrongful" standard for actual profits or damages and use the "willful" standard for treble damages.

Mark Tratos, Quirk & Tratos, spoke from Las Vegas. He was an intellectual properties attorney in southern Nevada and also in California who taught classes at the Boyd School of Law at UNLV. He agreed with Professor LaFrance's reading and thought it important to distinguish between recovery of the profits from any wrongdoing and limit the treble damages to intentional acts. Both "wrongful" and "willful" should be retained. Subsection 2, he noted, was expressly designed for the prevailing party to be entitled to reasonable attorneys' fees. The purpose of that subsection was to discourage frivolous suits. He supported the legislation.

Chairman Goldwater asked if there were questions.

Assemblywoman Buckley asked if it were possible, under this statute, to obtain punitive damages. Mr. Tratos stated that remedy was not available at the present time. She asked why that was not available and he stated that typically in common law, there were no punitive damages. The common law rights were to return the mark holder back to the position they were in before the infringement occurred. The difficulty, Mr. Tratos stated, was that the mark holder had an onerous burden in attempting to enforce those rights. Nevada, he continued, had some of the most famous marks in the world. His examples were Harveys, Harrah's, Bellagio, and Mirage. The state had world-class and world-famous marks.

Ms. Buckley asked what were the pros and cons in using the punitive damages remedy rather than treble damages. Punitive damages, she stated, were already defined in state law, whereas treble damages would have to establish case law. Mr. Tratos agreed it was a good observation but suggested that the punitive damage notion was based on the income derived by the entity that was being sued. Punitive damages were intended to make an example of violators and to discourage that type of conduct in the future. The problem, Mr. Tratos stated, was that damages were tied to the income of the defendant. He explained it might be better to use the standard of treble damages because it was an easier way of calculating damages.

Chairman Goldwater asked if there were further questions and there were none. He thanked the speakers. He asked if anyone else wished to testify.

Michael Alonso, Legislative Advocate, representing International Game Technology (IGT), stated he supported A.B. 81. After hearing the testimony, he explained, he supported the proposed amendment that Mr. Oceguera spoke of with respect to changing the language to include a "willful" standard in connection with the treble damages. He agreed with Professor LaFrance and Mr. Tratos about the distinction between the profits in a wrongful standard and a higher standard or an intentional and willful standard relating to the treble damages.

Bob Shriver, Executive Director, Nevada Commission on Economic Development, stated he supported the proposed amendments. He was pleased that intellectual property would be defined. He stated it was his Commission's role to promote Nevada as a place where intellectual property could be housed and developed to enable the state to diversify.

Berlyn Miller, Vice Chairman, Nevada Commission on Economic Development, stated he was also in support of A.B. 81 and stated they had been working with Mr. Oceguera.

Chairman Goldwater closed the hearing on A.B. 81. He opened the hearing on A.B. 2.

Assembly Bill 2: Limits right of employer to own certain intellectual property developed by employee. (BDR 52-365)

Assemblyman John Oceguera, Clark County, District No. 16, introduced A.B. 2. He distributed a three-page document that listed proposed amendments to this bill (Exhibit D). Most of the Committee might be unaware of the provisions of NRS 600.500, he noted. That statute had been enacted in 2001 and read: "Except as otherwise provided by express written agreement, an employer is the sole owner of any patentable invention or trade secret developed by his employee during the course of employment that relates directly to the work performed during the course of employment."

He posed a hypothetical situation. A 16-year-old worked at McDonald's as a cook. He hated the spatula he had to use to do his job because he was left-handed and the spatula did not conform to his hand correctly and also because the spatula got very hot from the stove. The 16-year-old, being an ingenious child, took a spatula from home, modified the handle to fit his left hand, and dipped the spatula in some heat-resistant material he concocted and took it to work. The modified handle worked. The hypothetical teenager soon realized that he had inadvertently invented something worthwhile, something patentable. The question was, Mr. Oceguera said, did he, as opposed to McDonald's, own his invention. NRS 600.500 provided that the employer was the sole owner of any patentable invention or trade secret developed by his employee during the course of employment that related directly to the work performed during the course of employment. Mr. Oceguera asked if the Committee agreed that NRS 600.500, as written, gave McDonald's sole ownership of the hypothetical teenager's multimillion-dollar invention, or did they believe that NRS 600.500, as written, did not apply to the hypothetical situation.

Mr. Oceguera stated he was attempting to illustrate that most people would likely conclude that NRS 600.500 applied not only to the scenario he just related, which would mean that McDonald's would be given sole ownership of the hypothetical teenager's patentable invention, but that it would apply to every employer/employee situation in which an employee developed a patentable invention or trade secret.

While the Committee was contemplating the example Mr. Oceguera had given, he asked if it had ever occurred to them that NRS 600.500 was only intended to apply to the high-tech industry. The purpose of NRS 600.500 was to attract high-tech industry to Nevada by giving high-tech employers sole ownership of patentable inventions or trade secrets. Their employee who was "paid to invent" developed those trade secrets and patentable inventions. In review of the legislative history of the statute, Mr. Oceguera stated it was clear that in spite of how this statute read, it was only intended to benefit high-tech employers who employed "paid-to-invent" employees.

In the hypothetical situation he stated previously, he said the correct answer would be that the teenager had the sole ownership of his patentable invention, not McDonald's. Mr. Oceguera said that given how NRS 600.500 was written, it could be interpreted differently and the teenager would have to spend hundreds of thousands of hypothetical dollars in attorneys' fees and costs defending a lawsuit brought by McDonald's over ownership of his patentable invention.

Mr. Oceguera asked if a statute could legitimately be read beyond its intended purpose, or if legitimate disagreements concerning interpretation of a statute encouraged complex and taxing litigation, was it truly a good law. It was necessary for legislators to make amendments to existing laws so that the meaning and intent of the laws were clear. He suggested to the Committee that a very simple amendment to NRS 600.500 would achieve the goal of clarity in meaning and discourage litigation over interpretation. Specifically, Mr. Oceguera explained, the descriptor "paid to invent" should be inserted before the term "employee." The descriptor should be defined in a new paragraph within NRS 600.500.

Mr. Oceguera stated there might be several witnesses in opposition to this bill but felt that if they were asked how A.B. 2, with the amendments, would weaken the original purpose and intent of NRS 600.500, they would be unable to answer. He asked the Committee to keep in mind his hypothetical situation and remember their first reaction to the question of whether or not McDonald's was the sole owner of the hypothetical teen's patentable invention. That concluded his remarks, he stated, and he would defer all questions to his experts in Las Vegas.

Chairman Goldwater asked if there were questions. He asked if there were any anecdotal occurrences that had prompted A.B. 2.

Mr. Tratos answered that he was unaware of any actual litigation. He felt they had an opportunity to correct the meaning of NRS 600.500 before litigation occurred. The language that was being proposed would correct the flaw that was inherent in the bill as it stood and noted that the example used was excellent. The objective, Mr. Tratos explained, was to attract high-tech industry to Nevada. No high-tech company had moved to Nevada as a result of NRS 600.500. High-tech companies had, he stated, moved from Nevada to California. He explained that Westwood Studios, which developed interactive video games, had moved from Las Vegas to Los Angeles because they needed to go where the talent pool resided. NRS 600.500 discouraged talent from being in Nevada. If there was no express right to invent or create and own what was invented or created, there would be no encouragement for talented, creative people to move into this state. Employers, he noted, went where there were talented, creative people. Encouragement to talented people could be established by giving them a statute that at least gave them an opportunity to own what they created, unless, he noted, they had been expressly hired by an employer with the intention of being employed to invent or create.

Chairman Goldwater thanked Mr. Tratos and stated he appreciated his comments, because they had changed intellectual property law to attract high-tech companies. The alter-ego doctrine had also been changed, and there was a litany of state and local government tax incentives to bring alternative industry to Nevada and it appeared not to be working.

Mary LaFrance wished to add a comment about the attractiveness of California to high-tech companies versus Nevada. The vast majority of states in this country, she stated, relied on the common law rules with respect to ownership of employee inventions. There were only a handful of states that had departed from the common law rules, Nevada being one of them. California, she stated, had also departed from the common law rules in one respect; it had actually enacted a statute that enhanced the rights of the employee-inventor. In contrast, Nevada had enacted a statute that decreased the rights of the employee-inventor, yet California continued to be the "Mecca" for high-tech industries. Other states that had pro-employee statutes regarding employee inventions included the states of Washington and North Carolina.

She concluded that the states that had enhanced the rights of employees were considered to be attractive places for high-tech industries to do business. She felt it was counterintuitive and that NRS 600.500 would not attract such high-tech workers to come to Nevada. She strongly supported A.B. 2 because it introduced an important protection for the employees by at least providing them notice of what they were giving up if they entered into one of those employment agreements.

Chairman Goldwater asked if there were questions and there were none. He thanked the speakers and asked if there was further testimony on A.B. 2.

Bob Shriver stated he had not seen the amendment prior to the presentation and would like to work with the sponsor of the bill to determine if there was any common ground relative to "paid to invent" versus the original bill from last session and the language in A.B. 2, which was not harmonious with what the intent had been. Perhaps, as Mr. Oceguera suggested, the focus at the last session had been more technology-based, but he would like to review the testimony to see if it had been applied more broadly. Their goal was entrepreneurship and development, and they did not want to impede a business from growing or, at the same time, to stifle the intellectual pursuits of employees. He was willing to work with the sponsor to see if the amendment was acceptable.

Mike Alonso stated he had spoken to the sponsor of the bill. IGT opposed the bill and they liked the statute as it stood. Although they understood Mr. Oceguera's position with his hypothetical situation, he stated that in IGT's case they did enter into agreements with their employees, they did have incentive programs to get employees who did not necessarily invent or whose jobs were not to invent to try to be creative. Those employees, he stated, might not be under similar contracts. IGT was in the business, he explained, of creating gaming devices and gaming systems, and the company needed to be protected from those people who might be looking over somebody's shoulder and usurping proprietary information. He noted that if an employee of IGT were to invent a "spatula" that IGT would not make a case that that spatula belonged to IGT. However, if the employee were to invent a new game of "Jeopardy" or something similar, then IGT would have an argument that the resulting intellectual property might belong to IGT.

The "paid to invent" amendment had not been discussed with Mr. Oceguera, and Mr. Alonso felt it was headed in the right direction but he would like to work with him further to try to come up with something that worked for IGT. IGT's main concerns, he continued, were the scope of the business, the amount of money invested in that business, and their attempt to provide incentives to employees to be creative during their work hours.

Chairman Goldwater stated he appreciated his remarks.

Mr. Oceguera stated he had discussed with Mr. Alonso other hypotheticals and that they still had differences of opinion. He stated he would like to work with IGT to rectify their disagreements. Chairman Goldwater told Mr. Alonso that he did not understand why the employer would not have the ability to have an agreement with the employees that would cover all intellectual properties. Mr. Alonso stated he agreed. IGT did a very good job and covered all employees employed to invent, but they were concerned about other employees; the janitor, for instance. They had incentive programs in place to cover those employees who created something during work hours. If an employee created something on the weekend, there were programs to pay incentives to those employees. He felt there needed to be language covering "course and scope." Because there were so many employees at IGT it would be possible to miss someone.

Chairman Goldwater stated that even under current law those risks would still exist. Mr. Alonso agreed.

Mr. Shriver commented on Mr. Tratos' reference to Westwood Studios, which left Nevada and went to California. He explained that another company had bought out Westwood and there had been no control over where that company went. He explained there had been examples where a Nevada company had purchased a company in another state and moved that company here. Nevada needed, Mr. Shriver said, to have a full complement of incentives to attract and maintain those high-tech types of companies in Nevada.

Chairman Goldwater stated he was still unsure about what the objection was. He asked if a company had a contract with their employees, were they afraid that the janitor would steal that idea and patent it. Mr. Alonso stated that the concern would be that they would not have a written agreement with every single employee.

Chairman Goldwater closed the hearing on A.B. 2 and asked Mr. Oceguera to let the Committee know what he wished the Committee to do.

Chairman Goldwater opened the hearing on A.B. 288.

Assembly Bill 288: Provides for judicial approval of certain contracts involving minors. (BDR 11-1116)

Assemblyman Kelvin Atkinson, Clark County, District No. 17, introduced A.B. 288. The objective of this bill, he stated, was to address a growing need in Nevada, particularly in Las Vegas and Reno, as the entertainment industry continued to expand and more minors were employed by the industry. Nevada was, he explained, a favored venue for film and television. In 2002, filming of all types in the state resulted in a calendar year total of $126 million in revenue. More than 2,500 days of production were generated by 543 projects during the 12-month period. Highlights of notable feature films produced in Nevada could be found on the Nevada Film Office Web site, Mr. Atkinson stated. Those films included Intolerable Cruelty, starring George Clooney and Catherine Zeta-Jones; Looney Tunes, with Brendan Fraser and Jenna Elfman; The Cooler, starring William H. Macy; Little John from "Hallmark Hall of Fame"; The Core, starring Hilary Swank; Charlie's Angels 2; The Hulk; George of the Jungle II; Head of State, with Chris Rock; and Timeline, by Richard Donner. Short portions of all those films were filmed in Nevada during 2002.

Producers, Mr. Atkinson continued, came to Nevada and often hired children, both locally and out-of-state, primarily from California. Both minor and major roles in films and television productions were hired. Most minors and their parents likely did not know or understand the legalities involved in the industry and whether or not the terms of the contracts were fair and reasonable. A.B. 288, Mr. Atkinson stated, would offer the assistance of the courts to make those determinations through judicial approval of contracts with minors who were entering into the entertainment industry.

This bill, Mr. Atkinson stated, was modeled after similar statutes in California and New York. In those states, judicial approval of contracts with minors in the entertainment industry had long been the standard. They were favored not only by minors and their parents but by the producers as well.

Mr. Atkinson explained that a minor could disavow a contract in every state upon reaching the age of 18. By offering a process via which judicial approval of an entertainment contract with a minor could be obtained, producers could be assured the minor would be unable to disavow the contract at a later date. A.B. 288 reached beyond entertainment contracts with minors and also included contracts with minors to purchase, sell, lease, transfer, exchange, or otherwise dispose of tangible or intangible, musical, artistic, or dramatic properties. Contracts that used the names, voices, signatures, photographs, or likenesses of a minor and contracts with minors concerning radio broadcasting, television, or motion picture rights for the performance of a minor would be covered.

Mr. Atkinson hoped the Committee would agree that this measure was fitting, not only for the state and its growing reputation as a favored destination for film and television, but for the children who were providing creative and artistic services. He stated there were experts willing to answer any questions the Committee might have.

Vice Chairwoman Buckley asked that the experts come forward to testify.

Mark Tratos stated that he had worked with the entertainment industry for many years. One of the objectives was to increase the economic diversity of Nevada by allowing new "clean" industry of entertainment to permeate and grow. One of the problems that had been faced by the entertainment industry in coming to Nevada, unlike the states of New York, Illinois, and California, was that there were no means of assuring themselves that the contracts they entered into would not be revoked or disavowed by the minor at a later date. Numerous producers, Mr. Tratos stated, had expressed their dismay at not being able to take a Nevada resident in and receive judicial approval of minors' contracts. Many had opted to hire talent residing in New York, California, or other states where judicial approval was acceptable, getting that approval in that state, and then coming into Nevada with talent that resided elsewhere. The enactment of A.B. 288 would support the development of talent here in Nevada. The bill as drafted would provide that the business courts were the primary courts that would do this, and in those counties where there was not a business court, the family courts would have jurisdiction. He stated his belief that most of the work would originate in Reno and Las Vegas, both of which had business courts.

C. Joseph Guild III, Legislative Advocate, representing the Motion Picture Association of America, Inc., stated the MPAA opposed A.B. 288 unless amendments could be considered. He stated that references had been made about New York, Illinois, and California being the models for jurisdictions that had judicial oversight and approval of minor's contracts in the entertainment industry. While it was true that those states had judicial review, he noted there was a particular problem with this bill because of its "mandatory" requirements for judicial review; in California the judicial oversight was not mandatory. He wished the Committee to consider two amendments, which would more properly align A.B. 288 with the California model. Mr. Guild said there would have to be some technical amendments to make the whole bill comport with his proposal, but he hoped the Committee could get the general idea. On page 4, Section 11, it stated that the court was required to schedule a hearing to determine whether the petition should be granted. Many of those contracts were standard contracts, which were covered by collective bargaining agreements, and he felt the parties should be able to waive notice unless the court found a good reason to require a hearing. In California, he stated, most of the contracts were reviewed without the need for a costly, time-consuming hearing. He asked if both parties had agreed to the terms of the contract, why was Section 11 needed. In case it was needed, his suggestion would be, at line 38, page 4, Section 11, to strike the word "shall" and insert the word "may."

Another section Mr. Guild proposed to amend was Section 15. This, he stated, was probably the most problematic for his clients because it allowed the court, on its own volition, to interfere with an existing contract. Their suggestion would be to strike the section entirely.

Mr. Guild suggested the amendment should change Section 16, on page 7, line 20, to begin with the words "if a contract" and capitalize the word "if." Mr. Guild stated the reason for this amendment was that the uncertainty Section 16 created undermined the entire reason for a court-approved process. He explained that the entertainment industry sought approval of contracts with minors to establish the certainty that the contract would be maintained. His clients wished the contracts to be binding and wanted the certainty that the performers would uphold the contractual responsibilities. Currently, he stated, if a party to a contract did not uphold the terms of the contract, the aggrieved party could take the claim to court in a normal contractual action, so he questioned if the provision in Section 16 was necessary. He explained he was willing to work with the sponsors to make this bill a better bill and to further the goals that had been stated and to make this law comport with existing laws in the country.

Mr. Oceguera stated he understood Mr. Guild's argument on page 4, Section 11, to make the language permissive and did not feel that would be a huge issue. He was not so certain, he explained, with Mr. Guild's concerns on Section 15. The language there was permissive, Mr. Oceguera stated, and it stated that the only time the court would be involved was if there was a finding that the mental, physical, or emotional health, safety, morals, or well-being of a minor was being impaired by the performance of the contract. That, he stated, appeared to be protective of the minor. He agreed that the intent would not be to get involved in the middle of a contract unless necessary, but those appeared to be necessary reasons to become involved.

Mr. Guild answered that he was not an expert in entertainment law, but it had been told to him by some experts that Section 15 was not at all similar to the law in the other jurisdictions mentioned. From a general legal principle point of view he disagreed with Mr. Oceguera. Where a guardian, parent, or agent acting on behalf of a minor found any of those stipulations mentioned in Section 15 existed, that person could certainly petition a court for intercession, but for the court, upon its own motion, to become involved, appeared to be unusual and unnecessary situation.

Mr. Oceguera asked if Mr. Tratos could address those concerns.

Mark Tratos stated that the testimony that had been heard was correct in that Section 15 was something that could not be found in either the New York or California legislation. The producers of television and motion pictures, he noted, had used the judicial approval of minors' contracts statutes in such a manner that they could insulate themselves from the subsequent disaffirmation of the contract. It appeared that A.B. 288 attempted to go one step beyond the legislative statutes in those other states. Since a court would have approved this contract, the bill stated, that court would be the most interested court in the ongoing well-being of the minor concerned.

This legislative draft, Mr. Tratos explained, was essentially intended to give the minor as much benefit as the producer. He understood this section's intent was to ensure the minor and the minor's interests were put uppermost in the court's thinking in the way those contracts would be enforced. He explained that this section would not apply if the court had not already been presented with the contract. Section 15, Mr. Tratos continued, would not be applicable if the court had not previously looked into and approved the minor's contract in the first place. Mr. Tratos stated that in those instances where the contract had not been submitted for approval there would be no opportunity for the court to intervene later.

Chairman Goldwater asked Wil Keane, Committee Counsel, to clarify, who stated there was just a minor point on Section 15. The intent of putting that section in the bill was, if there was something seriously going wrong with the minor, that the court would have the authority to revisit the contract. Mr. Keane stated the wording could be reworked or reworded or modified or even changed in its focus, but that was the basic intent behind that provision.

Assemblyman Brown agreed that the interests of the minors had to be protected. It appeared that the wording was too broad and would allow any attorney to question a contract. He wondered if there was any burden or standard of proof that would be necessary.

Assemblywoman Gibbons asked to hear what Robin Holabird felt about this bill because she was in that industry.

Robin Holabird, Deputy Director, Nevada Commission on Economic Development, Nevada Film Office, stated they were interested in protecting the rights of minors working with Nevada. Her concern, with the bill as written, was that it took the review provision a step beyond what California had provided. The concern would be that it would take more time than the competition getting those contracts approved. She expressed their desire to be in line with what the industry was doing elsewhere and felt this bill went too far. However, she was willing to work within the grounds that had been presented.

Chairman Goldwater asked Mr. Guild if the collective bargaining agreement and the Screen Actors Guild covered minors. Mr. Guild stated that featured actors and actresses were covered because they had to belong to the Screen Actors Guild. Chairman Goldwater stated they might belong to the Guild but wondered if they were covered. Mr. Guild stated in the big studios they were.

Chairman Goldwater stated that Mr. Keane had indicated to him that the drafters had modeled Section 15 on New York law.

Rick Loop, Assistant Court Administrator, Eighth Judicial District Court, stated that on behalf of both the Second Judicial District Court in Washoe County and the Eighth Judicial District Court in Clark County, they supported A.B. 288.

Assemblyman Hettrick asked Mr. Keane if there was a reason the bill drafters had used New York law rather than California law. Mr. Keane stated he had not been the drafter on this bill, but the drafter had e-mailed him to advise that New York had been the model. Mr. Keane stated he would investigate further and let the Committee know.

Mr. Hettrick wondered if there had been some value judgment made in choosing New York over California. He stated that California was their competition, not New York, and felt that they should model the bill more closely on California law. Mr. Keane stated he would look into that and let him know.

Chairman Goldwater asked if there was further testimony and there was none. He asked Mr. Guild to work with Mr. Atkinson and Mr. Oceguera to see if they could agree on some amendments so that a work session could be scheduled. He asked that he and Mr. Hughey be informed when consensus had been reached. Mr. Guild stated he would be happy to work with them.

Chairman Goldwater closed the hearing on A.B. 288. He opened the meeting on A.B. 478.

Assembly Bill 478: Revises provisions relating to registration of certain businesses regulated by Division of Consumer Affairs of the Department of Business and Industry. (BDR 52-1249)

Ms. Patricia Jarman-Manning, Commissioner, Nevada State Consumer Affairs Division, stated this bill was primarily a housekeeping issue. She gave a brief background of NRS 598. The Consumer Affairs Division currently registered and bonded buying clubs, credit organizations, dance studios, health clubs, and, since 2001, travel agencies, tour operators, and tour brokers. What A.B. 478 attempted to do was correct the omission of the 2001 tour brokers and operators in regard to the $25 registration fee. They wanted to increase the registration fee from $25 to $100. Additionally, she stated, they wanted to remove the inclusion of martial arts studios entirely. She asked if there were any questions.

Assemblywoman Buckley asked for the justification for the fee increase and if there was not enough money to deal with the complaints. She stated that there had to be some reason to raise the fees. Ms. Jarman-Manning stated that for the past 14 years they had been charging the same $25 and had not asked for an increase. There had been escalating costs in their operations, their mailings were expensive, and there were now four workers who dealt with the travel industry in addition to their regular duties. All of the funds, she noted, went back to the General Fund, but because of the amount of time that was required, the $25 fee was no longer feasible. Ms. Jarman-Manning explained that the salesmen registration fees had always been $100 and she just wanted them all to be the same.

Assemblywoman Giunchigliani asked if Ms. Jarman-Manning was speaking about a seller of travel or was it solely focused on the broker and operator. Ms. Jarman-Manning stated the bill would cover all of the registrants under Chapter 598, which would include buying clubs, credit service organizations, dance studios, health clubs, travel agents/brokers, and tour operators/brokers.

Ms. Giunchigliani stated that she had received a call from a travel agent who was concerned about this bill. People could go online to purchase most of their tickets and that had undermined the travel agency business; to raise the price of the fees was an added burden. This bill would be discriminatory because it did not affect those Internet firms who sold tickets. She asked if Ms. Jarman‑Manning had had any conversations with the travel agency groups.

Ms. Jarman-Manning stated she had had several conversations over the last two years with members of the industry, but explained the fee increase had not been one of their major concerns. They had commented they were concerned about the $100 fee but, she explained, it only amounted to about $8 per month. Ms. Jarman-Manning stated she personally paid more than the $100 fee on several licenses she held. She reiterated that there had been no increases over the past 14 years. They were not singling out a particular industry with this bill but raising the fees across the board.

Ms. Giunchigliani asked what the other issues were that had been raised by the travel agency groups. Ms. Jarman-Manning stated there were many. Questions had been raised about the $50,000 surety that was required, which could be in the form of a bond, a Certificate of Deposit, or a letter of credit. The issue, she explained, was that they needed to have good credit in order to get a letter of credit or a bond; those who could not qualify for that would have to put up the money for a Certificate of Deposit. Ms. Giunchigliani asked if that issue was to be heard in the future and Ms. Jarman-Manning agreed.

Ms. Giunchigliani asked for the rationale in eliminating martial arts studios. Ms. Jarman-Manning stated that martial arts studios had been included under health clubs, and after closer examination the Division had determined that those should not be under health clubs, so they were asking to eliminate them from this bill. Ms. Giunchigliani asked for clarification; had she testified that she wanted to delete martial arts studios from this bill, and Ms. Jarman-Manning agreed she did. Ms. Giunchigliani stated she was unclear why they should be eliminated.

Chairman Goldwater stated that due to the length of the agenda, he felt Ms. Jarman-Manning should provide to the Committee, in writing, what she felt the fee increase would raise, some indication of support by the industry for this increase, and give some rationale of why martial arts studios had been originally included and why she now wished to eliminate them. Ms. Jarman-Manning stated she would be happy to do that.

Chairman Goldwater asked if there was anyone else who wished to testify on A.B. 478, and there were none. He closed the hearing on A.B. 478.

Chairman Goldwater opened the hearing on A.B. 497.

Assembly Bill 497: Exempts licensed childcare facility from regulation as food establishment. (BDR 40-1199)

Chairman Goldwater stated he would take the privilege of the Chair and explained that a constituent of his was in the childcare business. He had informed the Chairman that he had a small kitchen where he might serve a hot lunch or a bowl of soup to the children. The Clark County Health District, which regulated his childcare facility, would not exempt him out of the regulations that he have a commercial kitchen. He stated he could not be exempted because the statute did not create that exemption. Chairman Goldwater stated he had requested A.B. 497 and informed the Committee that there were witnesses in Las Vegas who wished to testify.

Gary Vause thanked the Committee for the opportunity to speak about this bill. As background information, he stated, in August 2002 the Clark County Health District adopted regulations for childcare facilities that would, among other things, require commercial kitchens, just like restaurants and 5,000-room hotels, in child care facilities. At that time they had been told that the Health District had no choice but to enforce that regulation. He discovered that the Health District was referring to NRS 446.020. He explained that the Health District had to enforce those regulations because of the state statute. Mr. Vause asked Chairman Goldwater and other legislators to exempt childcare facilities from this onerous regulation. Some of the children they cared for got their only hot meal each day because the childcare facility provided it. He explained they opened cans and heated the food. They served meals such as spaghetti, pork and beans, turkey with gravy, chili, tuna casserole, macaroni and cheese, burritos, and sometimes they brought in pizza. Cans of vegetables, he continued, were opened and heated; they served canned fruits and fresh milk and also fresh fruits and vegetables as a snack. They would be unable to do any of that because of those regulations.

He told the Committee he would like to have this bill enacted. They would revert back to the regulations they had before where they had to maintain sanitary food-handling requirements and hand-washing requirements. They could continue to serve children hot lunches and other meals and snacks.

Chairman Goldwater asked Mr. Vause to clarify if there were there existing regulations and NRS 446.020 extended the commercial kitchen regulations to include the childcare facility. Mr. Vause stated that they had operated for years under guidelines before Clark County decided to adopt regulations, and in the process of adopting those regulations there was no provision or latitude to do anything to exempt child care facilities from the requirement for commercial kitchens. Mr. Vause was told that the only way to change the requirement was to go to the Legislature and have them remove the childcare facilities from the state statute. The explanation given to Mr. Vause was that if they were not exempted from the statute, then they were covered by it as a food establishment.

Lillie Englund, Board Member, Southern Nevada Association for the Education of Young Children, and Owner and Director, Imprints Day School, stated she had submitted written testimony (Exhibit E). Ms. Englund stated she basically agreed with the exemption. Without it, they had been told, they would not be allowed to cut an apple or spread cream cheese without a commercial kitchen and no knives could be in the facility. She stated they served similar food as Mr. Vause did for his children. Many of her children were there ten hours a day, which meant the facility was required to provide 50 percent of the children's nutrition. She was also advised that the Health District was not concerned whether the meals served were nutritious, only that they were safe and sanitary.

Ms. Englund explained that her childcare facility provided a homelike environment to the children, at times more than what they received at home. Many of the families had told them that they felt the children had been given nutritious meals at the facility and did not worry too much about what the child ate for dinner.

Chairman Goldwater asked if the options she faced were either a full-blown commercial kitchen or not serving any food at all. Ms. Englund agreed, but stated the other option could be every food item would have to be individually portioned prepackaged products that were stored according to manufacturer's specifications. If they stored anything that required refrigeration, they would have to have commercial refrigerators.

Chairman Goldwater asked if there were any questions for the witness. Ms. Englund stated she would like to add that they had received an estimate to upgrade their kitchen to commercial, which already had a three-part sink and commercial refrigeration. That estimate was $68,206.24, roughly $40,000 of which was to install the kitchen hood and the Ansul fire suppression (captive air) system.

Sean Gamble, Legislative Advocate, representing Clark County Health District, stated she had signed in as opposed to A.B. 497. The Clark County Health District, she stated, had some concerns about potential hazards of food handling. They were willing to work with the childcare facilities if they were only opening cans and heating the food. They would like to work with the language to limit the food preparation in childcare facilities. They were, Ms. Gamble explained, more concerned about raw meats because that was where the dangers existed. She stated she had two gentlemen in Las Vegas wishing to testify.

Assemblywoman Buckley wondered if something had happened recently to make this an issue. Chairman Goldwater answered that they had passed a law which regulated commercial kitchens, and because childcare facilities had not been specifically exempt, they were automatically included. Ms. Buckley asked when it had passed and who had passed it. Chairman Goldwater stated they should listen to the testimony from Las Vegas.

Daniel J. Maxson, Clark County Health District, stated that Ms. Buckley had asked "why now." He stated they had used guidelines for as long as he had been at the Clark County Health District and the food establishment regulations were based on NRS 446, but had not been enforced. When the regulatory authority was finally established with the childcare center regulations based on NRS 432, then NRS 446 did apply and it was simply brought into place. He stated that they agreed that low-risk food items should not be included; however, there was no caveat for allow for such minimal food preparation in the NRS. He stated they were against this bill as currently written but were willing to work with the sponsors. A.B. 497, as written, would mean they would have no inspection authority to go into those kitchens and protect those children in the event of an outbreak or for just routine purposes to check for infestations of rodents and other food problems, which could occur even when the risk of the food preparation was relatively low. He stated again they were willing to work on the language but needed the regulatory oversight they had in the past.

Chairman Goldwater stated they would work on the language to try to accomplish that goal. He asked if there was further testimony.

James T. Hogan, Environmental Health Supervisor, State of Nevada, Bureau of Health Protections Services, Department of Human Resources, read from prepared testimony (Exhibit F). He stated he was opposed to this bill. Children, especially young children, were one of the high-risk groups due to their immature immune systems. To remove oversight of food service programs at licensed childcare facilities would put children at an increased risk of contracting food-borne illnesses.

Chairman Goldwater stated that Mr. Keane had expressed his willingness to help with the wording of amendments.

Assemblyman Beers noted that since the theoretical risks had been described, did he have any anecdotal stories that supported the premise that there was a problem. Mr. Hogan stated there had been none of which he was aware.

Assemblywoman Buckley stated that because childcare was provided in such a wide variety of placements, they should be able to ensure proper food handling but still not require a commercial kitchen. She explained she did not understand why common sense could not fix the problem.

Chairman Goldwater stated they would all try to fix this. He thanked the speakers.

Bob Sack, Division Director of Environmental Health, Washoe County Health District, stated they were opposed to the bill on the same grounds as had been stated. He wished to state that they had a common sense approach right now; they did not require permits for someone to cut up apples. That would be covered under the individual regulations that they worked with. He felt they needed the permitting authority for oversight.

Chairman Goldwater stated no one wanted to take the oversight away. He asked if Washoe County governed childcare facilities as commercial kitchens. Mr. Sack stated that for certain types of activities they would have to get a full-blown commercial kitchen. Chairman Goldwater stated his understanding was that not every facility would need one and Mr. Sack agreed and stated they needed a permit but that a full-blown commercial kitchen was not needed. Chairman Goldwater asked if there were different interpretations of the same statutes by different counties, and Mr. Sack agreed.

Chairman Goldwater asked if there was further testimony and there was none. He stated they would try to perfect this statute. He closed the hearing on A.B. 497.

Chairman Goldwater opened the hearing on A.B. 498.

Assembly Bill 498: Makes various changes to provisions governing manufactured home parks. (BDR 10-1296)

C. Joseph Guild III, on behalf of the Manufactured Home Community Owners, spoke in favor of this bill. He thanked Assemblywoman Buckley and Speaker Perkins who, six years ago, had written to the interested parties, the landlords and the tenants who owned and lived in mobile home parks, and had requested they work together. They had done so, and successful legislation was passed in 1999 to improve mobile home park living. He felt they had a cooperative, consensus-building group that had produced A.B. 498. He explained that the tenant groups and the landlord groups came to the table and all issues were presented. A list was made of those issues they agreed on and a bill resulted.

The first section of the bill, Mr. Guild stated, simply stated that an applicant for residency could request a 72-hour cooling-off period to review a proposed rental agreement or lease. This review period would not preclude a landlord from renting the same space but it would also give the prospective tenant time to see if there were any questions that could be answered.

Section 2 of the bill Mr. Guild said needed amending because the wording did not reflect what the intent had been. The point, he noted, was the refund of the deposit must include interest that was equal to an average of the prevailing rate during the time period of the retention of the deposit until the deposit was refunded. Somehow, Mr. Guild said, a formula of prime plus 2 percent had been reached and that was not what had been agreed to.

Page 4, Section 3, of the bill required the landlord to notify a tenant of the laws regarding setups of mobile homes in mobile home parks and the requirement that a licensed and legally permitted person be used to install the home. This provision would eliminate the problems that occurred when unlicensed persons set up a mobile home in an unsafe and potentially hazardous manner.

Section 4 on page 4 of the bill, Mr. Guild continued, required a landlord to post and provide each tenant with the office hours and when the landlord would be available at the park.

The next change, Mr. Guild stated, was on page 5, Section 6, line 36, which would change the requirement that a continuing education course must be attended, six hours of which must be attended by every manager of a mobile home park of 2 or more lots, rather than 25 or more lots.

Mr. Guild explained the next change in the law would be on page 7, line 8. The small deletion of the words "or social" meant that a landlord could require a deposit for a social function that would be held in the common area or the clubhouse of the mobile home park.

Page 8, beginning at the top of the page, Section 7, subsection 2, would be the explanatory language of the previous testimony. This would allow a security deposit to be required for common use of the facilities for social functions and the deposit must be refunded on or before the eighth day after the function if there was no damage.

Current law provided that a landlord closing a manufactured home park was responsible for paying the cost of moving a tenant's home. Sometime, Mr. Guild stated, that was not practicable. If the home was very old and could not be moved without damage, the new section would allow for payment to the tenant for some compensation for the movement of that home. Section 8 appeared to be a fair formula for that procedure.

Page 9, Mr. Guild stated, again dealt with the conversion of a mobile home park to another use and required the landlord to pay the cost of moving.

There had been a great deal of discussion, Mr. Guild explained, regarding page 10. What was being proposed dealt with cases of dire situations where there might be health or safety violations occurring, which were enumerated on lines 9 through 16. Rather than a five-day notice to quit, some other super notice of three days in those situations would be allowed.

The most controversial segment of A.B. 498 was on page 11. This would change the law to say that where a tenant had received three or more ten-day notices to quit for failure to pay rent in the preceding 12-month period, they might have their tenancy terminated for habitual failure to pay timely rent. It would not, Mr. Guild explained, mean the landlord could avoid going to court or notifying the tenant. He stated it was like the "three strikes and you are out" law in California. Mr. Guild gave an example. Currently, failure to pay rent required a 10-day notice to quit. At the end of that time, if the landlord had not been paid and the tenant had not quit the premises, the landlord had to file a complaint for eviction and the tenant received 20 days to reply. At the end of that time, it would take 10 to 15 days to get to trial. He stated that was a total of approximately 30 days at best to 45 days at worst before trial. This would cost the landlord about an hour of attorney time, service and filing fees of approximately $50, and, if this happened three times in a year, they would be looking at a minimum of $700 and 90 to 135 days of time during the year. Those were considerable expenses. This provision would allow the landlord to use habitual late payment as one of the criteria for an eviction.

Bob Varallo, President, Nevada Association of Manufactured Home Owners, Inc., stated they were in favor of A.B. 498. He had participated in all the discussions over the years and was willing to answer any questions the Committee might have.

Assemblyman Beers asked, with regard to page 3, Section 2, making changes to the rates that were used to generate interest on deposits, if the language that was being struck included the phrase "compounded annually." The language that replaced it did not address what the compounding period would be.

Mr. Guild stated that on line 14, it stated a five-year period. A deposit, if held by a landlord, could not be held for more than five years from the date it was first received from the tenant until either the termination of the tenancy or the expiration of five years. Mr. Beers stated that was not his question. His question was the ambiguity of the replacement language. The current language alluded to annual compounding. If the change were made to prime plus 2 percent on January 1 and July 1, that would indicate a biannual compounding. He suggested that the period should be specified in the law so as not to appear to allow compounding daily. Mr. Guild replied that this language did not come back from the bill drafters the way they had wanted and the way it had been agreed to. The amendment he wished to propose would read something like "the refund of the deposit must include interest that is equal to an average of the prevailing rate during the time period." He felt that would solve the compounding problem.

Assemblywoman Buckley stated her appreciation for the hard work that had been done. In addition to the Section 2 amendments, she said she would like to see some amendment to Section 8, because she felt it did not come out of bill drafting exactly as agreed upon. That section did not explain what would happen if the tenant elected not to have the home moved by the landlord. She stated her belief was that the intent had been if the tenant wished to leave the home there, they would get the cost of moving a comparably priced home, minus the cost of removal and disposal, but if they wanted to take the home with them, they would just get the cost of moving a comparably priced home and there would not be a deduction. The bill was not worded to reflect that. Mr. Guild agreed.

Ms. Buckley stated that tenants frequently called the Assembly members who had mobile home parks in their districts to ask about the members' opinions, and she had concerns about the habitual late payer. Presently, she stated, there had to be cause for an eviction. The cost of moving their homes could be $7,000. She explained she could not support that provision. She stated the rest of the bill was excellent.

Karl Braun, Nevada Association of Manufactured Home Owners, Inc., stated that although the matter had not been discussed previously, there was a problem with page 9, lines 28-30, which stated "A landlord shall not increase the rent of any tenant for 180 days before applying for a change in land use, permit or variance affecting the manufactured home park." Mr. Braun explained that had happened at Tahoe Shores Park. The rent increase had been rescinded and Tahoe Shores then increased the rent after the application. He stated he would like to see that loophole closed. The law, he said, was drafted to protect residents when the landowner planned a change in land use that he could not increase the rent in an effort to remove people so he would not have to pay for their relocation costs. Allowing the landlords to increase the rent after the application for change in land use it would accomplish the same thing. It would make if difficult for the tenants to remain there. He would like to see an amendment to not allow rent increases before and after the application for changes in land use.

Mr. Guild stated that was not part of their discussion about this bill and he would like to preserve the integrity of the consensus-building process.

Chairman Goldwater asked if there was anything more on this consensus bill and Mr. Varallo wished to thank Speaker Perkins for his idea of bringing forth the forum they had. It had been a successful coalition.

Ernie Nielson, Washoe County Senior Law Project, explained that his organization provided free legal services to seniors primarily with regard to basic needs. One of those areas was mobile homes. He stated he did not oppose the entire bill, but just the one section that dealt with three late payments. He noted that his office had not been involved with the consensus process and they only became aware of the consensus after agreements had been reached. Essentially, Mr. Nielson stated, they wished that the Committee would delete portions of the following paragraphs:

paragraph 1(c)
all of paragraph 6 in Section 10
paragraph 2 in Section 11
paragraph 3(b) of Section 12

That portion of the bill, he stated, did not accomplish much for the landlord but a lot would be lost by the tenants. After a tenant, he explained, received a notice of non-payment, the tenant had ten days to pay that rent. If they paid during those ten days, then there would be no basis for an eviction action. This bill stated that if a tenant were late the fourth time, payment would no longer be a defense. From the tenant's perspective, there was a lot to lose. In northern Nevada, he noted, there might not even be places to move a mobile home. The landlord, he felt, had a plethora of other tools by which to evict a tenant and also to acquire late payment and non-payments, primarily the lien law whereby the landlord was able to notice and actually sell the mobile home if a tenant had not paid rent.

He stated he understood why the mobile home park industry would like to have this bill because it provided incentives for tenants to pay their rent in a timely manner; however, seniors on limited and fixed incomes had more problems being able to pay in a timely manner. He requested that the Committee not allow that part of the bill.

Chairman Goldwater asked if there were questions for Mr. Nielson and there were none. He thanked everyone for their work and conceded that consensus was difficult to achieve. Chairman Goldwater asked Mr. Guild to discuss their differences with Assemblywoman Buckley regarding Sections 11 and 12 to see if agreement could be achieved. Mr. Guild stated he would be happy to work with her.

Chairman Goldwater closed the hearing on A.B. 498.

He commended the Committee for getting through so many bills and noted that the agendas were getting larger.

Chairman Goldwater adjourned the meeting at 4:38 p.m.

RESPECTFULLY SUBMITTED:

Patricia Blackburn

Committee Secretary

APPROVED BY:

Assemblyman David Goldwater, Chairman

DATE: