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Granting Access to and Free Use of Our Beaches to District Employees Without Beach Access and Their Family Members

IVGID 101 Posted on by

Introduction: As demonstrated elsewhere, general improvement districts (“GIDs”) are limited purpose special districts. Their powers are strictly construed and limited1 to those provided by the Legislature2, as explicitly conferred by their respective County Boards of Commissioners (“County Boards”), in their initiating ordinances3 as supplemented if at all by: those “additional basic power(s expressly) granted4…pursuant to NRS 318.077;”5 “sections of this chapter (NRS 318) designated therein;”3 and, none other1. So did the District have the power to grant access to and free use of its beaches to District employees without beach access and their family members?

Did IVGID Have the Power to Acquire the Beaches? As elsewhere discussed, the District acquired the beaches in June of 1968. As with the propriety of all local governmental powers we begin our analysis insofar as whether it had the power to acquire the beaches with the Nevada Constitution given it “is the ‘supreme law of the state which ‘control[s] over any conflicting statutory provisions.’”6 Nev. Const. Art. 8, Sec. 8 instructs that the Legislature shall provide for/restrict the powers of general purpose governments. Since the Legislature has created the GID law7, and the Incline Village General Improvement District (“IVGID”) is a GID8, its powers are recognized/restricted by NRS 318.

As aforesaid, the powers the Legislature has expressly granted to all GIDs2 include, in part, those referenced in “sections of this chapter (NRS 318) designated therein.”3 Where as here9 their governing boards are authorized to: “acquire, improve, equip, operate and maintain any district project10; and, “acquire…and encumber real and personal property, and any interest therein, including leases (and) easements;”11 it may “acquire…extend and better lands” therefore12. As the District Court determined in Wright v. Incline Village General Improvement District on March 31, 2009, “pursuant to th(e) authority of…NRS 318.143(1) and NRS 318.175…in 1968 IVGID acquired the deeds to the beaches at issue.” So the answer to the question posed is yes. IVGID had the power to acquire the beaches.

Does IVGID Have the Power to Adopt Rules and Regulations Concerning Access to and Use of the Beaches? NRS 318.175(1) instructs that GID “board(s) shall have the power…to manage, control and supervise all the business and affairs of the district.” NRS 318.197(3) instructs that GID “board(s) are empowered (to)…prescribe and enforce regulations for the…taking of…the…services…of the district.” NRS 318.205(2) instructs that GID “board(s) shall have the power to adopt and amend bylaws, not in conflict with the Constitution and laws of the State…regulating the use or right of use of any project or improvement.” NRS 318.040 instructs that chapter NRS 318 “shall be liberally construed to effect its purposes.” Finally, the beach deed itself instructs that the District’s Board of Trustees shall have the authority to: “regulate (the beaches)…to effectuate the purposes (t)herein mentioned;” and, “impose reasonable rules, regulations and controls upon the use of (the beaches)…by the owners thereof.” Therefore we conclude that yes, IVGID has the power to adopt reasonable rules and regulations concerning access to and use of the beaches.

Did the IVGID Board Have the Power to Enter Into a Contract Insofar as Local Parcel Owners With Beach Privileges’ Access to and Use of the Beaches? Besides the fact GID “board(s) shall have the power…to manage, control and supervise all the business and affairs of the district,”13 NRS 318.09533(3) instructs that GID Board members are authorized to “enter into contracts extending beyond the terms of each member then serving on the board.” So yes we would conclude that GID Boards have the power to enter into contracts concerning access to and use of the beaches which extend beyond the terms of each member then serving on the board.

Did the IVGID Board Enter Into a Contract With Respect to Local Parcel Owners With Beach Privileges’ Access to and Use of the Beaches? Most people don’t realize that when the District acquired the beaches, it actually entered into a contract with the beaches’ grantor (Village Development Co. the successor to Crystal Bay Development Co.) for the direct benefit of local property owners within the District’s then geographical boundaries, as well as their successors and assigns14. This is called a third-party beneficiary contract15.

Are Local Parcel Owners With Beach Access Third-Party Beneficiaries of That Contract? This issue was addressed in local resident Frank Wright’s lawsuit against IVGID. “Although the 1968 property owners are not signatories to the deed, the deed nonetheless includes provisions relating to them. In particular, the deed provides for the following: (1) a restrictive covenant whereby IVGID is to hold, maintain and use the IVGID beaches ‘only for the purpose of recreation by, and for the benefit of, property owners…within the [IVGID] as now constituted;’ (2) the owners of the 1968 property can enforce the covenant; and (3) an easement for the benefit of the 1968 property owners to enter the IVGID beaches and use them  for recreational activities…(Thus) they are intended third-party beneficiaries. Whether an individual is an intended third-party beneficiary turns on the parties’ intent, ‘gleaned from reading the contract as a whole in light of circumstances under which it is entered16…Here, the unambiguous language of the 1968 deed indicates that the 1968 property owners are intended third-party beneficiaries of the restrictive covenant…There is a clear promissory intent to benefit the 1968 property owners, and the property owners’ reliance on the covenant is foreseeable. Indeed, the covenant is and undoubtedly has always been a valued property right of the original 1968 property owners and their successors. As a result, the court finds that the 1968 property owners are intended-third party beneficiaries to the covenant.”17 So yes we would conclude that local parcel/dwelling unit owners whose properties were part of IVGID as it existed in June of 1968 are third-party beneficiaries of the beach deed’s covenants.

Is IVGID Bound to the Restrictive Covenants of That Contract? Both the U.S.18 and State19 Constitutions mandate that neither the federal or state government shall pass any law “impairing the obligations of contracts.” This means that state governments are prohibited from “specifically legislating to interfere with (or usurp) private contract rights!”20 As a limited purpose special interest district IVGID has no power to pass laws nor legislate. But we would argue that its attempt at Ordinance No. 7 represents the moral equivalent.

Now the Particulars: At last count the District employed in excess of 1,000 employees21! Given staff consider themselves and their fellow public employees “to be (the District’s) most important and valued asset(s)”22, and past Boards have abdicated away to the General Manager23 their responsibilities to employ and fix the compensation and benefits of District’s employees24, is it any surprise staff have given away the store? Just look at the benefits staff publicize to prospective employees: “IVGID’s awesome benefits start with working at one of the most beautiful places in North America – Incline Village, Lake Tahoe.  Our employees enjoy unbelievable recreation privileges including access to Lake Tahoe’s finest fitness and recreation center with a 25 yard indoor pool, group fitness classes, a cardiovascular room and gymnasium; 11 court Tennis & Pickleball Center nestled in towering pine trees, two of the most beautiful, pristine 18 hole golf courses with views of Lake Tahoe; Diamond Peak Ski Resort with breath-taking views of Lake Tahoe and three private beaches on the beautiful North Shore of Lake Tahoe.”25 And insofar as the beaches are concerned, IVGID staff have published an “IVGID Employee Recreation Privileges” summary which discloses that if you are “a spouse, registered domestic partner, or child (up to 23 years old and living at home or away at school) of an employee,” you qualify for “free beach access” whether or not you are a resident of Incline Village, or you/your parent(s) own real property in Incline Village which is assessed and pays Beach Facility Fees (“BFFs”).

So you tell us. Does this behavior sound like restricting access and use of the beaches “only for the purpose of recreation by, and for the benefit of, property owners…within the [IVGID] as…constituted” in June of 1968?

Is Granting Access to and Use of Our Deed Restricted Beaches to Those Without Beach Access a Power the District May Exercise Pursuant to the Beach Deed, Ordinance No. 7, or Otherwise? According to the District, the answer is yes. Its justification is at least twofold. First it argues that as a local property owner within the District’s June of 1968 boundaries, it is free to grant its current and former employees and their immediate family members beach access as the District’s “guests.”26

Second, staff point to ¶71 of Ordinance No. 7 which states “the General Manager may from time to time adopt, amend, or rescind rules consistent with this ordinance27. The General Manager shall hold the final authority to interpret this ordinance and rules adopted thereunder (and) such authority shall include the application of this ordinance and rules to specific people, parcels, and circumstances.” Pursuant to this authority, ¶68 states that “nothing in this ordinance shall prevent the District from issuing recreation privileges to employees, former Board members, or anyone else (i.e. employee family members) in the past, present or future, as approved by the Board of Trustees.”

Unsurprisingly, for at least three reasons we would answer emphatically no! When IVGID entered into the beach deed contract referenced above, “a contract was created obligating the (District) to hold such property in trust for the people of (Incline Village with beach access) to enjoy” as expressly provided for in the beach deed28. Given granting beach access to persons without that access violates the beach deed use covenants, as does use for purposes other than recreation only, we would argue the District has violated its fiduciary duties under the beach deed. And who has standing to enforce those covenants? According to the court in Wright v IVGID “the…1968…owners of the” beaches.

Secondly, if IVGID staff have the power to designate their own as the District’s “guests,” do not every other local parcel owner with beach access possess the same power? Local resident and parcel owner Aaron Katz abhors the second class citizen treatment extended to Crystal Bay residents insofar as the beaches are concerned29. So some years ago he announced at an IVGID Board meeting that henceforth, all residents of Crystal Bay would be his “guests” insofar as beach access were concerned. Yet District staff have refused to honor Mr. Katz’s guest designation. We contend that as long as District staff refuse to honor Mr. Katz’s designation, they lack standing to make the same designation for their fellow public employees and their employees’ immediate family members.

Finally, the IVGID Board has passed rates, tolls and charges for all beach guests. Yet staff refuse to charge their guests beach guest fees30. We submit that staff’s failure to assess their guests beach guest fees, while charging the guests of local parcel owners with beach access beach guest fees, precludes staff’s fellow public employees and their employees’ immediate family members from accessing and using the beaches.

Conclusion: So there you go. We feel Wright v IVGID is pretty clear in instructing: the District’s ownership of the beaches is as nothing more than as a steward or fiduciary “for the benefit of, property owners…within the (IVGID) as…constituted” in June of 1968; and, it is charged with the duty “to hold, maintain and use the IVGID beaches only for the purpose of recreation by, and for the benefit of, property owners” with beach access. In our opinion, by granting hundreds of District employees, their immediate family members, and others access to and use of District beaches, the District has breached its fiduciary duties owed to we the third-party beneficiaries of the covenants contained in the beach deed! What do you think?

  1. See A.G.O. No. 63-61, p. 102, at p. 103 (August 12, 1963).
  2. See NRS 318.116.
  3. See NRS 318.055(4)(b).
  4. See NRS 318.055(4)(a).
  5. NRS 318.077 allows a GID “board (to) elect to add basic powers not provided in its formation, in which event the board shall cause proceedings to be had by the board of county commissioners similar, as nearly as may be, to those provided for the formation of the district, and with like effect.”
  6. See Thomas v. Nev. Yellow Cab Corp., 130 Nev. Adv. Op. 52, 327 P.3d 518, 521 (2014).
  7. See NRS 318.010.
  8. NRS 318.015(1) instructs that “each district organized pursuant to the provisions of this chapter shall be a body corporate and politic…quasi-municipal corporation” and general improvement district. 
  9. For a discussion of why, how and when the District was granted the basic power to furnish facilities for public recreation in general, and its beaches in particular, the reader is referred to https://ivgid101.com/our-beaches/.
  10. See NRS 318.175(2).
  11. “The constitutional and inherent powers of the legislature are…delegated to (GID)board(s) for the acquisition…and encumbrance of (real) property” (see NRS 318.160).
  12. See NRS 318.143(1).
  13. See NRS 318.175(1).
  14. The reader can examine this contract because it is contained within the body of the beach deed. Note where the District “accepted and approved” the contract’s terms and conditions on page 3 of the deed.
  15. “Generally, an intended third-party beneficiary is bound by the terms of a contract even if (he/)she is not a signatory. Whether an individual is an intended third-party beneficiary, however, depends on the parties’ intent, ‘gleaned from reading the contract as a whole in light of the circumstances under which it was entered’…The fact that (he/)she did not sign the contract (him/)herself is irrelevant” [see Canfora v. Coast Hotels Casinos, Inc., 121 Nev.771, 779, 121 P.3d 599 (2005)].
  16. See Canfora, supra, at 121 P.3d 605 [quoting Jones v. Aetna Cas. and Sur. Co., 26 Cal. App. 4th 1717, 33 Cal. Rptr. 2d 291, 296 (1994)].
  17. See Wright v. Incline Vill. Gen. Imp. Dist., 597 F.Supp.2d 1191, 1204-05 (D. Nev, 2009).
  18. See Article 1, section 10, Clause 1 of the U.S. Constitution which states “no State shall…pass any…Law impairing the Obligation of Contracts.”
  19. See Article 1, section 15 of the Nevada Constitution which states “no…law impairing the obligation of contracts shall ever be passed.”
  20. Go to https://thebusinessprofessor.com/en_US/us-legal-system/contract-clause-us-constitution.
  21. Go to https://transparentnevada.com/salaries/2019/incline-village-general-improvement-district/.
  22. Go to page 165 of the 2012-13 Budget.
  23. See ¶IV of Resolution No. 1480 which provides that “the General Manager shall maintain direct, day-to-day supervision over all District employees…Supervision includes the power to hire, fire, motivate, discipline, evaluate, promote, demote, transfer, and train employees.”
  24. NRS 318.175(1) states that GID “board(s) shall have the power…to manage, control and supervise all the business and affairs of the district.” NRS 318.180 states that GID “board(s) shall have the power to hire and retain agents, employees, servants, engineers and attorneys, and any other persons necessary or desirable to effect the purposes of this chapter.” NRS 318.185 states that GID “board(s) shall have the power to prescribe the duties of officers, agents, employees and servants, and fix their compensation.”
  25. Go to https://www.yourtahoeplace.com/employment/benefits.
  26. Recall that the beach deed expressly instructs that the beaches “and any and all improvements now or hereafter located thereon, shall be held, maintained and used…for the benefit of, (local) property owners and…the guests of such property owners.”
  27. As opposed to the beach deed.
  28. See City of Reno v. Goldwater, 92 Nev. 696, 702, 558 P.2d 532 (1976).
  29. Although Crystal Bay may not have been part of IVGID in June of 1968, on April 25, 1995 it was formally merged into the District’s boundaries (see Washoe County Bill No. 1103, Ordinance No. 928).
  30. Notwithstanding the IVGID Board adopts water rates, tolls and charges, and District facilities use such water, they are assessed the same water rates as all other users. Similarly, notwithstanding the IVGID Board adopts sewer rates, tolls and charges, and District facilities use such sewer services, they are assessed the same sewer rates as all other users. And similarly, notwithstanding the IVGID Board adopts solid waste removal rates, tolls and charges, and District facilities use such solid waste disposal services, they are assessed the same solid waste removal rates as all other users. So what is the justification for not charging staff’s beach guests the same beach guest fees that the guests of all other local parcel owners with beach access are charged?

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