MINUTES OF THE meeting

of the

ASSEMBLY Committee on Government Affairs

 

Seventy-Second Session

April 8, 2003

 

 

The Committee on Government Affairswas called to order at 8:26 a.m., on Tuesday, April 8, 2003.  Chairman Mark Manendo presided in Room 3143 of the Legislative Building, Carson City, Nevada, and via simultaneous videoconference, in Room 4406 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.

 

Note:  These minutes are compiled in the modified verbatim style.  Bracketed material indicates language used to clarify and further describe testimony.  Actions of the Committee are presented in the traditional legislative style.

 

COMMITTEE MEMBERS PRESENT:

 

Mr. Mark Manendo, Chairman

Mr. Wendell P. Williams, Vice Chairman

Mr. Kelvin Atkinson

Mr. Chad Christensen

Mr. Tom Collins

Mr. Pete Goicoechea

Mr. Tom Grady

Mr. Joe Hardy

Mr. Ron Knecht

Mrs. Ellen Koivisto

Mr. Bob McCleary

Ms. Peggy Pierce

Ms. Valerie Weber

 

COMMITTEE MEMBERS ABSENT:

 

None

 

GUEST LEGISLATORS PRESENT:

 

Mr. Jason Geddes, Assembly District No. 24, Washoe County

 

STAFF MEMBERS PRESENT:

 

Susan Scholley, Committee Policy Analyst

Eileen O'Grady, Committee Counsel

Pat Hughey, Committee Secretary

 

OTHERS PRESENT:

 

Carl Linvill, Ph.D., Economic and Energy Advisor, Director, State Office of Energy, Office of the Governor

Greg Smith, Deputy Administrator, State of Nevada, Department of Administration, Division of Purchasing

Terry Page, Manager, Legislative and Regulatory Services, Alrus Consulting

Jay Johnson, Business Development Manager, Arizona Public Service Energy Services

Dan Musgrove, Director, Intergovernmental Relations, Office of the County Manager, Clark County, Nevada

Ted Olivas, Assistant Director, Clark County Finance Department

Danny L. Thompson, Executive Secretary-Treasurer, Nevada State AFL‑CIO

Jack Jeffrey, Southern Nevada Building and Construction Trades Council

Greg MacRenaris, Citizen

Mary Henderson, representing the City of North Las Vegas

David Moore, Citizen

Janice Wright, Deputy Treasurer-Programs, Office of the State Treasurer

Elizabeth Fretwell, Deputy City Manager, City of Las Vegas

John Redlein, Assistant City Attorney, Civil Division, City of Las Vegas

Jim Avance, Consultant/Lobbyist, representing the International Carwash Association

Peter D. Krueger, State Executive, Nevada Petroleum Marketers and Convenience Store Association

Kami Dempsey, Government Relations Manager, City of Las Vegas

Richard Wilkie, Legislative Advocate, City of Henderson

John Swendseid, Swendseid and Stern, representing Clark County as Bond Counsel

Steve Walker, President, Walker and Associates, representing Douglas County, Carson City, and Lyon County

Madelyn Shipman, Deputy District Attorney, Civil Division, Washoe County District Attorney

Chairman Manendo:

Good morning.  Committee on Government Affairs, please come to order.  Madame Secretary, would you be so kind to call the roll?  [Roll taken.]

 

For those of you who went on the tour of Carson City and Douglas County, we have some photos from Mary Walker that we’re going to pass around.  If any Committee members would like one, you’re welcome to take one.

 

Mr. Collins, we marked you present.  We appreciate your work the last couple of mornings on subcommittees.  When we talk about these early mornings and late nights, our staff is with us as well.  In fact, usually earlier and staying later.  Ms. O’Grady, Ms. Scholley, they’re absolutely outstanding, and we could not have a better staff.  I would like to let this Committee and our staff know I had to excuse myself today from a subcommittee.  I had to meet with the Speaker of the Assembly.  We were going over some things for our Committee, and he said that this Committee is the best-organized Committee that he has.

 

Assembly Bill 398:  Establishes temporary alternative procedure pursuant to which certain performance contracts for cost-savings energy measures in buildings occupied by governmental entities are bid. (BDR 27-1115)

 

Chairman Manendo:

We are ready to go on Assembly Bill 398, which is Mr. Geddes’ piece of legislation.  Good morning, sir.

 

Jason Geddes, Ph.D., Assembly District No. 24, Washoe County:

[Introduced himself.]  [Exhibit C was distributed.]  The purpose of this legislation is to add a new code section allowing state departments and all other public entities, universities and colleges, public schools, and cities and counties to enter into energy, water, waste disposal, and other resource saving or operational saving performance contracts, either as an installment payment or a lease-purchase contract, without going through the lowest bid process.

 

The whole impetus of A.B. 398 was talking about the energy efficiency of buildings, the number of state facilities we have, which is well over 1,900, that they were built anywhere from 5 to 80 years ago, and that we don’t have the most modern energy efficiencies that we could get.  I was talking to Dr. Linvill from the Governor’s Office, who is joining me today to answer technical questions about what we could do to improve energy efficiency in the state system, and to start realizing cost savings from these energy efficiency upgrades.

 

[Assemblyman Geddes continued.]  As you’re going through the budgets from the state agencies, you will see increased costs in the school districts, state agencies, and counties and cities, due to increasing energy costs.  This is one area where we can save a tremendous amount of money directly from installing energy efficiencies, energy upgrades, and water efficiencies.

 

We can also get indirect savings in the fact that, in entering into these operational savings contracts and performance contracts, we can get an outside contractor to put in a new HVAC system, or a new lighting system, or a total comprehensive energy savings package.  They would put in the cost for paying for it, and we would pay back those costs from the energy savings that we get on an annual basis, thus reducing the operation and maintenance costs that we’re facing from old equipment.  We would also save in not maintaining these old pieces of equipment, and pulling those out of the renovation and capital improvement budgets.

 

A good example is the Nevada State Prison was looking at upgrading their heating and cooling system, but they didn’t have the money in the budget to upgrade it.  Under this sort of system, they could afford to put in a brand new heater and not have to be fixing it and repairing the old system all the time, and it would pay for itself out of the energy savings.

 

I want to go through a few of the goals of the legislation [A.B. 398], but first I wanted to thank some of the people that helped put this together.  It’s quite technical and good portions of it are beyond my understanding, but I had a lot of help putting this together.  Most notably would be the State Public Works Board, who is working on similar legislation, and we agreed to merge them into this one piece of legislation to spare you having to listen to both.  Also, the State of Nevada Purchasing Division, the State Energy Office [Nevada State Office of Energy], represented by Dr. Carl Linvill, and several contractors in private industry who are looking to do this.

 

In the audience today we have Mary Jane Hale from the National Renewable Energy Laboratory.  She is here to answer technical questions.  She doesn’t have a prepared statement for you, but if you have questions or comments that are more technical or about the type of savings that can be gained, she would be a good resource for that.  I also have a letter from e·three Consulting in support of this legislation that I submitted into the record, Exhibit D.  There is a letter that will be coming to all of you from the Renewable Energy and Energy Efficiency Task Force [Renewal Energy and Energy Conservation Task Force], talking about this specific piece of legislation and how it is concurrent with their goals.

 

[Assemblyman Geddes continued.]  The goal here is to realize energy savings and to provide the flexibility in the current program to go beyond what it is doing now.  The Energy Efficiency Program was created four years ago and, in that time, we’ve been able to successfully do three projects.  This legislation [A.B. 398] will change things greatly so that we can start doing more projects more quickly and realizing those savings.  In so doing we are creating jobs, because a lot of these contractors and providers who want to do these systems will be able to bid, get in, get these projects going, and employ people to get in here working on them. 

 

I think this is a terrific program.  This legislation [A.B. 398] came out of a model operating contract that has been used in several cities, towns, and states across the nation.  We took it and also went through the State Public Works Board bill.  There were some concerns in the Purchasing Division, the Nevada State Treasurer’s Office, and the Nevada State Office of Energy.  The mock-up that I have e-mailed to all of you and distributed today [Exhibit C] has incorporated all of the amendments that I have heard to date.  We also received comments yesterday from Clark County, and I have incorporated their amendments into the bill with one minor error that I’ll clean up. 

 

To this point in time, I have heard several comments from several state and private organizations, and I’ve incorporated all those into the mock-up [Exhibit C].  I think the mock-up, with the proposed amendments I handed out, is a terrific bill, and I encourage your support of it. 

 

The last point is performance contracts.  What you’ll see is a very basic system.  The system is basic for a reason, and the idea is to get these projects moving forward.

 

The goal is to get all of those contractors and subcontractors who are interested in doing work for the state agencies, as well as this is enabling legislation for all the county, city, and other agencies who want to participate to be able to participate, and it sets up that structure and says, “We are the State Legislature and we want to do an energy retrofit of the building.”  We meet with a group of contractors who have been precertified by the State Public Works Board to meet all the qualifications to perform these projects in the state, and to put in the financial assurances that they can stand behind their guarantee and their contracts.

 

As a state agency, you would sit down with these guys and, like an architect’s first go-round showing his conceptual drawings of what he wants to do, they would show you what projects they have done and what they would like to do for us.  As an agency, you would say you like company X, you like what they’re doing, you like the way they think, and you get along with them very well.  At that point in time, you would say you want to go with company X.  Company X would work with the State of Nevada Purchasing Division to design a contract for your particular agency to do all the retrofits and energy efficiency upgrades on your agency’s building or facility.  At that point it would go forward.  There is a step in there where the State Public Works Board will make sure that it meets all code and technical requirements in the state law. 

 

[Assemblyman Geddes continued.]  It would then go forward, the retrofit would take place, and at the end of that time, there would be an audit, and that would be built into the price to make sure that all of those upgrades and efficiencies were built into the system.  One aspect of this is that they’re guaranteeing the performance and they are guaranteeing the payback.  They do an audit of your facility, say they can save you 15 percent of your energy costs, and say they will get 20 percent savings from your HVAC and 10 percent savings from your lighting.  If those 20 percent and 10 percent numbers don’t come out, but they still achieve their 15 percent, it’s okay.  We are going for total savings in the system.  Within the legislation [A.B. 398], once they’ve signed off on that, there are provisions to, at least annually, evaluate those systems and report back the operational savings and what things are in there.  With those savings, you would pay back that retrofit. 

 

As you’re paying this back, if more money becomes available and you want to do more in your building, you have that option.  This is a way for us to upgrade all state agencies, all state facilities, and parks; to utilize alternative energy, to increase energy efficiency; and increase energy savings, waste minimization, waste diversion, and water savings, and to be able to calculate all of this back in and use it to pay for these upgrades, so we don’t have to place the burden on the state and we can get there as soon as possible.

 

Assemblyman Williams:

This proposal sounds exciting from the point of how we’re trying to do it.  It’s a different procedure for getting these upgrades, the new efficient equipment, this deferred payment, the payment contemplated through the energy savings.  The part that I don’t understand is, if you set this up and do these things in this order, why do we have to do it without going to the lowest bidder?  If we prequalify the contractors, why does the elimination of the lowest bidder have to come into play? 

 

Assemblyman Geddes:

The reason that it falls out in my proposal from going to the lowest bidder is, first of all, we’ve prequalified everybody through the State Public Works Board, and we said that these are good quality companies who are financially responsible and can do the work.  We’ve assured the taxpayers of the state of Nevada that these are good companies.  When we move into the process, we have performance guarantees and performance contracting where we are guaranteed a certain amount of savings that will be realized from that project.  From this list of people that are out there, when they come in and present what they want to do to your system, they will be presenting successful projects that they’ve done in the past, and they can show you real demonstrated savings that they have achieved on other projects.

 

[Assemblyman Geddes continued.]  When you’re looking at them and evaluating them, you can say this person actually achieved the 10 percent savings, or the 20 percent savings, or the 30 percent savings, and put that in.  The reason it’s not in there is I don’t feel it’s necessary since we’re guaranteeing a certain amount of savings.  We’re guaranteeing the savings will pay for the project.  The other answer is the immense complexity of what can be out there. 

 

With what can be incorporated, if you’re looking at water savings, you’re looking at waste minimization; if you’re just looking at what can be saved in lighting, you’ve got options of more efficient lighting, lighting controls, day lighting, light tubes.  You’ve got a great variety of technology that can be used to achieve the savings.  If you’re on a straight low-bid procedure, it’s not easy to compare different technologies with what will be gained in a low-bid process.  The point is to allow as much flexibility as possible.  As long as the savings are guaranteed, there is really no need to go to low bid, because we’re getting guaranteed performance and guaranteed savings.  We’re getting our guaranteed money.  That’s why I don’t think it’s entirely necessary.  Maybe Dr. Linvill would like to expand.

 

Assemblyman Williams:

Before he expands, once these companies are qualified and once we know we can get the best of equipment, the best of technology, and we get this group of prequalified folks, why can’t we, out of all those people who qualify, still look at which one of those companies can do it for the lowest or the cheapest?  You’re not going over the company that can’t do it.  All of these folks have shown that they can do it.  They’ve all been qualified as companies who can do it.  When you have all these folks in one room, you’d still want to save the public money by getting the person who could do it for less. 

 

Some of your comments on selecting in your testimony—here’s a company that we know can do it; I’d like them; I get along with them.  That seems like we should have a little bit more serious criteria than the fact of I like them, I’ve done work with them before, I can get along with them.  Once all of these companies have shown that they can do it cheaper or more cost-effective and they qualify, then why not get the person or the company from that group who can do it the cheapest for the public?  The way it’s presented right now, it seems like a way to handpick and select.

 

Assemblyman Geddes:

I think this does, in essence, prevent the handpicking and selecting that currently is out there.  This takes the A.B. 661 of the Seventy-first Legislative Session philosophy as far as Nevada going to alternative energy and energy savings and becoming the leader in the nation on that.  In essence, this moves us over to the energy retrofit side of it.  We want to look at new and innovative technologies and what will best fit in each building.

 

The problem we would fall into if we went straight low bid is that we would greatly limit the flexibility.  What you would see are the projects that are the cheapest and get the most gain right off the bat, which is going to be solar tinting of windows, energy efficient lighting, and maybe a new HVAC, and that would be the extent of the technology.

 

Some of these other technologies that can have a long-term savings and a long‑term payback wouldn’t flush out very well in a straight low-bid process.  If I came in and said that I’m going to do just your lighting and your HVAC, I can come in with a much lower bid than somebody who comes in and says he is going to put in electric urinals, window switches to keep your windows from opening when the heater and air conditioning are on, and switches that will compensate the inside light for the outside light.  You’ll lose a lot of those in the first initial bid, and I think we lose the long-term energy savings that we can gain through these efficiencies off the first go.

 

Assemblyman Williams:

The two still don’t have to be meshed together.  From that group of companies who can do it all, everything you want, we would still want the company who can do it the cheapest.  You’re assuming that, because we go straight low bid, we’ll get folks who can’t do the complete job, but if there are people who can do the complete job, the process still should include folks that can do it the lowest.  Why would we have to go without the lowest bid just to get somebody to do it right?  Maybe that will come up later.

 

Assemblyman Geddes:

I should probably refer to Dr. Linvill.  I’m not sure it matters in the long run.  If someone comes in, and they’ve had a successful project, and they’ve shown a 10 percent guaranteed savings, then somebody else comes in for that first meeting and they’ve shown a 15 percent guaranteed savings, and somebody else showed a 20 percent savings, you go with the 20 percent savings.  That’s where you’re going to get your most savings.  That’s where things are going to come in, in long-term demonstrated projects. 

 

[Assemblyman Geddes continued.]  I’m not sure it has to be out of there.  I’m just not entirely sure the low bid matters when they’re paying for the project, they’re guaranteeing the savings, they’re guaranteeing to pay for the project, and any savings beyond the cost get reverted back into the budget account, so it’s always money in that aspect.

 

Assemblyman Williams:

I understand that part.  I just think we could have the best of both worlds.

 

Carl Linvill, Ph.D., Economic and Energy Advisor, Director, State Office of Energy, Office of the Governor:

[Introduced himself.]  Each project that these firms would do is idiosyncratic.  It’s a little different.  It’s not like the agency that would request the project could say up front that these are the seven things I want done to the building and please give me your low-cost bid for doing these things.  How the process would work is there would be list of bidders qualified by the State Public Works Board.

 

The agency would invite several to do a preliminary walk-through and not a detailed site assessment, because a detailed site assessment is an expensive investment.  The preliminary walk-through would be to get a sense of what is being identified in the building as something that needs to be addressed, what the potential savings are, and what the combination of things being offered are.  The agency could seek help from the State of Nevada Purchasing Division and other experts in the state to help evaluate what combination of measures would most likely produce the greatest savings.  At that point, you select somebody, and they would do something called an investment grade audit.

 

In order to do what you’re describing to do, a least cost process, you would either have to have more than one firm do an investment grade audit and then compare the two, or you would have to select up front what things you wanted done to your facility.  We think it’s a bad idea to select up front what you want done to your facility, because some of the people sitting in the audience have more expertise and more up-to-date knowledge of what can be done to reduce your operating cost savings.  We want to draw upon that to the maximum extent possible. 

 

To have more than one company do an investment grade audit would be another option.  The only problem with that is that you’re increasing your costs.  It’s unlikely that another party would do an investment grade audit without being assured that they would be compensated for the audit.  Some of the people that will talk to you later can probably tell you what that cost would be for them to do that investment grade audit and how that would take away from the operating cost savings. 

 

[Dr. Carl Linvill continued.]  The third thing I’d like to point out is that this has worked in other states.  Other people can speak to that better than I can.  I’m not going to put the onus on our State Public Works Board, I just think that our statutes have been too limited and they’ve limited how this program can be rolled out in the state.

 

We’ve done a few projects over the last four years, and I believe Utah did $30 million worth of projects in two years.  This creates jobs, reduces the operating costs of the state in the long run, and brings better technology that brings better management of buildings and facilities.  Another important part of this is that it expands the definition for “buildings” to “buildings and facilities,” so we can address things like lighting and parking lots.  This is a great piece of legislation.  I commend Assemblyman Geddes very strongly.

 

Assemblyman Williams:

If this bill [A.B. 398] passes, what will be the future of the State Public Works Board?  Can we expect to see any changes in the State Public Works Board’s structure or existence if this passes? 

 

Dr. Carl Linvill:

This legislation [A.B. 398] does not remove the State Public Works Board’s ability to do retrofit projects as it currently does them.  This provides another financing mechanism and another administrative mechanism for doing retrofit projects.  With respect to the operating cost savings projects that are done, the State Public Works Board would have a role in prequalifying and qualifying the list of contractors.  The State Public Works Board may be asked by an agency that felt they needed technical assistance to help them with the evaluation process, but the State Public Works Board’s role would be reduced in implementing operation cost savings projects in the state through this legislation.

 

Assemblyman Geddes:

The State Public Works Board’s energy retrofit program would continue.  With this energy retrofit program, they would be participants in the qualifying and prequalifying of contractors, as well as watching those contractors once final audits are done, and if people aren’t performing, pulling them off the list.  It does not affect the makeup, activities, or anything else to do with the Board.  This just adds another energy retrofit option into the Board.  Their role here is different than their role in their energy retrofit program.

 

Chairman Williams:

Would they have the ability to pull folks off who were not performing?

 

Assemblyman Geddes:

Yes.

 

Assemblyman Collins:

You mentioned prequalified contractors.  Are those going to be general contractors, subcontractors, or specialty contractors?

 

Dr. Carl Linvill:

To be honest with you, I’m not sure, but I believe they’re general contractors. 

 

Assemblyman Collins:

We spent 1½ hours this morning in Subcommittee, we’re going to continue it again, and we heard something about it last week.  When you’re saying that the State Public Works Board qualifies these contractors, we need to know which ones, because they don’t qualify some of them, and that’s being discussed right now.  That answered the first question.  The second one is, in southern Nevada, the local utilities do quite a bit of conservation planning and working with private and public entities on finding more efficient ways to provide energy.  Is that currently available from your utilities in northern Nevada?

 

Dr. Carl Linvill:

Yes.

 

Assemblyman Collins:

Don’t they do what you’re asking to be done already?

 

Dr. Carl Linvill:

No.  What the utilities provide is demand-side management programs, and, through their take-control program, they provide conservation advice and recommendations for energy cost saving measures.  They’ll do a preliminary walk-through audit for you, but the utility itself does not provide an investment grade audit of your facility and implement all the changes.  There is a subsidiary of the utility which is one of the competitors in this business, and that’s e·three.

Assemblyman Collins:

In southern Nevada, I watched the utility come into local government and replace all the light bulbs in the building and save them $27,000 a year.  I’ve watched those kinds of programs.  Isn’t that what you’re proposing, new, better, efficient air condition/heating units and smart stuff that utilities already provide as a service?

 

Dr. Carl Linvill:

The utilities do not provide a comprehensive audit service to customers.  What you’ve described would be pieces of a retrofit program, but they would not be a comprehensive, operational, cost savings audit and program.  Lighting retrofits are one of the least expensive ways to improve energy efficiency in a building.  In the past, the utility has had conservation programs or demand-side management programs that they have made available to do single applications like that.  What this bill [A.B. 398] proposes is, there are holistic things you can do to a building that the contractors in the audience can describe much better than I can.

 

Assemblyman Collins:

Like install the insulation?

 

Dr. Carl Linvill:

Correct.

 

Assemblyman Collins:

Windows and screens?

 

Dr. Carl Linvill:

Doing them in combination allows you—for example, if you identify 20 percent energy savings in the building, and you need to replace an air conditioner, you don’t need as big an air conditioner any more.  If you do them as separate projects and you do the air conditioner first, you’re going to incorrectly size the air conditioner.  We think it’s important to do it as a holistic look at the operating costs.

 

If you look in Section 5 of A.B. 398, there is a list of other operational cost‑saving opportunities in public buildings that this bill [A.B. 398] is trying to pull in to try to maximize the cost savings to government.  Many of those other aspects like water savings are not things that typically fall into the purview of the utilities.

Assemblyman Collins:

I’ve seen most of these programs offered by utilities, and I’m curious how far they went in comparison to what you’re proposing. 

 

Assemblyman Hardy:

This is a paradigm shift.  I’m looking at the same kind of thing with the design/build concept with construction, where you’re looking, not just the cost of the bid, but at a factor of efficiency.  You’re looking at an implementation that can be brought about sooner, and therefore you save money sooner.  You save money in the long term, as well as the guaranteed revenue and the guaranteed maintenance.  When I read the bill [A.B. 398], it enables the local governmental entities to take advantage of this, not limit it to the state.  Is that correct?

 

Dr. Carl Linvill:

That is correct.  There is legislation right now that allows the states to do it.  This would take this program over to them and repeal the current statute, but this makes it far more expensive for the local entities to take advantage of this. 

 

Assemblyman Hardy:

Less expensive?

 

Dr. Carl Linvill:

Yes.

 

Assemblyman Hardy:

I’m thrilled with it.  I like it.

 

Assemblyman Geddes:

I would like to add to that.  There is an example we can look at in here.  It is the Nevada State Prison.  I talked to some representatives from the Nevada State Prison and they were looking at replacing their boiler.  The boiler replacement isn’t very high on the capital improvement list for the state.  They’re able to replace that boiler, and with the energy savings they can get back from that new boiler, they can pay for the upgrade to a new system in less than three years.  The payback period is 2.9 years.  Anything beyond those 2.9 years is savings every year to the state.

 

If you look at some of these buildings that are 40 to 70 years old, and at some of the buildings that we built not too long ago, there is a lot of opportunity for savings to the state.  When we look at all these budgets, and we have to increase the annual operating cost because of increasing energy costs, our savings will increase through the years as energy prices continue to increase. 

 

Assemblywoman Pierce:

I would like to say that I agree with Assemblyman Williams.  I’m not comfortable with a bidding process that ends with who you’re comfortable with.  That’s basically how you build a “good old boy” network, and not being a boy, I don’t want to see a “good old boy” network built.  I’m uncomfortable with that.  I think a way out of that is the lowest bidder.  It brings into the process a quantifiable measuring stick that isn’t about gender and race and religion and all those things we like to think we don’t choose by.

 

Assemblyman Geddes:

The last thing I want to create is a “good old boy” network of people getting contracts.  Maybe there’s a way to change it that isn’t quite the low bid.  I think if we go straight to the low bid, we’re going to lose a lot of the gains that we could get.  One person had suggested putting it on a rotating basis from everybody on the qualified list.  I wasn’t entirely crazy about that, because I thought that created a “good old boy” network where people flow through.  My intention is not to do that whatsoever.

 

Again, my fear with the low bid is that all of the efficiencies and creative technologies and innovative technologies that we could see long-term savings on aren’t going to be realized.  What we’re going to see is a series of light bulb replacements, window shadings, and HVAC upgrades, and everything else won’t show up because of the bidding process.  We lose a lot of ability for bringing in alternative energy technologies.

 

I understand your concern and I have the same concern.  I would hate to see this legislation create such a network.  I just want to make sure we’re able to achieve all we can achieve.

 

Assemblywoman Pierce:

Along those lines, I’m like everybody else, and I watch television at night and I see all these classy ads about how flexible American business is.  I like the idea of American government staying a little rigid and American business being required to jump the hurdles.  I want them to jump the hurdles, not us.  I think it’s possible to create a bidding process that, if American business is all that good, let them prove it. 

 

Assemblyman Geddes:

Actually I’m not looking at it so much from that perspective as the perspective of working up at the University of Nevada, Reno.  The current system, I’m sorry to say, has created a “good old boy” network up there, and you’re seeing lawsuits and legislation in regard to what has occurred at the University.  The University is a system of higher education, and all we have done in this regard is window tinting, shades on the windows, replaced the light bulbs and, over the winter break, we put 10,000 stickers on each light switch on campus.  That seems to be the extent of it.  We need to take this much further and, without being able to get the money from the state for these upgrades, they’re not going to go anywhere.

 

[Assemblyman Geddes continued.]  I agree with your concern greatly, and I would like to fix that in this legislation [A.B. 398] without us being stuck with the limited technologies that people are comfortable with. 

 

Assemblyman Goicoechea:

Presently, local government and state government have the ability to go out with a request for proposal for professional services.  I think you’re headed along the same line with this.  Technically, you would go out, put in the request—and at that point you never negotiate price—come up with the best package, and then you select your professional.  At that point is when you negotiate price.  I think that’s where you’re headed with it.  That’s the existing law.

 

Assemblyman Geddes:

The only addition on the local side is it does allow them to incorporate more than the energy side of it.  This allows them to incorporate waste minimization, water savings, and a lot of the other savings and energy efficiencies that are out there.  This would just expand the local government’s ability to get those efficiencies and save money in the long run.

 

Assemblyman Grady:

The University of Nevada, Reno has started a program, and I think with new technology, it has to go further than changing light bulbs and putting stickers on the switches.  I think they’re on the right track, and I fully support where you’re going with this.

 

Assemblyman Geddes:

I also brought up somebody from the State of Nevada Purchasing Division who may be able to better address the RFP/RFQ [Request for Proposal/Request for Qualifications] Process than myself.

 

Greg Smith, Deputy Administrator, State of Nevada, Department of Administration, Division of Purchasing:

[Introduced himself.]  Assemblywoman Pierce, your comments and Assemblyman Williams’ comments were exactly the comments that we started off with about a year ago.  That is the general process that we at State Purchasing and Contracts go through.  It is not necessarily a low bid mentality, but a best value type of procurement; who is offering us the best “bang for the buck”? 

 

[Greg Smith continued.]  Throughout the past year, we have been sensitized to the very unique nature of this type of a project and to why it is a little different than the normal things that we do.  You talk about the investment grade audit.  I heard numbers in the neighborhood of $10,000, $15,000, and sometimes $20,000 to do such an audit.  It would be very difficult to get three or four companies to lay out that kind of money for us to select one of them, and then tell the other three or four, “Thank you very much.  Hopefully, we’ll get with you next time.”  That was one of the issues.

 

I think Assemblyman Geddes has pointed out quite accurately, and I think some of the potential vendors who are here today would also let you know that, by doing it that way, you miss out on a whole plethora of potential energy saving ideas that you simply won’t get to if you do a low bid type of mentality.

 

In the last year, we’ve talked with folks in other states.  This process seems to work very well for them, and we worked very closely with these folks over the last year, and we, the Purchasing folks, support the process.  The State of Nevada Purchasing Division has transformed itself over the past ten years from people who buy staplers and pencils and chairs to where almost 70 percent of our business is done in contract services, about $250 million per year.  We have the staff and the capabilities of arranging and handling these projects in association with the Nevada State Office of Energy and with the State Public Works Board. 

 

Assemblyman Geddes:

I did want to mention that the proposed mock-up [pages 5-16 of Exhibit C] of A.B. 398 does include the Clark County amendments [Exhibit E].  I did go ahead and include what they had suggested.  I don’t have the backup explaining their amendments, but I’m sure they will hand that out.

 

Chairman Manendo:

It’s in this document here?  [Chairman Manendo held up Exhibit C.]

 

Assemblyman Geddes:

That is my proposed amendments in working with all the people here.  They will give you a separate document [Exhibit E] for theirs, but I did go ahead and incorporate them into the mock-up.  When you see their handout, you’ll see the explanation of why they wanted their changes, and you will see them reflected in here already.

 

Chairman Manendo:

We have two proposed amendments.

 

Assemblyman Geddes:

The one that says, “Proposed Amendment to A.B. 398,” prepared on April 8, by me.  [Pages 5-16 of Exhibit C.]  This has the Clark County amendment [Exhibit E] in here, but I don’t have a copy of their justification and amendments, but they are incorporated.

 

Terry Page, Manager, Legislative and Regulatory Services, Alrus Consulting:

[Introduced himself.]  We represent Pinnacle West Energy.  Their subsidiary, Arizona Public Service Energy Services, performs this kind of work throughout the southwest.  Because of the questions that have arisen, we thought we could share our experiences in that regard and ease some of the concerns about the low bid aspect that could possibly be eliminated by the proposal.

 

Jay Johnson, Business Development Manager, Arizona Public Service Energy Services:

[Introduced himself.]  Our parent company is Pinnacle West Energy.  We’re the largest electric utility in the southwest.  We’ve made a significant investment in Nevada.  We’re building a Silverhawk plant just north of Las Vegas, a 580‑megawatt [sic] plant.  We have a long-term commitment to Nevada.  I support this bill [A.B. 398] as written. 

 

This concept began back in 1983 and has been around for 20 years.  I think the team approached this in a very logical process, worked with other states, gathered information on other projects that have worked very well, and incorporated language that would improve and streamline the process over what currently exists.  The real strength of this is it allows agencies to be able to get facility upgrades and fund them out of reduction in energy costs and operational costs.  This process has been around a long time.

 

Most energy service companies or operational service companies like us like to work with local contractors and keep the money in the community.  Oftentimes, we’ll go through a selection process at that level to pick the best contractor.

 

The real key to approaching this was mentioned by the gentlemen who were up before us, which is that this is done through a qualification-based selection process.  There are standard guidelines through the U.S. Department of Energy and through other national organizations like the Energy Services Coalition.  Most state energy offices belong to that organization, and they provide guidelines that clearly help agencies like yours go through the selection.  It helps focus a number of items, like the financial strength of the organization, their approach to business, references, resumes of the team, and costs for the investment grade audit.  A lot of times that will run 10 cents to 15 cents per square foot.

 

[Jay Johnson continued.]  It is a rather expensive when you’re looking at a large campus or a large facility.  But this criteria is clearly measurable and definable, and it takes away the “good old boy” network.  It allows the agency and, in this case, the state, to select the most qualified parties.  They’re looking at three to five firms to be short-listed, and those firms would then work with the agencies in helping them select the firm that’s most qualified for their specific needs and operation.

 

The whole approach is designed around life cycle cost reduction, and you don’t know what the life cycle cost reduction is going to be.  The best solution for that facility, until you get into that facility and begin doing an engineering study, was referred to earlier in the investment grade audit.  There is a lot of detail that goes into that.  You’re analyzing all existing energy consumption, all water consumption, and all operational costs that are currently being expended in that agency.  The firm looks at that and models different solutions that would address those aged, obsolete systems, or those high cost areas, when they look at what scope would be appropriate, what cost, what savings, what payback, and then you have to add in the cost of the financing and the cost to measure and verify the savings on an ongoing basis. 

 

It’s a rather complex process, and that’s why these programs are typically not done on a bid and spec, because there are no specifications.  It’s a design/build‑type approach, specific and unique for that facility, and all of that is disclosed in the investment grade audit to the agency.  The State of Nevada Purchasing Division would be involved, and the Nevada State Office of Energy and State Public Works Board would be involved from a code compliance perspective, making sure that the solutions are sound.  There is a system of checks and balances in place to assure that these solutions would truly deliver the desired results.

 

It’s a total package.  It’s a total lifestyle, cost reduction approach, and it’s not as easy as designing a spec [specification] and saying that you replaced all the light bulbs in this building.  It’s a very complex situation, but it does provide the greatest value to the facility.

Dan Musgrove, Director, Intergovernmental Relations, Office of the County Manager, Clark County, Nevada:

[Introduced himself.]  We appreciate the efforts Mr. Geddes has brought to the Committee, and we wanted to make sure that the bill [A.B. 398] extended into local government chapters of NRS [Nevada Revised Statutes] that he did not address.  We appreciate him incorporating our amendments [Exhibit E] into his change, but we wanted to go through those amendments with you, so you understood what we’re trying to get out of the bill [A.B. 398], and I have asked Mr. Olivas to go through it for you.

 

Ted Olivas, Assistant Director, Clark County Finance Department:

[Introduced himself.]  I’ll be working from the proposed amendment document [Exhibit E] so you can follow along; the amendments were incorporated into this bill based on input that we provided.

 

The first change was on the third page.  This is Section 8, subsection 2, and those two changes basically makes the wording consistent with the wording that they changed for NRS Chapter 333 in Section 22, subsection 2, line 41.  We’re just making the same change that they changed in NRS Chapter 333.  As you know, what they did was they added this to NRS Chapter 332, which is local government purchasing, and NRS Chapter 333, which is state purchasing.

 

One of the items that was not incorporated that we would like amended is on page 3, Section 8, subsection 2, where it says, “and shall issue a request for qualifications to not less than 3 or more than 5 qualified service companies.”  We think “or more than 5” should be deleted.  We don’t want to limit this competition.  It should be fair and open for any company that wishes to submit a proposal.  The deletion of the last sentence was requested because local governments can always request assistance from any other agency, so we didn’t feel it was necessary.

 

The next change that we proposed was on the next page.  This is right above Section 9, and we added, “if the local government specifically appropriated money for that purpose.”  Again, that is wording that’s consistent with the wording that they incorporated into the state purchasing sections.  We wanted to make sure that we have to have a budget appropriation for these.  If we don’t appropriate money for it, then obviously, we can’t request this service.  So, that was incorporated as well.

 

On the next page, Section 11, we changed “local government body” twice in that section to “local government.”  This is merely cleanup.  It makes the wording consistent throughout this bill in those sections that relate to local governments.

 

[Ted Olivas continued.]  In Section 12 of A.B. 398, we added a line at the very bottom of that section.  We wanted to make it very clear that we’re not just going to take the audit and the savings that this company is saying we realized, and take that at face value.  We have to have the ability to validate those cost savings, and we wanted to make sure that it was clearly identified in this.

 

On the next page, after Section 14 of A.B. 398, there was a new section added.  That section was added for consistency with the wording that was incorporated for the state in Section 24.  This exactly mirrors that wording.  We wanted to make sure that it read the same for local governments as it does for the state.  Those were the changes that we proposed.

 

Danny L. Thompson, Executive Secretary-Treasurer, Nevada State AFL-CIO:

[Introduced himself.]  While we support good energy policy and savings based on that policy, we are adamantly opposed to this bill, A.B. 398.  This bill represents a “can of worms” that, if you open the lid, you will never get the lid back on.  Everything that is done in a building can be tied to energy savings.  For the insulation in the wall, you have to tear the sheetrock off the wall to get to that insulation.  The carpeting can impact the energy savings in a building.  We believe that this is the same as unlimited quantity contracting, and we are opposed to that. 

 

By adding local governments to this, you would gut the bid process and make it very difficult to enforce prevailing wage.  We spend a lot of money trying to do that now, and that’s why we’re very sensitive to this issue.  I applaud Assemblyman Geddes for his work in energy savings, but I believe this does set up a “good old boy” network, and it raises more questions than answers. 

 

A question would be, if you entered into these contracts and were on the hook for these energy savings, and then the facility closed down from time to time, you’re going to be on the hook for that money.  You’re going to still owe that contractor or that organization that put up the money.  Enron used these contracts extensively in California after deregulation.  For all the good intentions, we don’t believe that there can be a fix to this, and I would ask you to oppose this bill.

 

Jack Jeffrey, Southern Nevada Building and Construction Trades Council:

[Introduced himself.]  We also have concerns, particularly in the prevailing wage aspects of this bill [A.B. 398].  The way I read the bill, almost anything that could be done to a building in retrofit and reconstruction would be done, and the bill also says that NRS Chapter 338 doesn’t apply.  At least that’s the way I read it.  Maybe somebody could explain that it does apply.  Not only bidding procedures go out the window, but so do the prevailing wage and labor protections that are in NRS Chapter 338.

 

[Jack Jeffrey continued.]  My concern is as you qualify these contractors, the odds are they’re going to be out-of-state contractors, at least that are responsible for the bulk of the construction.  I think they’d bring their workers in.  I think it may create a lot of work, but not necessarily for Nevada workers under Nevada labor standards.  For this reason at least, unless prevailing wage NRS 338.010 to 338.090 is included, we have to oppose this bill.

 

Greg MacRenaris, Citizen:

[Introduced himself.]  I have a small business in Reno.  I’ve been following these procedures for 14 years, and what this bill [A.B. 398] is trying to do is transfer a request for proposals to a request for qualifications, and it’s trying to lay hundreds of millions of dollars of taxpayers’ money into the hands of small public entities, and from what I just heard, that’s 1,900, that’s a large number.  In the past, this bill has been worked at the University of Nevada, Reno, and we all know how that has come out.

 

This bill [A.B. 398], as far as business is concerned, is a license to steal.  When you go out and say the things that you’re saying about how well this thing is going to do this, and it’s going to do that, that’s all well and good, but you’re talking about a utopian world.  We live in the real world, and businessmen are in business to make money, any way that they possibly can.  They’ve been doing it successfully, and when you eliminate oversight, which is basically what you’ve done here, you’ve said, “You’re the fox, you run your own chicken coop.”  That’s already been tried, and it’s cost the state approximately $28 million.

 

When you open it up to anything that provides comfort, that’s anything and everything in a building.  I’ll give you a prime example of what can happen.  These are minutes from a conference call at the university.  [Greg MacRenaris held up a document.]  I’m going to read it at every meeting I go to.  It says, “By doing things this way, at least it looks like a legitimate bid.”

 

When you put the fox in control of the chicken coop, you get dead chickens, and that’s what is going to happen here.  Not to the tune of $5 million, $10 million, or $20 million—hundreds of millions of taxpayers’ dollars.  You’re about to invest the taxpayers’ dollars in the most volatile business on the planet, energy, without oversight.

 

I’d like to read you what happens to the business community when these “good old boy” things start happening:  “Many other contractors will recognize this for what it is and not bid it.”  I recognize what it is, and if you pass this law, you’re going to spread it across the entire state, and you’re going to pick the pockets of every taxpayer in the state of Nevada. 

 

[Greg MacRenaris continued.]  This bill [A.B. 398] is a license to steal by people who want to make money.  That’s what they’re in business for, and when you open the door and say, “Here’s the deepest pockets in the state; have fun.”  That’s what this bill will do.  I highly recommend that you put some heavy restraint on this.  You need some oversight.  This tells the people that we can do whatever we want, when we want.  That’s exactly what happened at the University, and because the University is such a great entity, everybody is protecting it.  The truth of the matter is, cure the problem, get rid of the protection, cure the problem.  That’s the best protection you can have, but nobody wants to do that.

 

This bill [A.B. 398] says everybody can be a university.  Everybody can make lots of money.  I don’t think this bill is proper and should be put through at this time, not in a world where energy conservation is of prime importance.  The business that it’s dealing with is energy, and it’s the most volatile business on this planet, and it can change from day to day. 

 

Mary Henderson, representing the City of North Las Vegas:

[Introduced herself.]  We just signed in, in case we needed to testify.  I think it’s been covered very adequately.  I did have some concerns, but a lot of the Clark County amendments [Exhibit E] took care of those.

 

Chairman Manendo:

So, you are in support?

 

Mary Henderson:

We’re neutral.  We have not taken a formal position on it.  I just wanted to make sure that, if the bill [A.B. 398] proceeded, we had some clarification.  I think that’s been handled.

 

Chairman Manendo:

We’re going to close the hearing on Assembly Bill 398, bring it back to Committee, and open the hearing on Assembly Bill 415.

Assembly Bill 415:  Directs Governor to appoint committee to study authorizing entrepreneurial activities to generate revenue for State. (BDR S-1164)

 

Assemblyman Knecht:

[Introduced himself.]  There is a handout [Exhibit F] coming around, which is a one-half page summary of this two-page bill [Assembly Bill 415].  I’ve kept the summary to half of a page, and I’ll very quickly go through that.

 

A.B. 415 authorizes the State Treasurer to engage in entrepreneurial activities that do not compete with private enterprise, but rather use unique assets of the state to raise nontax funds.  The idea was given to me by a creative, thoughtful constituent, David Moore, who is sitting here at the table with me.  It started with one of these ideas and he kept adding about one a week for a while.  Finally I thought this would make a bill that makes some sense, because it would be a way of raising probably tens of millions of dollars in state revenues without raising taxes, and I think we all know we could use a few tens of millions of dollars this term.

 

Section 1 of the bill [A.B. 415] allows the State Treasurer to enter into contracts such as Silver State Affinity Credit Card Marketing.  Typically in credit card marketing, something that’s done right now by universities and other organizations, the party which is helping with the marketing and providing its name and its emblem gets about 1 percent, so this would be a very effective way of reaching thousands of state employees and hundreds of thousands of Nevada residents who would like to have a credit card and see that the marketing money goes to the state of Nevada rather than to some bank in South Dakota or New York or California.

 

It would also allow the State Treasurer to enter into contracts such as the sale of advertising space on state vehicles and other property.  Think for a minute about NDOT trucks and putting ads on the sides of those, the way taxicabs and buses have ads on them.  It would allow the sale or lease of stadium and arena rights, or other similar building rights, and it would provide expressly for the sale of nonexclusive licensing rights to use the state of Nevada emblem, for example, on t-shirts and such other things.

 

Section 2 of A.B. 415 provides that the Governor shall appoint an uncompensated committee to study other such potential opportunities, such as issuing non legal tender, silver or gold bouillon, commemorative coins.  This is not getting into all the problems of other proposals that would issue coins and call them legal tender and fight with the federal government.  We’re not going anywhere near there.  Silver and gold bouillon coins have been issued by various private and public entities, and it may be a way to make some money.

 

The difference between this and other examples I gave is that there is no real upfront cost, no risk, on the other examples, but there is a risk and an upfront cost on this one.  The idea is to study it and see whether it looks like a net winner or not, and not do it until we’re sure.

 

[Assemblyman Knecht continued.]  The committee would study that and other options, and make recommendations to the next regular legislative session.  This bill would be effective July 1 of this year, according to the note, and on its face, has no material state or local fiscal impact.  I would like to give Mr. Moore a chance to say anything, and we will be happy to answer your questions.  I solicit your vote, and I thank you for your time.

 

David Moore, Citizen:

[Introduced himself.]  I live in Mr. Knecht’s district, so I went to him on this.  I have a lot of time to think where I work.  I’m what they call an area maintenance technician with the U.S. Postal Service.  There are three of us.  We cover roughly 40,000 square miles, and we cover 95 offices.  We do everything in regards to repairs, from sewer lines to rooftop air conditioners and everything in between.  We have to be creative in our thinking at times because, if we’re in a place like Denio and we need a part, it’s 100 miles to Winnemucca to get the part.  We have to get it up and working now.

 

That’s where some of my creative thinking comes in.  That, and when I’m driving down the highway and hear a sports comment coming from 3Com or Pac Bell Park [Pacific Bell Park], the thought hits me, why can’t UNR [University of Nevada, Reno] or UNLV [University of Nevada, Las Vegas] lease the naming rights to their coliseums for a year?  Maybe Steve Wynn would appreciate Steve Wynn Park for a year, and be willing to pay $1 million or so per year for that right.  We don’t know.  That’s why there would be a committee to investigate that feasibility to see if it is feasible.  That’s money that would cost us nothing to obtain.  The building is already there. 

 

I originally started with the gold coin idea after a couple of knee surgeries.  I used to do a little prospecting, and I like to collect gold.  I started collecting some gold coins.  I thought why can’t the state be selling these coins?  Part of where I travel is out in the gold country, through Winnemucca, and I talked to some of the miners.  This would help employ these people and keep them employed if the state was a market to do this.

 

One of the ideas I designed was for a silver coin very similar to a Morgan Dollar, but it would not compete with the federal government.  I don’t want to get in a battle with the federal government.  The coin would not be considered legal tender in regards to the U.S. government, but it would be considered legal tender within the state with state organizations, as well as collectors.  The legality of that comes from the fact that the Shawnee Nation has its own coin, only usable on the reservation as legal tender. 

 

[David Moore continued.]  We have another industry that uses coins quite frequently called the gaming industry.  They do their own coins.  They don’t fight with the federal government about it.  Reno just did a coin where they had a contest on the design.  The committee could do that, as opposed to me coming to you and trying to say what designs would be feasible.  This is where the committee comes in on the bill [A.B. 415]. 

 

I’m a strong believer in the “KISS [Keep It Simple, Stupid] Principle”, as well as delegate to the experts.  That’s why I’m not presenting you with designs or other ideas.  In my driving around Reno, I see taxicabs with placards on them, whereas when I’m out near Gabbs or Denio or McDermitt, I see a number of NDOT [Nevada Department of Transportation] vehicles with absolutely nothing on them but “NDOT.”  Why can’t the state put three by six placards on each side of an NDOT truck and charge for the rental space?  There are plenty of billboards out there, too.  This is something that would be very minimal cost to the state to build, especially if they did something like went to the high school metal shops and had them do the project of making the frames for these things. 

 

There are many ways that the committee could come up with to minimize any cost that’s being put out.  My main thing is, I don’t like paying increased property taxes.  I don’t like paying taxes, period, as most of us don’t.  Why not come up with ways to raise money for the state to operate that is a voluntary system on the people paying it, as opposed to forcing people to pay out of their pockets?

 

Assemblyman Knecht:

With the minting of coins idea, the state of Nevada has a unique resource in the old Carson City press.  Part of what got Mr. Moore and me thinking about this is that coin collectors have a great fondness for Carson City Mint coins, so we think there might be a market using this press for gold and silver bouillon coins that would cause collectors to pay a premium for them.  This, again, would be subject to a feasibility study and nothing would happen before that.

 

The overall point is to keep in mind that this bill, A.B. 415, is completely permissive.  It does not require the state to do anything that is risky or that doesn’t look like it would work.  It simply authorizes the State Treasurer to engage in these activities if, after the exercise of his prudent judgment and in consultation with the committee, he finds that it would raise money and not cause the state any risk.  So there is no real downside to this.

 

Chairman Manendo:

I’m not sure if we have anybody from the Governor’s Office or the State Treasurer’s Office here to see what their take is on this bill [A.B. 415].

 

Assemblyman McCleary:

That was my question.  Have you talked to the State Treasurer’s Office, and what is their input on this?

 

Assemblyman Knecht:

In the press of time, I made a gaff and forgot to get a formal response from the State Treasurer’s Office, but we are fortunate that we will have someone here today to tell us.  I want to emphasize the important point is that this is permissive; it’s not mandatory.

 

Janice Wright, Deputy Treasurer, Programs, Office of the State Treasurer:

[Introduced herself.]  I didn’t sign in for or against the bill [A.B. 415].  The State Treasurer is neutral on this bill.  I was here if there were any questions regarding the bill.  The State Treasurer does appreciate the intentions of the sponsor of this bill.  I’m confident State Treasurer Krolicki would be happy to work with the committee.  If there are any issues that can benefit the state, this is something that is very important to State Treasurer Krolicki.  If you have specific questions, I’d be happy to respond to them.

 

Chairman Manendo:

We’ll close the hearing on Assembly Bill 415, bring it back to Committee.  We’ve had a request to go out of order.  Assembly Bill 538.

 

Assembly Bill 538:  Allows certain officers and employees of redevelopment agency or community to have interest in real property in redevelopment area under certain circumstances. (BDR 22-461)

 

Elizabeth Fretwell, Deputy City Manager, City of Las Vegas:

[Introduced herself.]  This bill [A.B. 538] is one of the two bills that the Las Vegas City Council approved for submittal for drafting this year.  It is related to redevelopment.  There are only five areas in the state that have redevelopment areas and redevelopment agencies.

 

Redevelopment, for those of you who may not be familiar with redevelopment as a process, is a statute that was established in [Nevada Revised Statutes] Chapter 279, which allows for cities and counties to be able to make investments in areas that are blighted and struggling, but are important to the economy.

 

[Elizabeth Fretwell continued.]  For many years, the City of Las Vegas has had a redevelopment agency and has had redevelopment areas designated for close to 20 years.  Currently, there is a strict prohibition in NRS Section 279.454 that prohibits any investment by any public official.  The only exception to that is if it’s for a primary residence.  One of the things that we struggled with in following the direction of the Las Vegas City Council on this measure was trying to draft something that wouldn’t say, “We just want that prohibition removed.”

 

We knew that wouldn’t work because, in a redevelopment area, as well as with any public investment, as a city or a county government, we recognize that it’s critically important to protect the public trust to ensure that sound decisions are made and that those sound decisions are made on the public record.  What we’ve attempted to do is to try and change this section of the redevelopment statutes to make them a little more flexible.

 

Right now, this is so strictly construed that it would be almost impossible for even those who currently have businesses in the redevelopment area that sit in any advisory capacity, elected capacity, or appointed capacity, to even in a minor way, modify or expand their current business.  This is extremely strict, and what we attempted to do in preparing this bill [A.B. 538] and in working with Ms. O’Grady, Committee Counsel, in the drafting process, was to try to put in adequate safeguards to protect that public trust, as well as to create some flexibility in the areas of redevelopment investment by a public official.

 

What I’d like to do is ask Mr. Redlein to walk through how the current statute works today, and how this bill [A.B. 538] might change that statute, if it’s the Committee’s desire to do so, and I’d like to share a few examples during his testimony that might help illustrate some of the dilemmas that we’ve been facing as a redevelopment agency over the last several years.

 

John Redlein, Assistant City Attorney, Civil Division, City of Las Vegas:

[Introduced himself.]  One of the things, and again I explain this because the NRS chapter on redevelopment was passed more than 40 years ago and I think there are only five cities which have endeavored to create a redevelopment agency.  In most instances, the agency is the same membership as the ruling board or council.  They’re just wearing a different hat to achieve the specific purposes that the Legislature set forth in this NRS chapter to make good things happen, usually in a core, depressed, blighted area, as the NRS chapter describes it.

 

While, on a daily basis, the government is very involved in controlling what happens within their boundaries through zoning, general plan amendments, business licenses, and design features, this NRS chapter is different because the government, in a sense, becomes an entrepreneur.  By the exercise of imminent domain and by spending taxpayer dollars, they’re engaged upon an effort to make things happen within a designated area.  So, the prohibition that was inserted originally in this NRS chapter that, if you are a person who participates in the formulation or the approval of redevelopment plans or policies that you cannot acquire any interest in any land within your designated redevelopment area unless you’re going to live in it, makes a certain amount of sense.

 

[John Redlein continued.]  It became clear to me six years ago that there were some unintended consequences from this prohibition and Ms. Fretwell alluded to them.  Somebody who has a professional business gets elected to the city council so that he can do a good job with his own private enterprise and devote time to his newly elected office would not be allowed to lease office space within the redevelopment area where city hall usually is and where most professional offices, particularly if you’re a lawyer, are almost always going to be.

 

I have surveyed some of the lawyers that take care of the five cities that have redevelopment agencies, and we’re not alone in having had these problems.  I would suggest to you that there is no doubt because the prohibition is so broad, that when it talks about the acquisition of any interest in land, a renewal of a preexisting lease is probably prohibited by NRS 279.454.  We can cure the problems, and I wanted to try to figure out how to attain the original objectives that we don’t have when the members of government, acting as a redevelopment agency or policy makers for the agency, are setting about the kind of entrepreneurial activity of making things happen within a designated, area that they don’t have any opportunistic self-dealing, or use of inside knowledge to acquire land.

 

I did discuss this with the staff lawyer at LCB [Legislative Counsel Bureau] on the drafting because there’s apparently a style that doesn’t involve repetition of other controlling statutes, and I thought it was important to do in this instance.  That’s why you see references to NRS Chapter 281 in this bill [A.B. 538].  I didn’t want anybody to read our bill and think that, if they follow these few rules about the detailed public announcement, selecting a property that has never received any redevelopment assistance, and being barred from applying for redevelopment assistance, it was okay to buy that land or invest in that land, because it most certainly is not.  Particularly in NRS 281.481, which in my shop we refer to as “the ten commandments,” we find that laundry list of ethical prohibitions, and it contains prohibitions which are fairly on point for this sort of opportunity or business that we’re talking about government conducting, one may not seek or accept any economic opportunity which would influence a reasonable person in the impartial discharge of their duties.

 

[John Redlein continued.]  One may not use their position in government to secure a grant, unwarranted advantages, or privilege for yourself or somebody else in your family; can’t accept any private compensation for the performance of your public duties; and can’t use any inside information to further your interest or that of any other person.  Those things have applied in the past, they will apply in the future with this amendment, and I brought special attention to them.

 

I did discuss this with LCB.  I simply wasn’t able to come up with anything that covered all circumstances.  I wanted to cover the professional that had an office or leased business space in the downtown redevelopment area when they assume office or become a policy maker.  This isn’t all elected officials that we’re talking about.

 

We have a lawyer who is now out of her role, but for some years she was assisting us as a member of the principal advisory committee for all redevelopment business in Las Vegas.  She is a member of a law firm that has more than 40,000 square feet of leased space downtown.  This firm is so big that, whenever anybody moves out anywhere near them in this building, they will snap up this space for growth.  Were she an employee, that firm’s lease/hold interest in all that office space would be irrelevant, but she’s a partner in a firm, so every time they pick up 500 extra square feet of office space, we have what would appear to be a patent violation of the existing flat prohibition, because she picks up a lease/hold interest that she didn’t possess the day before on some downtown land.

 

She has left us and avoided this, but it was something that we were very conscious of during her service to the city.  The problem has existed in other municipalities.  I said there are only five cities or counties that I know of that have redevelopment agencies that engage in this activity, but essentially what we’ve done here is, we didn’t want this notification covered with a filing and, pursuant to the ethics chapter of NRS, I would have to file if I have any interest in any land that is of a value of more than $2,500 with the State Ethics Commission [Nevada Commission on Ethics], and let them know of that on an annual basis.

 

I didn’t want it to be able to happen discretely, so I’ve written it so that when the redevelopment agency holds its periodic meetings, there will be a specific agenda item in which the acquisition of the interest in land which is not currently possessed has to be announced and detailed on the agenda of that meeting.  Putting aside the circumstance where I, as a private lawyer have got an office downtown and then become elected to the city council or appointed to some advisory board, I wanted to make sure that, if I was selecting a building that I hadn’t previously occupied, there was no way the site was going to be a place that had received some cash or imminent domain assistance from the redevelopment agency.  That’s a place that I can’t go; that’s an interest I can’t acquire.

 

[John Redlein continued.]  If it has never received such benefits, and I do acquire this interest, then henceforth, for the period of time that I serve in this restricted role as a decision maker or a policy maker for redevelopment, I may never apply, and the property that I have a lease/hold interest in or ownership interest in, may never qualify for any redevelopment assistance.

 

I believe that the original prohibition made perfect sense, but I believe that in 1959 nobody envisioned the kind of problems that could be created for somebody who we expect to be part of the community, if they’re part of the older portion of the community or the central core that almost always encompasses the redevelopment area in each city, that their service could be interfered with or the law violated by a natural extension of an existing lease that somebody might want to come in downtown, not as an investor or an entrepreneur, but simply to acquire some office space, and couldn’t do it because of this prohibition.  When I look at the cure, I see that the things that one would naturally worry about in this circumstance are eliminated by this proposal, and yet we’re protected by somebody who would be mercenary and involved in some self-dealing to try to take advantage of a position as a policy maker or a decision maker for redevelopment.

 

Elizabeth Fretwell:

Mr. Redlein outlined some of the safeguards in the proposed measure before you today that would set a higher standard if an individual were to begin to make an investment in an established redevelopment area.  It’s important to stress at this point that redevelopment is not easy.  It takes a lot of time, it takes a lot of effort, it takes a lot of money, and it’s a high-risk investment for anyone who chooses to invest in the area.

 

As a result, by putting in some of these safeguards that are outlined on page 2 of the bill [A.B. 538], you’re setting a higher standard for those kinds of investments for a public official, in that you would have disclosure up front.  You would still have all the required disclosures and abstentions if your potential property were to potentially benefit from any other action, and this turns the lands for a public official in the downtown area or in the redevelopment area into lands similar to those in the other parts of the city that do not have a redevelopment agency and redevelopment designation set out for them, but requires that there be sufficient public disclosure and absolutely no direct financial benefit before or after the purchase, which is basically what the redevelopment area and agency are there to help do, spur economic investment in that area.

 

Assemblyman Hardy:

Can the concept of the Chinese Wall be incorporated in this?  Where are we with allowing the public official or the employee to not have anything to do with the decisions that they’re making and the concepts that they’re talking about, not only noticing that it’s going to happen, but have that person create a barrier between the person and the redevelopment agency so they are literally not involved with it in any way.  Their hands are clean.  They have no fiduciary responsibility one way or the other.  Could you elaborate on this?

 

John Redlein:

I understand the concept, but I have to tell you that what you would be most worried about in the sense of the Chinese Wall is that something big is going to happen downtown.  We don’t want me, if I’m one of these policy makers or decision makers, to be able to take advantage of that because of my inside information.

 

I would suggest to you that what we’re talking about is something that isn’t now controlled by NRS Chapter 279, the most likely hazard probably occurs when I already own that piece of land and I’m going to make a decision that this is a swell thing to happen and it happens to be near property that I already own.  I’m not worried about the amendment having an effect upon that kind of thing because, even if the great new project that’s going to increase property values around it is in the planning stages and I’m privy to all that planning, if I have the brainstorm that I want to take advantage and pick up a neighboring parcel, I am going to be announcing to the world what I’m about to buy into and describe the acquisition that I’m about to outright purchase or take some sort of option on.  Later on, when the new project is announced nearby, I would suggest that I’m “cooked,” and that separating decision makers and policy makers from decision making and policy making isn’t what the Legislature tried to do in 1959, and it’s not what I’m trying to do now.  I’m trying to make sure that the whole world will know if somebody tries to do something nefarious.  Effectively, it makes it impossible.

 

Elizabeth Fretwell:

Already in the ethics chapter, NRS section 281.501, an individual may not vote or participate when, in the independence of judgment of a reasonable person, he would be affected by a pecuniary interest.  In this case, that would be exactly what’s happening.  If someone else were to try to weigh in when they shouldn’t, as in the example that you shared with us in your question, they’d already be in violation of NRS 281.501.  You’ve got the extra standard that Mr. Redlein illustrated, which would raise a huge red flag, and you’ve got NRS Chapter 281 that already says that is illegal.  I don’t know if that helps answer your question, but I think that’s pretty pointed.

 

Assemblyman Collins:

I was a planning commissioner in North Las Vegas for nearly seven years and had tremendous opportunities to invest in real estate in North Las Vegas, and I avoided that totally that whole period of time just to avoid any possible appearance.  I stated two years ago on the Judiciary Committee on a morning like this towards a deadline, that you’ve never heard of Collins Consulting, because I don’t have a consulting company that allows me to find ways to make income and deal with folks that, otherwise, I would probably be in conflict of or possible appearance of conflict.  That is my own standard.

 

On the other hand, the famous or infamous that I recall in Las Vegas was near Buffalo and Summerlin.  It was not in a redevelopment area.  Just considering that, I guess someone would either had to have their own individual standards and ethics about how they took care of their own business, or we need laws like this to make it defined.  I’m not speaking for or against this, I’m just addressing the public’s view of public officials, in my opinion, and how they could be addressed.  It’s like when it says real property, within 300 feet, 100 feet, or across the street, how do you avoid those appearances?  Definitely on the other hand, I can’t see how we would restrict anyone’s ability from being involved in public service, as well as being involved in business in our community.  If you can solve that comfort level of knowing that we’re not leaving out a dotted “i” or a crossed “t” here to prove to our constituents that we’re doing something good.

 

Elizabeth Fretwell:

I appreciate your example because this bill would make these areas in a redevelopment area very similar to land anywhere else in the City of Las Vegas.  You’re right.  It comes down to a judgment call on behalf of that official as to what they might feel was prudent on their part.  Right now, things are written so strictly that this can’t even be tested, that judgment of that elected official that in some instances is elected by 50,000 people, 100,000 people, 250,000 people, in order to even get in that chair and serve.

 

What we’ve attempted to do in this bill [A.B. 538] is to try to craft a measure that would set a higher standard of disclosure than there is right now for land anywhere else in the city.  In other words, before you make the purchase, and I’ll use myself as an example, I could personally go out right now, buy a piece of property that’s not my primary residence, somewhere in Summerlin.  I wouldn’t have to tell a soul that I made that purchase until an agenda item came up and I would have to disclose and remove myself from discussions that might have a direct financial impact on me.  I would have to do that through the rules set out in NRS Chapter 281 right now.

 

[Elizabeth Fretwell continued.]  However, if you were to pass this measure [A.B. 538], and you allowed investment by a public official in the redevelopment area, not only would they have to follow those rules that I currently have to follow today if I invested in Summerlin, I would have to go an extra step before I even make the purchase in a redevelopment area.  I’d have to put an agenda item on that agenda of the redevelopment agency and announce publicly my intent to purchase that land.  That’s more than I have to do today anywhere else in the city. 

 

That’s one thing that creates a different filter, if you will, in that decision‑making process.  In addition to that, you’re still going to have to follow all of the current rules set out in NRS Chapter 281 where you disclose and abstain, or you remove yourself from the decision-making process, as I would have to do as a public official, and make it very clear, and make a record of it. 

 

The nice thing about this bill [A.B. 538] is that there are no surprises.  Everything is on the public record.  There can be no financial benefit, before or after, for that land for the public official.  This makes it even more proactive in the way of notification and disclosure than we currently have for other areas of the city.  You do have to fall back on the judgment of that elected or appointed official in that local jurisdiction.  That’s really the call for this body and your colleagues as to whether or not these disclosures, these removals of potential financial benefit which is the distinction between a redevelopment agency and everywhere else in the city, because the mayor and city council and advisory committees like the planning commission currently will get plans and make decisions about plans.  They would continue in that role, except that there would be a higher standard of disclosure for them, and there would be absolutely no direct financial benefit to that property that they seek to purchase.

 

I’m not sure if that helps you with your comfort level, but our attempt was to set a completely different standard as it relates to this kind of investment in this kind of area to address those issues that you outlined in your comments.

Assemblyman Collins:

Do you, as local officials, have to disclose as a legislator does, every piece of property they own in Nevada and adjoining states?

 

Elizabeth Fretwell:

We have to disclose our property ownership.  I think the only exception to that is our primary residence, which is already on file anyway because that’s your record of address.

 

Assemblyman Collins:

Any and all property including partnerships and so forth?

 

John Redlein:

This encompasses as with your own, our electeds, our key people in the city manager’s office, our department directors, and generally goes down to the deputy directors.  There are a number of staffers that have command positions that do not file that disclosure, but a number of people in the City of Las Vegas do besides the seven elected public officials.

 

Assemblyman Collins:

And it’s the same form we use?

 

John Redlein:

Yes.  This may be of some assistance of Assemblyman Collins.  The LCB [Legislative Counsel Bureau] did a good job of rewriting what I gave them.  I’ve looked at this and I’ve seen a phrase that probably doesn’t belong in there because it’s surplus.  I’ve seen a couple of phrases that you would probably be more comfortable about if you sign on to the concept that we’re here to explain, if they were massaged.  With your permission, since we’ve got the tape recorder on, I’d like to be able to make a record it.  So, if you want to move this forward, LCB has some specific suggestions.  May I?  [Chairman Manendo indicated Mr. Redlein could proceed.]

 

I’m starting from the bottom of the bill [A.B. 538], looking at line 3-22.  The latter half of that line, it says, “in a redevelopment area.”  It’s probably surplus language because I know of no way that there can be a redevelopment project elsewhere.  That can be stricken.

 

At line 2-15 of A.B. 538, which is the last line of subsection 2, I think it’s important to do something that I meant to do.  At the end of the sentence, following the word “agency,” I would suggest “in which all significant details of the interest are disclosed” be inserted.  I think the world is entitled to know if I’m going to buy a piece of land because I’m going to throw a building up on it, or if I have a golden opportunity to become partner number 10 in some little enterprise, and when this goes on the agenda, I would like to see that all explained.  I think it would be in the public interest to have it be explained.

 

[John Redlein continued.]  Just above that, line 2-14 of A.B. 538, in the line that starts with the word “property,” the word “interest” should be inserted afterwards because I want to make sure this is crystal clear.  It goes beyond my buying land, but includes buying into or even leasing land.

 

Finally, you have to be aware that throughout all of this, we’ve used the phrase “a business investment,” and I meant to include the obvious sense of that where a public official who is subject to this restriction buys a piece of land with the intent to develop it, the classic investment.  But if I am one of those decision makers or policy makers and I decide to move my law office downtown to be closer to my other desk, when I take out a lease on some office space for my law office, that’s an investment in my private business, that business being my law practice.  I meant for them all to be included.  I didn’t want to have any doubt about that, but neither I nor the drafter from LCB could come up with anything more clever that calling it “a business investment.”

 

Chairman Manendo:

There are five redevelopment areas:  Sparks, Carson City, Reno, Las Vegas, and Henderson?

 

John Redlein:

Those are the ones I know of.  I believe that NRS Chapter 279, 40-some years ago, gave everybody the ability to do this.  It’s just that those are the ones with older, degenerated core sections that have decided to jump into this enterprise.

 

Chairman Manendo:

I was just looking at the sign-in sheet to get an idea of where folks were at.  Nobody from Sparks on this bill, nobody from Carson City on this bill, nobody from Henderson on this bill, and Reno doesn’t check “speaking,” but I believe they have down that they are in support.  Out of those five, only two, I’m wondering why their folks don’t want to take a position.

 

Assemblyman McCleary:

I want to express why I have some sympathies with what this bill [A.B. 538] is trying to do.  Shortly after I got elected I went to see City Councilman Gary Reese who represents the same area in Las Vegas that I represent.  I went to him to discuss some of the issues and what’s important to him.  I decided to go to his barbershop.  His barbershop is in the redevelopment area, and when I got to his barbershop, there was a line coming outside of the barbershop.  There were three or four people standing outside waiting to get inside.  Eventually I got inside, and it was a small little barbershop.  Mr. Reese was in there and I came to find out that he wanted to expand his operation, but he can’t, even though he’s had this barbershop for 30 years, long before he served in public office, but because of this particular law, he can’t do that.

 

Another point I would like to make is these public officials are continuously trying to recruit to come into these redevelopment areas and invest their money and build up this community.  It seems contradictory not to allow them to put their money where their mouth is and come in and do the same.

 

Assemblywoman Pierce:

The part of the bill [A.B. 538] that says the real property has never received any direct benefit from the agency or legislative body as part of a redevelopment project, the whole idea of a redevelopment area is that it floats all boats.  There just isn’t any way to get around this. 

 

John Redlein:

That language is difficult for us.  Here’s what I’m trying to capture by saying “direct benefit” from the agency or from the legislative body.  To make good things happen in my redevelopment agency if I was the city council, I might say we’re going to increase design standards; no more shabby businesses.  Everything is going to have enhanced design standards.  I might change zoning to get rid of the businesses we don’t like, the rough ones that are inconsistent with a new and vibrant area.

 

My suggestion is that by saying “direct benefit,” what I was trying to capture is that a piece of land or a building that may have been the indirect beneficiary of upgraded zoning standards isn’t necessarily going to be precluded as an object of my future investment if I am this policy maker or decision maker.  But if rehabbed so it becomes much more valuable, and then afterwards, I decide that I want to become one of the partners in that enhanced property, you’ve got a real problem and a distinct conflict with this language.

 

You’re right.  There are lots of things that the city council might do that would float the boat, but the city council—and I believe the custom is the same—it’s the purpose of NRS Chapter 279, the city council isn’t doling out the money to make a property rehabbed or more valuable.  It is the redevelopment agency that says if you make that good thing happen within our redevelopment agency, we are in for 10 percent of the costs to make it happen.  It’s the redevelopment agency that’s granting the direct benefit.  That’s what I was trying to capture.  I think our discussion here today clarifies it.  If it needs to be made more plain, I certainly can work with LCB to do it, but that was what I was trying to achieve.  They’ve got cash.  If they’ve got some special zoning, some special use permit, some grant of a special license that nobody else around was giving, then that’s a direct benefit to that piece of property that I think makes it taboo.

 

Assemblywoman Pierce:

It seems to me that the prohibition to buy a piece of land in a particular area during a particular number of years does not strike me as an enormous cross to bear given the scope of human experience, and I just can’t get comfortable with this.

 

Assemblyman Hardy:

In Boulder City, the city council is the redevelopment agency.  Is that the way it is in Las Vegas?

 

John Redlein:

They wear different hats, yes.

 

Assemblyman Hardy:

They are members instead of councilmen when you’re talking to each other.  They are, in essence, making those decisions.  The way I read it, this is an opportunity to open up the purchasing or owning or benefiting from property by a public official or public employee, but just puts a new layer of disclosure requirements on that person.  Is that correct?

 

John Redlein:

That, plus limiting the property, because as I just pointed out in the discussion with Assemblywoman Pierce, not every piece of property is now going to be available to them.  If it’s gotten some benefit, it’s out of bounds.  Keep in mind there is one more component.  It’s just not to allow me to buy quickly.  I am worried about, as Assemblyman Collins pointed out, the interest that, in a little barbershop, when the place next door becomes vacant, that Councilman Reese might have had them knocking out the wall and putting in two more chairs, but what happens when time comes to renew the lease on his current barbershop? 

 

You could argue that NRS Chapter 279 forbids him from doing that, and that’s clearly not what anybody wanted in 1959 when, as Assemblywoman Pierce said, don’t buy land in this area.  When I read the prohibition when I first came to work for the city, I thought it made perfect sense, but I hadn’t thought about situations such as I’ve described where there are some very unfair things that happen.  If somebody wants to waltz in and buy some land, I think that this is a way that makes it fair.  If you want to stick with the prohibition and say you may not acquire land, that makes sense to me, but I do worry about the others that are affected by it in ways that were never intended.

 

Assemblyman Hardy:

When I read the sentence on line 9, Page 2, “The real property has never directly received any benefit from the agency or legislative body as part of a redevelopment project,” I have a problem with the way the sentence is now.  The real property has never received any direct benefit, because all boats float, and so every property in the redevelopment agency, and that’s why you do it, has improved its assessment value.  They all have improved.  You can’t do anything in the redevelopment agency that hasn’t theoretically met the requirements or the goal of the redevelopment agency and benefited.  So that sentence, you’re the word crafter, you can figure out how to do that better than I can.

 

After the official is out of office and no longer a member of the redevelopment board, no longer city council, no longer an employee of the body that makes those decisions, they will benefit.  When you say they will never benefit directly after they’re out of office, after they’re retired and they sell that, they are going to benefit by the “every boat floats” philosophy.  They will, if they sell, benefit.  I don’t know that you can stop that from happening after they’re out of office.  In lines 22 and 23, “ . . . during the period in which the duties of the officer or employee require him to participate . . .” I think it’s not quite accurate to say they will never benefit from this.  Hopefully, they will when they sell.

 

The way I see that disclosure you’re talking about is that I am saying if I’m the public official that I know I’m going to have a conflict of interest, you know I have a conflict of interest, and I’m going to vote on it anyway.  I have a problem with that.

 

To illustrate the Chinese Wall, I became a city councilman in Boulder City, and as soon as I did that, the lawyers wrote me a little note that said, “You no longer can take care of city employees on workman’s compensation.  You no longer can do firemen’s physicals on the contract that we wrote way back when.  You now have part of your practice that you can do nothing about.  You cannot talk about, you cannot meet in committee about, you cannot review the contract, you cannot be concerned about it in any way whatsoever in your private enterprise.”

 

Legal has created a Chinese Wall that prevents me, the practitioner, from doing anything with another kind of contract with the city, because the city would be paying me twice.  They’d be paying lots and lots of money as a public official, and I’m smiling now, versus the pittance that I would get as a physician, and I’m still smiling.

 

[Assemblyman Hardy continued.]  The city cannot pay me twice and, therefore, I cannot be involved in the decision making or the benefiting in any way from the prior contract that I had with the city as a group of physicians, and I had to exclude myself from that.  I see the Chinese Wall as more restrictive than what we’re talking about, in that you’re still allowed to vote, decide, discuss, et cetera, with this bill [A.B. 538].

 

John Redlein:

That’s why the early reference I made to the duplicative references to NRS Chapter 281.  Let’s go back to Councilman Reese and his barbershop who would like to get bigger, but can’t.  He’s in a strip mall at one end of it.  There’s a degenerated five-and-dime in an older part of town.  Let’s say that Albertson’s came in and, “We’re willing to put in a supermarket, which is a neat redevelopment project.  People in that neighborhood don’t have a nice supermarket.  We’re willing to do it, but that’s a pretty shabby building, and if you want us to go there, we’re going to need a little assistance.”  The redevelopment agency says, “Fine, we will help you with some sort of tax rebate or cash up front to make it happen.” 

 

Councilman Reese, under existing law, and under this modification, shouldn’t be voting on that because of NRS Chapter 281.  He has a conflict of interest.  Pumping up the value of property that’s 200 feet away has such a direct impact on the potential value of the zoned property that he is disqualified.  We’re not changing anything.

 

I mentioned NRS Chapter 281 in this bill [A.B. 538] because I don’t want anybody to read this and say, “Never got any redevelopment assistance; I guess I can buy it.”  That’s not necessarily so, because if I learned of it through my council contacts or the opportunity to buy it is being offered to me because of my council contacts, or I have some inside knowledge that makes me know that this is about to be a valuable piece of property, all of those circumstances would currently prohibit me from buying it in NRS Chapter 281.

 

I don’t want to change anything.  I want to remind people that, not only should they read this, they better carefully read NRS Chapter 281 because there are a number of other instances that require that they steer clear of an investment.

 

Assemblyman Hardy:

You may have got to my question, or the answer thereof.  The public official still has a Chinese Wall, still cannot vote on this, still cannot discuss it, still cannot be involved with it, still cannot lobby for it, still cannot have the conflict of interest negated in any way.  In other words, he’s disclosed, he’s done, but he still cannot be involved with the discussion, the voting, and the benefiting from.  Is that correct?

 

John Redlein:

Yes, and I think this goes back to the use of the word that Assemblywoman Pierce has some problem with, and that’s the “direct” versus “indirect.”  Go back to Councilman Reese as another example.  He lives in a ward.  He must live in that ward, and his job is to make good things happen in that ward.  He’s not precluded from voting on all redevelopment projects in that ward.  When it becomes direct so that it’s the market that’s 200 feet away, he needs to steer clear of it.  He ought not to be talking to planning.  He ought not to be talking to the redevelopment folks as they talk about the desirability of infusing some money into that market.  There are existing walls already built, and if it was the market 200 feet away from his shop, the way the law exists now he can’t vote on it, I don’t think, without a violation of NRS Chapter 281.

 

If it’s something else good far down the block that isn’t going to impact the barbershop, he should vote on it.  We expect him to.  It is, at best, an indirect benefit to him.  His boat floats a little by good things he does in his ward.  When we get down to it, every time a councilman votes on a park in his ward, he’s doing something good for himself, but the benefit is so indirect that I don’t believe that we have a NRS Chapter 281 triggered conflict.

 

Assemblyman Hardy:

I appreciate that clarification and, if I were him, I’d probably get up and leave the room when that agenda item is on.  I think it puts us at risk when we’re near, around, talking to, or winking at, anybody who may be discussing that.  I think we leave ourselves liable when we don’t have that.  But this does not allow public officials or the employee to violate any other rules that are already in place.  Thank you.  I feel much better.

 

Chairman Manendo:

Speaking about Councilman Reese’s example, if he owns that building where his barbershop is, and the person next door, for whatever reason, vacates their flower shop, he cannot use that pad in the building he owns to expand?

 

John Redlein:

Now?

 

Chairman Manendo:

Right.

John Redlein:

Absolutely not.

 

Chairman Manendo:

Why?

 

John Redlein:

He could not buy it.

 

Chairman Manendo:

He owns that building.

 

John Redlein:

If he owns the entire building and a portion has been leased to the flower shop and is vacated, no.  I would say that he has a different use.  When he owns the key to the flower shop, I don’t think he’s acquiring something else.

 

Chairman Manendo:

That example of where he could expand, he could expand if someone had a law firm in a building and owned the building, they could expand by going to the second floor, the third floor, and so forth.  If that’s the case, they can expand without this legislation?

 

John Redlein:

I believe so.

 

Chairman Manendo:

If in the scenario you’re using with Councilman Reese, help me understand why he cannot add another barber chair in his existing pad, if there’s room.

 

John Redlein:

Let’s presume, because I don’t know many of the details of Councilman Reese’s private business, it’s leased space in a strip mall and the flower shop next closes up, and he says, “Golden opportunity, two more chairs.”  It involves taking out a lease/hold on the former flower shop site.  That’s an acquisition of an interest in land that he didn’t possess the day before.  He may not acquire that interest in land.  It is forbidden to him.

 

Chairman Manendo:

But he’s not purchasing it.  He would be leasing it.  So, he cannot lease any?

John Redlein:

The people that have really worried me, but the ancillary affect that I believe was never intended are almost, in every instance, they have been lease/hold sort of interests.  There’s no doubt about it, when it says “acquire any interest in any land,” that includes lease/hold interests.

 

Chairman Manendo:

My other question was, in a current location, again using Mr. Reese as an example.  The pad that he currently, if he leases, he cannot add another barber chair into that pad that he is currently leasing, even if there’s space available?

 

John Redlein:

I never meant to suggest that, if we’re talking about within the space he now leases.

 

Chairman Manendo:

So, he could expand his business or she could expand her business in their current location?

 

John Redlein:

The walls don’t change.

 

Chairman Manendo:

If there’s room, they can expand their business?

 

John Redlein:

You bet.  I don’t think a third chair or a fourth chair involves an acquisition of an interest in land.  That involves remodeling.

 

Chairman Manendo:

So, when we’re portraying that people cannot expand their businesses, they can?

 

John Redlein:

Expansion usually connotes growth, and that means new walls.

 

Chairman Manendo:

Sometimes.

 

Assemblyman Christensen:

This is something that I’ve been aware of.  I have heard of this business issue.  These are a lot of the issues that bring me here.  Reading this bill [A.B. 538], hearing all the dialogue, and hearing questions and answers going back and forth, I just wanted you to know that I fully support it, now more than ever.

 

Assemblyman Williams:

I see this as not so much an example of existing situations like Councilman Reese, but those situations that may occur for these individuals that are not currently in office, or who do not have current businesses.  An individual could probably silently, for a lack of term, invest in some type of business and folks would never know.  I think this particular legislation is sort of a sunshine piece.  It puts it out front.  It allows everything to be in the open and allows the public to know.  I’d much rather know it, and have it revealed, and this allows it to do so, than to have it—before this, people could, if they wanted to or they had those type of intentions, go into some type of business deal, and we would never know because, just because you’re in business doesn’t mean your identity is revealed.

 

At least this bill [A.B.538] brings out in the open the ability to clearly state where you are.  The public will clearly know exactly what the intent is and what they’re doing.  I think it’s refreshing from that standpoint.  But if we don’t, and people intend to go into business anyway, it is going to have them circumvent the system and things could be worse.  I think the bill, if nothing else, brings out the ability to know exactly what’s going on.  I think it’s refreshing.

 

Assemblyman Grady:

Being a former city elected official, I don’t believe because you subject yourself to being an elected official you have to quit living.  I think the main reason for this bill [A.B. 538] is, as Assemblyman Williams stated, to bring some sunshine into this, and I fully support it.  I think it’s a great move to say if you’re going to be involved in something, spell it out in public, let everyone know what your intentions are.  I applaud you for bringing it forward.

 

Danny Thompson, Executive Secretary-Treasurer, Nevada State AFL-CIO:

[Introduced himself.]  I’ve sat and listened to all of this, and I can tell you that in Nevada we have a citizen legislature of which you all are members.  All city councilmen that I know are part-time employees.  All the county commissioners I know have other jobs, and I agree with Mr. Grady and his comments that just because you decide to do one of these jobs doesn’t mean that you shouldn’t be able to live.  I think this does provide sunshine for what’s going on, and removes any hint of anything being improper.  I’d like to go on record in support of this bill [A.B. 538].

Chairman Manendo:

Is there anyone in opposition to Assembly Bill 538?  I’m going to close the hearing on A.B. 538, bring it back to Committee.  We need to take a break.  We are in recess.  [10:52 a.m.]  Committee, come back to order.  [11.26 a.m.]  Assembly Bill 484.

 

Assembly Bill 484:  Requires governing body of certain cities and counties to adopt ordinances regarding licensure of mobile and             nonpermanent vehicle wash vendors and ordinance regarding recovery of wastewater by such licensees. (BDR 20-1303)

 

Jim Avance, Consultant/Lobbyist, representing the International Carwash Association:

[Introduced himself.]  I’m passing out letters to you from the International Carwash Association [Exhibit G].  Not wanting to read the entire letter, I think the third paragraph is pertinent and I would like to read it before we get to the bill [A.B. 484], so that you have that in your mind.  It states:

 

Authorized by the Clean Water Act of 1972, the National Pollutant Discharge Elimination System permit program regulates point sources that discharge pollutants into waters of the United States.  Stormwater collection systems, controlled by almost all municipal systems in the United States, came under the restrictions of the pollutant discharge system in 1999.  Local municipalities have the responsibility to ensure that water collected from streets, gutters, and drainage ditches, does not impair the quality of receiving waters.  Stormwater, unlike water that enters the sewers, does not undergo treatment before it is discharged into the waterways.

 

These are state and federal waterways.  We have an interest in those waterways.  Moving to the bill itself [A.B. 484], Section 1 requires that a board of county commissioners with a population of 100,000 or more, and later in the bill that same language is regurgitated for cities of 60,000 population.  It basically becomes the same language later on in the bill for cities. 

 

What we’re talking about is it states that a person must have a license to do a mobile car wash.  In that licensing system, the city needs to have a restriction or a requirement that includes the method used to remove the pollutants from the wastewater, the manner in which the wastewater generated during the process of washing is discharged, the method in which pollutants are captured and how they are then disposed of, and then the bill [A.B. 484] goes into definitions, et cetera.

 

[Jim Avance continued.]  On page 3, the new language requires that the county and/or city not issue a license unless the person indicates that he has knowledge of how to control the pollutants.  That basically is the bill.  You might note that there is no effective date at the end of the legislation.  It just tells cities and counties to take care of this problem.  It’s a federal mandate.  Under the Clean Water Act, there are systems that allow a person to clean a vehicle and capture the water in a remote situation.

 

One that comes to mind is very similar to a blanket.  You merely drive the car onto the blanket, you wash the car, and all the wastewater goes down into that blanket and is captured.  Eventually, that blanket needs to go to a hazardous waste disposal site, which is what occurs with the wastewater and the pollutants out of permanently affixed car washes.  This would not put these people out of business.  It just makes them conform to existing laws that we have.

 

The other part of the licensing process for those cities and counties that do not have it, it gives the client somewhere to go if their vehicle is damaged.  It seems to be very safe.  It’s an environmental issue.  I think we need to pass this.

 

Peter D. Krueger, State Executive, Nevada Petroleum Marketers and Convenience Store Association:

[Introduced himself.]  The Nevada Petroleum Marketers and Convenience Store Association is a statewide trade association that, among other things, represents many of my members having car washes.  These car washes range in some of the rural counties from a very small do-it-yourself handwand, yet have the appropriate environmental procedures to capture wastewater and the runoff, to the very sophisticated car washes that cost many hundreds of thousands of dollars that I think we’re all familiar with. 

 

This is a bill that’s designed not to put people out of business, but simply have them comply with the laws that many of us comply with.  They’re not only licensure, but business licenses.  When we’re talking about these mobile car washes, I think many of us have used them in the past, but it’s simply where an enterprising individual with a pickup truck or a van comes to your place of business or your home, hooks up your hose to your domestic water system, washes your car, and in the process of doing that, uses chemicals of unknown nature.  Those chemicals end up going, as Mr. Avance indicated, into the gutters, and are not treated as they are through oil sand separators, so that not only the dirt that comes off your car, but the oil and other byproducts of internal combustion engines, goes into the gutters, and then down to the north Truckee River and probably ultimately to Lake Mead.

 

[Peter Krueger continued.]  This would allow counties and municipalities to get their hands around these people.  Our membership thinks that there are many people operating out there probably through ignorance.  I don’t think that many of them understand that there is a business license required.  In some cases, depending on the size of their organization, they need to have workers’ compensation.  They’re not doing that either, at least in some cases that I’m aware of.  If your antenna gets broken off in a fixed facility, you see the manager or the person responsible for that facility.  Hopefully, there’s some immediate remedy to your scratch, your broken antenna, or whatever it might be.

 

In the mobile car wash business, the individual probably doesn’t have insurance, and if they do, it’s probably homeowners’ insurance or auto insurance, and you’d have to work very hard to get any redress for damage that occurs to your vehicle.  We recycle our waters.  Part of the process on car washes is recycling, so that it not only has no environmental impact, it also has saving water.  In the state of Nevada, both north and south, water is king, and recycling that water is important to all of us.

 

We don’t want to level the playing field, we don’t even want to be on the playing field; we simply want a fair bill that allows everybody to compete on an equal footing, and do the environment right, and do right by passing a bill that would do such a thing.

 

Assemblyman Grady:

Speaking about leveling the playing field, would this put the poor little cheerleaders that have a car wash on the weekend out of business?  

 

Jim Avance:

On page 2, line 23 of A.B. 484, where it defines a non permanent wash vendor, it says the term does not include a person or entity including, without limitation, scholastic, religious, or community organizations that wash vehicles for charitable purposes.

 

Assemblyman Grady:

My second question concerns the letter you gave us [Exhibit G], the third paragraph down, “local municipalities have the responsibility to ensure that water collected from streets, gutters, and drainage ditches does not impair the quality of receiving waters.”  If that is federal legislation, why do we need this?  I think as long as the local governments have to adhere to the Clean Water Act, and it’s done, we don’t need another bill and another level of bureaucracy.

 

Jim Avance:

This brings it to their attention, and it certainly makes the state of Nevada a participant that it’s our water, too.  Where there are federal waterways or state waterways, we have that concern.

 

Assemblyman McCleary:

You mentioned in your testimony that this allows the local municipality to create an ordinance to regulate this.  In the bill [A.B. 484], it says that they’re required to do so.  You’re saying that they cannot make ordinances affecting this now?  Why are we at the state level telling the municipalities what to do?  Aren’t they capable of making those decisions?

 

Chairman Manendo:

We do in some cases.

 

Peter Krueger:

Yes, and you will hear some testimony following us from municipalities that already have these kinds of ordinances on the books.  As Mr. Avance has indicated, we feel this Committee should act to encourage all the municipalities, and this is one of the radar screen issues.  It’s not on the radar screen.  There are obviously bigger fish to fry, but a cumulative environmental impact and factors cause this to become a problem, and I know in the day-to-day operation of most municipalities, this isn’t the most important thing to them.

 

In our judgment, it’s a cumulative kind of problem, and we think that the action by the Committee and ultimately by this Legislature will provide the incentive for others to act.

 

Assemblyman McCleary:

You mentioned something else that I’m not clear on.  You’re referencing the pollutants and contaminants that they’re putting in the water system.  I watch people wash their cars in my neighborhood all the time and Lord knows what they’re using on them to detail their cars and things like that.  This is such a minute affect upon the ecology compared to the average guy washing his car.  I guess I just don’t understand why it’s a big issue.  I apologize if I’m not getting the point.

 

Chairman Manendo:

People at their homes are probably using liquid soap, but I don’t know what type of chemicals these people use on their rigs that go around washing vehicles in parking lots.  I’m not sure, but I doubt it’s Dove.

Assemblyman Hardy:

The Clark County Health District has all sorts of regulations about wastewater.  Do we have their input on this, and what regulations there are, because they’re obviously involved in a county of more than 100,000, and they talk about wastewater all the time in setting up businesses, if you could elaborate on that.

 

Peter Krueger:

I’ve talked with the Clark County lobbyist, Ms. Foley, and they are neutral on the bill [A.B. 484].  That’s all I can tell you.  I was surprised, quite honestly.  They are an important link in this, but it comes down to the municipalities to try to catch these people and to enforce.  For those municipalities that have current ordinances on the books, the task for them becomes to catch them.  We feel that by the enactment of this type of legislation, people will be put on notice that they are required to do all these things like license and follow the laws that the rest of the people in the car wash industry are required to do.

 

Assemblyman Hardy:

These are the exact kinds of thing that Clark County Health District does.  They require a permit, they have a hearing, people have to show up and say what they do, and so I’m asking a direct question— Is there something Clark County Health District does right now that we would be infringing on their rules and regulations?  I would suspect that the cities in Clark County would be looking at two different masters at this point.  The people in the city would be looking at two different masters, both with regulations on wastewater and pollutants going into the system, so it would be nice to have somebody’s input.  I guess it’s the Nevada State Health Division that is for everybody except Washoe County and Clark County.  So where is the state on the wastewater pollution as well?

 

Peter Krueger:

I can’t speak for those organizations.  I asked those people to be here and you’ll have to ask them why they’re not here.  I don’t believe in my discussion, and with Mr. Avance and me understanding how the current ordinance is, you’ll probably hear from somebody just immediately following us that does this, but I can’t presume to speak for them. 

 

Kami Dempsey, Government Relations Manager, City of Las Vegas:

[Introduced herself.]  We are in opposition to this legislation [A.B. 484].  Although we definitely understand the concerns of wastewater and chemicals going into Lake Mead since that is our supply of our drinking water, and we realize there is federal legislation, and those are some of the reasons why we don’t think we have to duplicate additional ordinances or policies. 

 

[Kami Dempsey continued.]  When we look at then having to regulate and police, I think that is our larger concern because, when you have a mobile car unit that goes into a multi-jurisdictional area, you have multiple jurisdictions that are trying to police this person when you don’t even know which area they’ll be in or other how they’re going to be licensed with your organization or your local government.  We have a lot of concerns about that, and it would be difficult for us to have to monitor, regulate, and follow up to make sure that these businesses are following these regulations.

 

There’s been a lot of legislation this session that asked us to monitor and regulate, whether it’s handicapped signs or this type of business.  There are always additional things that we do.  We have a partnership with Clark County to pay for Metro.  We do have our detention enforcement officers, and they only have authority on public property.  We would probably have to hire additional staff to have to meet these regulations.  That’s why we are concerned about it.

 

Richard Wilkie, Legislative Advocate, City of Henderson:

[Introduced himself.]  The City of Henderson is also in opposition to A.B. 484 for many of the reasons that have already been specified.  We currently have business regulations that govern wastewater and runoff, so we’re already policing those aspects of it.  We think that addresses the concerns that have been provided by the sponsors of the bill.  The additional concern we have, as Ms. Dempsey highlighted, is concern for the enforcement. 

 

This bill [A.B. 484], in Section 1, goes into what the ordinance must establish with respect to such vendors, the type of system, the specific methods, the manner, and for us to enforce and make sure that they’re all adhering to each one of those which would put a big strain on our limited staff.  We don’t feel that this bill is necessary because of our current ordinances.  The information I have from our people down south is that these vendors tend to be “wander conscious.”  In addition to that, they don’t necessarily have any additional impact or any bigger impact than those scholastic, religious, and community organizations, or you or I washing our cars on our front lawn.  Again, we’re in opposition because we just don’t think this bill is necessary.

 

Chairman Manendo:

Do you have any specific details on the Clean Water Act of 1972?

 

Richard Wilkie:

No, but I can get you all the information you’d like.

Assemblyman Collins:

I’d like to ask a question of both Ms. Dempsey and Mr. Wilkie so either one could respond.  Ms. Dempsey made statements about jurisdiction and so forth, and that’s why we have state laws, so that when they go from city to city within a county, they’re consistent in ordinance.  I think all we’re talking about is a trap that they put underneath the vehicle that they’re going to wash, and so you, representing local government, issue a license.  If you only issue a license in the city, then you expect that, while they’re in the city, they will comply with the ordinances that you have, which would, I would suspect, already include the Clean Water Act and any other federal legislation that supersedes your laws.

 

I guess in regard to these portable car washes specifically, you have people who police water runoff and when you can run your sprinkler, so you do have a concern about water in the local areas.  You don’t let people burn wood in their fireplaces certain days.  You have all these simple things that you feel important to ordinance and police, so why wouldn’t you want to protect the environment that you represent in this manner in trapping those things?  You require restaurants and food service places to trap water to catch those kinds of contaminants.

 

I’m trying to think of some portable or mobile folks that you police or have the ability to police.  Why wouldn’t you want to allow a state law to dictate this so it would be uniform, so that when people come in and apply for a business in the City of Las Vegas or the City of Henderson, they would meet the same standard?

 

Kami Dempsey:

I think you make excellent points.  We’re all concerned about clean water and air quality, but the points you mentioned and a lot of the examples you referenced mention a lot of regional organizations.  We have the air quality group, we have the Southern Nevada Water Authority, which regulates sprinkler runoff.  I think it might be an excellent idea to address the Southern Nevada Regional Planning Coalition so that they can adopt a standard.  The concern when you start getting into multi jurisdictional items is you may have Clark County adopt a higher standard of ordinance rather than what we may pass.

 

Not that I have any understanding of the business community side of it, but even businesses are usually concerned because those who don’t know where they’re licensed have to get multiple licenses, and have to follow different rules depending on where they are.  We hear and see this a lot, especially with the smoking issues.  You’ll have some legislation before you trying to give local control over smoking.  One of the concerns we hear about and why we support one of the bills that has come through is to go through the regional group rather than the local jurisdictions so we have a standard among all the jurisdictions in one area, rather than adopting different standards among all local governments.  If it were something that the region wanted to address because it is a regional issue, I think that’s a better place to have the standard addressed.

 

Chairman Manendo:

Did you say the mobiles are licensed?

 

Kami Dempsey:

Any time a person has to run a business in a local government area, they do have to get a license through that local jurisdiction.

 

Chairman Manendo:

I wonder how often these folks slip through the cracks?  Maybe that’s one of the things that we need to look at.

 

Assemblyman Collins:

Being you’re familiar with the private sector as well as your public service, you know that if a person buys a license in the City of Las Vegas that you’re only dealing with what they’re going to do in the city.  They know when they buy that license that they’re becoming a law-abiding citizen and buying a license in your city.  They know if they go outside of your city boundaries, they must buy a license in another city or in the county.  That’s already addressed, whether or not they’re in business.

 

I guess if this bill [A.B. 484] requires you to add a requirement for that trap with the car wash, it should already be in your ordinance, and since it’s not, then this bill is a good idea.  Don’t you think it would be a good idea since you haven’t done that?  For example, since you brought up smoking, city street sweepers probably cause more pollution because they conserve water and fail to fill their tanks properly or often enough.  Also, because cars are still manufactured with ashtrays that don’t seem to be used, the city sweepers stir up more pollution from cigarette butts than probably any other issue you could address on the local level on smoking.  Since you don’t enforce that, why wouldn’t you want to turn toward the positive and allow this stuff to be trapped?

 

We’re spending $150 million on the Las Vegas Wash to clean up that stuff that’s been running out there.  Doesn’t this affect that as well?  I cannot understand why local government would not want to protect their constituents.

 

Richard Wilkie:

As Ms. Dempsey said, basically it’s a regional issue.  Air quality, air pollution, and water pollution are serious concerns for the Las Vegas Valley area, and we are working together with the SNRPC, the Southern Nevada Regional Planning Coalition, to address regional issues.  We take it very seriously.  That’s why we have ordinances that require people and businesses to adhere to federal statutes related to air quality, water pollution, and wastewater runoff.  If we find a business, either with a business license or without a business license, is not following the rules and regulations, then we can take action.

 

[Richard Wilkie continued.]  You had mentioned that it would be a good thing to have everybody on the same page.  I’m not a lawyer, but A.B. 484 just says that the ordinance must establish the type of system; it doesn’t specify which system that is, what method it is.  Given this, we could still come up with different standards.  I agree with Ms. Dempsey that this is a serious issue and may be more appropriately handled at a regional level amongst the different entities in the south.  We do have the ordinances and regulations in place.  We do prosecute if we can find those people, whether legal or illegal, operating a business, but they are violating the Clean Water Act, if you will.

 

Chairman Manendo:

Who goes out and checks on these?  You see them all the time.  They’re everywhere, especially in business parking lots washing somebody’s car.  Who goes out and enforces that to see if they’re licensed or not?

 

Kami Dempsey:

We’ve been into a little bit more detail than I probably have any experience with, but I think in terms of the business licensing and who would check, it would be our licensing department [Las Vegas Business Services Division].  We are limited in staff and the resources we allocate for that.  We do try to do checks.  We are in charge of auditing some of these businesses, and we can find, by a checks and balances system, some of the businesses that do slip through the cracks.

 

I think it’s also an efficiency issue.  When Assemblyman Collins asked the question, do we want to regulate, if you tell us to regulate, we’re obviously going to regulate.  However, in terms of trying to be the most responsible to the taxpayers, we have to take a look at what’s the best way to put together an ordinance, what’s the best way to monitor it and what’s the best way to police it.  If we were going to have something regional, and you have a select group looking at the entire valley rather than having Henderson, Clark County, Las Vegas, North Las Vegas, and Boulder City having to do their own independent entities, I would think that it’s doubling some of the resources that we may be able to allocate.

Assemblyman Collins:

I also think it was the Nevada State Legislature who created those regional agencies, including the health district.  So, it took the Nevada State Legislature to create those to help the local cities get the ball moving.  This is just another simple step that, because we haven’t voted on this, we could amend it to say that you will require them, as a condition to getting their license, to provide a mat or a trap to collect that, and that could be uniform.  We wouldn’t have to tell you what brand.  We could just say you will provide a trap when you’re doing this business.

 

Chairman Manendo:

It’s interesting because, if you have a lot of these folks out there as businesses and they’re not licensed, we’re losing revenue.  Ice cream vendors, same thing.  If they’re not being licensed and there’s no regulation, it’s a health and safety issue that we have to look at.  Losing revenue, wastewater into the lake—there are a lot of issues here.  We look in our own parking lots and see how many out-of-state license plates we have that have lost revenue that work in this building.  It’s amazing.  I don’t know what has to be done as far as enforcement, but something has to be done.

 

Assemblyman Christensen:

My question is this, and it was somewhat addressed in some comments from my colleague from Assembly District 1.  How does the federal law address this in our clean water, what drips off the bottom of these cars out in a parking lot, and how are we following up on that?  What are we doing about this federal legislation that some feel we don’t need this?  I’m glad we have an in-house expert on this topic.  Can you answer that, Mr. Wilkie?

 

Richard Wilkie:

I’m not a water expert and I’m not a pollution expert.  I can get that additional information to you.  My information from down south is that ordinances require these types of businesses, and businesses in general, to regulate for the water quality.  If there’s water pollution, they deal with the wastewater and storm- water runoff that you’re talking that goes into the Las Vegas Wash.  They captured the regulations that govern these individuals, and if they’re found not in compliance, then we take action.  I don’t have the details on exactly how the federal regulations are captured in our ordinances, but I can get you that information.

 

Assemblyman Christensen:

Just so you’re clear on what I’m looking for, and I respect both of you, and it has been great working with you.  I say that because I’m anxious to get down to the bottom of this.  I am trying to figure out where this federal law exists and what this bill [A.B. 484] is pointing out, and where the two would come together.  From there, that will help me understand how something like this would be enforceable.  You have your objections and the other people think that it’s great.  You have your concerns with it.  I’m just trying to understand where there can be an intersection and how we can figure out how to address this, particularly where it relates to enforcement and clean water.

 

Assemblyman Hardy:

The Clark County Health District does have regulations for solid and liquid waste.  They are the agency referred to by the state and working in concert with the county, and I think that’s where it ends.  If you look at the same thing with Washoe County, they would be the two counties that are affected by this, but there are regulations in place.  I will confess that I don’t know how many and where, but there are regulations, and it seems like it would be wise to keep that where it is and let them do their thing, even if it was nothing more than a letter of intent that we need to watch out for this particular industry that’s growing.

 

Chairman Manendo:

I wonder if they are doing their thing and, if they’re not, then we have to be conscious of that and step in at times.

 

I will close the hearing on Assembly Bill 484 and bring it back to Committee.  Mr. Christensen, we will assign this to you and see if there is anything that can come out of this bill by Friday.

 

We will turn to our final bill.  We have Assembly Bill 499.

 

Assembly Bill 499:  Authorizes governing body of local government to create maintenance districts to pay cost of maintaining and improving local improvement projects and other undertakings. (BDR 21-274)

 

Dan Musgrove, Director, Intergovernmental Relations, Office of the County Manager, Clark County:

[Introduced himself.]  Assembly Bill 499 is a Clark County bill.  I know that, because of the newness of some of the members of this Committee, you may not have come in contact with my witness who will present the bill, Mr. John Swendseid.  Those of you who are going to be a part of this legislative process will probably hear his name a lot and will have a chance to hear his expertise in the years to come.  I’d like to give you a little bit of his background.

 

Mr. Swendseid is an attorney whose legal practice centers on legal services as the bond counsel for both the state of Nevada and many local jurisdictions dealing with types of bond and loan financing.  He has practiced over 25 years, and 20 of those years have been in the state of Nevada.  His law firm has been the bond counsel for the state, and for Nevada counties, cities, and schools districts, and the vast majority of state and municipal bonds that have been issued since the late 1940s.

 

[Dan Musgrove continued.]  As bond counsel, Mr. Swendseid and his firm assist governments in structuring these borrowings, whether it be bond issues, bank loans, or notes, so they comply with both Nevada law and federal income tax law.  Municipal bonds are tax exempt and very attractive to investors, and I can tell you that with Mr. Swendseid’s credibility, when his name is on one of those bond issues, makes it very, very attractive to investors.  He serves Nevada and the counties as a resource, and I’m proud to have him assisting us on this bill [A.B. 499].

 

NRS Chapter 271 is the chapter of law that allows for local improvements.  Our Assembly Bill 499 is asking that we allow governing bodies of local governments to create maintenance districts to pay the costs of maintaining and improving local improvement projects, and then provide for the levying of assessments. 

 

To give you an example, those of you who know southern Nevada and the Las Vegas Strip, I’ve seen those pedestrian overpasses that were built in collaboration with the casinos and major resort properties that sit on those four corners.  That was something that they wanted to do for the safety of the pedestrians in Las Vegas.  They created an assessment among themselves to pay for those pedestrian overpasses.

 

The key is that the law doesn’t allow us to pass the maintenance costs on to those property owners.  It’s left on the backs of the county and the taxpayers.  This bill [A.B. 499] would allow us to incorporate maintenance into those assessments.  We did not have a chance, because of the deadline crunch, to see the last reiteration from LCB [Legislative Counsel Bureau].  The only reason we have an amendment [Exhibit H] is that there are a couple things we need to tweak.

 

John Swendseid, Swendseid and Stern, representing Clark County as Bond Counsel:

As Mr. Musgrove indicated, this bill [A.B. 499] is to specify procedures for maintenance districts.  It consolidates the existing provisions of NRS Chapter 271, which deals with special assessments and maintenance assessments.  NRS Chapter 271 is our general assessment district.  We use it for assessments for roads, streets, and sewers.  An assessment is where the government is going to put in an improvement adjacent to some property or that benefits a property, like a paved road or a sewer line or a water line, and they assess the property adjacent to the improvement for the cost of the improvement, since they’re benefited by it.

 

[John Swendseid continued.]  For a long time, Nevada law allowed that for capital improvements, such as streets, sewer, water.  In the last 10 or 15 years, you have also seen to allow it for some maintenance purposes.  There are four maintenance purposes in NRS Chapter 271, and each of them has a different statute.  A.B. 499 consolidates the four provisions in existing law that deal with maintenance.  It also allows us to use the maintenance districts for projects that we did not construct with an assessment district under NRS Chapter 271.  The purpose of that for Clark County is to catch the bridges over the strip.  Those were constructed with monies provided by the property owners, but the general taxpayers are maintaining them.  These certainly are projects that are of particular benefit to the adjacent casinos and hotels, so it would seem fair that the maintenance costs of those bridges or a portion of it be assessed against the hotels.

 

One of the existing provisions for maintenance is maintenance of street beautification projects.  With that, the trees and the landscaping in the middle of the Las Vegas Strip, is done through a maintenance assessment district under existing law.  The new law would allow us to include the Las Vegas Strip bridges.  It would consolidate the other maintenance provisions in NRS Chapter 271 and would allow us to cover some other maintenance requirements of the Legislature.  The county should look at, under NRS Chapter 278, one consolidated maintenance procedure, and the bill [A.B.499] specifies that procedure.

 

The procedure is very similar to what we currently use for street beautification projects.  The principle change is that the bill [A.B. 499] would allow us to establish a three-year budget and levy assessments over a three-year period instead of just having one-year budgets for maintenance.

 

The most important part of the bill [A.B. 499] is Section 3, which provides all the procedures for maintenance districts.  The other sections just conforms provisions of NRS [Nevada Revised Statutes] to the change made in Section 3.

 

Section 3 is the main provision of the bill [A.B. 499].  It allows the governing body to create a maintenance district for projects that are of special benefit to adjacent property owners or property owners that are close to the improvement.  Under existing law, to create one of these districts, we need to go through a public hearing, and if the people who are going to pay more than half of the cost object, we can’t create it.  So there is a safeguard in existing law.

 

[John Swendseid continued.]  Once we’ve created the district under this provision in Section 3, at least every three years we have to have another hearing.  At that other hearing, we would propose the budget for up to three years, and people would hear how much we propose to charge them for these three years, and how we propose to spread it among the different properties that are benefited.  We invite people to object.  They can also object at the second hearing.

 

They can’t kill the district at the second hearing, but they can point out errors that the county may have made in the method that they’re using to assess the benefits.  If enough of them object at the first hearing, they can kill the district altogether.

 

Once the governing body has gone through the second hearing, listened to objections, and made any changes they want to make, they levy the assessments which would be payable over a period of up to three years, either monthly, quarterly, or in a lump sum.  There is no interest charged on the maintenance districts, as long as you pay on time. 

 

Sections 4, 5, and 6 of A.B. 499 include these types of maintenance districts in the definition of “project” under NRS Chapter 271.  Sections 7, 8, 9, and 12 make minor modification to other provisions in NRS Chapter 271 to delete reference to a section that’s being repealed by the bill [A.B. 499].  These sections refer to either the street beautification provision being repealed or one of the other provisions being repealed, and they are replaced with provisions that require a hearing that are not being repealed in NRS Chapter 271.  We’re not actually making any real change, it’s just a change in the cross-reference from a section being repealed to a section that’s not being repealed that also requires a hearing after public notice.

 

Section 10 is included in this bill [A.B. 499] to be sure that people have the right to go to court if they object to the maintenance district, and this gives them a 30-day period in which to go to court.  That’s a little bit longer than usual.  Usually they would only have 15 days.  Section 10 gives persons a special objection procedure for these types of districts. 

 

The change in Section 11 is on page 8, subsection 6 of A.B. 499.  This is not a change in existing law.  It’s just a provision that is in one of the sections being repealed, and we had to put it back in somewhere.

 

Section 13 repeals the four existing maintenance districts in NRS Chapter 271.  Section 3 provides a consolidated procedure for the four districts that are already there.

 

Chairman Manendo:

Mr. Musgrove, how would this affect A.B. 390?  Does this conflict or interrelate in any way with A.B. 390 or are we going to run into some problems?

 

Dan Musgrove:

We don’t see any problems with Assembly Bill 390.

 

Chairman Manendo:

You don’t see any impacts if we pass this legislation?  Would we need to do any changes with A.B. 390?

 

Dan Musgrove:

I would defer to legal counsel.  I don’t believe so, but perhaps they need to look at those bills in concert, especially as they’re being amended.  I know they’re probably going to need to take a look at the final version to make sure.

 

Assemblyman Goicoechea:

You say if more than half of the people object.  Are you talking people or taxpayers like in NRS Chapter 318 where it has to be over 51 percent of the taxpayers?

 

John Swendseid:

If the people who are going to pay more than half of the assessment object.  If my property is going to be assessed for twice as much as your property, in effect, I have twice the voice in objecting as you do.

 

Assemblyman Goicoechea:

So, technically, if you have the major casino in the region, it’s very similar to the mining in northern Nevada, because they are more than 51 percent of the assessed valuation, they either say yes or no.

 

John Swendseid:

That’s right in most instances for one type of project in this district.  There’s a special provision for commercial revitalization projects that says one property owner can’t have too big a voice.  If it’s just one casino, their voice is limited to a certain percent.  I think it’s around 25 percent, even if they own 75 percent of the property.

Assemblyman Goicoechea:

That’s interesting.  I didn’t know that.

 

Chairman Manendo:

As an example, how would this affect the Boulder Highway Beautification Project in the county?  Would this have any impact on what’s going on there?

 

John Swendseid:

I believe the Boulder Highway Beautification Project is done under the street beautification statute, which is one of the statutes that is being repealed and replaced by the new Section 3.  The only affect it will have is that the county would be able to do three-year budgets for the district instead of one-year budgets.  The reason the county wants to do that is, typically, it gets two- to three-year maintenance contracts for someone to maintain the beautification improvements, so it makes sense to tell the property owners we have a contract to do a project, it’s going to cost X, come in and object if you want, but if you don’t object, we’re going to fix your costs for two or three years.

 

Under existing law, we have to do a new budget every year, and when the contract is for two years, you really can’t change it in any way.  This would let us go for more than one year, but no more than three years. 

 

Chairman Manendo:

Is Clark County going to be 100 percent responsible for the maintenance of the Boulder Highway Beautification?  I believe there’s some state jurisdiction on that.  I’m just trying to figure out, with the budgeting, how that all works in interaction with the state’s responsibility.  If they have the responsibility, what would it be?

 

John Swendseid:

A lot of the roads in Clark County are state roads.  For these projects that are on state roads, which is frequent, the county enters into cooperative agreements with the state.  The county doesn’t want to put on the property owners the level of maintenance that the state would provide without an assessment district.  It’s only the stuff above what the state otherwise would provide that we want to have the property owners pay for, and the county and the property owners are all sensitive to that.  If the state would normally do an overlay every three or four years, we’re not there to have the property owners pay for that.  We still want the state to do that.  What the street beautification project does are the things over and above that, the planting of palm trees in the middle of the Strip and watering those, and the other landscaping that the state wouldn’t otherwise do.  Did that answer your question, Mr. Chairman?

 

Chairman Manendo:

Not entirely. 

 

Assemblyman Collins:

I was going to bring up the Strip because I understand that the Strip is going to become a county road and not be a state highway anymore, or maybe that’s somewhere in negotiations.  This would allow you to assess the Strip property owners to do the additional maintenance on the Strip outside of—I thought you just addressed the walkways—were you going all the way up and down the Strip corridor?

 

Dan Musgrove:

As we stated, the street beautification part was already allowed under statute and that was something that has already been done in the Clark County portion.  I believe the City of Las Vegas has done similar things on their section of Las Vegas Boulevard that is above and beyond what either the state, when they had responsibility, or the county, when they assume responsibility over that road, would normally take care of.  The Strip owners want something special that’s more than just an average county or state road, and that’s where these assessments would come, when they voluntarily come in and say let’s do something above and beyond.  Just like the sidewalk issue.  If a developer wants to do cobblestones, the city says fine and the county says fine, but we require concrete and that’s what we’ll take care of, but if you want to go above and beyond that then you’re taking on that responsibility yourselves.  I hope I’m answering your question.

 

John Swendseid:

The street beautification project on the Las Vegas Strip is already allowed under law.  We assess the property owners along the Strip for the costs of the special maintenance.

 

Assemblyman Collins:

But you’re repealing that.

 

John Swendseid:

Right now we do a budget for that every year.  We’re substituting a new procedure that would allow us to do a budget for that every three years.  Otherwise the procedure is not changed for that project.

 

Assemblyman Collins:

Because the Chairman mentioned the Boulder Highway, does this change your availability for matching funds and grants like was used on the Boulder Highway in Henderson when they change how you can receive other grants through the state or federal government?

 

John Swendseid:

Not at all.

 

Steve Walker, President, Walker and Associates, representing Douglas County, Carson City, and Lyon County:

[Introduced himself.]  We are in favor of this bill [A.B. 499].

 

Chairman Manendo:

How come?

 

Steve Walker:

Because it adds flexibility to assessment districts and the maintenance component.

 

Madelyn Shipman, Deputy District Attorney, Civil Division, Washoe County District Attorney:

[Introduced herself.]  Until Mr. Swendseid mentioned that this bill [A.B. 499] would repeal the street beautification law that currently exists, I wasn’t going to speak.  We have a street beautification project going on in Incline Village and we’re utilizing current statutory procedure for doing that.  This bill, if it takes its place, would continue that process.  I just don’t want to have the process interfered with.

 

Chairman Manendo:

This would be okay with you?

 

Madelyn Shipman:

This would be fine with us.  We’re into the point where we’re going to be going through the first assessment on that project, so this might allow us to do a three-year instead of a one-year budget for that.

Chairman Manendo:

I’m going to close the hearing on Assembly Bill 499, bring it back to Committee.  Is there anything else to come before the Committee?  We are adjourned.  [12:27 p.m.]

 

RESPECTFULLY SUBMITTED:

 

 

                                                           

Pat Hughey

Committee Secretary

 

 

APPROVED BY:

 

 

                                                                                         

Assemblyman Mark Manendo, Chairman

 

 

DATE: