MINUTES OF THE
SENATE Committee on Judiciary
Seventy-second Session
February 13, 2003
The Senate Committee on Judiciarywas called to order by Chairman Mark E. Amodei, at 8:00 a.m., on Thursday, February 13, 2003, in Room 2149 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Senator Mark E. Amodei, Chairman
Senator Maurice E. Washington, Vice Chairman
Senator Terry Care
Senator Mike McGinness
Senator Dennis Nolan
Senator Dina Titus
Senator Valerie Wiener
GUEST LEGISLATORS PRESENT:
Senator Ann O’Connell, Clark County Senatorial District No. 5
STAFF MEMBERS PRESENT:
Nicolas Anthony, Committee Policy Analyst
Bradley Wilkinson, Committee Counsel
Jo Greenslate, Committee Secretary
OTHERS PRESENT:
Paul V. Townsend, Legislative Auditor, Audit Division, Legislative Counsel Bureau
Rocky J. Cooper, Audit Supervisor, Audit Division, Legislative Counsel Bureau
Robert King, Acting Executive Director, State Dairy Commission
Michael N. Compston, Smith Valley, Agricultural Economist Representative, State Dairy Commission
Dave Coon, Anderson Dairy
Timothy Hay, Chief Deputy Attorney General, Bureau of Consumer Protection, Office of the Attorney General
Jim Kiernan, Owner and President, Northern Nevada Title Company
Irene E. Porter, Lobbyist, Southern Nevada Homebuilders Association
R. Ben Graham, Lobbyist, Nevada District Attorneys’ Association - South
Chairman Amodei opened the meeting with an information hearing on Marketing of Dairy Products in Nevada. He asked Nicolas Anthony to present an overview.
Nicolas Anthony, Committee Policy Analyst, provided a brief overview of the Suiza Foods and Dean Foods merger and the resulting antitrust litigation. He said Suiza Foods Corporation, headquartered in Dallas, Texas, was started in 1993 when Gregg Engles purchased a Puerto Rican dairy and took its name, “Suiza.” Mr. Anthony read the remainder of his testimony. It is included in these minutes as Exhibit C.
Chairman Amodei said he requested this briefing because a former client is a marketer of dairy products in western Nevada, and as his counsel, Chairman Amodei became sensitized to the issue of marketing dairy products in this State in terms of who had what percentage of market share and how mergers and acquisitions had the potential to affect dairy product pricing at both the retail and wholesale levels. Additionally, Chairman Amodei expressed curiosity regarding dairy product acquisition for food programs in Nevada school districts. He remarked although there were currently no pieces of legislation on this matter, he wanted to hear from individuals with an interest in the issue.
Senator Wiener inquired what percentage of market share Dean Suiza dropped when the antitrust question forced the sale of 11 dairies in several states. She noted its market share had been 34 percent. Mr. Anthony clarified in order to gain compliance for the merger, Dean Suiza had to divest 11 dairies held prior to the merger.
Chairman Amodei stated he had invited the Legislative Auditor to participate in the hearing since, as a member of the audit subcommittee during the 71st Interim, the State Dairy Commission was one of the entities audited in the routine course of audit selections. He asked Mr. Townsend to provide an overview of the audit and his conclusions.
Paul V. Townsend, Legislative Auditor, Audit Division, Legislative Counsel Bureau, introduced Rocky Cooper, Audit Supervisor, who was with him at the hearing. He distributed copies of the Audit Report of the State Dairy Commission (Exhibit D. Original is on file in the Research Library.), and said there was background information on the State Dairy Commission on page 4. Mr. Townsend said audits were performed on licensees to ensure compliance with Nevada laws and regulations, and to determine if assessments were paid accurately and timely. Investigations are performed primarily at retail establishments to identify unlicensed distributors and discover below-cost sales.
Mr. Townsend reported the audit of the State Dairy Commission included a review of the commission’s audit and investigative functions over a 2-year period. The objective of the audit was to determine if the commission’s audit and investigative activities were carried out in accordance with its standards for monitoring the dairy industry. Mr. Townsend said Rocky Cooper was the audit supervisor on the audit, and he participated in the fieldwork. Fieldwork consisted of accompanying a dairy commission investigator on visits to several retail establishments to observe firsthand their day-to-day operations.
Rocky J. Cooper, Audit Supervisor, Audit Division, Legislative Counsel Bureau, read the summary of the audit on page 6 of Exhibit D. He reported the State Dairy Commission’s audit and investigative activities did not always follow audit manual guidelines for planning, supervising, and documenting audit work performed. Additionally, staff investigators did not routinely document key activities during their investigations. Therefore, Mr. Cooper noted the commission did not have adequate assurance its monitoring efforts achieved the intended purpose. He added penalties for late payment of dairy assessments were not always collected as required. Mr. Cooper concluded while audit and investigative functions needed strengthening, management was taking steps to better manage the commission’s operations.
Senator McGinness referred to page 11 of Exhibit D, where it stated the complaint log was not maintained, and asked if that meant some complaints might be lost or never investigated. Mr. Cooper answered, if a complaint came in, it would be assigned to an investigator. If the investigator did not believe the complaint warranted further action, it might be dropped and never forwarded to management or the commission. He said what the auditors were looking for was a log of all complaints to see what the complaints were about, how they were being resolved, if there was consistency in handling complaints in the north and south, and so forth. Mr. Cooper stated they did not find evidence a complaint was not investigated because they did not have a log to review.
Robert King, Acting Executive Director, State Dairy Commission, and Michael N. Compston, Smith Valley, Agricultural Economist Representative, State Dairy Commission, approached the witness table to testify. Chairman Amodei advised if they did not have prepared remarks, the committee would be interested in hearing their assessments of current market conditions in Nevada in terms of who the suppliers and producers were, and from whom the State obtained its products on retail and wholesale bases.
Mr. King stated he had not prepared remarks and would attempt to give an overview. He reported in the northern part of the State, including the Reno metropolitan area, there were key players. Model Dairy, owned by Suiza, was No. 1, No. 2 was Raley's and Scolari’s stores, which have milk distributed from Sunnyside Farms in California. Mr. King mentioned two others, Smith’s, which brings its own milk in from Utah and Arizona, and Safeway, which brings milk in from California. Mr. King said in the south there are many including Anderson Dairy and Suiza.
Mr. Compston remarked approximately 40 percent of the fluid milk in Nevada was from out of state. He said Nevada produced approximately 60 percent within the State; however, Nevada does not have enough processing capacity within the State to handle all the fluid produced here. Mr. Compston explained a large percentage of milk went out of state, was packaged and came back bottled and shelf-ready. He remarked the State Dairy Commission made every effort to maintain a free and open market and a healthy product for consumers.
Chairman Amodei, addressing the wholesale dairy product industry, asked when the Dean Foods Group acquired Model Dairy in northern Nevada. Mr. King answered he was not certain of the exact date, but offered a guess of within the last 5 years. Chairman Amodei inquired who else was distributing in northern Nevada in terms of wholesale dairy products. Mr. King replied there were a lot of distributors. Chairman Amodei asked if Mr. King knew whether the source of distributors’ supply for dairy products in northern Nevada was also Suiza labels coming from southern California. Mr. King answered he did not have such knowledge with him at the hearing, but stated he could get that information from his office. Chairman Amodei asked if Mr. King had knowledge of the mission statement for the dairy commission. Mr. King read the mission statement:
The mission of the Nevada State Dairy Commission is to ensure that the people of the State of Nevada reap the benefits of a viable dairy industry by ensuring that there is an adequate and healthful supply of dairy products available to the consumer, that dairy products are reasonably priced, and that unfair trade practices, which might threaten the existence of a strong domestic dairy industry, are controlled or eliminated.
Senator McGinness asked Mr. Compston, as an agricultural economist, if he analyzed the market, and if somebody was trying to monopolize the market, what actions could be taken by the dairy commission. Mr. Compston answered he did analyze the market, and the dairy producers themselves spent a lot of money and time with specialists in the field to monitor the situation. He stated members of the commission, especially himself, as a primary responsibility, kept close watch on the market for signs of monopoly. Mr. Compston added the commission did everything possible to encourage an environment in the State that did not promote monopolies. He further stated, under current statutes, the commission could not prevent a monopoly. Senator McGinness inquired whether the commission was under the auspices of the Office of the Attorney General, and when Mr. Compston answered affirmatively, suggested if the commission recognized a situation, it could alert the Attorney General to investigate.
Mr. Compston remarked there was currently a tremendous amount of surplus milk, as well as cheese and powdered milk products in the United States, and the dairy producers were in serious financial distress throughout the country. He said it might be quite a while before there was any relief at the producer level because of oversupply, and consumers were enjoying lower prices for fluid milk. Mr. Compston stated he had observed an extremely competitive Nevada market at the retail level. He noted Nevada’s laws prohibited retailers from selling milk below cost. Senator McGinness asked if this situation made dairy producers vulnerable. Mr. Compston answered there was a significant number of dairies throughout the United States currently in financial trouble. He explained the cost of production within dairies ranged from $9 per 100 weight to approaching $15 per 100 weight, and the support price is $13.20, per the United States farm bill. He said dairy farmers above that price were definitely vulnerable.
Senator Care asked if there was a mechanism that mandated a dairy inform the commission of a contemplated merger, takeover, or any kind of change of ownership. Mr. Compston asked if the Senator meant a producer or a processor. Senator Care answered a processor, such as Anderson, Suiza, or Model. Mr. King answered, yes, the mechanism was the dairy commission must license all entities before they could distribute dairy products, and the license was nontransferable. By way of example, he said, during the Dean Suiza merger all existing licenses had to be reissued. Senator Care asked if that would be the mechanism used to stop a merger if the commission believed it might have monopoly potential. Mr. King answered affirmatively.
Senator Care inquired whether the commission had ever used the mechanism to prevent formation of a monopoly. Mr. Compston answered it had not during his tenure. Senator Care asked if there were guidelines within the dairy commission that contemplated what might or might not be a possible monopoly or at least control of a large market share. Mr. Compston replied not to his knowledge. Senator Care asked if Mr. Compston ever had cause to believe the United States Department of Justice (USDJ) was concerned about the possibility of monopolies in Nevada. Mr. Compston answered the USDJ did have concerns about monopolies throughout the United States, and in their analysis looked at specific marketing areas rather than states. He said the commission scrutinized the Dean Suiza merger for evidence of a possible monopoly. Senator Care inquired whether Mr. Compston recalled the last time he had discussions with the USDJ on the subject of monopolies. Mr. Compston replied he monitored the issue closely by looking at the merger process, and it had been approximately 1 year since he had discussed it with the USDJ. Senator Care asked if Mr. Compston was permitted to review settlement agreements, for example, any dairy that did business in Nevada and had settled an antitrust investigation for conduct in other parts of the country. Mr. Compston answered not to his knowledge; however, the Office of the Attorney General possibly handled that aspect.
Chairman Amodei inquired whether Mr. Compston had ever requested assistance from the attorney general’s office in any antitrust matter. Mr. Compston answered negatively.
In follow up to her earlier question, Senator Wiener inquired why the particular 11 dairies were divested. Mr. Compston replied the merger was to take place in the intermountain marketing region, and as he viewed it, they would have had an uncomfortable percentage of total market share.
Chairman Amodei asked if either Mr. King or Mr. Compston had any knowledge of the bottling operations existing before and after the purchase of the Reno plant. Mr. Compston answered the Model facility in Reno was an important part of the northern Nevada milk system; it was the closest plant to the producers in the northern part of the State. He continued, since the merger, it has always been a well-operated facility and continued to be. He noted now that Suiza owned it, improvements had been made, and the volume had been expanded to keep it at maximum capacity, including co-packing for labels other than Model. Mr. Compston stated it was currently helping the total northern Nevada dairy industry. Chairman Amodei inquired whether Mr. Compston knew how many plant shifts used to run versus the number currently running. Neither Mr. Compston nor Mr. King knew the answer.
Senator Care asked if the commission had at any time in the last 5 years received a complaint regarding unfair trade or pricing practices by dairy producers in Nevada. Mr. Compston answered negatively. He said the producers’ prices were set. He explained producers sold milk into a pool, and the percentages going to class 1, class 2, class 3, whether it is fluid milk, yogurt, ice cream, or cheese, had different prices for those specific classes. Senator Care asked if the commission, as a matter of course, communicated with equivalent commission bodies in neighboring states. Mr. Compston replied yes, he and Mr. King just attended the midyear executive committee meetings for the international milk control agencies held in Las Vegas. He remarked communication was ongoing between controlling agencies in other states, as well as Canadian provinces, to keep a handle on what was happening in other parts of North America.
Chairman Amodei inquired whether Mr. King or Mr. Compston had knowledge of bottling plant expansion plans on behalf of anyone in southern Nevada. Mr. Compston replied Dean Foods had submitted building permit applications in Clark County for a bottling plant. He added the commission had not as yet seen plans for the bottling plant, and the commission must review the plans before a plant could be built. Chairman Amodei asked whether the commission’s approval authority was in the context of health or marketing concerns. Mr. Compston answered the commission was interested in health rather than marketing concerns. Chairman Amodei clarified the commission did not have the ability to deny approval based upon concerns regarding market competitiveness in southern Nevada. Mr. Compston noted that was true.
Dave Coon, Anderson Dairy, advised he spoke with Nicolas Anthony last week, but he was not clear what the committee wanted from Anderson. He said as he caught the spirit of the hearing, he took a few notes that he would be willing to share with the committee. Mr. Coon remarked the dairy commission in southern Nevada had been involved in assuring fair trade practices were kept in play. He noted being a small dairy, it was important to Anderson for everyone to play by the same rules. Mr. Coon said currently Anderson was the only bottling plant in southern Nevada, and had been since the mid- or late-1970s, when Arden Dairy closed its plant. He remarked since that time, Anderson has had no shortage of major competition, and was currently competing against the No. 1 and No. 2 dairy distributors in the United States.
Mr. Coon remarked the dairy commission had been active in ensuring everyone sold above cost, as mandated. He gave a brief overview of Anderson Dairy, saying it employed 215 people and competed against the two largest dairies in the United States, as well as U.S. Foods and Cisco, two of the largest food distributors in the United States. Chairman Amodei asked if Mr. Coon knew who supplied U.S. Foods and Cisco milk products. Mr. Coon answered U.S. Foods was supplied by Cream O’ Weber, which was part of National Dairy Holdings; Cisco carried Meadow Gold, which was a Dean Suiza operation. Mr. Coon noted in addition to competing against these companies, they competed against their best customers, Smith’s and Vons, which have their own bottling plants. He maintained Anderson had had several opportunities to sell to the two major companies. Mr. Coon said Anderson had been in business since 1907, and the two remaining families involved in ownership of Anderson believed they were an integral part of the community. He added many of the 215 employees were second- or third-generation employees within families of the company.
Mr. Coon commented on the dairy commission’s role in health inspections. He said Anderson’s health inspections had been lacking in prior years due to a lack of time. As a result, Anderson requested additional health inspections of its facilities. Mr. Coon explained weekly or biweekly health inspections of his plant ensured a good product and helped maintain a good relationship with federal inspectors. He claimed if a federal inspector was unhappy with a State inspector, the only way he could penalize the inspector was to penalize the dairy. Mr. Coon noted the dairy commission was the driving force in facilitating Anderson’s removal from the Federal Milk Order several years ago when Anderson thought they had been removed, but found they had only received an exemption. Referring to an earlier reference to school bids, Mr. Coon remarked Anderson had been fortunate to have won the school bid the last 3 or 4 years.
Senator Wiener referred to the proposed bottling facility in southern Nevada and asked what share of the market Anderson currently held. Mr. Coon stated he did not know and suggested Senator Wiener ask the dairy commission. Senator Wiener asked Mr. Coon to give an educated guess as to what the impact would be to Anderson of an additional bottling facility in southern Nevada. Mr. Coon replied Meadow Gold had been in the market for over 10 years. He said it would be different when they had a plant in southern Nevada, but he did not know what the exact impact would be. Senator Wiener asked what Anderson’s growth or expansion in the market had been. Mr. Coon answered it had become increasingly difficult to compete. He added a lot of business had been done on a regional or national basis. Additionally, he said a lot of the business in southern Nevada had been a carryover from a national contract or agreement for which Anderson had no opportunity to compete.
Chairman Amodei stated currently Anderson Dairy was competing with Cream O’ Weber and the Meadow Gold labels, and clarified Cream O’ Weber had distribution facilities in southern Nevada, but bottled milk in Salt Lake City. He inquired whether Meadow Gold was also bottled in Salt Lake City. Mr. Coon answered yes, presently. Chairman Amodei pointed out Anderson Dairy was currently competing with entities that were bottling several hundred miles away and trucking to distribution facilities in Anderson’s competition area. Mr. Coon confirmed that was correct. Chairman Amodei asked whether Mr. Coon believed when the costs associated with trucking the product from several hundred miles were eliminated, there would be an impact on competition in his market area. Mr. Coon answered affirmatively.
Senator Care asked if Anderson had an exclusive contract with the Clark County School District. Mr. Coon replied negatively, stating it was handled on a bid basis. He said there was a contract clause that gave the school district the right to exercise an extension, which it had done for the upcoming school year. Senator Care asked who held the contract before Anderson. Mr. Coon said he was not sure. Senator Care asked who Anderson’s largest customers were. Mr. Coon stated the breakdown of Anderson’s business was almost 50/50 food service versus retail up until 2 years ago, at which time its retail business moved slightly ahead of its food service business.
Senator Washington asked to which retailers Anderson distributed. Mr. Coon answered approximately 850 convenience stores in Las Vegas, which was probably the majority of convenience store business there. He said it was predicated on service and the ability to supply stores at all hours of the day. Mr. Coon stated Anderson was sharing shelf space in Wal-Mart, Vons, with Vons’ own label, Smith’s, Albertson’s, and up until 3 or 4 months ago, Raley’s markets, with both private label and Anderson’s label. Additionally, Anderson supplied hotels and restaurants. Senator Washington asked if Mr. Coon had any idea of possible expansion and growth due to southern Nevada’s continuing growth. Mr. Coon replied Anderson just expanded its parking lot onto property purchased 6 years ago. He said they also expanded their processing plant, added a large warehouse, and a tour for school children. Senator Washington inquired whether most of Anderson’s bottling was done at its plant in Nevada. Mr. Coon answered the in-state plant was fully integrated; they processed cultured products, sour cream, cottage cheese, buttermilk, fluid milk, and ice cream.
Timothy Hay, Chief Deputy Attorney General, Bureau of Consumer Protection, Office of the Attorney General, gave a brief overview. He confirmed deputies attorney general provided legal advice to the dairy commission. He noted this was a function separate and apart from the Office of the Attorney General. Mr. Hay remarked his office had statutory authority to inspect conditions in the marketplace and addressed things such as price fixing and activities that might result in restraint of trade under current general antitrust authority. He mentioned his office coordinated with the United States Department of Justice in its review of the Dean Suiza merger concluded in December 2001. Mr. Hay stated his office had not received any complaints of alleged marketplace abuses from the dairy commission or market players. He noted, as always, they would stand ready to examine those issues as needed.
Senator Care inquired how the price of milk had changed over the last 5 years in Nevada compared to neighboring states. Mr. Hay replied his office did not have that information, and suggested the dairy commission might have statistics along those lines. He offered to coordinate with the dairy commission to review any pricing trends or abnormalities that might be evident from reviewing those statistics. Senator Care stated he wished to review what had happened in the last 5 years to see if price increases or decreases had been consistent with neighboring states. He said if there were discrepancies, he would be interested in suggestions from the dairy commission regarding possible reasons. Mr. Hay stated he would contact the dairy commission to coordinate the analysis of that data.
Senator Washington mentioned before the merger there were a number of complaints, especially in the north about Model Dairy, regarding pricing from consumers as well as producer-owners. He said he would also like to review the statistics mentioned by Senator Care. Mr. Hay reiterated his willingness to obtain those statistics. Senator Washington noted a complaint from California regarding an influx of dairy products into Nevada, which drove down prices and made it difficult for Model Dairy to compete. He noted it would be interesting to see what happened after the merger. Mr. Hay stated he would supply that information, paying particular attention to whether an out-of-state producer was underpricing local producers or selling products at costs lower than the cost of production.
Senator McGinness, as chairman of a temporary subcommittee, turned the meeting back over to Vice Chairman Washington. Vice Chairman Washington opened the hearing on Senate Bill (S.B.) 63.
SENATE BILL 63: Permits recording of affidavit of death by surviving spouse who holds homestead in community property or who takes community real property by intestate succession. (BDR 10-247)
Jim Kiernan, Owner and President, Northern Nevada Title Company, stated during the course of the past 5 years, with the aging of America, he had noticed an increase in properties acquiring title as community property. He credited this occurrence to buyers’ lack of understanding of the nuances of various manners in which property title could be held. Mr. Kiernan said he had observed more than 24 transactions each year that either faltered or failed because the seller did not realize a court appearance would be necessary to close the sale of a property, and it would take 60, 90, or 120 days to get into court depending on the court calendar. Mr. Kiernan remarked in many cases the savings of the surviving spouse were tied up in the equity of the property. He told of an incident that prompted him to request Senator Amodei sponsor S.B. 63. An elderly woman needed to sell her home and be placed into an ongoing care facility. Mr. Kiernan reported that by the time the sale had been published and the elderly woman received her order, the buyer had backed out of the transaction due to interest rate changes. He said the woman lost her spot in one of the local care facilities and could not afford to pay the residency fee without the proceeds from the sale of her home.
Senator Care referred to section 1, subsection 1 of S.B. 63, and asked if Mr. Kiernan was talking about the case in which a husband and wife filed a homestead declaration and that document existed prior to the death of one or the other spouse. Mr. Kiernan answered affirmatively and said the Nevada Revised Statutes (NRS) presently provided if property was acquired as community property, and sometime during tenancy of the property a homestead was filed or recorded, upon death of one of the tenants, the surviving tenant was entitled to title to the property. Senator Care asked if the language in section 2, subsection 5, line 44, on page 2 of S.B. 63, “As an alternative method of terminating the interest of the deceased person” and lines 2, 3, and 4 on page 3, “as a homestead in community property or as community real property that passes to the surviving spouse by intestate succession,” was akin to an action to acquire title in which the surviving spouse could actually terminate the interest of the deceased simply by filing an affidavit. Mr. Kiernan answered the bill drafters attempted to allow the surviving spouse the same rights as a joint tenant or a surviving spouse under community property with right of survivorship to file an affidavit setting forth the document by which they acquired title, attaching a certified copy of the death certificate, and making certain statements in the affidavit in recording it.
Mr. Kiernan said recording the affidavit would confirm transfer of the title pursuant to NRS, rather than having to publish, to avoid a lengthy court transaction. He stated 6 months might be relatively quick in the timeframe of the court, however, when a seller needed the money from the equity of his home, as in his example of the elderly woman, he needed a remedy much swifter than the court system allowed. Senator Care noted this situation would arise in scenarios where there probably would not be anyone to challenge the affidavit. Mr. Kiernan stated that was correct, and the way the language of the bill was set out, it did not preclude anyone from going to court, it simply allowed an alternative method in cases where one was needed.
Vice Chairman Washington turned the meeting over to Chairman Amodei.
Senator Wiener stated, in the interest of a community property holding, the presumption would be both husband and wife made the homestead declaration, and asked if the exception would be if one or the other acquired the property prior to marriage. Mr. Kiernan stated that was correct. He explained the affidavit, similar to a joint tenancy, set forth the signer had personal knowledge the decedent was the one mentioned in a particular document. He remarked typically the document would be a deed where the owner acquired the title with a spouse. The owner would have provided the recording information of that document, and made a statement they acquired the property as community property and, depending upon which was relevant, the survivor made a diligent search, and to the best of his knowledge the decedent died intestate; or they held the property as community property and had a homestead which was recorded on and the recording information would be stated.
Senator Wiener gave an example of a couple who was cohabitating and one person acquired property prior to marriage. She asked if it would be possible for the survivor to comingle the property as in other assets and create a community property, even though it was acquired prior to marriage. Senator Wiener asked, in other words, could a homestead be comingled so it would become a community asset rather than start as a community asset? Mr. Kiernan answered the homestead would not necessarily become comingled. He added in order to gain title, a conveyance would be recorded from one spouse to both spouses and a statement would be made in advance regarding whether title would be as joint tenants, community property, or tenants in common. Senator Wiener asked if a property were homesteaded to one person, the parties would have had to take an assertive step after marriage to make it a joint homestead. Mr. Kiernan stated he was not sure that would be true. He said it seemed to him the homestead itself would have carried through even though one person had property prior to marriage and had filed a homestead. He reasoned if the couple later married and conveyed the property into both spouses’ names, the previously-filed homestead would still be valid.
Chairman Amodei closed the hearing on S.B. 63 and opened the hearing on S.B. 70.
SENATE BILL 70: Increases amount of homestead exemption. (BDR 10-15)
Senator Ann O’Connell, Clark County Senatorial District No. 5, remarked this was a bill the committee passed out of the Senate during the 71st Session. She said it went over to the Assembly side and did not get passed out.
Senator Titus asked how Senator O’Connell arrived at the figure of $280,000 and why it was such a great increase. Senator O’Connell answered the figure in the bill was not the figure she started out with during the 71st Session, even though she had requested the bill be a duplicate of last session’s bill. Senator O’Connell recommended the figure be changed to approximately $180,000 versus the $280,000 that appeared in S.B. 70. She stated this was her error, and it did not make sense to have an allowable homestead value higher than the median price of a home.
Senator Wiener inquired whether they had discussed an indexing method of determining homestead value versus coming back every so often and raising the allowable amount of equity in property held by a claimant. Senator O’Connell answered they had not discussed it, because the chairman of the committee last session believed there should not be a price on the homestead at all. She asked Senator Titus if she had worked on the bill last session and if she could remember what happened. Senator Titus affirmed she had worked on the bill and said the reason for not indexing got lost in the shuffle. Senator O’Connell said there was a company or State division that decided on the median price of homes each year. She said it was suggested to her to look at the combination of home prices in northern and southern Nevada and automatically put that price into the law, which was a form of indexing.
Irene E. Porter, Lobbyist, Southern Nevada Homebuilders Association, stated she was in support of S.B. 70 and at the request of Senator O’Connell was attending the hearing to provide the committee statistical information. She said there was a company in Las Vegas called Homebuilders Research, Inc., operated by Mr. Dennis Smith, who had become the statewide authority on single-family residential resale and new home median and average prices. Ms. Porter remarked she spoke to Mr. Smith February 12, 2003, and he said he was preparing statistical information and she would supply this information to the committee. She said the median single-family home price in Las Vegas in December 2002, was $188,000. Ms. Porter stated Mr. Smith predicted it would reach $200,000 within the next 2 to 3 months. In northern Nevada, Ms. Porter found retail housing in Reno was approximately $15,000 per unit higher than in southern Nevada and new homes were approximately $20,000 per unit higher than in southern Nevada. Ms. Porter commented if median home values were at $188,000 in Las Vegas in December, the median price of a home in Reno would be almost $210,000. She remarked the value of single‑family homes had increased over the past several years from 6.5 to 8.5 percent per year, and resale rates had risen from 10 to 12.5 percent per year. Ms. Porter said it was therefore difficult to tie the rise to a consumer price index. She offered to work with the committee and Senator O’Connell to find a system of indexing the median price of homes annually. Ms. Porter remarked $180,000 might be a little low and suggested $200,000 to $210,000 would probably be more accurate when considering northern as well as southern Nevada.
Senator Wiener said her concern was Mr. Smith may not always be in business and if he went out of business there might not be a successor. Ms. Porter suggested the Housing Division could gather necessary statistics and Mr. Smith would probably be willing to help set up the program.
Senator Care remarked he wanted to ensure the committee selected a figure that was a true and fair balance.
Senator Washington noted he realized Senator O’Connell recommended the amount of $180,000, but after listening to Ms. Porter’s statement the median price of a home could vary from $200,000 to $210,000, he believed $180,000 was too low, but supported the idea of indexing. He asked if Senator O’Connell would be open to raising the figure. Senator O’Connell answered she would be open to whatever the committee decided.
Senator Washington asked Ms. Porter what impact leaving the current homestead value at $180,000, or raising it to $210,000, and the construction defect legislation had on the median price of homes. Ms. Porter explained the increase in home values was on a broader plane than saying it was 12 percent. She said land costs had risen significantly in southern Nevada. Land was now running $225,000 to $250,000 an acre. Ms. Porter stated governmental fees and exactions were all part of it; fees, taxes, and exactions included in building new developments were running between $25,000 and $30,000 a house. In answer to Senator Washington, Ms. Porter stated the fees included county and city fees, taxes and exactions. She said the increasing price of insurance due to construction litigation was also included in rising costs.
Chairman Amodei remarked S.B. 70 was a fairly clean bill, but now contained a fiscal note. He asked if the committee had any sense for a number. Senator Titus suggested the committee amend and do pass S.B. 70, amending the maximum equity amount to $200,000.
Senator Nolan agreed with the $200,000 figure due to the rising cost of homes in southern Nevada.
Chairman Amodei closed the hearing on S.B. 70.
SENATOR TITUS MOVED TO AMEND AND DO PASS AS AMENDED S.B. 70 BY CHANGING THE FIGURE ON PAGE 1, LINE 7, TO $200,000.
SENATOR WASHINGTON SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Chairman Amodei called for a motion on S.B. 63.
SENATOR WASHINGTON MOVED TO DO PASS S.B. 63.
SENATOR CARE SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Chairman Amodei referred to the Work Session Document dated February 13, 2003, Exhibit E. He stated a couple measures in Exhibit E were heard previously. Chairman Amodei said the first item was S.B. 17, Senator Wiener’s bill. He asked Senator Wiener to bring the committee up to date on the bill.
SENATE BILL 17: Provides penalty for person who leaves child 7 years of age or younger unsupervised in motor vehicle under certain circumstances. (BDR 15-586)
Senator Wiener replied Mr. Graham had some concerns and requested he come forward to explain his recommended change of language.
R. Ben Graham, Lobbyist, Nevada District Attorneys’ Association - South, remarked his proposed amendment, Amendment No. 1, regarded anyone prosecuted under this section and was offered in an effort to ensure any other criminal conduct could be prosecuted as well so it could not be reduced to a misdemeanor from a higher offense. Amendment No. 1 to S.B. 17 was included in Exhibit E under tab A.
Mr. Wilkinson confirmed Amendment No. 1 addressed Mr. Graham’s concerns.
Chairman Amodei said the committee already acted on the measure, so with the committee’s permission, S.B. 17 would be reported out of committee with this amendment on the floor.
Chairman Amodei stated S.B. 40 was the bill requested of him by a constituent to close the loophole existing in present law to make it an equal offense to fire out of, as well as into, a structure. He said some individuals expressed concern because aircraft and vehicles were added.
SENATE BILL 40: Prohibits discharge of firearm from structure, vehicle, vessel or aircraft under certain circumstances. (BDR 15-887)
Chairman Amodei directed the committee to the amendment under tab B of Exhibit E, saying it had been accepted in total. Chairman Amodei then identified another proposed amendment by Mr. Graham under tab C of Exhibit E. He requested Mr. Wilkinson check with the Division of Wildlife to see if their concerns about conducting business out of an aircraft had been addressed. Mr. Wilkinson remarked he was of the opinion the amendment under tab B addressed wildlife management activities. Chairman Amodei requested Mr. Wilkinson check to make sure that was the case.
Senator Titus asked if the exemption was put into the bill, and employees of the Division of Wildlife were shooting out of their automobile at a coyote, for example, and accidentally shot a person, would they not be responsible for that action? Chairman Amodei stated in his opinion, the employees would not be able to be prosecuted under this particular statute, but would still be subjected to prosecution under statutes relating to assault with a deadly weapon and other related measures. He asked Mr. Wilkinson to also research Senator Titus’s question.
Chairman Amodei mentioned the committee had heard S.B. 26, on page 3 of Exhibit E, regarding monitoring devices.
SENATE BILL 26: Establishes certain requirements relating to monitoring devices attached to exterior of vehicles to track movement or location of vehicles. (BDR 14-146)
Chairman Amodei asked the pleasure of the committee regarding S.B. 26. Chairman Amodei inquired if the committee had any pleasure regarding S.B. 41.
SENATE BILL 41: Revises provisions governing release and use of limited personal information to certain supervisors of personnel involved in security of resort hotels. (BDR 14-110)
Hearing no response, Chairman Amodei said he had two bill draft requests (BDRs) for committee introduction.
BILL DRAFT REQUEST 10-416: Allows tenant to recover immediate possession of premises from landlord under certain circumstances. (Later introduced as Senate Bill 128.)
BILL DRAFT REQUEST 57-836: Requires certain insurers that make adverse underwriting decisions based on consumer reports, credit history or insurance scores to follow certain procedures. (Later introduced as Senate Bill 129.)
Chairman Amodei called for a motion to introduce BDR 10-416 and BDR 57‑836.
SENATOR MCGINNESS MOVED TO INTRODUCE BDR 10-416 AND BDR 57-836 TO THE COMMITTEE.
SENATOR WIENER SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman Amodei adjourned the meeting at 9:46 a.m.
RESPECTFULLY SUBMITTED:
Jo Greenslate,
Committee Secretary
APPROVED BY:
Senator Mark E. Amodei, Chairman
DATE: