Nevada Legislature 29th (2015) Special Session Report
By McDonald Carano Wilson Government Affairs Group
NAIOP 2015 Public Affairs Position Paper
Government Affairs – August Updates
Emissions Reduction – New Program
The attached regulation (R054-15I – ERC) is proposing a new, voluntary program intended to assist in growth and economic development in areas designated nonattainment for a national ambient air quality standards (NAAQS). The program will provide offsets for a new major stationary source wishing to locate in a nonattainment area or for an existing facility to make a major modification. The proposed program provides for the creation, banking, transfer and use of Emission Reduction Credits (ERCs). In a nonattainment area, if a facility reduces emissions through an operational change, a reconfiguration or a shutdown, the program will allow the facility to request credit for the reductions and bank a reduced portion of the credit for future use or sale. The emission reductions used to generate an ERC must be surplus, permanent, quantifiable and federally enforceable.
According to the State Environmental Commission, “the proposed amendments are no more stringent than what is established by federal law.”
As you know, the Clean Air Act which required, among other things, that states be subject to increased obligations to reduce emissions. Clark County was a non-attainment areas and as a result its growth – including plans for Ivanpah and other industrial areas – were hampered. It is my understanding that NAIOP become a very big proponent of rolling back proposed regulations in non-attainment areas. At this time, Clark County’s regulations and NDEP’s are equally stringent.
In order to comply with federal emission offset requirements, the offsets (ERCs) must be obtained from emission reductions created in the same nonattainment area where they will be used, with one two-part exception. An ERC from another nonattainment area is applicable if:
- The other area had an equal or higher nonattainment classification than the area in which the source is located, and,
- Emissions from the other area contribute to a violation of the NAAQS in the area in which the source is located.
Determination of a nonattainment area contributing to another nonattainment area where a source wants to use the ERCs would be made by USEPA. If ERCs are granted, they are discounted 10% before they are recorded in the State registry, to encourage further progress toward attainment of the NAAQS in the nonattainment area.
The attached proposed regulation has already gone through the public workshop phase and will come before the State Environmental Commission regulatory meeting on October 14 (Agenda). If approved and adopted by the SEC, then it will go before the Legislative Commission for final review and approval.
Las Vegas Redevelopment Agency Offers Grants for Commercial/Industrial Property Owners
The City of Las Vegas Redevelopment Agency will consider at its Aug. 5 meeting modification of the Commercial Visual Improvement Plan (CVIP LV CVIP – Aug 5) for RDA 1 and 2 (see attached map LV Redevelopment Map).
The objective of the Plan is to establish financial mechanisms that provide financial incentives to new, existing and expanding business owners with exterior improvements to commercial, industrial and mixed-use properties located within the Redevelopment Area. The CVIP will provide a grant rebates up to $25,000 for projects located anywhere within RDA 1 and 2 that meet the program requirements.
The RDA requires applicants to provide 2:1 matching funds; in order to receive the maximum grant of $25,000 the owner must invest at least $50,000 toward qualifying improvements.
Applicants must demonstrate that the project results in a significant improvement to the exterior of a commercial, industrial or mixed-use building consisting of but not limited to any combination of the following;
- Appropriate, permanent landscaping
- Improved and/or upgraded signage (coordination and style of signage is important factor)
- Better access and availability of parking for on-site users
- Exterior improvements including: painting, new or repaired windows, improved entry ways, new or repaired facades, etc.
- Funding priorities are given as follows (partial list);
- Multiple and adjacent business owners seeking to collaborate
- Projects which are catalytic in nature and have the potential to revitalize and promote the economic stability of the surrounding neighborhood
- Projects where the owner demonstrates the ability to sustain improvements
- Projects where no other reasonable means of financing exist to fully fund desired improvements
- Projects where the owner has tenant vacancies and is looking to substantially improve the property to attract tenants
Ineligible properties and businesses include single family residential properties and multi-family residential properties that are NOT part of a larger mixed-use development; Medical Marijuana businesses; businesses that require a privileged license (i.e. adult nightclub, pawnbroker, smoke shop, wedding chapels, locksmiths, auction house, slot route operator, martial arts, outcall entertainment, psychic arts, non-restricted gaming, etc.); check cashing and bail bond businesses, churches, convenience stores and others.
Full program requirements are detailed in the Visual Improvement Program attached LV Visual Improvement Program 2015.
During the meeting on Wednesday, Aug. 5, the Redevelopment Agency will review a couple of applications for CVIP funds from business owners, as well as consideration of an amendment to, and expansion of, the current Redevelopment Area.
Immediately after the Redevelopment Agency meeting, which is scheduled to begin at 8:00 a.m., the Las Vegas City Council will meet. Included on the agenda will be consideration and vote on the CVIP applications.
The Latest on Nevada Tax Proposal & Structure
AB464_R1 Latest Tax Plan
AB 464 Amendment Summary v.2
NPRI FreedomBudget Proposal – 2016-2017
AB452 Complete Bill
Governor’s Press Release SB252 Senate Passage
AB 464 – Summary
AB464 – Complete Bill as Introduced 03-23-2015
SB 252 Summary
SB252 Complete Bill First Reprint
Business License Fee Rate Calculation Summary
The State of Nevada’s Structure: How’s It Working?
NAIOP Letter to Governor Sandoval 03-20-2015
Tax Foundation Study
SB 378 Summary
Guinn Center Testimony on SB 378
Article: Nevada Governor Attacks Tax Foundation Report | Tax Foundation
Tax Bill Review
The following ‘review’ of the major tax bills currently in front of the Nevada Legislature is put together from hearing notes, exhibits provided during testimony on the bills and testimony by proponents. One size does not fit all with taxes and the make-up of our current legislative body is such that cooperation and concession will be a must to get the two-thirds votes from each house to pass any tax measure.
As you know, at the time of this writing (4/22/2015) only one major tax bill has passed one of the houses…Governor Sandoval’s SB252 which passed on 4/21 with a vote of 17-4.
AB464 (Armstrong/Anderson Bill) creates one Modified Business Tax (MBT) for all taxpayers on gross wages, eliminating the deduction for allowable health care expenses. The MBT tax structure provides an exemption equal to $50,000 in quarterly gross wages with a 1.56% tax rate on quarterly gross wages over $50,000. The Business License Fee (BLF) is changed to a $300 annual fee for all businesses, except for corporations with an annual fee of $500. AB464 repeals the Branch Bank Excise Tax. The revenue from the provisions of AB404 is designed to cover the Branch Bank Excise Tax, the Governor’s recommended Slot Route Operator gaming percentage fee tax proposal, the current MBT on nonfinancial and financial businesses and the Governor’s recommended MBT-mining proposal.
AB 464 is primarily a payroll tax, so it would affect small businesses differently than SB 252 and SB 378, both of which are based on gross receipts. Many single proprietors begin as non-corporations and do not have payroll. Under AB 464, these businesses would pay a $300 Business License Fee. Businesses with less than 66 2/3 percent of the average annual wage ($28,100) would not be subject to the Business License Fee. If a small business is a corporation, the Business License Fee under AB 464 would be $500, an increase of $300 from the current business license fee. Under AB 464, a small business would begin paying the MBT once it has payroll over $50,000 per quarter.
SB252 (Sandoval BLF) This is a simplified version of the Texas Franchise Tax, which was the basis for the Nevada margin tax proposals in 2011 and 2014, yet it proposes approximately two dozen rates. According to the Guinn Center, the Governor’s Business License Fee proposal is intended to be as broad-based as possible and aims to capture all 330,000 businesses in the state. This includes businesses incorporated in other states (foreign corporations) and business with no employees. All businesses with no employees would pay the flat $400 business license fee. This would encompass many of the foreign corporations, which do not have any employees in Nevada. Foreign corporations with employees would be required to pay the designated tax amount for the industry and business size.
One criticism of gross receipts taxes is that they may lead to pyramiding, the imposition of a tax on each stage of production, which is especially problematic for developers.
AB412 (Kirkpatrick’s Commercial Property Tax proposal) This bill has two main components. The first is to allow the board of county to increase the property tax rate 5 cents per $100 of assessed value on all property within a county and to allow the board of county commissioners or the board of school district trustees to increase the rate of property tax 5 cents per $100 of assessed value on all property within a county including cities without a vote of the people and to be approved by a majority of the commissioners or trustees. Both provisions are outside the combined property tax cap of $3.64 and may not be used for salaries or be considered to settle or used to determine the financial ability in arbitration disputes.
Of the 5 cents allowed to school districts, 2 cents may be used for operating. The second component changes the partial property tax abatement to 6 percent for non-residential property, instead of the current formula which allows the 8 percent partial abatement cap to fluctuate, and exempts commercial property, which is reduced in value due to an appeal based on obsolescence, use of the income approach or discounted cash follow to receive the partial abatement for property tax.
Legislative Update – February, 2015
The dust has settled, but is there a tornado brewing?
Last month I wrote that the post-election dust had not yet settled, referencing that the Assembly majority party had yet, by the middle of December, announced full committee memberships. Wide-eyed newly elected legislators were scrambling to raise money to retire campaign debt, yet unless you are a large hotel casino property or utility, most associations and businesses that typically make contributions want to know that they are helping someone who will be serving on a committee relevant to that business’ interests. I patiently explained that, over and over again, to new assembly members as the calls for money continued to come in, right up until the December 31, 2014 deadline.
The long-awaited full Assembly committee assignments finally popped out on January 7. Here is a link to access all the committees, Assembly and Senate, and their respective meeting times: Legislative Committees 2015 . Given that no-one currently in the majority in the Assembly has ever chaired a legislative committee, and given that 14 of the 25 members of the majority are newly elected, it stands to reason that there may be one or two new legislators chairing a committee.
That is the case with a committee that will be very important to our membership – Assembly Committee on Taxation. Mr. Derek Armstrong, a Marine with a background both accounting and law was a good pick as Chairman. This committee is going to be very busy this session as we look to evaluate and revise our current tax system. Committee members will need discipline, stamina and caffeine as they plow through mountainous volumes of spreadsheets, financial analyses, and detailed information about how shifting a dollar here impacts a dollar there.
On the Senate side, they have a softer and friendlier name for “Taxation.” There is called “Revenue and Economic Development” but it means the same. As is typical of the Senate side, the Majority leader chairs this powerful committee. Veteran Senator Michael Roberson will hold the gavel alongside his volumes of spreadsheets.
Governor Sandoval has vowed to fix our education system. Nearly half of his 55 minute State of the State speech was devoted to K-12 education funding and reform. He laid out his policy agenda, and asked business to support him in generating the resources needed to make these changes, acknowledging that it was not going to be easy.
While only his closest cabinet members and advisors have the full budget proposal, we do know that there is a proposed increase to the Business License Fee (BLF) paid by all businesses. The Governor said his plan for the BLF was “Broadest. Least complicated. And Fair.” The proposal, as we understand it today (that’s my disclaimer), is a sliding scale on business license fees.
Here are the Basics:
- Currently, $200 for every business (raised $137.2 million over the 2013-2015 biennium)
- Proposal will raise the minimum BLF to $400 and cap it at $4.2 million (to be paid by a half dozen or so Nevada companies that gross $1 billion or more a year)
- It will be a tiered structure with a 15% cushion between tiers
- 30 different business categories will be identified, recognizing that different businesses have different margins, i.e., gas stations different from casinos, are different from car dealers, etc.
- Anticipated change would raise about $450 million over the biennium
Could you call this a gross receipts tax? Yes, probably. The spin doctors working with the Governor will be very careful never to utter “gross receipts tax” as they describe the tiered fee.
In the State of Nevada, our legislature cannot pass a fee or tax increase upon the people of the state without a two-thirds vote in each house. With 42 Assembly members and 21 Senate members, that means the Governor will need 28 votes in the lower house and 14 votes in the upper house. Some legislators have already drawn their line in the sand and said, without benefit of seeing or studying the actual plan, “Nope, no way.” Many others are saying, “I need to see the details.” And others are saying, “I’m going to work with the Governor, talk to my constituents, and based upon the information presented, do what I think is best for the State.”
No matter what the Governor’s budget bill actually proposes, it is certain to be a rock and roll session. Or…perhaps a knock-down, drag-out (oh, can you say “Special Session”?) session. As always, your lobbying team will work to keep NAIOP leadership in the know as information trickles out and help NAIOP have a voice in Carson City. When the gavel drops on opening day of Session February 2, it’ll be show time.
NAIOP 2015 Public Affairs Position Paper
Susan L. Fisher | McDonald Carano Wilson LLP
Legislative Update – January, 2015
NAIOP Southern Nevada’s own John Restrepo discusses the Good, the Bad, and the Ugly when it comes to sales tax on services.
As the legislative sessions gets underway, tax reform is a hot topic… and with tax reform, a sales tax on services is often discussed as a possibility. Check out the article below to read Restrepo’s insights and knowledge into this complicated issue.
Legislative Update – December, 2014
The election is over. What now? Have you ever made a prediction that is proven wrong even before it is officially in print? Well, I have! If you read the pre-general election report on this website that I wrote in mid-to-late October, you read that the Assembly would remain in Democrat control. Within a week after I submitted that report, I was wishing I could tug it back and re-do it. The “Red Wave” rolled across the nation and across Nevada tossing Democrats out of office right and left and setting history in Nevada.
As I write this in the beginning of the second week in December, I would like to be able to report that the dust has settled. Unfortunately, with leadership comes difficult choices. The State Senate leadership caucus rallied quickly and assigned leadership roles and committee assignments. The Assembly leadership has changed, and changed again and some are speculating there may be yet more change. Thankfully, committee chairmanships have been assigned so we can start talking with committee chairs about our issues. However, we are still waiting for the announcement of full Assembly committee memberships.
We have been watching the bill draft request (BDR) list and making note of ones that look like they may impact our members’ businesses. To date, 650 BDRs have been submitted. We currently have just under 45 bill drafts flagged to watch and gather information on, on behalf of NAIOP and the list will grow and shrink as additional information and actual bill language comes available. To view the entire legislative bill draft request list to date, go to Nevada 2015 full BDR list.
Freshman legislators each get five bill drafts which must be submitted on or before December 10, and one additional bill draft to submit between February 2 and February 9, 2015. Incumbent Assembly members have a total of 10 bill drafts available to them, incumbent Senators have 20 bill drafts, and newly elected Senators have 12, and so on.
What we can expect this session? With the support and coordination of NAIOP and member businesses, and with a tremendous financial investment by business organizations around the state, Question 3 – the Margins Tax – was soundly defeated. That’s the good news. The bad news is that we have got to find a way to improve our education system. The Governor will roll out a plan, various Chambers of Commerce will announce plans, legislators will announce plans, and we’ll sift through them to see which one, or which parts of multiple plans make sense.
What we can expect universally in the various plans is some sort of tax reform. Nevada needs a stable and predictable tax structure. Existing businesses and businesses looking to come to Nevada need to know that there will be long-term consistency in the way they will be taxed to support the backbone of the state; infrastructure and education. NAIOP is committed to being involved in the discussion and to work with business partners (Chambers and other associations) around the state to help find solutions. There are no easy fixes; no silver bullet. But there are committed organizations and individuals around the state who want to fix the system, rather than just tear it down.
Susan L. Fisher | McDonald Carano Wilson LLP