MINUTES OF THE meeting

of the

ASSEMBLY Committee on Judiciary

 

Seventy-Second Session

May 14, 2003

 

 

The Committee on Judiciarywas called to order at 7:55 a.m., on Wednesday, May 14, 2003.  Chairman Bernie Anderson presided in Room 3138 of the Legislative Building, Carson City, Nevada, and, via simultaneous videoconference, in Room 4401 of the Grant Sawyer State Office Building, Las Vegas, Nevada.  Exhibit A is the Agenda.  Exhibit B is the Guest List.  All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

 

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. Bernie Anderson, Chairman

Mr. John Oceguera, Vice Chairman

Mrs. Sharron Angle

Mr. David Brown

Ms. Barbara Buckley

Mr. John C. Carpenter

Mr. Jerry D. Claborn

Mr. Marcus Conklin

Mr. Jason Geddes

Mr. Don Gustavson

Mr. William Horne

Mr. Garn Mabey

Mr. Harry Mortenson

Ms. Genie Ohrenschall

Mr. Rod Sherer

 

GUEST LEGISLATORS PRESENT:

 

Senator Michael A. Schneider, District No. 11, Clark County

 

STAFF MEMBERS PRESENT:

 

Allison Combs, Committee Policy Analyst

Risa B. Lang, Committee Counsel

Deborah Rengler, Committee Secretary

 

OTHERS PRESENT:

 

Michael E. Buckley, Attorney, representing the Community Association Institute Legislative Action Committee

Tami DeVries, Real Estate Division, Nevada Department of Business and Industry

William Magrath, Homeowner

Gail J. Anderson, Administrator, Real Estate Division, Nevada Department of Business and Industry

Karen Dennison, Attorney, representing Lake at Las Vegas Joint Venture

Pamela Scott, Senior Property Manager, Community Association Management, Summerlin, The Howard Hughes Corporation

John V. Briggs, former California State Senator; and resident of Elks Point, Zephyr Cove, Lake Tahoe, Nevada

Robert Maddox, representing Nevada Trial Lawyers Association

Melody Luetkehans, General Counsel, Nevada Association of REALTORS

James Flippen, Vice President and Community Association Manager, Associated Management, Inc.; and member of the Community Association Institute Legislative Action Committee

Shari O’Donnell, Community Relations Director, Signature Homes

Betty Ravendo, Owner/Manager, Raven Management and Consulting Services

Mark Kaplinsky, Homeowner

Terri Janison, Homeowner

Amber Williams, Homeowner

Eldon Hardy, Ombudsman for Owners in Common-Interest Communities

 

 

Chairman Anderson:

[The Chair reminded the Committee members and those present in the audience of the Standing Rules and appropriate meeting etiquette.  Roll called.]

 

Eight needed for a quorum, eight are present, we have a quorum; anyone arriving late should be marked as present.

Senate Bill 100 (1st Reprint):  Makes various changes to provisions governing common-interest communities. (BDR 10-29)

 

Senator Michael A. Schneider, District No. 11, Clark County:

Again, the Senate Committee on Commerce and Labor brings you a lengthy bill that is very complicated.  I would like to give the Committee a brief overview of how we got to this point.  In the 1997 Legislative Session, I brought forth a bill [S.B. 314 of the Sixty-ninth Legislative Session] after I met with constituents regarding homeowners associations (HOAs).  I found out all the problems that were in HOAs.  We drafted a large bill and were able to pass what was called the “Homeowners Associations’ Bill of Rights.”  It affected Nevada Revised Statutes (NRS) Chapter 116 quite extensively and we created the office of the Ombudsman for Owners in Common-Interest Communities.  Yet, every session we have had to return and readdress this issue.  Also in 1997, the Legislature passed a bill stating that HOAs, although corporations for the tax benefits, are governments.  We put it in the statutes to acknowledge that we recognize these as being governments.  Since they are governments, they have a different set of laws and they must operate like governments with open meetings.  It’s been very successful.

 

Homeowners associations were spinning out of control in many areas.  Although those in the audience did not realize it at the time, they are here today in support of legislation to affect HOAs.  I know that it’s an issue for HOAs across the nation, not just in Nevada, where HOAs have lost control and need direction.  I recall an evening in 1997 when Mr. Carpenter and I had dinner with members of the Spring Creek Homeowners Association from Elko, Nevada.  At that time, Mr. Carpenter believed that “frontier justice” would preclude Elko from the necessity of being included in the 1997 legislation.  The next session, Mr. Carpenter was back requesting that the Spring Creek HOA be added into the legislation because they would not live up to their word about open meetings, et cetera. 

 

[Senator Schneider shared a number of HOA worse case scenarios of “frontier justice” with the Committee.] 

 

I also have a proposed amendment (Exhibit C) to this piece of legislation that has to do with delegate voting in HOAs.  In HOAs and large master-planned communities there are two different layers: the master association and the sub‑association.  In many of the large associations, delegate voting is allowed, where the sub-association sends a delegate to vote on issues affecting the master association.  What we are proposing is that the delegate should be elected by written secret ballot just like regular board members.  This has been a tough process to propose, but elections are performed in the same manner as we are elected:  written secret ballot, the ballots are opened, and available for review. 

 

Chairman Anderson:

Do any Committee members have any questions for Senator Schneider regarding his piece of legislation [S.B. 100] or his history in developing it?  He is considered to be the master of this particular section of the law.

 

Senator Schneider:

I have traveled the country speaking in different state legislatures about this.  I am trying to allow you to become the experts so that you can handle this in my place. 

 

Assemblyman Mabey:

How are you going to avoid the possible fraud associated with receiving extra secret written ballots?

 

Senator Schneider:

It’s an envelope system with each envelope numbered.

 

Assemblyman Mabey:

How would you make sure that all envelopes returned were counted?

 

Senator Schneider:

That’s the problem of open government.  It’s up to the homeowners association.  I will allow some of the property managers to explain the system they use; it’s a very good system.  We have struggled with that over the last several sessions.  The double-stuffed envelope system has worked very well where it is numbered, coded, and even color-coded.  They eliminate the fraud by doing that. 

 

There is a difference between property manager and an association manager, which I had to learn several years ago.  That’s a totally different profession.  We have created separate licenses for them in the Real Estate Division, which requires separate training and education.

 

[Chairman Anderson excused Senator Schneider to return to the Senate.]

 

Michael E. Buckley, Attorney, representing the Community Association Institute (CAI) Legislative Action Committee:

[Introduced himself and submitted Exhibit D and Exhibit E.]  I have been involved with this issue since 1991, when it first passed.  Nevada Revised Statutes Chapter 116 actually began in the Assembly Committee on Judiciary; it was one of the first consumer protection laws that we had in Nevada.  It originated from a uniform act, which we reviewed and modified for Nevada.  It has been back to the Legislature every session since the statute was adopted in 1991 with different tweaks and fixes to the law.  In 1993, we amended the provision regarding plats.  In 1993 or 1995, the Community Association Institute(CAI) promoted ADR (alternate dispute resolution) for HOAs so that you wouldn’t have to go to court if you had a dispute, but you could go through arbitration; in fact, you had to go through arbitration.  The idea was to lessen the costs.  In 1997, as Senator Schneider indicated, the Ombudsman for Owners in Common-Interest Communities was created.  The Ombudsman is funded through a $3 per unit fee on every association in the state.  One of the provisions in S.B. 100 will try to better capture and ensure that everyone is paying that fee. 

 

Chairman Anderson:

Believe it or not, 1991 was my freshman year and my first year on the Assembly Committee on Judiciary.  I have been on this ride since it began; Mr. Carpenter predates that.  Mr. Carpenter and I believe this is, indeed, a never-ending story.

 

Michael Buckley:

Another fix was reserve studies, which originated through the CAI, where associations had to not only have reserve studies, but fund reserves.  Most of the new homes in Nevada are located in common-interest communities, particularly in Clark County.  We believe that Nevada is in the forefront of community association laws.  The Ombudsman is doing a tremendous job of educating and getting the word out.  Currently the Real Estate Commission, Real Estate Division, Department of Business and Industry, has ultimate authority over associations.  It licenses permit holders and certificate holders.  As mentioned by Senator Schneider, it is recognized by the real estate industry that association management is a completely different profession than buying, selling, or leasing real estate, both commercial and residential. 

 

The first proposal of this bill is to create the Commission for Common-Interest Communities.  When NRS Chapter 116 was created, it was completely self-administered; there was no state agency, the Attorney General and the counties did not help, not even the Real Estate Division helped.  The Ombudsman was the first state intervention in associations.  The Ombudsman is a person who tries to educate people and work out problems by getting both parties talking to each other.  There are a number of theories behind the Commission:

 

·        To obtain a prompt result from a state body that has authority.

 

·        Not costly since the plaintiff in the proceeding is the Real Estate Division.

 

·        Involve experts in the industry.

 

·        Consistent rulings, with ADR and different arbitrators we currently get different results.

 

·        Promote guidelines on operating associations the best way possible.

 

[Michael Buckley continued.]  I will walk you through the bill.  While it is Senator Schneider’s bill, we think it is our bill too, since we have spent so much time working on it.  It reflects a lot of the ideas of all the different facets of the industry from the association managers, the developers’ attorneys, association attorneys, and the homeowners.

 

The first 12 sections of S.B. 100 are definitions; a number of these are restatements of existing law.  I would point out that in Section 2 there is a reference to a “certificate” which is a licensed manager.  That is different from a property manager.  A person who holds a property manager license issued by the Real Estate Commission has a permit, so we have a “certificate” and a “permit.”  In order to be a community manager, the defined term in Section 4, you need to have a certificate, a permit, or an exemption.  The defined term, “management of a common-interest community” is the licensed area.  The new terms are the definition of “commission,” a “complaint,” “hearing panel,” “party to the complaint,” and “respondent.”  I will go through these when we get into the process.

 

Section 13 relates to the Commission for Common-Interest Communities itself, consisting of five members appointed by the Governor.  It would involve all aspects of the industry:

 

1.      An owner who has been a board member

2.      A community manager

3.      A developer

4.      A CPA (certified public accountant)

5.      An attorney

 

All of these professions have input into association law.  At least three members would be from Clark County.  Of course, the Commission members must have common-interest community experience.  They would serve three-year terms.

 

In Section 14, the Real Estate Division would provide education for the commissioners.

 

[Michael Buckley continued.]  Section 15 provides that the officers of the Commission would be elected: a chairman, vice chairman, and secretary.  The Commission must meet once each quarter, or more frequently, if they desire.

 

Section 16 contains an important concept making it clear that the Real Estate Division administers NRS Chapter 116 but the overall supervision would belong to the Commission for Common-Interest Communities.  The Commission could delegate back to the Real Estate Division; there is an administrative set-up within NRS Chapter 116.  Both the Commission and the Real Estate Division are authorized to adopt forms, procedures, and regulations.  These regulations would be published and be available to the public.

 

In Section 18, the Commission is given the assistance of the Attorney General for advice and opinions.

 

Section 19 authorizes hearing panels.  The Commission can designate one or more people, independent hearing officers, to hold a hearing on a dispute.  The hearing panel decisions can be appealed by the parties to the complaint, or the Commission itself can review the opinion.  

 

Section 20 permits teleconferencing and videoconferencing of the Commission.

 

Section 21 protects the members of the Commission from civil liability if they act in good faith.

 

Section 22 is an important section, although it is really a restatement of what is already in existing law.  Basically, the Commission will maintain statistics and information on common-interest communities.  As Senator Schneider stated, you do hear horror stories about associations.  This bill will provide that the Commission will be a resource to the Legislature providing real information and statistics.  In Section 22, subsection 3, page 6, the Commission will provide education guidelines, which is important since we have conflicting legal opinions on how to conduct meetings and elections or how to enforce governing documents; the Commission would promote best practices on how to run an association.  The Commission would also promote educational programs for management and ADR.

 

Section 23 permits the Commission to establish standards for subsidizing ADR.  When the Ombudsman office was created, the $3 fee was used for two things:  The [salary of the] Ombudsman and to subsidize ADR.  I don’t think that has ever happened because the Ombudsman did not know how to do it.  The bill will now authorize the Ombudsman to establish standards by which any ADR would be funded.  It also expands what those funds could be used for, such as educational programs.  The Ombudsman could tell you that this has been a real success story for the Ombudsman, getting out and explaining to owners and board members what NRS Chapter 116 is, how it works, and what the law is. 

 

[Michael Buckley continued.]  Section 23 would also allow the Commission to accept grants.  Sometimes you run into a problem with an agency when somebody wants to make a gift of money or materials to be used for different purposes in that field, and this would allow that.

 

Section 24 provides that the Commission has the oversight and licensing responsibility over the Division’s licensing of certificate holders.  This is a restatement of existing law, transferring [this task] to the Commission rather than just the Real Estate Division.

 

Sections 25 and 26 are federal law requirements regarding court-ordered child support payments.

 

Section 27, page 8, defines an important concept of “violation.”  The idea of the Commission is that its jurisdiction deals with a violation of NRS Chapter 116, the regulations, or an order, rather than the internal affairs of CC&Rs (covenants, conditions and restrictions).

 

Chairman Anderson:

Let’s stop and ask questions on the first 26 sections. 

 

In Section 15, we are talking about the Commission meeting.  Is it possible that the Commission could be a full-time position with the commissioners meeting every day?  [Michael Buckley replied negatively.]  I don’t see any back end to the frequency of their meetings, so they could meet theoretically five days a week for the whole duration receiving $80 a day and per diem. 

 

Michael Buckley:

The model for the Commission for Common-Interest Communities is the Real Estate Commission.  The Real Estate Division will be administering and servicing as the administrative assistant to the Commission for Common-Interest Communities.  The Real Estate Division already works with the Real Estate Commission.  Tami DeVries is in Las Vegas and can explain how they would assist the Commission for Common-Interest Communities.  I think it is strictly a part-time job. 

Tami DeVries, Real Estate Division, Nevada Department of Business and Industry:

[Introduced herself.]  We anticipate, and our fiscal note reflects the same, that this Commission for Common-Interest Communities would meet approximately six times a year.  We have modeled that on the Real Estate Commission, which does meet approximately six times a year at this time.

 

Chairman Anderson:

The chairman and vice chairman would not be meeting more frequently than that?

 

Tami DeVries:

No, they are governed by the Open Meeting Law, so they would have to meet in accordance with that law.

 

Assemblywoman Angle:

I am unclear as to the funding process for this.  Would this come out of the Ombudsman’s fees?  Is that where all the funding will come from?

 

Michael Buckley:

Yes, this is self-funded through the Ombudsman’s fee.

 

The process of the Commission for Common-Interest Communities starts with a violation.  The intent of the Commission is only to deal with violations of NRS Chapter 116, not violations of CC&Rs, unless the violation of the CC&Rs also constitutes a violation of law.

 

In Section 28, the Commission has jurisdiction over any person involved in associations including:  owners, board members, officers, developers, managers, and tenants.

 

For example, a developer is required to turn over certain items when the control period ends in the association.  So if the developer did not relinquish control to the association, the Commission would have authority to pursue that violation.

 

Section 29 points out that these are additional remedies, they are not exclusive remedies, all existing rights and remedies under law and the CC&Rs are preserved.  It also makes it clear that the Commission does not intervene in the internal activities of the association. 

 

Section 30 is the complaint/violation process, which starts with an affidavit.  The affidavit is filed with the Real Estate Division.  Everyone was concerned that the Commission not just be a place to go to right away if you have a problem, so in order to file an affidavit with the Real Estate Division that alleges a violation there must be evidence that the complainant has attempted to resolve it.  There has to be proof that he or she has notified the person or association that has violated the law.  After at least two attempts to resolve it and it can’t be resolved, then the complainant can swear out an affidavit that the resolution process has failed.  There is a statute of limitation of one year. 

 

[Michael Buckley continued.]  Section 31 deals with the second step after the affidavit has been filed.  The matter is then referred to the Ombudsman who will, in the first instance, try to resolve the matter.  If that fails, in Section 31, subsections 3 and 4, the matter is referred to the Real Estate Division for investigation.  In Section 31, subsection 5, if the Real Estate Division believes that grounds exist to proceed further, the Real Estate Division files the complaint with the Commission. 

 

Section 32 involves the hearing procedure, which has to start within 90 days, although the Commission can grant continuances.  There is a service of the complaint with evidence on the respondent.  Section 32, subsection 4, limits new evidence that can be presented.  The idea is that everything will be up-front quickly and that is what the Commission rules on.

 

Section 33 permits representation by counsel, but again, remember that the real parties are the Real Estate Division as the plaintiff and the alleged violator is the respondent.

 

Section 34 deals with decisions by the Commission, which must be done within 20 days.  The idea is to get to the Commission and obtain a quick decision.  The findings must be committed to writing within 60 days.

 

Section 35 is a key section because it deals with the remedies that are available if the Commission finds there has been a violation.

 

• Subsection 1(a), the main remedy, is a cease and desist order.

 

• Subsection 1(b) is an order directing the respondent to take affirmative action.

 

• Subsection 1(c) is a fine of not more than $1,000.

 

• Subsection 2 addresses when the violator is a member of the board or an officer, the Commission can order that he or she be removed from office if there has been a knowing and willful violation.

 

• Subsection 3 says that if there is a violation of the cease and desist order, there could be a fine of $1,000.

 

• Subsection 4 allows the Commission to order the respondent to pay the costs.

 

• Subsection 5 is the indemnification. 

 

I proposed amendments (Exhibit D and Exhibit E) yesterday and actually I’m not even sure that we need Section 35, subsection 5.  Section 4, subsection 5, says if the board member or officer is judged in violation of the law and has to pay a fine, the association pays it.  That is already part of the law of indemnification.  Normally a corporate officer is indemnified by the association, by the corporation, for all his acts as an officer and director.  There are exceptions to that if the officer or director is guilty of knowing and willful violations.  I proposed that the association not indemnify an officer who knowingly and willfully violates the law.

 

William Magrath, Homeowner:

[Introduced himself.] I have been working with Michael Buckley, Karen Dennison, and many others in the room for the last nine years on these processes.  I am a homeowner and member of the Caughlin Ranch Homeowners Association, which has 2,200 members; it is one of the largest HOAs in Reno.  I have been on the board for 12 years, elected in open public elections with secret ballots, et cetera.  With respect to the indemnification issue, I raised this issue because all members of the board are volunteers.  Everybody who serves on these boards is a volunteer, and we have some very talented people volunteering.  If they fear that they might be subject to a fine or that they might be caught into a fine process, I think most of those people who are smart will resign or will say, “I don’t want to fiddle with it.  I am not going to volunteer my time and put my family or my assets at risk.” 

 

This provision specifically indemnifies them.  It gives me, as a board member or president of a board, an opportunity to go to a good person who would be serving on the board and say, “You’re protected.”  If somebody makes a mistake or our counsel makes a mistake advising us, and the Commission ultimately rules that we are at fault, then under those circumstances you are indemnified, so you are not at risk.  My fear is that if we start eliminating the good board members or put them at risk, we are going to have bad board members.  It’s the bad boards that are causing the problems that Senator Schneider has heard as complaints.  I agree with Mr. Buckley that there are probably times where certain individuals deserve some punishment, but my fear is that you will kill the source or pool of qualified candidates for these volunteer positions if you leave it ambiguous so that anybody could possibly be fined.  That is why I think it is important that Section 35, subsection 5, remain in the bill. 

 

Assemblyman Mortenson:

If you fine an association—let’s just say, an individual homeowner has a complaint about the association and he goes to the Ombudsman, where the Ombudsman finds there is something substantial and he fines the association.  The money the association uses to pay the fine came from the guy who complained, so if he complains, he is picking his own pocket.  I wonder why we would even bother to have a fine situation when the only people who can be fined are the complainers?

 

Michael Buckley:

If an association is fined, all of the members collectively will each share in their tiny pro rata share of that fine.  Ultimately, if they find out that their dues are being increased because the board or board member is not following the law, they will turn those officers or board members out through the elective process.  Much of the testimony that has come from individual complainants over the last three months before the Senate Committee on Commerce and Labor said, “We need to have some teeth; we need to have something in this bill so that the Commission, when it finds a violation, can fine somebody if they believe that’s appropriate.”  I know ultimately that the association, somebody, has to pay it, but it does create a pinch, which will hopefully cause that conduct to be deterred.  There had to be something placed in the bill.  Others have argued against no fines, but I think it is a reasonable amount.  It will ultimately be communicated back to the members because they will pay that on a pro rata basis.  You are correct; it will include the complainant.

 

Assemblyman Mortenson:

I have an HOA in my district, which is composed of about 15 houses; that’s going to be a big bite on those people.  I happen to know their association treasury runs about $0, so if a person complains to the Ombudsman, it goes through the process, the fine comes down, and he has to pay for what he complained about.

 

William Magrath:

The best way to look at that is the Commission sets the fine.  The bill states, “a fine not to exceed $1,000.”  If there were a small association, I would hope that the commissioners would take that into consideration.  If 6 of the members of a 15-member association are complaining, it seems to me that if the fine got back to them, the Commission would take that into consideration.

Assemblywoman Angle:

When you collect these fines, where do they go, back to the Ombudsman?  Do they go to the Commission?  Where will the fines ultimately end up and what will they be used for?

 

Michael Buckley:

The fines go into the Commission’s fund.

 

Gail J. Anderson, Administrator, Real Estate Division, Nevada Department of Business and Industry:

[Introduced herself.]  Fines and penalties that are collected go into the General Fund per our budgets.

 

Michael Buckley:

Just a technical note, following up on the issue of indemnification, I made a note on my amendment (Exhibit D) to cross-reference to Section 63, subsection 4, page 31, because that does provide for indemnification but it excludes if the board member “acted with willful or wanton misfeasance or with gross negligence.”  So at the very least, Section 35, subsection 5, page 13, and Section 63, subsection 4, page 31, need to be made consistent. 

 

Section 36 is a neat idea; one of the remedies available to the Commission is to order that the association have an audit.  A lot of these problems are financial so the Commission can order an audit.  The Commission can also, for good cause, require the association to hire a professional manager.  Sometimes you see these as a lending requirement that an association have a professional manager.  Oftentimes, associations with problems are those that don’t have a professional manager.

 

Section 37 simply allows the Commission to obtain an injunction in state court, inside or outside of Nevada, without a bond.  It specifies how the Commission would get an injunction.

 

There are a number of other sections in S.B. 100 that go through conforming changes; I will try to go through those quickly.

 

Section 51, page 18, simply changes the references from the Real Estate Commission to the Commission for Common-Interest Communities.

 

Section 53, page 20, provides for funding of the Commission by the Ombudsman’s account and the account is renamed the Account for Common-Interest Communities.

 

Section 70, page 41, deals with conforming changes regarding manager licensing, in other words, transferring [the task] over to the Commission.  The Commission is given the authority over both permit and certificate holders.  There is an attempt to have consistent regulatory authority over both types of managers.

 

Section 71, page 43, is simply a conforming language change, as is Section 74, page 45. 

 

Section 74 also permits fines for associations that fail to register on time with the Real Estate Division.

 

An amendment (Exhibit F) was brought by John V. Briggs.  It is another technical change in S.B. 100 related to the fees paid by associations that are registered under NRS Chapters 78 or 82; most associations are nonprofits.  There are a couple of old associations that are under NRS Chapter 81, so there should be an amendment to bring in associations that might be incorporated under some old nonprofit law.

 

Vice Chairman Oceguera:

Who is Senator Briggs?

 

Michael Buckley:

He is a retired California State Senator and a homeowner in Elk Point, Zephyr Cove, Lake Tahoe, Nevada.

 

That proposal would make references to other nonprofit statutes in Nevada to pay the $3 fee.

 

Section 86, page 57, is conforming changes regarding the Commission for Common-Interest Communities’ account.  It gives oversight of the account to the Commission.

 

Section 88, page 60, is the appointment of the initial Commission members.

 

Section 89, page 60, gives authority to existing officers and agencies to carry out the provisions of the act before the effective date.

 

Section 90, page 60, transfers funds from the Ombudsman’s account to the Commission account.

 

Section 91, page 60, is an additional changeover provision.

 

Section 93, page 61, is the effective date.  The Commission would go into action on January 1, 2004.  Other provisions are effective October 1, 2003.

 

The last provision of the bill that I would like to address quickly is Section 38, page 13, which is the flag amendment.  I believe this was passed in a number of other bills that permits unit owners to display the American flag in accordance with the Federal Flag Code.  There are limits on the size of the flag, height of the pole, and the number of flags.

 

Assemblywoman Buckley:

I wanted to get more clarification about the funding mechanism.  The Commission seems to be paid by the $3 assessments.  What’s the proposed budget?  How is it going to affect the Ombudsman’s office?  Can you give us those details?

 

Michael Buckley:

I would defer to Tami DeVries or Gail Anderson.

 

Gail Anderson:

There is a fiscal note attached to Senate Bill 100.  The fiscal note indicates that for fiscal year (FY) 2004, there will be a budget of $523,000, for FY2005 it will be $568,000.  The fiscal note has been reviewed through the Senate Committee on Finance and approved.  The fiscal note outlines some additional staffing positions related to carrying out the business of the Commission.

 

Assemblywoman Buckley:

Is it included in The Executive Budget?

 

Gail Anderson:

No, it was not included at that time.  Senate Bill 100 changed from what was originally presented and came out of the Senate Committee on Commerce and Labor.  We revised our fiscal note numerous times to reflect the changes as they were made.

 

Assemblywoman Buckley:

Are you seeking a General Fund appropriation?

 

Gail Anderson:

No.  This is entirely funded by the Office of the Ombudsman for Common-Interest Communities’ self-funded budget.

 

Assemblyman Buckley:

The $3 fee is still the cap?

 

Gail Anderson:

That is correct.

 

Assemblyman Buckley:

Did the Senate Committee on Finance approve the positions?  Is it now in The Executive Budget?

 

Gail Anderson:

The Senate Committee on Finance did approve it; my assumption is that it is in The Executive Budget.

 

Assemblywoman Buckley:

Has the Governor approved the creation of this Commission?  He was heard to say a week ago that he was not approving any more commissions.  Did somebody check with him?

 

Gail Anderson:

To the best of my knowledge, this has been communicated through the Office of the Governor as to where the bill was going. 

 

William Magrath:

According to the Ombudsman’s report, there are approximately 249,000 doors, or separate units, each of which would pay the $3 fee, so you are looking at approximately $750,000.  To my surprise, I found that many associations have not registered.  This bill will hopefully remedy that, so that there will be additional income to help support both the Commission and the Ombudsman.  This $3 fee will be assessed to each individual member of each association.

 

Karen Dennison, Attorney, representing Lake at Las Vegas Joint Venture:

[Introduced herself.]  I also serve on a State Bar committee which is a subcommittee for the review of NRS Chapter 116.  Since Mr. Magrath needs to leave for a hearing, he would like to give his testimony.

 

William Magrath:

[Reintroduced himself and submitted Exhibit G.]  Senator Schneider mentioned that there were some associations spinning out of control.  It’s true that there were some in Nevada, but as I mentioned earlier and the statistics, which this bill will help the Ombudsman and Commission gather, prove that of the roughly 250,000 units in Nevada, there were only 1,000 complaints.  They were vocal complaints, but if you look at the statistics you will see that about 99.6 percent of the units did not complain. 

 

I think you should be proud of the laws that have been passed over the last multiple years that have taken care of many problems.  The Ombudsman also reported in his survey that 92 percent of the people who live in HOAs are very satisfied and love their association.  It takes care of its common elements: pools, greenbelts, parks, et cetera.  The only reason I say that is because I mentioned early there are many volunteers on these boards, and my fear and concern is that if the laws are written too strictly you will drive out the volunteers.  You will end up with boards that are not responsive to the people or may be single-issue boards.  The biggest problem is that once that starts to occur, the complaints will rise.  Once the boards are not made up of good volunteers, it will be a problem.

 

I strongly support the combined bill that is before you.  I say that because last session you may recall Senate Bill 421 of the Seventy-first Legislative Session was passed through the Senate after many months.  Unfortunately, it came to the Assembly very late and on the last day of the session; it did not pass.  So all the efforts that went into the last session stopped dead.  This session the bill draft request started with many of the components of S.B. 421 of the Seventy-first Legislation Session and eliminated provisions related to construction defects and other problems present in the old bill.  Now, after many months of testimony from homeowners and members of the industry, it has developed and evolved into this current bill, S.B. 100.  It’s a good bill.

 

There are some sections that specifically involve Caughlin Ranch, particularly Section 43.  Let me explain.  If you have a developer of a large common community that sells off individual segments to a successor developer, those successor developers were claiming that they were not bound by the law, they were not the original declarants.  This law now brings the successors into the law.  It forces those successors that build parks and greenbelts to create reserve studies and fund those reserves so that when the homeowner takes over in those individual communities they are not burdened with the huge expense of an unfunded reserve.

 

Another area, Section 73, talks about park tax refunds.  Park tax refunds are allowed by law to be used inside areas in common-interest communities, large subdivisions, to build parks within that community.  In Caughlin Ranch we have a public park, which is owned by Caughlin Ranch.  Our crews maintain it and mow the lawns; it is a beautiful public park in the city of Reno paid for with my dues.  My association owns the land, but it is open to the public.  In that particular case, the playground equipment costs money, over the years will deteriorate, and will need to be replaced.  This bill now allows that the park tax that comes in from current sales of new units can also be used to replace that existing deteriorating park equipment.  Under the current law some people interpret the law to say it can only be used for the original improvement.  We think it is important that the new units that come on-line help pay for those current park areas.

 

[William Magrath continued.]  Amongst the entire group present today, there are going to be multiple amendments that will be technical amendments.  I have submitted an amendment (Exhibit G).  Let me explain two unique problems that exist. 

 

1.      If you are a member of a homeowners association and you want to look at the books and records, some associations say, “They are not here.  They are at our lawyer’s or accountant’s offices.”  One association member told me that he couldn’t look at the books and records unless he posted $450 in advance as a credit for the time for the accountant to sit and watch the books.  What I’ve proposed on page 49, line 3, is a suggestion that “the executive board must not require a unit owner to pay in excess of $10 per hour to review any books, records, or other papers of the association.”  Mr. Buckley, who is a craftsman in drafting legislation, pointed out that the $10 per hour might become fixed in the law, and maybe it should read, “. . . not pay in excess of $10 per hour, unless a different amount is set by the Commission.”  But it certainly should not be.  I should not, or you should not, be required to pay $250 for a lawyer to sit and watch you as you copy the books because some associations are using this as a method of hiding their books and records.  They are really playing games with the statute.

 

2.      Some boards and associations refuse to tell the members how many hours their crews are working.  They will tell them what their salary is but not what their hours are.  As a result, people don’t feel that they are getting “their dollars for their bucks,” so I have added, “hours worked” in that amendment.  I believe it has the approval of all others who were here. 

 

Finally, we met with the Nevada Trial Lawyers Association (NTLA) who had reviewed this bill in its entirety and were concerned about a tiny, particular section.  It is my understanding that the NTLA has proposed technical language that would exclude an attorney’s contract from the disclosure requirements.  We as a group do not have any difficulty with that.  Those amendments are appropriate; we have reviewed and approved them.  It is my understanding that the NTLA concerns about the entire bill have now been resolved, which is good news to us.  This is a good bill and we certainly want to see this bill become law so that every homeowner who has a complaint will now have an instant remedy, once they have attempted to resolve it with the association, with the Commission.

 

Assemblyman Buckley:

On the $10 an hour, I support that concept; charging $150 to $300 an hour does frustrate the ability of a homeowner to access their records.  I am wondering about the $10, more from a philosophical than a financial point of view.  Shouldn’t someone have the right to review these records?  It is one thing if someone is abusing it and wants to sit there for a month, although you would hope people would have more of a life than that; but from a philosophical point of view, shouldn’t somebody have the right for free to inspect the records of the association?

 

William Magrath:

I would agree with you that philosophically that’s correct.  I was trying to figure out a minimal clerical wage that would be applied to somebody standing there, so that if you run into that problem that somebody wants to sit there for a month to go through the records, the rest of the members don’t bear that cost.  I have spoken with the gentleman who met the demand for $450 up front; he felt $10 was appropriate.  It might also eliminate some people “willy-nilly” wanting to go through the records.

 

Assemblyman Mortenson:

Did I hear you correctly that you want to amend the law so that these impact fees, or whatever they are called to construct new parks, will also be used to maintain parks?

 

William Magrath:

No, this is not for maintenance of parks.  The amendment in Section 73 is intended to allow those funds in limited circumstances to be used to purchase new equipment, not to maintain.  We are not talking about mowing the lawns, if in fact the park equipment . . .  Caughlin Ranch is over 20 years old.  If the equipment wears out and we have to buy new equipment in a public park area, it’s our belief that those public park tax funds should be allowed to be used for that purpose.  Currently under the law, our fear is that it says “new improvements,” and we could build a new playground piece of equipment and tear the old one down, but that seems to be ridiculous.  I am simply asking that this one section be allowed to be amended to allow for that replacement, so long as it is an item that is part of the reserve study.  These funds are not used for maintenance items; they are used for capital items only.

 

Assemblyman Mortenson:

Parks seem to be the lowest priority among local governments in our state.  In the south we have less than 2 acres per 1,000 [people] where the national average is about 10 acres.  This ruling that they can only use impact fees, and I am not sure that I am using the right terminology there, construction tax.  To only use it to construct new parks to me was “a little light in the sky” that helped the problem.  If you allow local governments to go back and start reconstructing or replacing, they should be shamed into doing that rather than use the new money to construct those new facilities.

 

William Magrath:

I don’t disagree with that.  What we are talking about is public park areas that are maintained by HOAs yet are open to the public.  The funds under discussion are only capital items; it’s not maintenance, it’s not cleaning or maintaining or mowing the lawn.  It’s simply for these large expense capital items; a park tax should be used for those purposes.  Otherwise the HOA and the individual homeowners will individually pay for those items in their dues.

 

Assemblyman Mortenson:

I don’t want to see public money paying for HOAs’ replacement equipment.  I understand you said it was a public park.  What kind of ratio would you say, the people that visit this park, is homeowners from the HOA and public, not members of the HOA?

 

William Magrath:

From my experience from having visited that park, it is an open area so it’s not behind gates, I would venture to say that it is 50-50.  The homeowners themselves are also paying their public taxes to the local community, so in effect, they are paying a double tax within their HOA.  They are paying their dues to maintain the park and they are paying their city or county taxes.  Those who are outside the HOA are simply paying their municipal taxes.  The individual bills for each single unit, we’re talking about $1,000 per unit from 200 units, that is $200,000.  Those funds, if there is an agreement reached with the City, should be allowed to be used not to maintain but to replace important equipment that is a capital expense.

 

Assemblyman Mortenson:

I just hope it doesn’t become abused.

 

Assemblywoman Buckley:

On your proposed amendment, with regard to the fines that can’t be imposed unless the respondent has knowingly and willfully committed a violation, is that the same standard whereby fines can be assessed against a homeowner?

 

Michael Buckley:

First of all, it’s not the standard for fines.  Whether a fine is assessed is simply whether there has been a violation.  This deals with when the association must indemnify the board member or the officer who was fined by the Commission.  The association shouldn’t have to indemnify the “bad board member,” that’s the idea.  It’s not the same standard; it’s a completely different issue than a homeowner who violates the CC&Rs.

 

Assemblywoman Buckley:

What is the standard, and is it always based upon an individual?  No, it has to also be based upon the board’s collective action.

 

Michael Buckley:

That’s my understanding.  The board has to assess the fine for violation.

 

Assemblywoman Buckley:

Are we going to have the same standard where the Commission can assess a fine against a board, as the board assessing a fee against a homeowner?  I think we should consciously make the decision that we are not making it easier for the Commission to fine a board than we are a board fining a member.

 

William Magrath:

I believe it is the same identical standard, to a certain extent, a bit of a strict liability standard.  You may recall that Senate Bill 136, offered by Senator Hardy, has already been heard by this Committee.  That bill provides a new procedure, which requires due process before any fine can be assessed to a homeowner.  If the homeowner wants, they are entitled to a hearing in front of the board or the executive committee.  Of importance is that the burden of proof would be a preponderance of the evidence.  If the Commission finds, by a preponderance of the evidence, that a board or a board member has violated the law, that is a violation.  If the HOA finds the same for the homeowner, that would be a potential fine.  That would be an identical standard. 

 

Mr. Buckley’s comment indicated that a separate standard of who gets indemnified requires a knowing violation.  Senate Bill 136 also requires and emphasizes what the law currently states that before you can impose a fine, you must give notice to that person who is going to be fined.  In effect, each association should be reminding their members to comply with the law and that they could be fined, so the member is given a warning in advance rather than innocently violating the law.

 

Karen Dennison:

I will walk the Committee through the rest of the bill starting with Section 39.  The last half of the bill reflects the collective testimony, not only from this session but also from last session, of various homeowners, board members, community managers, and lawyers who have had their input into this bill.  It deals with the administration of common-interest communities and the procedures that should be followed for conducting meetings, keeping records, and things of this sort.  There are also some purchaser disclosure provisions in the latter half of the bill, an extension on the foreclosure period for homeowners’ liens, and some provisions relating to common elements.

 

Sections 39 through 42 deal with the conduct of the executive board and the conduct of community managers. 

 

Section 39 covers a situation where an owner has filed a complaint against the board.  This requires that the board actually put that complaint on the agenda for the next regularly scheduled meeting so the board can take action on the matter.  This dovetails back to what Michael Buckley talked about which is the attempt to resolve.  This should be one of the first attempts to resolve a dispute before it gets to the Ombudsman’s office. 

 

Section 40 is a conflict of interest provision, which states that a board member, officer, or community manager cannot accept gratuities or other compensation that would improperly influence him or her. 

 

Section 41 protects a homeowner from retaliatory action.  If the homeowner has made a complaint against the board, the board cannot retaliate.

 

Section 42 prohibits board members from accepting compensation for goods or services.  Section 42, subsection 2, recognizes that there needs to be certain declarant exceptions.  Often a declarant, during a declarant control period, will furnish goods and services to an association as part of the declarant subsidy.  Another exception is contracts between the declarant and the association, which are already covered in NRS 116.3105.  That section allows the owner-controlled board, after a declarant turnover of control to the owners, to terminate any contracts with the declarant without cause.  Finally, Section 42, subsection 2(c), allows the declarant to appoint employees of the declarant to the board.  Employees often serve as members of the board during the initial stages of development.

 

Section 43 addresses common elements that are constructed after declarant control turnover.  Bill Magrath has adequately covered that section.

 

[Chairman Anderson made comments related to the “Day of 1000 Cookies” when Ben Graham and his family provide cookies for all the members of the Legislature.  Chocolate chip cookies were distributed to the Committee members.]

Karen Dennison:

Section 44 is identical to A.B. 319, which passed this Committee and deals with transient commercial use.  You don’t need any additional testimony on that subject.

 

Section 45 is a provision of very limited application.  In older communities, which have a very imputable distribution of common element costs among the owners, this provision would only apply in counties [with populations] over 400,000 and also to master associations that were created before January 1, 1975.  It allows the board of directors to reallocate common area maintenance costs.

 

Section 46 deals with delegate voting; you heard a little bit about that from Senator Schneider in his amendment (Exhibit C).  Section 46, subsection 1, allows delegate voting effective October 1, 2003, in large communities consisting of at least 1,000 units.  Section 46, subsection 2, deals with delegate voting documents created before October 1, 1999.  If an HOA was created before October 1, 1999, any size community could have delegate voting because there are existing communities that do have it.  I would like to point out that delegate voting is only allowed if a declaration, the governing documents of the association, permit it.

 

Section 47, which deals with construction penalties, is identical to Section 1 of S.B. 136, which you heard last week.  Again, I will assume no further testimony is required.

 

Section 48 deals with conflicts between two NRS chapters.  The ones we are dealing with now are NRS Chapter 116, and NRS Chapter 82, which is the chapter under which most associations were formed.  John Briggs submitted an amendment (Exhibit F) to also provide that if you were formed under another section of the NRS as a homeowners association, any conflicts with NRS Chapter 116 would be resolved in favor of NRS Chapter 116.

 

Sections 49 and 50 are technical corrections or amendments. 

 

Chairman Anderson:

Do you support John Briggs’ amendment?  Do you think it doesn’t conflict with what your working group had intended?

 

Karen Dennison:

Yes, I should have said it was a friendly amendment, a good catch by Mr. Briggs.

 

Section 51 was covered by Michael Buckley.

 

Section 52 deals with the Ombudsman and was covered by Michael Buckley, as was Section 53.

 

Section 54 is the next important section; it addresses a problem with rural communities.  There was a particular problem in Humboldt County where lots were sold, people bought lots just to use the recreational amenities—a lake.  As a consequence, no homes or very few homes were built.  This amendment would have limited application; it would apply to situations where 50 percent or less of the lots have homes on them.  The community would have to be created prior to 1992 and be in a county with a population of less than 50,000.  If all those criteria are met, that community is outside of NRS Chapter 116; it’s no longer governed by NRS Chapter 116. 

 

Chairman Anderson:

Does that include Mr. Carpenter’s Spring Creek in Elko, Nevada?

 

Karen Dennison:

I think that could be it.  Actually I think it was Humboldt Estates.

 

Chairman Anderson:

Does it harm Mr. Carpenter’s Spring Creek in Elko County?  [Ms. Dennison indicated no.]  We are trying to get them to pay attention to some parts of this.

 

Karen Dennison:

The next section is Section 54.  Section 54, subsection 5, allows the administrator to adopt formal exemption procedures.  There are certain communities that are exempt from this act; one is a rural agricultural community.  Now it is a self-determining exemption; this would allow the administrator to have a formal exemption procedure.

 

Sections 55 and 56 are technical corrections, as is Section 57.

 

Section 58 is an important section and it received quite a bit of testimony during the last session with respect to owners wanting to put in improvements to their units for disabled persons, for security purposes, and for energy-saving purposes.  This would allow those owners to do that subject to any architectural review that is required by the governing documents.

 

Sections 59 and 60 are technical corrections.

 

Section 61, subsection 1(b), deals with limitations on fines.  There is an amendment to be proposed by the CAI on this.

 

Assemblywoman Buckley:

I wanted to go back to the improvements for individuals with disabilities.  An association may not unreasonably restrict items needed to improve access.  I want to make sure that wording is appropriate because I don’t want to see, “Your ramp should be at a different slope.”  I don’t know why the association would be subject to ADA (Americans with Disabilities Act) or the Fair Housing Act (FHA) . . .  So I am just wondering how this conforms to either the FHA or ADA standards.

 

Karen Dennison:

If I may hazard a guess, we don’t believe that it violates either of those two [standards].  We could, however, follow up with some information for you after this hearing if you so desire.

 

Assemblywoman Buckley:

What if the governing documents violate FHA or ADA?  What if an HOA states, “We have a 60-day review period,” and in the meantime someone wants to get their wheelchair up their steps, they have every right to do so.

 

Karen Dennison:

I would assume that any law contrary to homeowners association documents would prevail and would govern over those procedures if they were architectural procedures or some kind of time-sensitive procedure.

 

Michael Buckley:

This is a good example of where the Commission comes in because if there is a problem now, the Commission could order the association to comply.

 

Assemblywoman Buckley:

I don’t disagree; I don’t want to put anything in statute that would presumably give an association authority to act in violation of the Fair Housing Act and someone’s ability to get a ramp into their own home. 

 

Michael Buckley:

I don’t think any of our group opposes that; I think that was the intent of this.  If we need to make any changes, that is fine with us.

 

Assemblyman Carpenter:

I would like to go back to page 22, lines 5 through 12.  Would you explain what that means again?

Karen Dennison:

Section 54? 

 

Chairman Anderson:

I believe Mr. Carpenter is referring to Section 54, subsection 5, where “the Commission shall establish, by regulation, a criteria for determining whether an association or common-interest community satisfies the requirements for an exemption from any provisions of this chapter.”

 

Karen Dennison:

The Commission will determine what the exemptions will be.  For example, landscape communities maintaining facilities for flood control or rural residential communities, these are terms that need additional explanation.  This provision allows the Commission to establish, by regulation, the criteria for determining whether an association satisfies one of these exemptions.

 

Assemblyman Carpenter:

My concern is if it were already in statute, then how would the Commission, by regulation, establish it. 

 

Michael Buckley:

I will give you an example.  One of the exemptions, in Section 54, subsection 2(a)(1), page 21, is referred to as a landscape maintenance association.  There is a lot of discussion over what exactly the limits are.  The idea of a landscape maintenance association is if it’s just maintaining a wall, if the association is required by the City to maintain a wall, you shouldn’t have to be covered by all the provisions of NRS Chapter 116.  But what if it’s a street or if it’s a passive park facility?  There are questions as to where to draw the line.  The same thing would be true for facilities for flood control.  It only comes up when there is a question of whether a particular association would claim an exemption and there is some issue as to whether they would qualify for that.

 

Karen Dennison:

I believe we were on Section 61.  Section 61, subsection 1(b), deals with limitations on fines.  It clarifies that the existing caps do not apply to interest, late charges, and the like.  Section 61, subsection 4, is the more important provision; it places limitations on what can be charged to an owner in respect to interest, late charges, and collection costs.  I believe there is a CAI amendment (Exhibit D) on this, which we consider a friendly amendment.  Pamela Scott will propose a clarification amendment to this section (Exhibit I).

 

[Chairman Anderson asked that Ms. Scott’s amendments (Exhibit H and Exhibit I) be distributed.]

 

Pamela Scott, Senior Property Manager, Community Association Management, Summerlin, The Howard Hughes Corporation:

[Introduced herself and submitted Exhibit H and Exhibit I.]  My amendment to this is really a clarification.  In the summary that was done by the Legislative Counsel Bureau (LCB), it indicates that the intent of this section was not to limit what is incurred as the cost to collect, but to limit what could be charged back to a homeowner because an association has absolutely no control over what a title company charges for documents or what the post office charges to send registered mail.  Those are the things that are not controllable, so my amendment (Exhibit I) suggests that the word “incur” change to “charge to the unit owners” and that collection agencies, community managers, and other persons or entities simply be removed from this.  It is the association that assesses that charge against the owner. 

 

Karen Dennison:

Sections 62 through 64 deal with boards of directors of homeowners associations.  Section 62, subsection 3, provides for staggered terms.  Section 62, subsection 5, deals with certain disclosures that candidates have to make.  Section 62, subsection 6, prohibits community managers and members of their families from serving on boards.  Section 62, subsection 8, provides when delegates cast votes for board members, it must be an open process; it’s not a secret process because obviously the people that these delegates represent would like to know how they vote.  Section 62, subsection 9, provides that a quorum is not required for the election of boards.  There has been a lot of testimony given on the Senate side with respect to the fact that in certain associations that have quorum requirements, they are not able to get enough people to return their secret ballots in order to elect a board.  This would remedy that situation.

 

Chairman Anderson:

I received a complaint that by changing the voting requirement, we would be potentially changing the process so it would no longer be “one person, one vote” within the HOA.  Is there a potential for a board to “load up” the voting requirements?

 

Karen Dennison:

It is just like any public election.  Those who choose to vote will vote.  Oftentimes you don’t get a majority of the voters voting.  Everyone gets a secret ballot; everyone is entitled to return their secret ballot.  If they choose not to vote for the board, that’s their prerogative, but we need to have governing boards for these associations to function.

 

Section 63, subsection 2, provides for the secret ballots for removal of board members just like the election of board members.  Section 63, subsection 5, clarifies that even when a board member is removed, disciplinary action may be taken against that board member.

 

Section 64 requires that bylaws of an association provide procedural rules to conduct an election.  Part of the procedure could address the question brought up earlier on the balloting and how one ensures that no one stuffs the ballot box.

 

Section 65, subsections 5 and 6, talk about the minutes for homeowners associations and what must be included for the meetings.

 

Section 66 talks about the meetings of boards and how their minutes must be taken.

 

Assemblywoman Buckley:

Section 56, does this have something to do with Lake Tahoe?

 

Karen Dennison:

Which subsection?

 

Assemblywoman Buckley:

Someone just said that there was something in this bill that would give a special break to Lake Tahoe and I am trying to track down that rumor.

 

Karen Dennison:

I believe it is simply a technical correction changing the words “does not conform” to “that violates” and removing the words “created before January 1, 1992.”  I know of no testimony on any Lake Tahoe project that would benefit by this provision.

 

Assemblywoman Buckley:

What about the whole bill?  Is there some sort of special break for Lake Tahoe anywhere in this bill?

 

Karen Dennison:

The only thing that I can think of is that certain provisions only apply to counties [with populations] of 400,000 or more.  Parts of Lake Tahoe would be in Washoe County, while others would be in Douglas County.

 

Assemblywoman Buckley:

So you don’t know of anything?

 

Karen Dennison:

No, I don’t.

 

John V. Briggs, Retired California State Senator; and resident of Elks Point, Zephyr Cover, Lake Tahoe, Nevada:

[Introduced himself.]  There is nothing in this bill that was put in to favor any development at Lake Tahoe that I am aware of, I can assure you.

 

Karen Dennison:

Section 67 deals with a hotly contested issue, which is when an executive board of an association can go into executive session, excluding the owners.  The statute specifically provides that owners may attend and speak at board meetings except when they are in executive session.  Section 67, subsections 2 and 3, clarifies that contracts cannot be entered into by the board in executive session, they must be done out in the open. 

 

I do know that there is an amendment to be proposed, which we do not oppose, from the Nevada Trial Lawyers Association.  Mr. Maddox is in Las Vegas and will be submitting that amendment (Exhibit J) to this section dealing with contracts between an association and an attorney, which are privileged contracts.  I don’t know if you want to take that amendment at this time.

 

Robert Maddox, representing Nevada Trial Lawyers Association:

[Introduced himself and submitted Exhibit J.]  The way that Section 67 is presently worded would require an association board that is contemplating legal action against a developer or member of the association to have to negotiate an agreement for legal services in front of the person the association is contemplating suing.  That is something that would go against the time-honored concept of attorney-client privilege. 

 

We are proposing to amend Section 67, subsection 2 (Exhibit J), to exclude contracts with an attorney from the prohibition of dealing with contracts in an executive session.  We also propose to amend Section 67, subsection 3, by striking the last sentence that would say, “The provisions of this paragraph do not permit the executive board to meet in executive session to take any action regarding a contract with the attorney for the association.”  There is also an amendment in the first sentence that would allow the association to consult with an attorney, the attorney may not yet have been hired, so we strike the words “for the association” for purposes of protecting the attorney-client privilege and allowing the board to consult with an attorney in closed session.

 

The bottom of the first page of the letter (Exhibit J), I ask you to disregard.  Where it says “Section 67, subsection 3, et cetera . . .” it was left over from a prior letter and should be disregarded.

 

To finish this, we propose an amendment to Section 79, which simply follows up on our amendment to Section 67, so that it would preserve the attorney-client privilege as it applies to a contract between the association and an attorney.

 

Chairman Anderson:

As I understand it, [you are amending] Section 67, subsections 2 and 3, [with] deletion and inclusion language, and then at Section 79, subsection 1, page 49, lines 40 through 45, and page 50, lines 1 through 9.  Ms. Dennison, do you consider these to be acceptable to your groups?

 

Karen Dennison:

Bob Maddox has discussed this, as has Bob Crowell, with many of the people who are here testifying today.  We have absolutely no problem with these amendments.

 

Chairman Anderson:

Questions for Mr. Maddox?

 

Assemblyman Carpenter:

How would homeowners in this association then find out what was going on in a lawsuit or whatever kind of action there might be?  The reason I bring this up is that there was a case in Spring Creek, Elko, that had to do with buried tanks, leaking tanks, and things like that.  The people were very upset because they could not find out what was going on in the situation.  They seemed to be blaming the association and its attorney for what was happening.  As it ended up, the association, and it goes back to the homeowners, had to pay a fairly large sum of money to settle the lawsuit.  I am just wondering how the people in the association would find out if these things were kept secret.

 

Robert Maddox:

The provisions that we are talking about here simply have to do with negotiating an agreement between the attorney and the association.  It doesn’t address the obligation of the association board to keep the membership of an association current regarding ongoing litigation.  The privilege still applies in terms of meetings between the association board and the attorney, but typically the association boards put out newsletters or conduct board meetings where the membership is entitled to be present and to ask questions about ongoing legal matters.

 

Assemblyman Carpenter:

I think that is one of the problems when we have these meetings.  They would bring up the attorney-client relationship and it didn’t seem like anybody could find out what was going on.  I know this is a situation sometimes in the cities and counties related to ongoing controversy, but it just seems to me that this then can cause a lot of problems with the association, its members, and the board where these things are kept secret and nobody has a way to find out exactly what’s going on.

 

Robert Maddox:

The problem really is that the Nevada Supreme Court has determined that members of a nonprofit corporation, such as what most homeowners associations are, are strangers or third parties.  The association is run by the board of directors and it’s the board of directors that act on behalf of the association.  Unless members are separately represented by the same attorney for the association, when they are present during a meeting, it’s just the same as having any stranger off the street.  Maybe we really need to be looking at this broader issue of members who should really be treated the same as board members for purposes of preserving the attorney-client privilege because the members of the association are so much affected. 

 

Given the current state of the law, if a discussion between the board and the attorney takes place in front of the members, and the members are not separately represented by the same attorney, it’s the same as though the people you are suing are present.  The concept of attorney-client privilege is that if you waive it in part, you might be waiving it entirely.  That, unfortunately, is why we deem it necessary to try to protect the attorney-client privilege so that clients can have the ability to have confidential discussions with an attorney of their choice.  Right now, the problem is that if members of the association are present, the attorney-client privilege is deemed waived as to anything that is discussed.  Perhaps we need to look at the concept of attorney-client privilege applying to the members of the association as well as to the board of directors so that the members can participate in that discussion.  While we are not proposing that, it is not a bad thing to do.

 

Assemblyman Carpenter:

I just bring it up because I think that sometimes in public bodies the attorney-client relationship is abused and we all need to be aware of that so that it doesn’t proceed down the road so that the members of the association are really at loggerheads with the board and it leads to hard feelings.  What happened in Elko was that members of the board were voted out.  We need to be careful with that.  I understand the attorney-client relationship, but we need to be aware of that if you are invoking this so that it doesn’t cause unintended consequences.

 

Michael Buckley:

I had a thought and a suggestion for Assemblyman Carpenter.  I would point out that in Section 66, top of page 36, subsection 6, “at least once every 90 days, unless the documents impose more stringent standards, the executive board shall review at one of its meetings . . . (f) the current status of a civil action.”  It was the intent that this is done in an open meeting and wouldn’t necessarily have to involve any attorney-client privilege matters, but simply informing the members of the status.  I think there is already a duty there for the board to keep its members up-to-date without necessarily violating the attorney-client privilege.

 

Karen Dennison:

Section 68 deals with quorums and has been the topic of much testimony related to the inability to obtain quorums.  Section 68, subsection 1, provides that the quorum requirement is 20 percent unless the governing documents provide otherwise.  You would have to amend your governing documents if you had a higher quorum requirement.  Section 68, subsection 2, is more important, perhaps, in that it allows for a fallback position if a quorum is not present for a meeting.  If the quorum requirement in your documents is more than 20 percent, you notice a meeting of the owners but you don’t get the quorum required to hold that meeting, what you can do is adjourn the meeting, and if at the second meeting you still don’t get your required quorum, that quorum is automatically lowered to 20 percent, but you can only discuss and act on those matters that were on the agenda for the original meeting.  This was proposed through collective discussions of those who are actually hands-on in the management of these associations and have difficulties getting quorums that are higher than 20 percent.

 

Assemblyman Carpenter:

On page 33, right at the bottom, the bill talks about getting a copy of the minutes or summary of the minutes to a unit owner but that they have to pay for the cost.  Why would you want to charge someone to get a copy of the minutes?  I don’t think that the city council or board of commissioners charge.  Why would homeowners be charged to get a copy of the minutes?

 

Karen Dennison:

I believe that most homeowners associations charge copying costs.  Perhaps that would be better left to some of the managers to explain what is done in practice.  The law does allow them to charge the cost, not any profit, on this particular matter.

 

Chairman Anderson:

That is current law.  I do believe that local governmental bodies do charge for actual copy cost to people who come and ask for copies after the fact.  They usually print free “before” and then “after” there is a charge to do it.  That’s an Assembly Committee on Government Affairs kind of question.

 

Karen Dennison:

Section 69 deals with a form of proxies and housekeeping items.

 

Sections 70 and 71 were discussed by Mr. Buckley.

 

Section 72 clarifies where the association budget has to be kept.

 

Section 73, which addressed the tax credits for park facilities, was discussed by William Magrath.

 

Section 74 was discussed by Mr. Buckley.

 

Section 75 is a technical correction.

 

The next important section is Section 76, which deals with co-op liens.  Co-ops are not at all common in the state of Nevada but I had occasion recently to use a co-op form for an affordable housing project, which was a mobile home park purchased by the owners through the co-op form.  What I wanted to make sure was that we could use the same lengthy foreclosure procedures in a condominium or a planned community that you can use for a homeowners association lien foreclosure.  The way the current law reads now, it could be read to say that the declaration couldn’t provide for the period of time an owner has to cure, but you would have to rather go into the Uniform Commercial Code which could be as short as 10 days.  This brings co-ops on par with condos and planned communities in the lien foreclosure process. 

 

Sections 77 and 78 are important because they lengthen the period of time that an association must wait before they can hold a sale of an owner’s unit.  This is lengthened by 30 days so it would go from 90 days, which exists under current law, to approximately 120 days.  This also puts homeowners associations’ lien foreclosures on a par with deed of trust foreclosures, which are approximately 120 days from initial notice to the sale of the property.

 

We have amendments to Section 79 already discussed.  Sections 79 through 81 deal with records that must be kept by the association and where they must be kept.  With that, I will turn over [the explanations of] Sections 82 and 83 to Melody Luetkehans, who represents the Nevada Association of REALTORS.

 

Melody Luetkehans, General Counsel, Nevada Association of REALTORS:

[Introduced herself.]  Our membership deals basically with the disclosure requirements when a unit within a homeowners association is sold.  Previously those disclosure requirements were to be given to any potential buyer who walked through the unit.  Some of those disclosure packages were approximately two inches to three inches thick.  At this time, we have modified the language to say that a seller can reasonably give a purchaser the disclosures after they have executed the purchase agreement but before that purchase agreement becomes binding on the purchaser.  We have requested modification of that language which is reflected in the bill. 

 

The second portion, [Section 83], includes the reserve studies as one of the documents that can be made available to a potential purchaser.  Currently a homeowners association is required to provide a certificate to the seller.  The certificate isn’t just a single piece of paper; it’s a series of documents regarding the homeowners association.  It includes a copy of the declaration and the monthly assessments.  Heretofore it hasn’t been required to provide a copy of the reserve study; now you can provide a summary of that reserve study.  However, if the potential purchaser wishes to see the full reserve study, that’s now available to them.

 

Karen Dennison:

That concludes my presentation.

 

Chairman Anderson:

Questions from members of the Committee?  I would like to see us process this bill.  It’s a real big hope that we get it moving along.  I am sure there will be work for the Committee to do next session, but I would at least like to get this one taken care of now since we have been working on it for two [sessions] in a row.

 

James Flippen, Vice President and Community Association Manager, Associated Management, Inc.; and member of the Community Association Institute Legislative Action Committee:

[Introduced himself.]  I think the bill was very well presented and I wanted to express that the bill is a consensus of many years of work of many professionals in the industry.  I am an association manager and I am here to express my support for Senate Bill 100.  While it may not be perfect, the bill provides reasonable legislation and law that will benefit homeowners associations and their owners by clarifying issues that are not currently or properly addressed or not addressed at all.  The bill further supports and enables a more fair administration of associations and the owners that live in the communities. 

 

Shari O’Donnell, Community Relations Director, Signature Homes:

[Introduced herself and submitted Exhibit K.]  I don’t think I have anything further to contribute other than to say, “Absolutely, this bill has my full support.”  I won’t belabor all the benefits of the bill.

 

Betty Ravendo, Owner/Manager, Raven Management and Consulting Services:

[Introduced herself.]  The Community Association Management Executive Officers (CAMEO), a newly-formed organization of business owners and management companies in the Nevada area, consists of the owners and key managing executives of property management companies and community management companies who manage common-interest communities throughout the state of Nevada.  In a recent survey of member companies, it is a fact that our group manages more than 200,000 homes in southern and northern Nevada.  For the most part, we are supporters of the bill, but there is one particular area of concern. 

 

The purpose of the bill has always seemed to be to enhance communication between the homeowners and their board of directors in an effort to make the enforcement of the documents more harmonious.  In a lot of cases, the previous bills and this current bill will accomplish that. 

 

[We are concerned about Section 65 that covers] the minutes of a board meeting.  As managers, we deal with the everyday operations of these associations.  The way that Section 65, subsections 6 and 8, is worded on page 32, requires—minutes are records of actions taken by the body, not comments made by anyone, including members of the board.  CAMEO has serious concerns of defamatory remarks that may be made at a meeting or written comments requested to be attached that may be sent to potential buyers during the escrow period.  The way this section reads is it requires that the substance of what the homeowners addressed to the board in open forum be documented in the minutes and that attachments of their narrative be entered into the record as well at their request.  This can present serious problems because in many cases these narratives could be both slanderous and defamatory due to disputes between homeowners and their board. 

 

I recently had an occasion where I was requested to provide the last minutes of a meeting of a new association I had just taken over.  The open forum minutes were extremely detailed to the point that there were ten different disputes that were openly discussed in this narrative.  I was hesitant to attach that to the package that was to be sent to the prospective owner because I couldn’t help thinking that had I been that prospective owner I would be very suspect of buying a home in a community where there seemed to be so many obvious disputes, which oftentimes represent only a small number of homeowners. 

 

I would just simply request, and I apologize for not having any wording for a proposed amendment, that the word “summary” be replaced with the word “substance” and the requirement that it be attached to the minutes be eliminated.  I see that this is problematic in enhancing communication between homeowners and their boards.  It could also jeopardize the positions of homeowners who are trying to sell their properties.

 

In answer to an earlier question regarding secret ballots, I can only speak for my own company, but most of our members of CAMEO work in a similar situation where we take the owner of record and put their name on the outside envelope that is mailed back with the sealed secret envelope.  These are noted as they are sent in so that we can only receive one from each homeowner.  Then these envelopes are actually opened in open forum.  It’s not foolproof, I don’t think any system is, but it is well-monitored and has been successful for us. 

 

Regarding the other question posed relating to the charge to inspect records, this becomes necessary in most cases because when homeowners come into the community association management office to inspect the records, these records may have already been archived.  If the homeowner wants to review their own personal homeowner file, letters and correspondence, this process of interview has to be monitored and it can take several hours depending on the nature of the documents that they want to review and the number of copies they want made.  The time that is involved must be compensated somehow; in most cases it will be charged to the association.  If we did not put a value on that time, I think that the right of the homeowner to inspect could become abusive and costly to the association.

 

Chairman Anderson:

You appear to be substituting the homeowners association officers for some of the county and city clerks’ offices and other kinds of governmental agencies that a public city would have.  Since the homeowners association acts in a quasi-governmental format, this really is trying to maintain the same opportunity to find out what’s going on in a homeowners association as would be going on at a city council meeting or county commissioners’ meeting.  I would be perplexed that if for some reason I couldn’t go to the county commissioner or city meeting then I would want to be able to review the minutes if I knew something happened in the meeting that dealt with my particular parcel or street.  Don’t you think that a homeowners association should have that same opportunity?  [Betty Ravendo indicated that they do.]  Isn’t that what it is trying to get to?  I was thinking of that part [of your presentation] where you wanted them to only take down the substance of the remarks that is required and you wanted us to delete that. 

 

Betty Ravendo:

I was addressing only the area of the meeting that is open forum for the homeowners to come and address any questions or issues that they have to the board.  Unlike county meetings, we do not transcribe our meetings.  We take minutes to reflect the actions taken by the board and narratives leading up to actions.  During the homeowners’ forum, we typically address the substantive issues addressed in open forum.  If the discussion in open forum leads to proposed actions to be taken, that would indeed be put on the agenda for the next meeting and would be detailed in the minutes.

 

Chairman Anderson:

Are you going to put something into writing for the Committee?  It is my intention to take this up at a work session tomorrow if we are going to get this out [of Committee]. 

 

Betty Ravendo:

We can have that for you.

 

John Briggs:

I support the bill in its totality.  I would like to address briefly the last comment.  I am opposed to giving the board of directors any discretion regarding entering into the minutes what they think might have been said.  I could spend two hours on the subject, but if it is said by somebody, that’s their problem.  If the board publishes that, that’s not their problem.  I think it ought to be as verbatim as it could possibly be.  I urge you to pass the bill.

 

Mark Kaplinsky, Homeowner:

In the interest of time, I am throwing away my presentation since most of the points have been discussed.  I would like to comment briefly on the different points made this morning.  First, I would like to thank those who drafted this bill; I think you have done a brilliant job.  [Introduced himself.]  I have been a board president and non-professional manager of a homeowners association in Las Vegas.  I have completed hundreds of volunteer hours with the Ombudsman’s office; we have been videotaping the educational sessions. 

 

Just to comment on some of the issues brought up.  I know that some of the Committee members have brought up the issue of fines, whether they should be applied, and who should pay them.  I think this bill is more clever than that, it’s the ability of the Commission for Common-Interest Communities to remove the bad members; that’s the key power.  Sure I would love to fine them, make them pay for their crimes, but just getting them off the board is the real aim.  I am hoping when the Commission is finally formed that it doesn’t go the fine route; that hurts the innocent homeowners.  Just get the bad members off the board, keep them off the board, and, if need be, appoint a property manager to be the remedy to the problems.  I think that will take care of just about every problem that I have ever heard of.

 

The second point is about the election ballots.  I have had a lot of experience running elections; I have run three of them.  It’s a very well-crafted, intricate process, however, there are one or two holes still.  Hopefully, I will soon close those or at least make suggestions about that.  Ultimately, what I would like to see is a nonpartisan interest, third party, maybe the Real Estate Commission itself, conduct elections so that nobody who has a stake in the election has anything to do with the counting of the ballots.

 

Mr. Magrath mentioned that 92 percent of the homeowners were happy with their associations, but that means 8 percent are not.  Of a million homeowners— that’s 80,000 [unhappy] homeowners—and, unfortunately, I am one of those.  We have a board who will not turn over our records and if this bill doesn’t pass, I am going to be out $10,000 to $15,000 in legal fees just to find out if our board is stealing our money because there is no other way of doing it. 

 

The reason that the current mechanisms of mediation and arbitration don’t work is because the courts, the mediators, and the arbitrators work with the boards and homeowners as if we are under the rules of corporations.  Associations are not corporations, they are governing bodies that are closer to municipalities.  I know this has been discussed.  Only this Commission for Common-Interest Communities will be able to address the issues as a municipality, or at least those elements that are a municipality.  Therefore, they could remove bad board members who continue to abuse, which is why I think this bill is so good.

 

Finally, I would agree with the speaker from CAMEO.  What I would recommend for the minutes is that—to state the problem, I go to a meeting, I will see in the minutes that, “Mr. Kaplinsky made an idiot of himself.”  I don’t think I was an idiot.  If anybody really cares about it, let them produce a written statement and include that with the minutes and let that become the official record of the organization and nothing more.  They will never get it right, they will never be able to transcribe it right, they will never agree, and perhaps it will give the person that is making that comment a chance to cool down.  Maybe they won’t put all that information in because the homeowners that I know would end up with a slander suit anyway.

 

I urge the committee to pass this bill and I thank you very much for allowing me to speak.

 

Chairman Anderson:

Unless you have something specific that you are offering that hasn’t been addressed, it is a good time to say, “Me, too,” so that we can move on to the other part of the agenda.

 

Terri Janison, Homeowner:

[Introduced herself.]  I came to discuss specifically amendment [Section] 46 of S.B. 100.  Other than that, I think the bill is very good.  I am a homeowner who is part of that 8 percent who is dissatisfied at this time with our association.  I had sent your Committee previously a more detailed description of why I am against this amendment, but I would like to reiterate again, even as I listened this morning, I keep hearing over and over again that it’s the association, it’s the management company, it’s the property manager, it’s CAI, and, yes, even the homeowners.  Well, it should be the homeowners first.  I would like to thank the Committee because you have at least stepped up and keep readdressing the fact about the concerns of the homeowner. 

 

Section 46, regarding delegate voting, is not homeowner-friendly.  If you are elected on the Assembly Floor, you get one vote.  When we vote in an election for you, we are given one vote.  If a homeowner chooses not to vote in an election, the delegate should not be given the right to represent those people.  If there are 100 homes in a development and 40 decide to vote in person or by proxy, then the other 60 will be voted by the delegate?  I think that is the most undemocratic thing that could happen in unfairness to a homeowner.  The association I live in has over 16,000 homes in it alone.  Their concern is apathy?  My statement back to them, if that’s the case, you need to work harder to get the homeowners involved and not be apathetic.  It’s not to give you more power as an association, management company, or an association board to amend the CC&Rs, elect the board, or whatever you feel the need is for that power.  As a homeowner, I strongly disagree with Section 46.

 

Chairman Anderson:

Questions for Ms. Janison?  Thank you for raising your concerns.

 

Amber Williams, Homeowner:

[Introduced herself.]  I have lived [under the rules of] a homeowners association for the past three years, two and a half years as a board member, and it was one of the most enlightening experiences of my life.  I found that I had to know law and accounting in a way that I don’t think a layperson is prepared to; it’s extremely complicated.  I am in favor of S.B. 100, but I have seven brief comments:

 

1.      The underlying fact that hasn’t been brought up is that we are talking about people’s constitutional rights.  When I bought into a homeowners association (HOA), I never had a clue that my constitutional rights could be violated.  I know that is a real complicated issue, I am not a legal scholar, but I know that it happens.

 

2.      Regarding the whole issue of what is private and public, Nevada has done a wonderful job.  I think that NRS Chapter 116 and the Commission [for Common-Interest Communities] are great ideas, but we are really dealing with a public institution.  These are governments, they collect fines, taxes, assessments, they make major decisions over people’s lives, and they make zoning decisions in some cases, so I really think that we have to understand that this is public and get away from the idea that we are dealing with a private corporation.  We are dealing with people living in their houses.  Most studies show that HOA’s property values do not increase at the same rate as non-HOA houses.  I think that is very significant.  Senate Bill 100 applies ethics and it will benefit everybody—realtors, homeowners, and lawyers—it will make the whole community work better.

 

3.      Talking about complaint statistics—only 1,000 or 1 percent—and 92 percent are happy—well, I had a talk with Eldon Hardy, whom I respect highly, but the way that survey was done that showed 92 percent of the people were happy is extremely flawed.  I have done scientific research and the way the survey was conducted would never pass any scientific study; it was flawed and the statistics are unreliable.  If anybody were making judgments based on those statistics, I would ask you to examine the survey.

 

Chairman Anderson:

You need to be specific to the bill, since we are trying to process the bill.  We have been hearing this bill for two and a half hours; we are at the point where you should focus on what is in the bill.

 

Amber Williams:

4.      The other thing I had a problem with is Section 61, subsection 4, about past due fines.  I think that Nevada would be going backwards to add that in.  This has happened in other states where there is a very small fine, such as $50 or $100, and then several thousand dollars of attorney fees are added on top of that, making it arduous for the homeowners to pay or it’s very threatening and harassing.  I ask that be deleted and go back to what we had.

 

5.      The election procedures are essentially public elections and people should not be involved that have a stake in the outcome.

 

6.      Who is the client?  I have been told that the president of the association is the only client.  I have been told that it is the board of directors, and I have been told it is the association.  I don’t see anything wrong with negotiating a contract with a lawyer in public.  I do think that there may be legal issues that should be handled by the board in private; I don’t see how the negotiation of the contract could not be public.

 

7.      The minutes are an interesting issue.  I actually think that the people who speak at the meetings should be documented and I also think that they should be indemnified just like a board member.  For what they say that goes in the minutes, they are protected, so that they can freely speak.  I think people have a right to know.  If I was buying into an association, I would want to see the minutes and I would want to know what the issues are.

 

Chairman Anderson:

Questions for Ms. Williams?

 

Tami DeVries:

I have no further comments.

 

Gail Anderson:

[Submitted Exhibit L.]  The Real Estate Division supports Senate Bill 100.  Specifically, it adds a very important component to the authority of the Office of the Ombudsman [for Owners in Common-Interest Communities].  Section 52 states the Ombudsman will investigate disputes and assist in resolving disputes.  This authority has not been there and it will help a great deal in our office.  We realize there is probably some pent up demand and there is a process we have established for dealing with complaints and assessing what complaints will need to go before the Commission for Common-Interest Communities.  I have provided that in written testimony (Exhibit L) dated May 13, 2003.  We support this bill and have been actively involved in working on this legislation throughout the process in this session.

 

Chairman Anderson:

Is there anybody in Carson City who has not been heard who feels they need to get themselves on the record?  Is there anyone in the south who did not sign in who needs to get themselves on the record?

Eldon Hardy, Ombudsman for Owners in Common-Interest Communities:

[Introduced himself.]  I would just like to say a few words about our office and how we feel.  We are supporting this bill strongly because we recognize the need from our experience of taking at least 1,000 calls per month asking for acceptance.  We have a staff of four people.  I believe that at least half of the people of Nevada live in associations.  We want a process in place to give these people a feeling that there is a source to get a resolution; this Commission for Common-Interest Communities will do it with the hearing panels and so forth.  We know that it’s important that people realize what they are getting into when they buy into an association; that’s covered in the section dealing with disclosures.  Everybody should have the right to know what’s going on with their corporation, their company, and their largest investment in their life, which is in an association run by the boards.  This bill is providing an avenue to uplift people’s spirits and let them feel like there is an option and opportunity to get resolution of complaints.  Our office is excited that we can go beyond what we have been able to do in helping to resolve these issues before they become life-changing matters.  I want you to know that we want to be involved only more so and in a more positive manner.

 

Chairman Anderson:

[Chairman Anderson accepted into the record Exhibit M submitted by Michael Schulman, Attorney, Wolf, Rifkin, Shapiro & Schulman, who was not present to give testimony.]  This person showed up yesterday and prepared an amendment relative to Sections 61, 62, 67, and 79.

 

Michael Buckley:

I am familiar with John Leach and Michael Schulman who are also members of the Community Associate Institute Legislative Action Committee.  I am not familiar with the change for Section 61, subsection 4.  Section 61, subsection 5, was the same change that Pamela Scott proposed.  I actually put together a quick amendment on Section 62, subsection 8, that was discussed.  When an association sends out a ballot we thought the law ought to provide that a homeowner have at least 15 days to return it.  I think that is what most associations do.

 

Chairman Anderson:

Ms. Scott’s amendment is the same as Section 61, subsection 5?  Section 62, subsection 8, would deal with 15-day return?  You would suggest that one?  [Mr. Buckley indicated yes.]  How about the amendment for Section 61, subsection 4?  Do you perceive that to be acceptable?

Michael Buckley:

I would have to think about that.  I don’t know the context where that is given.  What they are doing is uncapping these charges for certain fines.

 

Chairman Anderson:

The removal of the language in Section 67, subsections 2 and 3?

 

Michael Buckley:

Section 67 was handled by Mr. Maddox’s amendment, as was Section 79, subsection 1, on the last page.

 

Assemblywoman Buckley:

I wanted clarification on the costs of collecting.  I like the specificity of the amendment as proposed by Pamela Scott of the Howard Hughes Corporation, although I have some concerns with the collection fees.  I don’t practice in this area of law, but I had someone come in who was going to lose their home.  They were on social security, so they came to legal aid because they had a decorative toilet in their front yard as a planter with petunias and they got charged a huge fine for an unsightly object.  So picturing this “toilet bowl woman” who is capped with the fee, that is why we passed that in previous sessions, but now the $100 fine has a $100 collection fee and a $50 recording fee.  Could you address that for me?

 

Pamela Scott:

This does not add fees.  This was requested by Senator Ann O’Connell.  As most of you already know, you may file a lien for outstanding penalties that have not been paid for violations, but you cannot foreclose that lien under the law.  Senator O’Connell’s concern was that the cost to file liens is in the $300 to $400 range; it does cost the association that amount.  She did not want someone who has a $100 or $200 outstanding penalty to be charged those costs, since there is a scale at 10 percent.  Some associations are going to protect themselves by filing that lien.  I personally have never done that, but others do.  The idea is that you cannot pass those charges on, whether you have incurred them or not, that’s the association’s business judgment.  You cannot hit someone with fees who has a disputed penalty as late charges on the penalty itself.  However, it does not address monthly assessments.

 

Assemblywoman Buckley:

Now you can’t charge the cost of collecting, but under the new bill, even with the amendments, you can?

Pamela Scott:

No, I was not clear.  You can pass late charges and costs of collecting onto the homeowner at the present time.  This is intended to limit the amount you can pass on.

 

Assemblywoman Buckley:

Right now, the limit is the fine not to exceed $100 or a total of $500.  The new language about the limitations does not apply to the charges, and costs are being added.  It looks like new language, not existing language in Section 61 on page 27.

 

Pamela Scott:

I believe that fines are defined as assessments under the existing law and you can pass the collection costs on for assessments.  It was Senator O’Connell’s intent under this bill to separate the two issues.  Where you have a homeowner who is not paying their monthly assessment, which is basically what supports your association, you have to have the ability to collect those and you still can pass those costs on.  If it’s over a fine, you cannot pass the costs on.  That was her intent, if the language does not say that I will have to defer to LCB on that.

 

Assemblyman Mortenson:

We heard testimony regarding the “one person one vote”; I have been looking for that section and I can’t find it.  [Michael Buckley indicated Section 46.]  Is there a problem that if there is apathy and under-voting in a community the homeowners association can have larger than “one vote”?  What was the concern?

 

Pamela Scott:

The concern related to delegate voting, which is a representative form of voting similar to “we elect you and you vote for us on matters.”  Several large associations in Nevada use this; they all have slightly varying rules on how they operate.  Testimony referred to the Summerlin North Homeowners Association, which provides for delegate voting.  Each subdivision or neighborhood elects its delegate at a meeting that is called for that purpose.  That delegate has the ability to cast all of the votes for the neighborhood.  At the time that there is a matter to be voted on by the entire association, a designated proxy is sent to every homeowner within Summerlin and those proxies are returned to the delegate.  Discussion on apathy relates to many homeowners who do not return that proxy, and the governing documents for the Summerlin North Homeowners Association provides that if the homeowner does not return the document then the delegate for that neighborhood may cast in any way he sees fit the votes of the homeowners who did not return their proxy.  For example, if there are 100 people in the neighborhood and 30 send back the ballot proxy, the delegate must vote the proxies in exactly the manner that the homeowners have directed him to do.  The other 70 are left to the discretion of the delegate to cast.

 

Assemblyman Mortenson:

I guess I would have concern also.  It seems to me that if only 30 vote, the votes should reflect what those people voted, rather than 30 for them and 70 for one individual.

 

Pamela Scott:

I do understand that; I am telling you exactly how those documents read.  I will tell you that if the majority of the persons in that neighborhood cast their ballots in one manner, then the delegate must cast all the ballots for the neighborhood in that manner, no matter what his feelings are on the issue.

 

Chairman Anderson:

It deals with the original governing documents of the homeowners association as a voting methodology, because of the large nature of the homeowner group.

 

Assemblyman Mortenson:

But if 30 percent vote one way and they are actual voters, and 70 percent don’t vote, as I understand what you are telling me, the representative can cast something that reflects 30 percent in this manner and he gets 70 percent personally to cast however he feels.  Do I understand correctly?

 

Pamela Scott:

Yes, basically, I think you do understand it, but it is similar to any other representative form of government.  You may get 25 letters from constituents opposing something that you, as their representative, feel is good for all of the people.  You will therefore cast that vote that may not agree with the 25 that did correspond with you.

 

Michael Buckley:

I just wanted to add that this was discussed in the Senate.  Summerlin is just one way of delegate voting; there are many different kinds.  It really depends on the documentation that is recorded before you buy in.  We tried to think of some way to address it, but there are so many different ways, we couldn’t come up with a way to satisfy everyone’s concerns.

 

Assemblyman Carpenter:

I need to propose an amendment (Exhibit N) to S.B. 100.  On the original version this amendment was in there, but it got lost in the shuffle.  Spring Creek—they need to abide by the Open Meeting Law.

 

Chairman Anderson:

I would never leave Spring Creek out of our discussion.  [Chairman Anderson read the amendment language from Exhibit N.] 

 

In addition, I will make part of the record a letter from David Stone (Exhibit O) relating to two items of concern regarding the Commission and Section 61, so that when we look at this in our work session tomorrow we will see if we can process S.B. 100. 

 

We have quite a few amendments to deal with, most of which we apparently agree to.  It is my understanding that the construction defect study is also going to be on the work session tomorrow, although they are still working it out. 

 

Let’s close the hearing on Senate Bill 100, and turn to our Work Session Document (Exhibit P).

 

I have set aside time for Thursday evening (May 15, 2003) and Friday evening (May 16, 2003) for the Committee, recognizing that we do have some bills that are exempt, including this bill (S.B. 100).

 

Senate Bill 122 (2nd Reprint):  Makes various changes regarding malpractice insurance and actions. (BDR 57-265)

 

Allison Combs, Committee Policy Analyst:

Senate Bill 122 was heard on Monday, [May 12, 2003], and it makes various changes regarding medical malpractice insurance and actions.  There was testimony in support of the measure indicating that the bill’s provisions were designed to address factors contributing to the state’s medical malpractice crisis.  There were some concerns raised by the Insurance Commissioner regarding the potential impact of the bill on her office.  There were no proposed amendments to the bill.

 

Vice Chairman Oceguera:

As indicated it appeared that there were several people in support of this bill.  The Insurance Commissioner was neutral; I would recommend a Do Pass.

 

Chairman Anderson:

The Chair will entertain [a motion] on the recommendation of Mr. Oceguera.

ASSEMBLYMAN OCEGUERA MOVED TO DO PASS S.B. 122.

 

ASSEMBLYMAN GEDDES SECONDED THE MOTION.

 

THE MOTION CARRIED UNANIMOUSLY.

 

Let me assign that bill to Mr. Conklin.

 

Senate Bill 264 (1st Reprint):  Makes various changes to provisions pertaining to Department of Corrections. (BDR 16-1182)

 

Allison Combs:

The next bill was also heard on Monday, [May 12, 2003], that’s S.B. 264.  The proponent was the Nevada Department of Corrections.  The testimony focused on the reentry program that will be authorized under the legislation, as well as the compassionate release provisions for inmates in ill health or pregnant upon imprisonment.  There were no formal amendments proposed to the measure.

 

Vice Chairman Oceguera:

There were no formal amendments, although I think the Committee had some issue with this bill regarding Section 5, page 4, subsection 3, the pregnant prisoner clause.  I think it would warrant further discussion.

 

Chairman Anderson:

Since I was not present for the original hearing of the bill, does the Committee have a feeling about the bill?

 

Assemblyman Mabey:

Having taken care of a number of prisoners when I was a resident, it does seem like a huge expense to the state to transport them, bringing them [to the hospital] in shackles, having a guard at the labor and delivery area, and having a guard by their room after they deliver.  I understand where Assemblyman Horne came from, too, when he spoke about it, but I would support the bill the way it is as it pertains to that.

 

Assemblyman Brown:

I made mention that I supported that particular provision.  I certainly understand and don’t want any kind of “free ticket” out of jail.  I don’t think there was discussion—perhaps the Chairman, or others who have considerable experience on this Committee, may have knowledge as to what programs are available for a mother who is incarcerated to have a period of time with the child even if that’s in the institution. 

 

Chairman Anderson:

I am not knowledgeable about that particular concept.

 

Assemblyman Brown:

I am in favor of the bill.

 

Assemblywoman Buckley:

I have some concerns about letting pregnant prisoners out.  I agree that the expense to the state is something that should be considered, but I think the message then is sent that if you get pregnant you get out of jail free.  That’s the worst message that we could send.  I think that if it is a non-violent offense and a person is before a judge for sentencing, the judge is going to cut them a break and not sentence them unless it’s a really serious crime.  If it’s a serious crime, I don’t want to encourage people to get pregnant to get out of a jail sentence.  Since I was pregnant during legislative session, I understand a little bit what it’s like to be in prison while pregnant.  I just have a problem with that; I think we are sending the wrong message.  What does somebody do while they are awaiting sentencing, try to get pregnant?  Prison—pregnancy?  They might take that choice and then that’s the last state of mind we want for somebody bringing another child into this world. 

 

Assemblyman Gustavson:

I also have some real concerns about this one portion of the bill itself.  I think it is sending the wrong message to the people out there, women especially, that if they are pregnant they can go out and do the crime, but they don’t have to do the time. 

 

Assemblyman Conklin:

I like the bill; I have the same concerns as Ms. Buckley and Mr. Oceguera have with regards to Section 5.  I also would like to express my complete displeasure and I am appalled at the number of times during this hearing that the Nevada Department of Corrections indicated that’s the law on the books, but they don’t do it that way.  I don’t understand how we can spend four months every two years making laws that the executive branch just doesn’t feel they are important enough to enforce.  I don’t know that I have an answer for that, but I think that needs to be on the record.

 

Vice Chairman Oceguera:

I was going to speak to that as well, I think that’s appalling, and to say that on the record was amazing to me, actually.  I would suggest that maybe to make it even more concrete on the record we send a letter from the Chairman.

 

[Chairman Anderson and Assemblywoman Buckley simultaneously voiced, “Again?”] 

 

Chairman Anderson:

The last time I wrote to the Director, I got a letter back and I think she missed the point.  She and I had a conversation a couple of days later and she understood shortly after that what I was trying to get at.  Clearly, the Nevada Department of Corrections does not want to break the law.  I think that what’s happening is that their bureaucracy is such that it has a method of practice that doesn’t necessarily keep up to date and it seems to be a little unwilling to change regardless.  The new director is well intended and would like to bring about full compliance with the law, but is having some problems just from budgetary restraints of doing some of the things that we would like them to do.  If it is the desire of the Committee, we will have Ms. Combs, once again, try to draft a letter on behalf of the Committee.

 

Vice Chairman Oceguera:

In my estimation that might . . . if there ever was a law that they didn’t follow properly in regards to someone in a lawsuit and we had sent several letters, that may be part of the evidence in that case. 

 

Assemblyman Horne:

My concerns are as everyone else’s regarding the message we are sending.

 

Assemblyman Claborn:

If we are trying to get some kind of consensus, I support the bill but with reservations the same as those who have spoken about the pregnancies.

 

Assemblyman Brown:

I thought Ms. Buckley’s comments were compelling, particularly about a judge in a pre-incarceration situation.  If we have somehow conjugal associations going on in prison, that probably needs some serious addressing.  I have no problems with amending out any reference to the pregnancies and proceeding with the bill in that condition.

 

Assemblyman Gustavson:

I just wanted to add to the letter discussion that when we get the letter drafted, in all due respect to the Chairman, I think that if each and every member [of the Committee] signs that letter, it might have a little more effect.

 

Assemblyman Mortenson:

I saw this as a money matter, the Nevada Department of Corrections kept saying it was too expensive for them, they could not afford it, and therefore they wanted the birth to take place in the emergency room, which would shift the burden to the community and away from the prison.  I have problems with the bill also.

 

Chairman Anderson:

Other than the 15-signature letter on my stationery, I can’t see anything else.  The bill goes to the Assembly Committee on Ways and Means, if that gives us any solace.  Ms. Buckley, am I to understand that if we move with the bill, the preferred motion is an Amend and Re-refer of S.B. 264 with the deletion of Section 5 of the bill?

 

Assemblywoman Buckley:

Yes, and the only other question relates to page 4, line 16, “ill health.”  I don’t have as much problem with that because the current guidelines are that they look at the nature of the offense, the nature of the illness, and they already have some parameters, so I don’t have a problem with that.  I just wanted to raise it to make sure that everybody was on the same page.  There should be some intent that pregnancy is not ill health.

 

Chairman Anderson:

We are really talking about lines 22 and 28 and any other reference that would include the pregnancy questions of S.B. 264.  We will be leaving in Section 5 and the other part of the bill, but delete the references to pregnancy avoiding the term “terminate.”

 

ASSEMBLYWOMAN BUCKLEY MOVED TO AMEND AND RE-REFER S.B. 264 TO THE ASSEMBLY COMMITTEE ON WAYS AND MEANS WITH THE AMENDMENTS AS DISCUSSED.

 

ASSEMBLYMAN CARPENTER SECONDED THE MOTION.

 

THE MOTION CARRIED UNANIMOUSLY.

 

Senate Bill 436 (1st Reprint): Makes various changes to provisions pertaining to business. (BDR 7-982)

 

Allison Combs:

The next measure on the Work Session Document (Exhibit P) is S.B. 436, which makes numerous changes to the business chapters of the NRS.  The testimony noted that this measure is the omnibus measure presented each session by the Business Law Section to update Nevada’s business statutes.  I have included a copy of Mr. Fowler’s overview as part of the Work Session Document; it’s attached in blue (page 6).  There was also testimony from the Office of the Secretary of State that they had addressed their concerns through an amendment in the Senate Committee on Judiciary.  There have been several amendments that have been raised, the first of which involves the fictitious firm name statutes.  On the green document (page 23) that is attached at the back of the Work Session Document, those concerns are outlined primarily with Sections 263 and 265 of the bill. 

 

Section 263 is on page 148 of the bill.  The concerns raised involve the deletion of the reference to the street address of a residence or business.  There is also a concern raised in that same document with regard to the deletion of the notarization requirement under Section 263, and that deletion is also reflected in Section 265.

 

Chairman Anderson:

That was from the County Clerk of Washoe County.

 

Allison Combs:

The second proposed amendment was raised during the hearing by Assemblyman Carpenter who expressed the desire for a need to provide notice directly to an individual of an impending expiration of a certificate filed by a person doing business under an assumed or fictitious name.  Currently under NRS 602.010, which is amended by the bill in Section 262, on pages 147 and 148, these certificates expire five years after the filing if the board of county commissioners adopts an ordinance providing for that expiration.  The board has the authority to do this under a separate section of the NRS.  That section provides for notice of the expiration through publication in a newspaper.

 

There were several other amendments submitted for discussion by Assemblywoman Buckley, the first of which involves Section 2 of the bill, which is the authorization for a corporation to maintain records by any means of, or in the form of, any information processing system or other information storage device or medium.  There is a concern that this section might be overly broad, so an amendment was suggested to address this concern by including a phrase such as “except as other required by federal or state law.”

 

In Section 23, pages 11 and 12, dealing with director and officer liability protections, the changes add creditors to some of the protections under this section.  The proposal was to delete that addition, as well as a provision on page 12, Section 23, subsection 7, the same section where “creditors” was added, to revise an “and” to an “or.”

 

The third proposal involves statutes setting forth activities that do not require qualification for doing business in Nevada.  The referenced sections are Sections 141, 142, 175, and 176.  These sections allow foreign limited-liability companies under NRS Chapter 86, and limited partnerships under NRS Chapter 88, the same list of activities that foreign corporations currently can engage in that do not trigger the necessity of qualifying to do business in Nevada.  Those sections are under NRS Chapter 80 currently.  There are two options that were suggested:

 

·        Delete this extension of the law in NRS Chapters 86 and 88, so it would delete the new sections of the bill.

 

·        Repealing some of the activities that may cause concern as far as those activities that would not constitute doing business in the state.  Those activities are listed on the bottom of page 3 of the Work Session Document (Exhibit P), which include:  making sales through independent contractors; soliciting or receiving orders outside the state through or in response to letters or catalogs or other forms of advertising; accepting the orders outside the state and filling them by shipping goods into the state; and creating or acquiring indebtedness, mortgages and security interests in real or personal property. 

 

Two additional activities were also suggested, if the Committee were to choose to go with the deletion from existing law of these provisions:  securing or collecting debts or enforcing mortgages and security interests, and owning real or personal property.

 

Finally, in Section 266, page 149, the penalty for a violation of NRS Chapter 602, “Doing Business Under Assumed or Fictitious Name,” or falsely filing a certificate of termination is changed.  Currently in the law, it is a misdemeanor but the amendment would make that a fine instead.  The suggestion raised would be to maintain the existing misdemeanor penalty.

 

Chairman Anderson:

Ms. Buckley, do you have a feeling as to how you want to proceed with S.B. 436?

 

Assemblywoman Buckley:

Just a comment on paragraph c, the third proposal, the general concept is that you subject yourself to jurisdiction or you can be sued here if you have minimum contacts with the state.  That means that if a company does something to you, you are not forced to go to Florida, if they come into the state.  It’s this minimum contact concept, which Mr. Brown can explain in full, but generally that’s the law now.  It just gives me a little concern to begin to do this laundry list so that if something a company does may not fall squarely within it, but they have done something in our state and harmed someone, that we have lost jurisdiction.  Perhaps Mr. Fowler can provide more information, but he is gone.  I suggest eliminating this (paragraph c) and if he can bring back more explanations to the Committee, maybe the Assembly would reverse.  I don’t feel comfortable taking away Nevada jurisdiction without a better reason, so that suggestion under paragraph c is to leave the wall the way it is now unless there’s a better reason presented. 

 

The rest of the amendments I agree with.  The clerks brought up changing the fictitious names, as did Mr. Carpenter, related to telling people when the certificate is expiring; I think those are good suggestions so that you can track down when people change their names.  Likewise the first part of paragraph 3, it makes the law more clear.  If you are amenable, I would do an Amend and Do Pass motion, including all of the amendments on our Work Session Document (Exhibit P) to include 1, 2, and 3.

 

Risa Lang, Committee Counsel:

I want to clarify on amendment 3, whether we are going with c(i) or c(ii)?  I think Ms. Buckley was suggesting c(i).

 

Assemblywoman Buckley:

Yes, amendment 3c(i), just delete it and keep the law the way it is now.

 

Chairman Anderson:

We are not doing 3c(ii)?

 

Assemblywoman Buckley:

No, we are doing 3c(i) instead of 3c(ii).

 

Chairman Anderson:

Are we doing the additional activities that might also be considered for deletion?  [Assemblywoman Buckley indicated no.]  OK, we are not doing that part at all—just deleting the new sections of the bill. 

 

ASSEMBLYWOMAN BUCKLEY MOVED TO AMEND AND DO PASS S.B. 436 WITH AMENDMENTS 1, 2, AND 3a, 3b, 3c(i), and 3d AS OUTLINED IN THE WORK SESSION DOCUMENT.

 

ASSEMBLYMAN CONKLIN SECONDED THE MOTION.

 

THE MOTION CARRIED UNANIMOUSLY.

 

The bill has passed.  Mr. Brown, it is your turn to defend this bill on the Assembly Floor.

 

We also have a Work Session Document Supplement (Exhibit Q).  I did not want us to feel that we were not working hard.

 

Senate Bill 136 (1st Reprint):  Makes various changes relating to certain penalties and fines imposed by unit-owners’ associations. (BDR 10-897)

 

Allison Combs:

In the Work Session Document Supplement (Exhibit Q), the first measure is S.B. 136 and it was heard in the Committee on May 9, 2003.  It makes changes relating to penalties and fines imposed by unit-owners associations.  Testimony explained the measure was requested to clarify some due process rights of homeowners in an association to request a hearing before fines can be imposed.  Additional testimony focused on the new section requiring unit owners to adhere to construction schedules and the penalties that could be set forth or may be imposed for failure to do so.  There was testimony today that the section is also in Senate Bill 100.  There were no formal amendments proposed at the time of the hearing.

 

Chairman Anderson:

Problems with Senate Bill 136?

 

Assemblywoman Buckley:

I like the bill.  The only question I have is on Section 4.  Some of it I know is just reorganizing, but I am not totally sure that something isn’t changed here and I would like the other minds on the Committee or staff to comment on that.  In Section 4, subsection 3, the due process language, I like that a lot; I like having a procedure, notice, and a hearing.  On page 4, line 24, we are eliminating the “threatening the health and welfare” language?  That seems to be a substantive change.  I don’t have any problem with the construction penalties, I don’t have any problem with the due process, but this is an area like the toilet bowl fines, where we want to be really careful because all these homeowners associations love to fine people for really petty stuff.  We don’t want to reverse any of the protections we enacted in the last few sessions.

 

Chairman Anderson:

Let me hang on to S.B. 136 for a day longer and see if I can’t find . . .  There is something about S.B. 136 that still troubles me and I can’t pick it out.  Any members of the Committee find distress with S.B. 136?

 

Assemblyman Conklin:

Initially I didn’t think I had a problem with it, but in reading the section that Ms. Buckley had mentioned, once you take out the language, I am almost concerned that it doesn’t define what a violation is.  I have a problem with that as well.

 

Chairman Anderson:

Somebody brought up in our meeting “if a tenant or guest of the unit owner violates any provision of the governing documents, the executive board, if the governing documents so provide, can impose a fine or take any other action authorized by the section, against the unit owner.”  If I have a guest that parks incorrectly while coming to a party at my house, I pay the bill?

 

Assemblyman Conklin:

I have a follow-up question regarding the line that Ms. Buckley spoke of on page 4, line 24, where it says, “failure to comply . . . that does not threaten the health and welfare of the common-interest community . . . .”  Are there other statutes that clearly spell that out and that’s why it has been taken out?  If there aren’t, then that seriously concerns me.

 

Chairman Anderson:

I will hold S.B. 136 for another day.

 

Assemblyman Horne:

Related to Section 4, subsection 1(b), I agree that removing of the “health and welfare” broadens it as to the entire scope of what they can fine.  As to your question, I do remember testimony on a guest breaking the rules.  I think the answer was that there is still due process for the homeowner to present an explanation.  The executive board has the discretion to not fine you under certain circumstances.

 

Assemblyman Brown:

In regards to that deletion, this is how I read it.  I would imagine, and I am happy to hear comments on that, if there is a violation that threatens the health or welfare of the community, there is probably a separate section that allows them to remediate or have some kind of recourse.  That’s a little more draconian.  If Mr. Geddes has his ammonium perchlorate out and he is trying to [inaudible] in his back yard, we would probably shut him down in short order.  The existing language is that if there is failure to comply with something that does not threaten the health or welfare, this is your garden-variety garbage or parking, by deleting that, you have to understand that it has “not” in front of it, I don’t think we are expanding on this.  I think we are safe with that deletion.  I would love to hear, if there is some expertise within this realm, there is some kind of provision when there is a violation that threatens health or welfare.

Chairman Anderson:

Ms. Lang says she can help us with the language; it’s the reason we like to have Ms. Lang around.

 

Risa Lang:

Actually, my point was very similar to Mr. Brown’s comments.  This section currently authorizes these fines if, first of all, they are provided in the governing documents and it specifies that for failure to comply that does not threaten health or welfare.  We are not talking about fines imposed for those violations that do threaten health or welfare.  In NRS 116.31162, they can actually foreclose a lien for a health and safety type violation.

 

Chairman Anderson:

I will hold S.B. 136 for another day and put it on the next Work Session Document.

 

Assemblyman Carpenter:

It seems to me that what this does is that it takes out the ability to fine a guest of the tenant, but what I was wondering about on page 4, line 17, “provisions of this subparagraph do not prohibit the unit’s owners . . .” then it takes out the tenant or the guest “from using any vehicular or pedestrian ingress . . . .”  What does that do to your guests if they can’t use the street?

 

Risa Lang:

I think the tenant and guest provisions are moved down to the new language in subsection 2 and they require a tenant or guest to be subject to all the same requirements as the homeowner so that they would still be subject to those requirements.

 

Assemblywoman Buckley:

How do you fine a guest when they don’t have the governing documents?  Do you have a mini police department out there?  It’s one thing to say that you have to control your guest’s owner, but that seems a little weird, too.

 

Chairman Anderson:

I am going to hang onto S.B. 136 for another day.

 

Assemblyman Brown:

I understand some of these provisions but I hope we have some rational latitude as human beings that we offer each other.

 

Chairman Anderson:

Let’s discuss Senate Bill 351.

 

Senate Bill 351 (1st Reprint):  Requires certification for persons who counsel problem gamblers. (BDR 54-123)

 

Allison Combs:

Senate Bill 351 is the bill that requires certification for persons who counsel problem gamblers.  There was no opposition to the measure; testimony indicated broad support to ensure that qualified individuals are available to counsel people with gambling problems.  There were no proposed amendments at the time of the hearing. 

 

[Chairman Anderson entertained a motion on S.B. 351.]

 

ASSEMBLYMAN GEDDES MOVED TO DO PASS S.B. 351.

 

ASSEMBLYMAN HORNE SECONDED THE MOTION.

 

THE MOTION CARRIED UNANIMOUSLY.

 

Chairman Anderson:

Mr. Scherer, this is yours to defend on the Assembly Floor.

 

We have reduced our Work Session Document considerably.  I hope to address construction defects tomorrow, May 15, 2003, and Friday, May 16, 2003; that will leave us medical malpractice.  Please recognize that I have asked for a room to be reserved for us tomorrow evening and one for Friday evening as well.  We have a couple of bills that we are still working on.  [Mr. Horne questioned the times of the meetings on Thursday and Friday.]  Since I am on the Assembly Committee on Taxation as well as the Assembly Committee on Elections, Ethics and Procedures, which are Tuesday/Thursday meetings, they have a tendency to go a little long as they deal with some hot topic issues, so as soon as those are over with . . .  I am hoping for 7 p.m., but I can’t guarantee what it’s going to be.  Regardless, it is not my intention to go past 9:30 p.m.  Friday night I can’t guarantee how late we will go.  We can’t go later than midnight. 

 

Medical malpractice?  We have some bills that are still in Committee that are exempt.  Therefore anything referred at this time is already an exempt bill and we are in pretty good shape with that.  Starting next week we will predominately be on the Assembly Floor, but we may have to have a couple of Committee meetings. 

 

We have two bills that have come from the Senate to Concur or Not Concur.  Both documents look like they are OK; neither amendment does substantial harm to the bills.  We have a conference committee working tomorrow at 3:30 p.m.  [Inaudible comments from Committee.]  Nothing is for sure.  The problem is that we are meeting Saturday morning for a Floor session, so in all probability . . . 

 

I have no idea what is going to happen with construction defects tomorrow, and I have no idea what is going to happen with medical malpractice, which we hope to have finished on Friday.  Those two major issues are still in the air.

 

We have a 7:30 a.m. posting for Friday morning and a 3 p.m. posting for Friday afternoon.  Saturday the Committee is not meeting; there will be a Floor session.  [Comments off the microphone from Committee members regarding plans for the weekend, which will prevent attendance.]

 

We are adjourned [at 11:38 a.m.].

 

RESPECTFULLY SUBMITTED:

 

 

 

                                                           

Deborah Rengler

Committee Secretary

 

 

APPROVED BY:

 

 

 

                                                                                         

Assemblyman Bernie Anderson, Chairman

 

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