School board seeks to raise RCT
Members of the Douglas County School Board and school district administration appeared before the Assembly Committee on Ways and Means Tuesday to lobby for an increase in Residential Construction Tax from a maximum of $1,000 to $1,600 per developed unit.
Assembly Bill No. 198, introduced by Assemblyman Lynn Hettrick, calls for the above raise in fees as well as a change in the population cap on the size of counties which can ask their commissioners to enact the fee from 35,000 to 40,000.
Rick Kester, director of business services for the district, was quick to point out that this bill is only enabling legislation, which makes it possible for counties to use the RCT. It must first be approved by the county commissioners, then taken before the Nevada tax commission for approval.
In introducing the bill to the Ways and Means Committee, Hettrick said he was concerned Douglas County may go over 35,000 in population by the next census and not be able to collect the fee.
While testifying before the committee, Kester said the $600 raise in the tax is to make up for inflation.
“Douglas County has had to struggle to keep infrastructure up with the increasing student population,” said Kester.
Kester said the county was able to urge the voters to pass a bond five years ago, in May of 1992, only with the promise that another one won’t be put before the voters for another five years. An increase in the RCT would be a way of avoiding another bond before its time.
“Multi-track schools have helped us keep that commitment,” said Kester. “We’re five years through the commitment and don’t plan on going back on it.”
Douglas County has tried other ways of keeping up with the increasing population of the county’s schools including the ill-fated Fair Share Cost.
In October of 1993, Douglas County began charging developers $2,400 for each new unit in their subdivisions. This was $1,400 on top of the $1,000 the county could charge by law for the RCT. This was done after the board of county commissioners approved an ordinance for the enaction of the FSC.
The FSC was challenged in district court in Douglas County by H&S Construction, Keuper Kustom Homes Inc. and the Douglas County Contractor’s Association.
Judge Dave Gamble, in July of 1995, found for the county and school district regarding the FSC issue, but the case was appealed before the Nevada Supreme Court.
On Dec. 20, 1996, the Supreme Court of Nevada reversed Gamble’s decision stating that the FSC is not an contract, regulatory fee or a fee in lieu of land dedication, but that it is a tax or impact fee.
Then on Feb. 3, Gamble met with various affected parties to decided what should be done with the $1.5 million the county had collected in FSC fees.
Gamble ordered the school district and county to refund fees collected under the FSC along with nearly $50,000 in attorney’s fees and interest.
Due to this defeat and still a growing school district population, the Douglas County school board asked Hettrick to introduce the bill.
Board vice president Don Forrester, who also testified at Wednesday’s hearing, said there have been other school districts in the state who have opposed an increase in the RCT in past legislative sessions. Currently Douglas County is the only one in the state to use the RCT to its fullest extent, Story County charges $500 for construction of new units.
The population cap was put into the bill so that large counties who already have various costs associated with the construction of new units would not oppose the bill. However, with the entire population of the state growing at such a quick rate, large counties who had previously bashed Douglas for the RCT now seem to embrace it and want it for their own.
Henry Etchemendy, executive director of the Nevada Association of School Boards, appeared before the Ways and Means Committee Tuesday to ask that the Legislature remove the population classifier so that any county in the state may use the RCT if the county’s school board and commission deem it appropriate.
“That is the position of the school board association,” said Etchemendy. “That’s what we’d like to see happen. Delete the 35,000 and make this eligible for every one in the state.”
Etchemendy said raising the population cap to 40,000 would not benefit anyone in the state since they would use the 1990 census results to classify school districts.
“We don’t think raising this to 40,000 makes any difference to anyone,” said Etchemendy.
Forrester said that, as far as Douglas County is concerned, it would be great for everyone in the state to be able to use the RCT, but the RCT money it receives is too important to Douglas County to risk a battle over the issue in the legislature by upsetting larger counties.
“We at Douglas County can’t afford to lose the $1,000 to go to $1,600,” said Forrester. “We’d love to raise fee amount and the cap but we don’t want to get beat up on the issue.”
Kester said, in an interview Thursday, that Douglas County, although sympathetic to and supportive of the state’s other counties, would not be willing to get rid of the population cap.
“We’re not willing to allow Clark (County) or anyone else to remove the population cap,” said Kester.
Dick Price of the Washoe County school district testified saying Washoe supports the bill with a removal of the population cap. Price said the Washoe County school district has grown by 11,205 students from 1990-96.
“If you build it, people will come,” said Price. “We are supporting the testimony Etchemendy has given.”
David Goldwater, D-Las Vegas, indicated that Nevada’s largest city may be seeing the RCT as a possibility.
“What we’re talking about is an impact fee,” said Goldwater. “Every new house in the community has an impact when it comes to schools. This is something the committee has to look into.”
“I’ve always thought this was a better idea,” said Chris Giunchligliani D-Las Vegas. “Why, if we’re debating it, can’t we take the population cap out?”
As there were many in approval of the bill at the Ways and Means hearing, there were also many in opposition at the meeting.
Jim Woods, vice president of the Douglas County Building Industry Association, said no one consulted his group on the proposed raise in the RCT.
“We’re getting taxed without representation,” said Woods. “There trying to change the state law.”
In response to this comment, Hettrick said he spoke to Mary Cioffi, spokesperson for the Building Industry Association, who told him the group would support the bill if it called for only an increase of $600.
Woods said another problem his organization had with the bill is that there is no public plan or budget to what this money is to be assigned.
“If you’re asking us for a blank check and we pay the bill, then you’ll probably see another challenge,” said Woods referring to the the FSC fiasco.
“We pay for everything. Growth pays for everything. We build the roads and the sewers. Those all come in as part of the extraction process.”
“What about the effect on other counties such as Elko?” added Woods, outlining his third objection to the bill. “This should be seriously considered before this bill goes any further.”
Woods asked the committee to deny the bill, saying the issue needs to be further studied before a decision can be made. He said he’d like representatives from the Building Industry Association to meet with members of the school district to try to find a solution.
“I appreciate your willingness to work with the school district and to take what you probably feel to be the unpopular position,” said Hettrick.
“It still has a long way home, but I think it has a reasonable chance,” said Kester. “We have all the faith in the world in Lynn Hettrick.”
With no further hearings scheduled on the bill, Kester said the school district will simply have to let the Legislature run its course and be there to testify should there be another hearing.
Hettrick said, in an interview Thursday, that the Chairman of the Ways and Means Committee, Morse Arberry Jr., D-Las Vegas, will hold the bill for a few days to see if there is any significant opposition to the bill.
If there is no major opposition, Hettrick estimated that the bill will be brought to the committee for a vote within seven-10 days.
Providing it clears each stage, the bill will next go to the whole Assembly, the Senate Finance Committee, the Senate, and, finally, the governor, who can veto it or sign it into law, said Hettrick.