Government Affairs Report – July 2019

“Well, that wasn’t such a chore, now, was it?”
Ray Stantz to Pete Venkman, covered in slime, Ghostbusters

Tuesday, June 4, Carson City woke to the sweet sound of silence.  Legislator offices were empty, halls were quiet, committee rooms were dark.  Even the bill copies were removed from the wooden racks.  “Slimer” was safely in his trap, not to be seen again until the sequel; release date, February, 2021.  All that remained from the 80th Legislative Session were memories, and for those who got “slimed,” those were more than enough to beat back the nostalgia of another year passed in our charming Capital.  Like Venkman’s attempt to remove the cloth beneath a fully-set banquet table because he “always wanted to do this,” only to relocate the settings to the floor, the predominance of business-related bills this session were introduced with unacceptable language, significantly modified by the business community, only to have a stripped-down bill pass and the sponsor proclaim victory at the end of the whole ordeal; “and THE FLOWERS ARE STILL STANDING!”  For these reasons and others, 2019 will be remembered among the most challenging legislative sessions in recent memory.  However, as dawn broke on June 4, several pieces of legislation emerged as fundamental changes to the way Nevada does business, setting the state on a different course with the promise of correcting some well-known issues.  The only question remaining is whether these measures, untested in the past and possibly as foreboding as “crossing the streams” will avert the state from being stomped, even if it means we’re going to get a little marshmallow on us in the process.

Below is a glimpse at legislation we’ve earmarked as some of the most controversial business or commercial real estate bills of the 2019 Session.

AB 136
Bill Sponsor: Speaker Frierson

This bill amounted to a complete rollback of the prevailing wage reforms made in the 2015 session, mirroring AB 154 from the 2017 Legislative Session, which was ultimately vetoed. It decreased the minimum threshold for public works projects from $250,000 to $100,000, eliminated the exception for the public school districts and Nevada System of Higher Education (“NSHE”) requiring them to only pay 90% of the prevailing wage, and eliminated the exemption for charter schools from paying prevailing wage. No amendments to this bill were accepted. The bill had six fiscal notes, the Department of Administration, NSHE, Local Government, Department of Business and Industry, Office of Labor Commissioner, Carson City School District, and Carson City totaling $20,063,165 from 2018-2021. This bill passed out of both houses on party line votes, and was signed by the Governor.

AB 190
Bill Sponsor: Assemblyman Daly

This bill clarified when prevailing wage must be used, the rate, and for how long. The bill defines “bona fide fringe benefit” and addresses acceptable use of bona fide fringe benefit (in lieu of the prevailing wage) and assesses penalties for misuse. The bill defines reverse auction and prohibits a public body from using a reverse auction where a bidder may submit more than one bid if each additional response to online bidding is a lower price, when awarding a contract for public work.  It also makes clarifying changes to existing law regarding prevailing wage requirements that apply to certain construction projects that are not public works. As introduced, this bill mirrored the Speaker’s prevailing wage bill AB 136, but due to the existence of three identical bills, was amended to reflect the above. It passed party line out of both houses, and was signed by the Governor.

SB 243
Bill Sponsor: Senator Hardy

This bill established four prevailing wage regions by which the Labor Commissioner shall determine prevailing wage, as opposed to doing it by county. It also created districts for Washoe County, Clark County, and separates the rural counties into two groups split by the north and south.

It changes the timeframe from annually to every odd-numbered year, for which the Labor Commissioner shall determine the prevailing wage in each region, and requires the determination be issued by the Labor Commissioner on October 1 of the odd-numbered year. This bill passed unanimously out of the Senate, and 32-7 in the Assembly, with Republican Assembly persons Hafen, Hardy, Leavitt, Roberts, and Tolles voting in favor, and has been signed by the Governor.

SB 166
Bill Sponsor: Senator Spearman

This bill, dubbed the “Equal Pay Bill,” as introduced provided for expanded, higher penalties against an employer subject to a Nevada Equal Rights Commission (“NERC”) discrimination complaint. It provided for additional penalties should NERC find discrimination was on the basis of sex. Additionally, it expanded the role of NERC, and the amount of time to file a complaint for civil action. It also raised the amount of the civil penalties the Commission could award. The first amendment to the bill removed the requirement that any civil penalty collected by NERC go into a newly created NERC Gift Fund. It also reduced both the amount of back pay categories that could be paid and the civil penalty amounts. The second amendment codified federal law and removed both the additional penalties on sex-based discrimination and all other language inconsistent with federal law. This bill was a highly contentious and hard fought battle throughout the entire Session. The final version was the result of a huge lift by the business community to make the legislation more palatable, making it very clear that the bill would not be scuttled. This bill passed out of both houses with little opposition (Senator Hansen and Assembly persons Edwards, Ellison, and Wheeler being the only nay votes), and was signed by the Governor.

SB 312
Bill Sponsor: Senator Woodhouse

This bill as introduced was a reprisal of SB 196 from the 2017 Legislative Session and required an employer in private employment to provide forty hours of mandatory sick leave for all employees. The first amendment changed sick leave to paid leave and amended the manner in which it could be accrued. The second amendment changed the accrual from a calendar year to a benefit year. This bill was also contentious and heavily amended by the business community, but it could not be killed because it was designated as a priority bill for the Democrats. The bill passed unanimously out of the Senate, and 31-9 in the Assembly, with Assembly persons Hardy, Roberts, and Tolles voting in favor, and was signed by the Governor.

SB 36
Bill Sponsor: Senate Committee on Government Affairs

This bill would allow a Board of County Commissioners to do a number of things when it comes to sales and appraisals of real property, including:

A county may purchase real property for above the appraised value, if selling or leasing county owned property, the county shall use the average of two independent appraisals, if two were obtained; or, the appraised value if only one independent appraisal was obtained, if there is a material change relating to title, zoning, or an ordinance governing the real property, or the appraisals were prepared 6 months before the date which the real property is offered for sale or lease the second time, the county must obtain a new appraisal, and allows the county to use an internet website to auction real property and hold a public meeting once the auction has closed to make a final acceptance of the highest bid. Currently a county may not purchase real property for above the appraised value, potentially keeping them out of certain real property sales that may benefit the county. The county also must sell real property using the highest appraised value of the real property. The ability for a county to use an online auction would assist them in getting multiple bites at the apple to assist in selling real property. An amendment to the bill removes the county’s ability to purchase land above the appraised value and added additional clarity regarding notice provisions. This bill passed unanimously out of both houses and was signed by the Governor.

SB 151
Bill Sponsor: Senator Ratti

This bill sought to increase the amount of time a tenant has to remedy after receiving a notice of an eviction action, from 5 judicial days to 10 judicial days.  Additional increases in time are provided for pertaining to removal of a tenant, from “within 24 hours” to “not earlier than 48 hours” once the eviction order is received from the court. The notice to surrender timeframe for which an individual may holdover and continue in possession of real property or a mobile home after certain actions would change from 3 days to 30 days. The bill also removed from statute a landlord’s ability to utilize summary eviction procedures on a tenant who is part of a “low rent housing program operated by a public housing authority.” Finally, the procedure by which certain notices to surrender are delivered would be dictated by either the Nevada Rules of Civil Procedure or the Justice Court Rules of Civil Procedure. This bill had both residential and commercial impacts in eviction and unlawful detainer proceedings.  Many meetings were conducted with the bill sponsor and Legal Aid (ultimately behind the legislation) regarding the impact this legislation would have on commercial properties, even though the intent was purely to change residential statutes. A deal was struck whereby Legal Aid would state on the record, during the committee hearing that there would be a forthcoming amendment removing references to commercial premises. The bill was amended, creating two sections within Chapter 40; one that deals specifically with the residential changes and one that maintains commercial exactly as is. This bill passed out of both houses on party-line votes, and was signed by the Governor.

AB 538 & SB 551
Bill Sponsor: AB 538 Speaker Frierson / SB 551 Senate Majority Leader Cannizzaro

Both of these bills sought to remove the scheduled buydown of the Modified Business Tax (the “MBT”), passed along in the 2015 Session. Within that piece of legislation, should the Commerce Tax produce excess revenue in certain amounts, the MBT would decrease from 1.475% to 1.378% for most business, and from 2 % to 1.853% for the mining and finance industries. By removing the buydown of the MBT, Democrats found an additional $100 million for the coming biennium. AB 538 was limited to just the MBT language, which Republicans vowed they would never vote for, due to promises made in 2015. This bill ultimately died.

SB 551 was likely one of, if not the most polarizing pieces of legislation in 2019. It was brought by the Majority Leader as an emergency measure the Tuesday before Sine Die. This bill however, took the “found money” and put it toward school safety, which was previously stripped of $30 million. It also funded Opportunity Scholarships, which also saw their budget money removed. Both defunding measures disturbed the minority party to no end. In addition to MBT, SB 551 as introduced, would have used excess revenue from Clark County’s “More Cops Tax” to fund additional school safety measures. In an effort to garner some Republican support, Democrats amended the bill to put the 2/3 majority requirement back on it (after an LCB opinion came out earlier in the month stating 2/3 was not needed, supremely frustrating Republicans and causing them to threaten a lawsuit, should either of these measures pass), taking the “More Cops” language out, and detailed the amounts each county would receive over the next biennium. On the day of Sine Die, fireworks were seen on the Senate floor as legislators opposed to the bill had their floor speeches cut short by a call of the question, after which the measure was put to a vote.  The bill failed to receive a 2/3 majority. After a brief recess, the amendment was rescinded. A new amendment was proposed, the bill remaining mostly intact, but removing the 2/3 requirement and also removing Education Savings Accounts – an unfunded GOP priority – from the statute altogether. After little floor debate, a number of Senators again called for the question, and the measure passed out of the Senate 13-8. It was passed 28-13 out of the Assembly, and signed by the Governor.

SJR 14
Bill Sponsor: Senate Committee on Revenue and Economic Development

Originally introduced in 2017, SJR 14 returned for the second round of legislative approval necessary to send the measure to the voters in 2020.  This Resolution would have removed the constitutional prohibition on “reset on sale,” allowing the legislature to consider the concept along with other available options to reform Nevada’s real property tax structure. Due to legislative neglect over the 2018 interim, this measure did not get the traction it needed to pass its second round.  In addition, a single late-session stakeholder meeting and disclosure of a 377-page report commissioned by LCB less than a month prior to sine die sealed the fate of this Resolution, which never received a hearing.

Odds & Ends

Leaving Carson City following a legislative session is always an awkward ride.  Exhaustion, memories of the final thoughts of debate and subsequent immediate silence, and the realization that everything which has dominated your thoughts and conversation is now moot make for a very strange 7-hour drive back to Las Vegas.  This year, instead of beating feet back to the heat, we detoured to visit Virginia City, enjoy a bourbon at the Bucket of Blood Saloon, and take a walk through the Silver Queen Hotel.  Rated among the most haunted places in Nevada, the Silver Queen Hotel was built in 1876, and is said to be home to a Ghost named “Rosie,” who reportedly  committed suicide in Room 11.  Overnight guests have reported hearing voices, doorknobs turning, and footsteps on a wooden floor, which is particularly odd, given the entire hotel is carpeted.

Enjoy your summer…and sleep well!

 Jon & Kerrie

Jonathan Leleu, Director
Kerrie Kramer, Government Affairs Analyst
Fennemore Craig |  | T: 702.692.8037