MINUTES OF THE meeting
of the
ASSEMBLY Committee on Government Affairs
Seventy-Second Session
April 23, 2003
The Committee on Government Affairswas called to order at 9:16 a.m., on Wednesday, April 23, 2003. Chairman Mark Manendo presided in Room 3143 of the Legislative Building, Carson City, 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:
None
STAFF MEMBERS PRESENT:
Susan Scholley, Committee Policy Analyst
Eileen O'Grady, Committee Counsel
Pat Hughey, Committee Secretary
OTHERS PRESENT:
Renee Parker, Chief Deputy, State of Nevada, Office of the Secretary of State
Derek Rowley, President, Nevada Resident Agent Association
Mary Walker, President, Walker and Associates, representing Carson City
Robin Williamson, Chairman, Carson City Redevelopment Authority, and Carson City Supervisor
Bob Anderson, Director of Fiscal Services, Carson City School District
Chairman Manendo:
Madam Secretary, will you please call the roll of the Assembly Government Affairs Committee? [Roll taken.] Turning to our agenda, S.B. 112.
Senate Bill 112 (1st Reprint): Makes various changes to provisions relating to Secretary of State. (BDR 18-557)
Renee Parker, Chief Deputy, State of Nevada, Office of the Secretary of State:
[Introduced herself.] I am here to speak on Senate Bill 112, which is a cleanup bill of Nevada Revised Statutes [NRS] Chapter 225, which is a general chapter governing the Office of the Secretary of State. It’s a short bill, and I’ll explain to you what we’re attempting to do in each section of this bill.
We do have a proposed amendment in Section 1 of S.B. 112. We met with the resident agents last night. Other than me, nobody spoke on this bill in the Senate. I guess the resident agents weren’t aware of it, but they had some concerns about Section 1. I think we’ve come up with a proposed amendment that will satisfy them and is acceptable to us. In Section 1 we’re trying to clarify that this section means that a filing is not deemed filed in our office unless it is accompanied by the appropriate fee and it is complete.
The problem we run into is when we have an incomplete filing. Someone is trying to meet a filing deadline in our office, especially at the end of the year when they want the December 31 date. They rush and put together incomplete filings and file the incomplete filings in our office. For several weeks, we then have to do return letters, and they still try to claim the postmark date or the date it was received in our office, even though it was incomplete. Unless it’s a complete filing and it contains the appropriate fee, we would not deem it filed in our office.
There’s a statute in the NRS that the default is that you use the postmark date. We don’t use the postmark date. In the past we have tried to accommodate certain persons with the postmark, but our problem is that we have a new system coming in at the end of the year, and if we use the postmark date, we have to image all the envelopes. We’re going to be imaging everything and trying to get everything done within a day or two in our new system.
If we use a postmark date, we have to image the envelopes and keep them on file under the archiving records, and we’ll create a bottleneck in our mailroom and may not see the efficiencies in our new system. We’re just trying to clarify. That’s actually the practice we engage in now. As long as it had the fee and was complete, if they needed the December 31 date, we could deem everything filed as of that December 31 date in the future, if we ran into a big problem.
Yesterday we met with the resident agents. One of their suggestions was that we add to Section 1 of S.B. 112 some reg [regulation] authority for our office to define that we aren’t accepting the postmark, and what forms of overnight delivery or courier service may be acceptable. Their concern is they need to have some way to ensure that they’re going to get the date that they put it in the mail. If they put it in the mail two weeks ahead of time and it doesn’t get to us for three weeks, they think it’s unfair when they did try to meet the deadline.
We’ve worked out that if they did an overnight courier, such as FedEx or UPS, and it was within one or two days, that we could do that. It won’t mess up our system right now. The other thing with the postmark is we have to backdate, and we have default notices that are automatically generated. If we had to use that postmark date, we’d mess things up in the system.
They’ve suggested we add to Section 1 of S.B. 112 some regulatory authority to define forms of postage or forms of service that would be acceptable for us to use a different date.
Chairman Manendo:
Did they give you any language?
Renee Parker:
No. I thought they were going to be here today, but I don’t see them, so I’m okay if you don’t do it. Mr. Derek Rowley, President of the Nevada Resident Agents Association is here, but they didn’t give us any language.
I think the IRS has some language in their regs that they use to define it, because they do use the postmark. They also deem other certain services appropriate. I think they define FedEx and UPS, but if they’re not on that list, then it’s not acceptable, so they suggested we look at that. This just came late last night, so I haven’t had a chance to look at it.
Chairman Manendo:
Please take a look at it and make sure that your office is comfortable with that.
Renee Parker:
What we’re doing in Section 2 of S.B. 112 is, in NRS Chapter 239, there is a default statute that says that for copies of some of the laws, resolutions, et cetera, that are in this section, you can charge the actual cost to the agency, or you can waive the fee, so you have the ability to not charge the fee. The reason that we’re trying to remove these $1 and $.50 fees—and this isn’t for all copies—in our general statute we have specific fees for copies for commercial recordings in other statutes, but this is if we don’t have a specific fee, this has been our default.
Our concern is when someone walks into our office and they have a one-page document that they need a copy of before filing it. We have to take the document, make a copy, write up a receipt, and then we have to send it to our receipting division. For that $1 fee, it actually costs our office a lot more in staff time. We would prefer to go to the default statute that says we can charge the actual cost or we can waive the fee. The purpose for going to that is to be able to waive the fee or to charge the actual cost to us if there is something more involved with preparing the copy. It’s just to default under NRS Chapter 239, like most other agencies do under these circumstances.
The fee in the next section for certifying a copy of any law or joint resolution is going from $10 to $20. That was a fee that we missed last legislative session. For all other certified copies in our notary statutes, it’s $20. For commercial recording statutes, it’s $20. That was raised in Senate Bill 577 of the Seventy‑first Legislative Session when they raised all of our commercial recording fees, and it’s the same process for certifying copies. So, we have to charge $10 in some circumstances and $20 in all other circumstances. We’re trying to make the fees consistent. The more consistent they are, the more efficient we are. We don’t want to have staff confused on which fee they’re charging for the same type of service. That one is just to make it a consistent fee.
[Renee Parker continued.] “Negotiable instrument” is being deleted in this section because we’ve made some changes in subsection 2(d). What we’ve done here, and we actually amended this in the Senate, is that for each check or negotiable instrument returned unpaid, we’re raising the return check charge to a $25 minimum, or the direct costs associated for us to process the check or other returned instrument.
The reason for that is we run into a circumstance where a resident agent has about 25 corporations. They bring in a $10,000 check to cover the 25 different transactions, and that check bounces. We then have to go back and undo the transaction in our system for every single entity. We have staff time because they have to undo the transaction for every entity involved. In some cases, it may have been that they only needed to show a bank that they were in good standing, and we can’t undo that transaction. They’ve actually received the benefit of the transaction. In other cases, it’s substantial staff time. We have to put a stop in our receipting system, deal with the accounting controls, and stop it in the accounting system. We could be looking at 20 hours of staff time, and if you assume even $10 an hour, at $25, a returned check charge doesn’t reimburse the state for the work that they’ve had to do to deal with that bounced check.
We’re one of the unique agencies in dealing with that because of the resident agents and the fact that they may be covering multiple entities. That’s what we were trying to deal with. I guess they put in the direct costs incurred. I believe Ms. Erdoes [of the Legal Division of the Legislative Counsel Bureau] helped with that language in the Senate, and it was that we would have to list out what that cost was. We’d have to say it took 10 hours of staff time, et cetera, if we were going with that. In most instances, the $25 charge would reimburse if it were one check, one oversight. We just run it back through or they come in and reimburse and it’s one entity, so it doesn’t take a lot of time; but in those other instances, we do use a lot of staff time, and that was the purpose of that.
Subsection 3 was just a technical change. They changed the word “half” to “one-half.”
We did put a requirement that we would post the schedule of fees. We currently do. I think it just wasn’t specific in the statute that we would do that, so we wanted to clarify that we would do that. I think it’s in other statutes, but because of the difference in the check charge, we added subsection 4.
Section 3 is a technical change to show that it doesn’t apply to NRS Section 225.085. The statute now says that you—actually I was thinking that was the postmark statute, it’s not—it was just a technical change that LCB legal made.
Assemblyman Goicoechea:
When you’re no longer going to accept the postmark date, does that include certified mail, too? Presently, I think if you send it certified, you accept that as a filing date.
Renee Parker:
We did discuss that yesterday. The problem with certified mail is that we run into the same issue of having to image the envelope. I think one of the concerns with the resident agents was with certified. We actually don’t receive much certified mail on commercial recordings. We do for elections, and there’s a specific statute in the election statute that says we accept the certified mail. We don’t image those documents, so that won’t affect the election statute, but we would run into the same problem. The resident agents don’t generally send certified mail for commercial recordings because it takes several weeks and they have to go out of their way to go down to the post office.
What they’ve suggested is defining certain couriers. The way this law reads now, and we’re trying to clarify it, we’re not supposed to accept the postmark because the statute that requires the postmark says that if you have another more specific statute that doesn’t, then you don’t accept it. This statute said, “care, custody and control.” We continued under certain circumstances to accept it because we were moving to this new system and didn’t want to change the procedure on everybody in the middle of the process. We thought we’d wait until we got into our new system to see if we could accommodate that, and then discovered that with the scanners and having to do the prep work to image the envelopes, we wouldn’t be able to accommodate and gain the efficiencies from the system. So right now, we’ll accept certified mail; we just won’t give the date that it was mailed.
Chairman Manendo:
Can a member of the public come into the Secretary of State’s Office, get on the computer and access files without a fee right now?
Renee Parker:
Yes.
Chairman Manendo:
Is there anyone’s that they can’t?
Renee Parker:
We have computer terminals set up in our lobby area. They can come in and access the records that are on file if a corporation or an entity is in good standing, and what their status is. We can’t get into our mainframe system right now, but we’re hoping that with our new system, you can get into most of the records. You can’t make any changes; it’s on a “read only” basis, but you can access most of the records in our office via the Internet or on the terminals in our office. We don’t charge for that right now, and we don’t anticipate charging for that in the future.
Assemblyman Knecht:
On page 1, with the change that you propose, suppose someone files a document on December 31 and it turns out to be complete, have all the required fees and attachments, but you don’t verify that until January 5. What’s the date that’s recorded for filing?
Renee Parker:
January 5. We currently do it that way except at the end of the year; we have given the December 31 date and backdated it. The problem is, right now we can do that in the system that we have. With our mainframe system, the default notices don’t generate for 15 days and they haven’t been able to correct that, so we don’t run into a problem with backdating to December 31 and having a default notice generated.
With the new system, all of that is supposed to be automatic. As soon as you’re in default, the default notices generate. The intention was that they were always supposed to be in our office, but you have the process. Actually, it would be January 5, assuming that we don’t get to it until January 5, but it’s more likely we’ll get to it January 2 if the first is a holiday, because we’ll be imaging it. So, we’ll get the date that goes into the imaging system. As soon as we finish imaging it, it’s in our system, and they’ve determined that the filing is complete.
Assemblyman Knecht:
Let me see if I understand what you just said. If I file a document that has a legal due date of December 31 on December 31, and it is complete, and you image it on January 2, and you determine on that date or very shortly thereafter that it is complete and in full good form with all fees, et cetera, I would have the problem of having filed it on time as the law requires, but the Secretary of State’s records would show that it was filed two days late.
Renee Parker:
No. It’s not going to generate a penalty though. The purpose is, when it’s processed, that’s the date in our system that it shows processed, but it won’t generate a penalty. We’ll be able to look and, if it was in our office and complete on December 31, it’s not going to run into a penalty phase and it’s not going to show that you were late.
It’s just that when it’s processed right now, our processors stamp it, it goes through, it goes over to Archives. The date that that would occur, if it’s January 5 when our processors are looking at it, it will be January 2 when the receipters are looking at it and putting it in the system, and if it was in our office on December 31, you would not be shown as being late, and it wouldn’t be deemed late. The issue is, if it was incomplete, it would be sent back, but it would not show as late if it were in our office by that December 31 date. It would just show timely. It would show that the date it was processed was January 5, and the date that it was imaged and in our system timely.
Assemblyman Knecht:
I appreciate the point you’re making about no penalties attaching because the certification by your office isn’t performed until January 2. My concern goes to other matters. Let’s just say for devil’s advocacy that I’m a party to a transaction who at some point becomes an adverse party to the person making the filing or to a person on whose behalf he’s making the filing. What if I look this record up in the Secretary of State’s Office and it says that it was received and filed January 5?
Renee Parker:
It won’t say that. It will show filed as of December 31. It won’t show the exact date; it just shows that it’s timely filed as of December 31. I’m just telling it won’t be in our system, so you can’t access your image until January 2 or January 5 when it’s processed, but it will show that it was timely filed as of December 31, as long as it’s in our office by that date and it was complete.
Assemblyman Knecht:
That makes clear what I was getting at because I was concerned that we might somehow generate a cause of action or claim on a third party’s part that wasn’t really well-founded, and I didn’t want us to be doing that. My other question is on page 4 at line 18. Pursuant to NRS Section 225.085, what section is that and what does it apply to?
Renee Parker:
It’s Section 1 of the bill [S.B. 112].
Assemblyman Knecht:
That’s the resident agents’ filings, for example?
Renee Parker:
Yes. Section 3 of NRS Section 238.100 is the general statute that says that agencies that default use the postmark date, and this is excepting out filings under Section 1 because of that change.
Assemblyman Knecht:
In Section 2, I thought I understood you to say, and please correct me if I misunderstood, that the fee for a certified copy of any law, et cetera, would go from $10 to $20, and that casual copying of two or three pages would essentially be exempted from any charges at all to the filer. Is that correct?
Renee Parker:
The certified copy fee would go from $10 to $20. With the casual two or three pages, if somebody walks in our office and they realize they need to keep a copy of their document for themselves, if it would cost us more than what we can charge, we would give that for free. But, under Title 7, a copy of two or three pages of a document that’s already on file in our office is $1 a page, and I think there are several bills on fee increases right now that would raise that to $2 or $1.50. We don’t have any issue. We don’t care either way. This is just if you’re standing in your office, you haven’t filed the document yet, you realize you need a copy, and we now jump through several hoops and it costs us more in staff time to make that copy and charge $1 than to give it for free.
Assemblyman Knecht:
I understand the principle. I guess I’d like to know how it might work. Let’s say my friend comes in with a two-page filing at 4:55 p.m. on the due date and I come in with a 10-page filing of the same kind at 4:55 p.m. on the due date. How are you going to make the decision on whether to charge each of us or both of us or neither of us? How is that going to work?
Renee Parker:
Under NRS Chapter 239, it requires that if you’re going to waive a fee, you have to state the procedures. So, if this passes, we’re going to have to come up with the procedures. We need to determine where we don’t recoup our costs. It may be at four pages. What we’ve talked about in our office is that it’s at about four to five pages or under that we don’t recoup the cost of the staff time, et cetera. We would have to generate that cost table and post it.
Assemblyman Knecht:
And that would be part of your posted fees advice to the filers?
Renee Parker:
Yes.
Assemblyman Hardy:
What is the rule? Is it when a thing is postmarked or when it is processed? If we have a deadline that something has to be in the Secretary of State’s Office, does it have to be in the Secretary of State’s Office on December 31 or postmarked on December 31?
Renee Parker:
Under the current statute, it is supposed to be in our office in our care, custody, and control. The statute was changed in 1997 contemplating a new system coming on at that time and since we’re just now bringing that system, we didn’t change the postmark. The rule in NRS Section 238.100, which is the general rule for state agencies if you don’t have a more specific statute, is it’s the postmark date. It’s been in our statutes that we don’t use the postmark date, but we have continued because we haven’t had our new system and it hasn’t caused us problems. This is to make it clear that when our new system is brought on, using the postmark date would cause a problem in our office.
Assemblyman Hardy:
Let me restate the answer. The answer is, the filing has to be complete with the check, and the “T”s crossed and the “I”s dotted, and in your office on the 31st of December, not postmarked.
Renee Parker:
Right. And today, even if it’s postmarked by the 31st of December, but it’s incomplete or doesn’t have the correct money, we have to return it and you don’t get the postmark date. Once we have to return it, you’re not entitled to the postmark date because it wasn’t a complete filing as of that postmark date. Right now, it’s returned anyway. But, yes, it has to be complete, appropriate fees in our office on that date, or you won’t get that date.
Assemblyman Hardy:
My concern would be for the person who mails it on the 26th of December when all the Christmas cards and holiday greeting cards are going out that inundate the mail service, and delivery takes longer because of the holiday, et cetera, and it doesn’t get to your office until the 2nd of January. That person is out of luck?
Renee Parker:
Yes. That’s the purpose of the resident agents’ proposed amendment, for us to do regs and to define other circumstances when we would deem the receipt of the filing or the mailing of the filing acceptable. We may come up in the reg process that if it’s December 31, we will accept the postmark date or we’ll accept if it’s put in UPS or FedEx or various other couriers by that date or within a day or two of that date, that we will accept that filing date. That’s where the big issue is at the end of the year, and we understand that. We weren’t really trying to get around that. We receive 206,000 annual lists a year, plus another 50,000 new filings, so if we had to image every envelope, we wouldn’t see the two-day and three-day processing time that you’re seeing in our office now.
We’re trying to get around that for the majority of the year. Maybe there is a way to define that during the rest of the year. If you use UPS or FedEx, we will accept it, that it will be deemed timely filed as of the time that you dropped it in UPS or FedEx, as long as you can show the tracking. At the end of the year, we may say that we’ll also accept certified mail as long as you produce a certified mail receipt, so it’s not ongoing throughout the year that we have to deal with that problem, but it addresses that very issue, and December is about the only time that it poses a concern. That was the purpose of the proposed amendment, to give reg authority to come up with other times when it may be deemed timely filed or other dates.
Assemblyman Hardy:
Are there other places where this could be filed in Clark County in person or places other than the office next door where a person can file in person?
Renee Parker:
We have an office in the Grant Sawyer Building in Las Vegas, and you can always walk in in there.
Derek Rowley, President, Nevada Resident Agent Association:
[Introduced himself.] Many of the concerns with regard to this bill [S.B. 112], have already been addressed here, but we felt it’s important from a customer service perspective to be able to provide clear information to people who are using Nevada entities to let them know procedures by which they can be assured that their filings will be determined to be timely. In discussion with the Secretary of State’s Office yesterday, they were very receptive to our concerns.
The only reason we didn’t bring in specific language today is that we feel this bill [S.B. 112] needs to provide the Secretary of State’s Office that regulatory authority. We would then be involved in those hearings and those discussions as they adopt those regulations and as they determine what carriers would be approved carriers. Rather than insert that into the law, those carriers might change from time to time. We felt that just by giving them that regulatory authority and the ability to participate would resolve our concerns. That’s how we arrived at the recommendation to amend this bill to provide that regulatory authority.
Chairman Manendo:
Was this discussed at all in the Senate?
Derek Rowley:
No, to my knowledge, this was not discussed in the Senate. This was a bill that came to our attention after it had already passed the Senate Government Affairs Committee, and we approached the Secretary of State’s Office about our concerns as soon as we were aware of the issue.
Assemblyman Knecht:
I understand and share your concerns about the clarity of the processes and the ability of your industry to maintain itself and represent its clients well, because I think your industry is very valuable to the state of Nevada. For that reason, I understand what you said about the carrier filings and that sort of thing.
I want to turn your attention to page 3 of this bill [S.B. 112], which the previous witness brought up in connection with resident agents on the returned check charge. In lines 8 through 14, the provision for a returned check fee would be changed to $25 or the cost to the Secretary of State, whichever is greater. Is it your understanding that the determination of what the cost is and, when it’s greater than $25, it would be subject to the promulgation of regulations that you would be represented or have an opportunity to participate in on behalf of yourself and your clients? Secondly, are you comfortable that this language and any regulations that might be adopted under this provision would give you adequate certainty as to what costs or charges you may face?
Derek Rowley:
It is my understanding that there would be regulations that would need to be adopted in order to determine specific costs in this area. It’s my further understanding that circumstances in which this fee would exceed the $25 minimum amount here would primarily apply to resident agents, as Ms. Parker outlined, who are filing a number of filings with one check. It would be something that would not, typically, fall on the public, but would fall on the resident agents. We would take the position as an association that we would expect members of our association to submit filings and pay with checks that will clear, and if they don’t, they should be subject to whatever penalties that the regulations provide for. We don’t really have, as an association, great concern about that so long as there is some clear regulatory assistance that gives us an indication that this is not just going to be decided at the spur of the moment, but that there will be a basis for determining the fees.
Assemblyman Knecht:
I certainly share the notion that anyone who causes the Secretary of State or any other entity to incur a cost due to a bounced check should pay for that. I don’t have any problem with that at all. I understand that all of you want to be good corporate citizens and make sure none of yours bounce, and I agree with that. What I’m concerned about is inadvertently, especially when you have complicated transactions such as the ones we’re talking about, sometimes things go wrong, and I just want to be sure that there would be a systematic method that would determine a fair fee and that would give adequate notice to the people who are using this system. I understood you to say that you think the process of promulgating the regs will satisfy you on that point. I hope so.
Chairman Manendo:
I would like to see what you have in writing, if you could get that to me. This would be something that I would possibly take to the Senate and ask my counterpart, since you have not done that. I don’t want to put this piece of legislation at risk, so the sooner you get that to me, the sooner we have a chance at working something out.
Derek Rowley:
The nature of the amendment that you’re asking for is very simple and we can provide that to you today.
Chairman Manendo:
Thank you. I appreciate that. We’ll all get a copy. I’ll close the hearing on Senate Bill 112, bring it back to Committee.
We will open the hearing on Senate Bill 113.
Senate Bill 113: Revises manner of valuing certain property that becomes exempt from taxation for purposes of allocating certain tax revenue among taxing agencies and redevelopment agency. (BDR 22-263)
Mary Walker, President, Walker and Associates, representing Carson City:
[Introduced herself.] S.B. 113 is a clarification of the law in regard to when the state purchases properties within a redevelopment district. Carson City Redevelopment District was established in 1986. By 1989, we realized that we could have a potential major problem if the state purchased properties within the Carson City Redevelopment District and then our incremental value would be decreased.
[Mary Walker continued.] Potentially, since the Carson City Redevelopment District is the poorest redevelopment district in the state of Nevada, it could have some very detrimental effects on us. In 1989, Carson City presented a bill to the Legislature, S.B. 197 of the Sixty-fifth Legislative Session. We thought we corrected this problem in 1989. However, recent events have led us to relook at the actual mechanism that is being processed in our Assessor’s Office, and we realized that the law was not clear in exactly what the Assessor should be doing when the state purchases property within a redevelopment district.
This only affects the Carson City Redevelopment Authority. It does not affect any other redevelopment district in the state of Nevada. The reason is because we are the only redevelopment authority that has state properties within the district. The reason why we didn’t catch it before is because the state has purchased very little property within the redevelopment district in the last 14 years, so it was never a major financial flag for us.
This bill [S.B. 113] will hold a district harmless when the state purchases property within the redevelopment district. There is a handout [Exhibit C], which is the fiscal analysis from LCB [Legislative Counsel Bureau] back in 1989, which talks about S.B. 197 of the Sixty-fifth Legislative Session. The original intent of that bill is on the second page on the top paragraph. It says the bill:
Provides that any land acquired by the state that becomes state exempt property will be removed from the base and not the incremental increase of the assessed valuation used in funding of redevelopment agencies.
This provision would keep the redevelopment district held harmless when the state purchases property. An example can be seen on the third page of Exhibit C, and this is the analysis that was provided to the Legislature back in 1989. What it shows in the first column of numbers is before the state purchases property in the redevelopment district. Let’s say the current assessed value of the district was $10 million, but let’s say in 1986 when the district was formed, the value was $9 million. Therefore, the tax increment is $1 million, and it’s that $1 million that the redevelopment authority collects all of its property tax revenues from.
If the state purchased property, what would happen is, if this law was not passed, the $1 million increment that we currently enjoy would be totally taken away from us, and we would no longer have any property taxes within our redevelopment district. With the passage of S.B. 197 of the Sixty-fifth Legislative Session, 14 years ago, we thought we had this problem resolved. What would happen under that scenario is this. Let’s say the current assessed value within the district is $10 million and the increment was $1 million. If the state purchased property, you would now have a total value in your redevelopment district of $9 million, but your base would also decline by $1 million. Therefore, you would still retain the $1 million of the tax increment.
[Mary Walker continued.] This hasn’t been so much of a problem because we thought we had resolved it, and there hasn’t been a lot of properties purchased within the redevelopment district by the state. The problem comes in when we try to sell bonds. The potential bondholders, as well as bond rating agencies, note that the state has a very large portion of property within our redevelopment district. What if they expand? That is going to take away money from the redevelopment district. You could virtually end up with no assessed value within redevelopment, and you would no longer be able to make your bonds.
We have told them that problem has been resolved. We even had our bond counsel, Jennifer Stern, tell the bond rating agencies and the potential bondholders that there was no problem, that we had gotten it resolved, so we’ve been able to sell our bonds. Now that we know there is a problem, we need to get it corrected. In the future, if we do sell bonds, we have to make sure that we can tell our bond holders and continue with the assertion that, if the state purchases property within the redevelopment district, we would be able to make our bond payments, and that’s what this is all about.
The effect of this by going back to the original intent when the state purchases property within the district, it would now come off of the base, which means that it will affect primarily Carson City and the Carson City School District. In 1989, the Carson City School District supported this measure and they support us today, fourteen years later, and we’re very thankful for that.
Chairman Manendo:
You said that Carson City is the only jurisdiction in Nevada having state-owned property in a redevelopment area?
Mary Walker:
That’s correct.
Robin Williamson, Chairman, Carson City Redevelopment Authority and Carson City Supervisor:
[Introduced herself.] I’m just here to answer questions.
Bob Anderson, Director of Fiscal Services, Carson City School District:
[Introduced himself.] I’m here in support of the bill [S.B. 113] and to explain that there are some financial advantages for the redevelopment agencies assessed value contributions to our Debt Service Fund. We’re also in collaboration with the city [Carson City] on making sure that we team up in the redevelopment authority and that we have a synergistic relationship, and we certainly do.
Assemblyman Knecht:
Supervisor Williamson, for the record, I presume that the support of S.B. 113 was considered by and voted on by the Board of Supervisors. Is that correct?
Robin Williamson:
This was part of our legislative package that was presented and, yes, it was discussed and supported.
Assemblyman Knecht:
Was there a specific vote on this, was it just a general consensus, or what was the process? What I’m trying to get on the record is was this consensus or unanimous or were there any dissents among the Board?
Robin Williamson:
No, there were no dissents. Again, it’s something we thought we had fixed. We realized in recent years there were purchases of state property and that it was a hazy area. Our Assessor is very conservative in his actions, and we support that. We support these changes.
Assemblyman Knecht:
Mr. Anderson, did the School District Board vote on this matter? Was there a recorded vote, or is this a consensus, or how did you arrive in support?
Bob Anderson:
The Carson City School District Board of Trustees have given me direction to look out for the financial welfare of the school district. My primary job is to protect and safeguard the assets of the school district. If we lose assessed value in the redevelopment agency, that will reduce the amount of revenue that comes in for debt service. The school board did not take a vote on this particular bill, but in general, they’re assured that I will be looking out for their best interests.
Assemblyman Knecht:
Thank you very much to each of the three witnesses. I’m grateful to you, Mr. Anderson, for fulfilling that fiduciary responsibility for me as a Carson City School District taxpayer and future client.
Assemblyman Grady:
Robin, I just want to congratulate the Board of Supervisors on your new selection for a city manager. I think you made a great choice.
Chairman Manendo:
We’re going to close the hearing on Senate Bill 113, bring it back to Committee.
ASSEMBLYMAN KNECHT MOVED TO DO PASS S.B. 113.
ASSEMBLYMAN GRADY SECONDED THE MOTION.
THE MOTION CARRIED. (Assemblyman Collins was absent for the vote.)
Chairman Manendo:
Mr. Knecht, do you want to handle this bill? [Mr. Knecht indicated he would.] Anything else to come before the Committee? We are adjourned. [10:14 a.m.]
RESPECTFULLY SUBMITTED:
Pat Hughey
Committee Secretary
APPROVED BY:
Assemblyman Mark Manendo, Chairman
DATE: