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Are The District’s Recreation (“RFF”) And Beach (“BFF) Facility “Fees” Really “Fees?” Or Are They “Taxes?”

IVGID 101 Posted on by

They’re taxes. And what follows are the many reasons why.

As we’ve demonstrated elsewhere,

“Each year the District establishes…annual Recreation…and Beach Facility Fee(s)…collected from property owners within the District through a levy placed on the(ir) property tax bill(s)1. As part of the annual budget process the Board…approves a resolution2 which outlines the billing (see NRS 318.1973) and collection (see NRS 318.2014) process(es) set forth in Nevada Revised Statutes…At (a publicly noticed) meeting the Board…t(akes) action…which…approves a final report5 contain(ing) a description of each parcel of real property receiving…services and facilities(, and) the (final) amount of the charge(s)…for such year.”6 That resolution and report describe the RFF/BFF as “standby and service charges7 (for)…the availability of the use of IVGID’s beaches” and other delineated public recreation facilities8.

But Just Because IVGID Staff And Past Boards Have Told Us The RFF/BFF Are “Fees,” Doesn‘t Necessarily Make Them So: That’s because as elsewhere explained,

“The nature of (a) tax or charge that a law imposes is not determined by…(its) specially descriptive phrase…but (rather,)…its operating incidence”9 or “effect”10 “on the basis of realities.”11

Therefore, this discussion examines the “operative incidence” and “effect” of the RFF/BFF in an effort to determine whether they are the legitimate fees staff and the current/past Board(s) represent/have represented. Or are they simply “taxes?” Let’s begin by examining

The Legal Test For Determining Whether The RFF/BFF Are “Fees:” As we’ve stated elsewhere, “the Hawaii Supreme Court in Medeiros adopted a modified version of the test articulated by the Massachusetts Supreme Judicial Court in Emerson College12. One which analyzes whether a particular monetary charge:

(1) Applies to the direct beneficiary of a particular service in a manner “not shared by other members of society;”13

(2) Is allocated directly to defraying the costs of providing (a) service; and,

(3) Is reasonably proportionate to the benefit received.”

Where “th(e)se criteria fit the charge, it is a fee”14. And where they don’t, it’s a tax15.

The Additional “Paid by Choice” Factor: Emerson College included a fourth (4th) factor in its test for determining whether a monetary exaction is a fee; whether it is paid by choice16. Although the Massachusetts Supreme Judicial Court subsequently “weakened…(its) adherence to the…’voluntary receipt of the service’…factor,”17 relaxation of this factor is limited to services affecting public health or sanitation18.

Since none of those fees we will be examining, specifically including the RFF/BFF, pay for special services affecting public health or sanitation, insofar as the District is concerned, the voluntariness of payment pillar continues as a fourth (4th) factor to the Emerson College test when it comes to determining whether the RFF/BFF are “fees.”

The “Special Assessment“ Exclusion: As we’ve elsewhere demonstrated, a GID Board’s power to adopt fees such as the RFF/BFF flows from NRS 318.197(1) which instructs that a GID Board “may fix, and from time to time increase or decrease (various)…rates, toll rates, tolls or charges.” However, only if they represent something “other than special assessments.” Which means that by definition, GID Boards have no power to adopt “special assessments” under the authority which allows them to adopt fees.

So with that said, consider the following:

The RFF Does Not Pay For Any “Special Benefits:” Our Whether The RFF/BFF Are The Product of Nonexchange Transactions discussion demonstrates that the RFF furnishes no benefit in consideration of payment in a manner “not shared by other members of society.”13 Because District staff and current/past Boards represent/have represented19 that the RFF pays for the “availability of the use20 of IVGID’s…Championship golf course; Mountain golf course; tennis facilities; the Chateau and Aspen Grove; Diamond Peak Ski Resort, and Recreation Center;” and these facilities are public meaning they are just as available to be accessed and used by any member of the general public whether they own real property in Incline Village/Crystal Bay, or their properties are assessed the RFF; those who pay the RFF21 realize no peculiar (i.e., special) “benefit” whatsoever! Rather, the RFF is most closely aligned with “assessments imposed on…individuals, other than (those) assess(ed) on exchange transactions.”22

Therefore because “th(is) criteria (does not) fit the charge14, (the RFF) is a…tax15.”

Insofar as The District‘s Beaches Are Concerned, The BFF Does Not Pay For Any “Special Benefits:” Our Is The BFF The “Recreation Standby And Service Charge…For The (Mere) Availability of The Use of IVGID’s Beaches” Staff And Past/Current Boards Have Represented/Represent discussion demonstrates that the BFF furnishes no benefit whatsoever in consideration of payment. Because District staff and current/past Boards represent/have represented19 that the BFF pays for the “availability of the use”23 of “IVGID’s beaches (and) boat launch ramp;” and as elsewhere stated, under the beach deed local parcel owners with beach access have been expressly granted “an easement…for the benefit of (themselves,) all other owners of property located within (the District’s then) boundaries, and their respective successors and assigns in such ownership…to enter upon (the beaches) and to use said property for the recreational uses and purposes specified (t)herein;”24 local parcel owners with beach access, their successors and assigns, and their guests are entitled to “use…IVGID’s beaches” not because of payment of the BFF but rather, because of the express use easement in the beach deed. Stated differently, those who pay the BFF, or more importantly their Incline Village real properties because they’re the ones actually assessed, realize no peculiar (i.e., special) “benefit” whatsoever in consideration of payment!

Therefore, because “th(is) criteria (does not) fit the charge14, (the RFF) is a…tax15.”

Let Alone Those Which Specially Benefits The Person or Entity Making Payment25: Recall that on the District’s Facility Fee FAQ web page, in answer to the question of “what benefits do I get from these fees,” we are told:

“In short: IVGID beach access and discounts at IVGID-run venues and programs.

The long answer: Each parcel and dwelling unit that is assessed an IVIGD Facility Fee is eligible to receive a combination of IVGID Recreation Passes and Recreation Punch Cards, totaling five (5), as suits their personal needs. These cards are paid for with the annual Recreation and Beach Facility Fees that are reflected on your Washoe County tax bill. IVGID Recreation Passes and Recreation Punch Cards allow the holder to pay a reduced rate at all IVGID facilities, and provide access to the restricted-access IVGID Beaches. Check out the programs and admission rates on our website and you will often see a discounted rate for IVGID Picture Pass holders.”

Given “these cards are paid for with the annual Recreation and Beach Facility Fees…reflected on (local parcel’s)…Washoe County tax bill(s),” we ask how exactly are those parcels able to realize “IVGID beach access and discounts at IVGID-run venues and programs?” Given they can’t, those parcels which are forced to pay are not the direct beneficiaries of the alleged benefits furnished. And as we’ve elsewhere explained, the RFF is spent on the alleged availability of public recreation facilities which primarily benefit the world’s tourists. Even though the overwhelming majority are not required to pay the RFF, unlike local Incline Village/Crystal Bay parcel owners. Given taxes are spent on vital services which “benefit…the entire community,”26 and not just those who pay27 the local parcels which are assessed are not the direct beneficiaries. And insofar as the BFF is concerned, since this charge does not pay for the availability to access and use the beaches, again, the local parcels which are assessed are not the direct beneficiaries.

Or stated differently, because “th(is) criteria (does not) fit the charge14, (the RFF/BFF are)…tax(es)15.”

Given No Benefit is Received in Consideration of Payment, The RFF/BFF Lack Proportionality: “(T)he crucial factor in determining whether a municipal charge for (facilities or) services constitutes a valid…fee(, or something else,) is whether (it)…cover(s) the cost of administering a regulatory scheme or providing a service.”28 In other words, to be a fee, the RFF/BFF must be proportionate to the costs the District actually incurs to furnish the availability to access and use the recreation and beach facilities for which these fees are assessed29. Or stated differently,

“The services for which the (RFF/BFF) are imposed (must be) sufficiently particularized as to justify distribution of the costs among a limited group (the ‘users,’ or ‘beneficiaries’ of the service), rather than the general public”30 as a whole.

It is for this reason that ¶5 of the resolution the Board adopts each year which fixes the RFF/BFF and orders their collection on the county tax roll2, disingenuously recites they

“Are reasonable in their relation to the object of the charges imposed…and that said charges have been apportioned in relation to said natural, intrinsic, fundamental and reasonable distinctions among said rates.”

However, just because staff and the Board have adopted the necessary language31 doesn’t necessarily mean it is truthful11. And here we’ve demonstrated that no benefits are furnished in consideration of payment. And that

“The (alleged) benefits (availability to access and use District owned recreation and beach facilities)…are not limited to (just) the [parcels/dwelling units assessed (see discussion above)]…The capacity to (furnish District owned recreation and beach facilities extends to…not only the private property interests of the owner(s), but also the(ir)…building’s occupants as well as (those of) surrounding buildings and their occupants.”32 And of course, the world’s tourists.

“If the benefits for which (the RFF/BFF) are imposed were limited to (just) the owners of (assessed parcels/dwelling units and they were)…essential to the public welfare, there would be no reason to depart from the optional character of a traditional fee.”33 But because, as we’ve elsewhere demonstrated, the RFF/BFF greatly “exceed…the value of the specific services for which (they are allegedly) charged,”34 and the District has failed to “sufficiently particularize…the services for which the (RFF/BFF) are imposed,” there is no “reasonable proportionality” to the value of the arguable benefit(s) furnished35.

In other words, “th(is) criteria (does not) fit the charge14” and the RFF/BFF “are impermissible taxes36.

The RFF/BFF Are Assessed Primarily to Raise Revenue: Recall that the main factor in determining the difference between a legitimate fee and a tax is whether the exaction is limited to covering the reasonable cost of providing a particular governmental service37. Where as here the primary purpose is to raise revenue38, the authorities are uniform in holding that this is primary indicia of a tax because the exaction “entitles the taxpayer to receive nothing except the governmental rights enjoyed by all citizens.”39 Or stated differently, because “th(is) criteria (does not) fit the charge14, (the RFF/BFF are)…tax(es)15.”

The RFF/BFF Are The Product of “Enforced Contribution:”16 In other words, the payors of those exactions are given no choice insofar as payment is concerned40. As explained above, this makes them taxes. Or stated differently, because “th(is) criteria (does not) fit the charge14, (the RFF/BFF are)…tax(es)15.”

Moreover, They‘re Not The Standby And Service Charges For The Availability of Public Recreation Facilities Staff And Current/Past Boards Represent/Have Represented41: Or stated differently, because “th(is) criteria (does not) fit the charge14, (the RFF/BFF are)…tax(es)15.”

District Staff, Its Auditors‘ And Consultants‘ Admissions: If the above weren’t sufficient to nail the coffin in the determination of whether the RFF/BFF are the “fees” staff and current/past Boards represent/have represented, it turns out District staff and its auditors have made a number of admissions that the RFF/BFF are not the “standby and service charges (for)…the availability of the use of IVGID’s” beach and District owned recreation facilities they represent. Which makes them “taxes.”42

So there you have it! Given the presence of any one (1) of the above factors is sufficient to demonstrate the RFF/BFF are “taxes” rather than “fees,” and here we have at least eight (8), the RFF/BFF must be and are in fact taxes. Or stated differently, because “the(se) criteria (do not) fit the charge14, (the RFF/BFF are)…tax(es)15.”

And now you know.

  1. See page 102 of the packet of materials prepared by staff in anticipation of the Board of Trustee’s (“Board’s”) May 27, 2020 meeting (“the 5/27/2020 Board packet”).
  2. See NRS 318.201(9). For an example of the type of resolution, see pages 228-231 of the packet of materials prepared by staff in anticipation of the Board’s May 26, 2022 meeting (“the 5/26/2022 Board packet“).
  3. Which allows general improvement district (“GID”) boards to “fix (in part)…recreational facilit(y)…service…and standby service charges, for services or facilities furnished by the district, (as well as)…the (mere) availability of service…”
  4. Which allows “any (GID) board which has adopted rates pursuant to…chapter (NRS 318 to)…elect to have such charges for the forthcoming fiscal year collected on the tax roll.”
  5. An example of that report (for fiscal year 2022-23) appears at pages 232-237 of the 5/26/2022 Board packet.
  6. See NRS 318.201(8) and (9).
  7. See ¶4 at page 229 of the 5/26/2022 Board packet.
  8. See ¶4(b) at page 230 as well as ¶I at page 234 of the 5/26/2022 Board packet.
  9. See the reasoning in State v. Medeiros, 89 Hawai’i 361, 366, 973 P.2d 736, 741 (1999), adopted by the Nevada Supreme Court in Clean Water Coalition v. The M Resort, LLC., 127 Nev. 301, 310, 255 P.3d 247, 257 (2011).
  10. See Emerson College v. City of Boston, 39 Mass. 415, 424, 462 N.E.2d 1098, 1105 (1984).
  11. See Hukle v. City of Huntington, 134 W.Va. 249, 58 S.E.2d 780, 783 (1950).
  12. v. City of Boston, 39 Mass. 415, 462 N.E.2d 1098, 1105 (1984).
  13. If the benefits furnished are as available to those who are not assessed, as those who are, there is no “special” benefit. Such as one which “presumably bestows a benefit on (an) applicant, not shared by other members of society.“ Like “a request that a public agency permit an applicant to practice law or medicine. Or construct a house. Or run a broadcast station” [see National Cable Television Assn. v. U.S., 415 U.S. 336, 340-41, 94 S.Ct. 1146 (1974)].
  14. See Medeiros, supra, at 973 P.2d 742-745.
  15. See Clean Water, supra, at 127 Nev. 315; Douglas Co. Contractors v. Douglas Co., 112 Nev. 1452, 1457, 929 P.2d 253, 256 (1996); State ex. rel. City of Reno v. Boyd, 27 Nev. 249, 256, 74 P. 654, 655 (1903); 71 Am. Jur. 2d  §13, State and Local Taxation (2001).
  16. Meaning the party paying the fee has the option of not utilizing the governmental service and thereby avoiding the charge [see Vanceburg v. Federal Energy Regulatory Comm’n, 571 F.2d 630, 644 fn. 48 (D.C.Cir. 1977), cert. denied, 439 U.S. 818, 99 S. Ct. 79 (1978); Medeiros, supra, at 973 P.2d 741].
  17. Holding that “the element of choice is not a compelling consideration which can be used to invalidate an otherwise legitimate charge” [see Medeiros, supra, at 973 P.2d 741; Nuclear Metal v. Low Level Radioactive Waste Mgmt. Bd., 421 Mass. 196, 656 N.E.2d 563, 570 (1995)].
  18. See our When The “Paid by Choice” Factor Applicable to All Fees is Relaxed discussion.
  19. See ¶4(b) at page 104 and ¶I at page 108 of the packet of materials prepared by staff in anticipation of the Board’s May 27, 2026 meeting (“the 5/27/2026 Board packet“).
  20. In other words, the necessary alleged special benefit.
  21. Or more pointedly their Incline Village/Crystal Bay real properties because they’re the ones actually assessed [see NRS 318.201(11) which states “the county treasurer shall include the amount of the charges on bills for taxes levied against the respective lots and parcels of land. (And that) thereafter, the amount of the charges shall be collected at the same time and in the same manner and by the same persons as, together with and not separately from, the general taxes for the county.”
  22. In an exchange transaction, each party receives and gives up essentially equal values” [see GASB Statement No. 33, Accounting and Financial Reporting for Nonexchange Transactions. GASB stands for the “Governmental Accounting Standards Board.” It is “the independent, private-sector organization…that establishes accounting and financial reporting standards for U.S. state and local governments that follow” Generally Acceptable Accounting Practices (“GAAP”) [see https://www.gasb.org/about-us]. Since Nevada local governments’ financial statements [see NRS 354.486(3)], other schedules required for funds [see NRS 354.612(2)], and annual reports concerning capital improvements [see NRS 354.5947(2)] must all be prepared in accordance with GAAP, the simple fact of the matter is that GASB governs the financial reporting of the District’s RFF/BFF].
  23. In other words, the necessary alleged special benefit.
  24. See page 2, line 27-page 3, line 2 of the beach deed.
  25. In other words, “the direct beneficiary of a particular service” (see Medeiros, supra, at 973 P.2d 742; Clean Water Coalition, supra, at 127 Nev. 315).
  26. See Hawaii Insurers Council v. Lingle, 120 Haw. 51, 60, 201 P.3d 564 (Haw. 2008).
  27. See Clean Water Coalition, supra, at 127 Nev. 322 quoting State v. Boyd, supra, at 21 Nev. 255,
  28. See Rizzo v. City of Philadelphia, 668 A.2d 236, 238 (Pa. Cmwlth. 1995).
  29. See Commonwealth v. Caldwell, 25 Mass. App. Ct. 91, 94-95 (1987).
  30. See Emerson College, supra, at 39 Mass. 425.
  31. That is, that the RFF/BFF are reasonable in their relation to the object of the charges imposed.”
  32. See Emerson College, supra, at 39 Mass.425-26.
  33. See Emerson College, supra, at 39 Mass. 426.
  34. See Executive Aircraft Consulting, supra, at 845 P.2d 62 quoting National Cable Television Ass’n Inc. v. F.C.C., 554 F.2d 1094, 1106 (D.C. Cir. 1976).
  35. See Emerson College, supra, at 39 Mass. 417-419; National Cable Television, supra, at 554 F.2d 1106-1107; Utah Office of Property Rights Ombudsman, Advisory Opinion #101, supra, at page 9 of 9.
  36. See Margola Assocs. v. City of Seattle, 121 Wn.2d 625, 640-41, 854 P.2d 23 (1993). Also see Health Services Medical Corp. v. Chassin, 175 Misc. 2d 621, 668 N.Y.S.2d 1006, 1009-10 (Sup. Ct. 1998) where a fee was declared “to be an unconstitutional tax because it directed a portion of payments made (i.e., the excess) by health maintenance organizations to hospitals for inpatient care to be deposited in the state’s general fund.”
  37. See Medeiros,supra, at 973 P.2d 741.
  38. That is, the financial shortfall between budgeted revenue and intentional overspending [see our RFF/BFF According to Us discussion].
  39. See U.S. v. City of Huntington, W.Va., 999 F.2d 71, 74 (4th Cir. 1993).
  40. See National Cable Television Ass’n v. United States, 415 U.S. 336, 341, 94 S.Ct. 1146, 1149 (1974); United States v. La Franca, 282 U.S. 568, 572, 51 S.Ct. 278 (1931); City of Gary, Ind. v. Indiana Bell Tel., 732 N.E.2d 149, 156 (Ind. 2000).
  41. For a more comprehensive review of this topic, the reader is referred to our Are The District’s Recreation And Beach Standby And Service Charge(s) Its Current/Past Boards Represent/Have Represented discussion.
  42. See our Are The RFF/BFF Taxes Because They’re The Product of Nonexchange Transactions discussion.

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