As we have discussed elsewhere, the only basic powers a general improvement district (“GID”) may legitimately exercise (including the power to fix fees and assess taxes) are those expressly granted in its initiating¹ and supplemental² ordinance(s) “as supplemented by the sections of this chapter (NRS 318) designated therein”³, and none other⁴. And should there be “any fair, reasonable (or) substantial doubt concerning the existence of power (it) is (to be) resolved…against the (municipal) corporation (i.e., here the GID⁵, and)…all acts beyond the scope of…powers (expressly) granted are void.”⁶ Given IVGID is assessing a solid waste “franchise” fee⁷, we question whether its assessment is expressly authorized by NRS 318 and/or any other laws. And that’s the purpose of this discussion.

Again as we have discussed elsewhere, just because GIDs are political subdivisions of the State⁸ doesn’t mean they possess the general police powers⁹ true municipalities like counties¹⁰, cities¹¹ and unincorporated towns¹² possess. Therefore just because counties, cities and unincorporated towns can and do charge providers of public utilities (i.e., water, sewer, electricity, natural gas, solid waste disposal, cable television, etc.) municipal franchise fees, doesn’t mean GIDs are permitted to do the same thing.

With the foregoing as a primer, take a close look at NRS 318. Nowhere will the reader find where GIDs are given the power to pass laws or adopt legislation. The closest such powers the reader will find are that GID “board(s) shall have the power to adopt and amend bylaws, not in conflict with the Constitution and laws of the State: 1. For carrying on the business, objects and affairs of the board and of the district; (and,) 2. Regulating the use or right of use of any project or improvement.”¹³

Given the purpose of franchise fees is to reimburse government “for the right to use (its) public streets or rights-of-way,”¹⁴ yet here IVGID essentially owns no public streets nor rights-of-way in Incline Village/Crystal Bay [Waste Management’s (“W-M’s”) service area]; the alleged services for which the fee is assessed are not expressly recognized in NRS 318; regardless, IVGID provides no facility nor service to W-M in consideration of their payment of IVGID’s solid waste franchise fee; independently, GIDs have not been given the power to provide for the health, safety and welfare of their inhabitants, as have counties¹⁰, cities¹¹ and unincorporated towns¹²; yet notwithstanding all of these facts IVGID assesses a solid waste “franchise” fee⁷ which is “passed on” to local property owners²⁰; following Dillon’s Rule¹⁵ it’s our position that IVGID’s solid waste franchise fee is void.

Nonetheless, to independently test the validity of our assessment, we examine: the kinds of exactions (i.e., fees, charges, taxes, assessments) a GID may permissibly assess, as well as the propriety of the subject fee’s assessment insofar as the current circumstances are concerned.

Ad Valorem Taxes: See NRS 318.225¹⁶. An ad valorem tax is “a general tax levy…on real property…which applies a given (tax) rate to the assessed valuation of all taxable property within a particular taxing district.”¹⁷ IVGID’s solid waste franchise fee is not levied against real property, nor is it based upon its assessed valuation.

Other Taxes: The definition of a “tax” is an exaction of money for the purpose of generating revenue¹⁸. In contrast to a fee (see discussion below), taxes are “compulsory and…entitle…the taxpayer to receive nothing except the governmental rights enjoyed by all citizens.”¹⁹ Here IVGID’s solid waste franchise fee does not benefit the persons ultimately paying the fee, let alone in a manner not shared by all other members of society. Moreover, these fees are not paid by choice. Those who own property²⁰ have no choice in removing these fees from the solid waste bills the occupants of their homes on their properties are charged. In other words, IVGID’s franchise fee meets the definition of a tax. So where in NRS 318 is a GID expressly allowed to levy any tax other than an ad valorem one against property? Nowhere!

Special Assessments: See NRS 318.350(1)²¹. A special assessment is in essence “a local tax levied on property in addition to an ad valorem tax to pay for specific local infrastructure projects such as the construction or maintenance of roads or sewer lines. The (assessment) is charged only to the owners of property in (a) neighborhood that will benefit from the project.”²² Stated differently, “special assessments (are)…assessed for local improvements which enhance the value of real property.”²³ Here IVGID’s solid waste franchise fee doesn’t pay for specific local infrastructure projects, let alone ones charged only to the owners of property allegedly specially benefited therefrom. Moreover, it is not levied against real property.

Rates, Tolls and Charges: See NRS 318.197(1)²⁴. True “fees are charged in exchange for a particular governmental service which benefits the party paying the fee in a manner not shared by other members of society.”²⁵ Moreover, “they are collected not to raise revenues but to compensate the governmental entity providing the service…for its (actual) expenses.”²⁶ Finally, “they are paid by choice, in that the party paying the fee has the option of not utilizing the governmental service and thereby avoid(ing) the charge.”²⁷

Here IVGID provides no service to its solid waste collector (W-M) in consideration of the latter’s payment of IVGID’s solid waste franchise fee. However, assuming arguendo IVGID does, or it otherwise may charge W-M a solid waste franchise fee, because IVGID by and large doesn’t own public streets or rights-of-way in Incline Village/Crystal Bay, its cost to provide that “something” is essentially $0.00. Which means IVGID’s charge is excessive (see discussion below) and its intent must be “to raise revenues…for general spending purposes.”²⁸

Excessive Fees: Not only is IVGID’s solid waste franchise fee an impermissible tax, for at least two (2) reasons it is an excessive one. And why is this noteworthy? Because “if the charges (assessed) exceed the reasonable cost of the activity on which they are based,”²⁹ or they “are…in substantial excess of the (value of the) benefits received,”²² “the(y)…are (deemed) levied for unrelated revenue purposes and are therefore taxes.“ Were this not the rule, excessive franchise fees would (simply) become a vehicle for generating revenue independent of the purpose of the fees²⁸. So let’s examine the two (2) reasons.

First, as described elsewhere, municipal franchise fees represent “sums paid for the right to use public streets or rights-of-way.”¹⁴ But here IVGID owns essentially no such Incline Village/Crystal Bay public streets or rights-of-way because they’ve been dedicated to Washoe County. That makes its solid waste franchise fee “excessive.”

Second would be the amount of IVGID’s solid waste franchise fee. As the Nevada Public Utility Commission instructs, “in 1995 the Nevada Legislature passed S.B. 568³⁰ (which) establish(ed) a 5% cap on the fees…a local government can impose on the gross revenues of public utilities…derived from customers located (with)in the local government’s jurisdiction³¹…These fees are not kept by the utilities but (rather) are passed through to the local governments.” And the payee is similarly “passed through” to the utilities’ customers in the form of higher rates and charges. Now technically this limitation on franchise fees may not extend to a public agency’s solid waste charges³², however, the reasoning behind this limitation extends equally to a local government’s solid waste franchise fees. That makes IVGID’s solid waste franchise fee which is double this limitation, doubly “excessive.”

Conclusion: Given IVGID essentially owns no public streets nor rights-of-way, its solid waste franchise fee cannot be intended to offset the costs it incurs in maintaining and repairing those streets and rights-of-way. This fact proves that the purpose of IVGID’s solid waste franchise fee to raise revenue. Moreover, whatever benefits are derived from IVGID’s solid waste franchise fee, they accrue to society as a whole, whether or not an individual member is the one paying the fee. Therefore, “the (subject solid waste franchise fees)…levied…(by IVGID can)not survive scrutiny under the first prong of (the)…Medeiros test because the (services provided)…directly benefit…the public-at-large — not th(os)e…who pay the (fees)…inasmuch as the public at large is the primary beneficiary, and th(os)e (who are assessed) themselves are, if anything, only incidental beneficiaries.”³³

So now that you the reader know the facts, have we proved our point? If not, is there “any fair, reasonable (or) substantial doubt (in you the reader’s mind) concerning” IVGID’s ability to assess solid waste franchise fees? Under either inquiry, and according to Dillon’s Rule, “the existence of power is (to be) resolved…against the (municipal) corporation (i.e., here IVGID).

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1. See NRS 318.055(4)(b) which instructs that a GID’s “initiating ordinance must set forth…a statement of the basic power or basic powers for which the district is proposed to be created (which)…must be one or more of those authorized in NRS 318.116.
2. See NRS 318.077 which instructs that a GID “board may elect to add basic powers not provided in its formation, in which event (it) shall cause proceedings to be had by the board of county commissioners (“County Board”) similar, as nearly as may be, to those provided for the formation of the district, and with like effect.”
3. See NRS 318.055(4)(b).
4. See A.G.O. 63-61, p. 102, at p.103 (August 12, 1963).
5. NRS 318.075(1) instructs that GIDs are “quasi-municipal corporations.”
6. See Ronnow v. City of Las Vegas, 57 Nev. 332, 343, 65 P.2d 133 (1937).
7. See https://ivgid101.com/what-are-franchise-fees-how-are-they-collected-does-ivgid-assess-these-fees-and-if-so-how-and-against-what/.
8. NRS 318.075(1) instructs that GIDs are “governmental subdivision(s) of the State of Nevada.”
9. Municipal “police power(s) do…not specifically refer to the right of state and local governments to create police forces…(Rather,) the sovereign power of a state includes protection of safety, health, morals, prosperity, comfort, convenience and welfare of the public. In the U.S., the authority to regulate local matters concerning health, safety, and morality of state residents is reserved to states under the Tenth Amendment to the Constitution. The basic right of governments to make laws and regulations for the benefit of their communities is police powers. Police power is defined as the power of a governmental body to impose laws and regulations which are reasonably related to the protection or promotion of a public good such as health, safety or welfare[see Shreveport v. Restivo, 491 So. 2d 377, 380 (La. 1986)]. Usually states delegate to their political subdivisions the power to enact measures to preserve and protect safety, health, welfare, and morals of the community” (see https://municipal.uslegal.com/police-powers/).
10. NRS 244. 137(6) instructs that counties are empowered “to address matters of local concern for the effective operation of county government.” NRS 244.143(2)(a) defines “matters of local concern” as those “that (affect the) public health, safety and welfare” of its inhabitants.
11. NRS 268. 001(6) instructs that cities are empowered “to address matters of local concern for the effective operation of city government.” NRS 244.003(2)(a) defines “matters of local concern” as those “that (affect the) public health, safety and welfare in the city.”
12. NRS 269.190, et seq. grants unincorporated towns powers to provide for the “health, safety and morals” of its inhabitants.
13. See NRS 318.205.
14. See Jacks v. City of Santa Barbara, 3 Cal.5th 248, 262, 219 Cal.Rptr.3d 859 (2017).
15. NRS 244.137 instructs that “(1) Historically under Nevada law, the exercise of powers by a board of county commissioners has been governed by a common-law rule on local governmental power known as Dillon’s Rule, which…set(s) forth the common-law rule defining and limiting the powers of local governments. (2) In Nevada’s jurisprudence, the Nevada Supreme Court has adopted and applied Dillon’s Rule to county, city and other local governments…Dillon’s Rule provides that a (local government’s governing board)…possesses and may exercise only the following powers and no others: (a) Those powers granted in express terms by the Nevada Constitution or statute; (b) Those powers necessarily or fairly implied in or incident to the powers expressly granted; and, (c) Those powers essential to the accomplishment of the declared objects and purposes of the county and not merely convenient but indispensable. (4) Dillon’s Rule also provides that if there is any fair or reasonable doubt concerning the existence of a power, that doubt is (to be) resolved against the (local government)…and the power is denied.” Although this statute literally applies to county governments, since it accurately instructs that Dillon’s Rule applies to all forms of local government, most legal professionals believe it is equally instructive insofar as GIDs are concerned.
16. Which authorizes GID “board(s)…to levy and collect general (ad valorem) taxes on and against all taxable property within the district.”
17. See Solvang Mun. Improvement Dist. v. Board of Supervisors, 112 Cal. App. 3d 545, 552, 169 Cal.Rptr. 391(1980).
18. See Douglas Co. Contractors v. Douglas Co., 112 Nev. 1452, 1457, 929 P.2d 253, 256 (1996); State v. Boyd, 27 Nev. 249, 256, 74 P. 654, 655 (1903); Hawaii Insurers Council v. Lingle, 120 Haw. 51, 201 P.3d 564 (2008).
19. See U.S. v. City of Huntington, W.Va., 999 F.2d 71, 74 (4th Cir. 1993).
20. See ¶3.1 at page 9 of IVGID’s solid waste Ordinance #1 which states the District’s “garbage and other rubbish collection service…shall be mandatory for all owners, occupants, or persons in possession, charge, or control of all places and premises in the District where garbage and other rubbish is created, accumulated, or produced.” And ¶5.9 at page 18 states that “all (solid waste) charges, fees and amounts due and payable (including IVGID’s solid waste franchise fee) shall be billed to the owner of the premises, whether or not the owner is also the occupant”
21. Which instructs that “except as otherwise provided in subsection 2 (which applies to school districts rather than private persons and property owners), such part of the expenses of making any public improvement (to implement any one, all or any combination of basic powers stated in NRS 318.116 and granted to any district in proceedings for its organization or…its reorganization or as may be otherwise provided by law)…may be defrayed by special assessments upon lands and premises abutting upon that part of the street or alley so improved or proposed so to be, or the lands abutting upon the improvement and the other lands as in the opinion of the board may be specially benefited by the improvement.”
22. See https://www.investopedia.com/terms/s/specialassessmenttax.asp.
23. See Emerson College v. City of Boston, 391 Mass. 415, 419, 462 N.E.2d 1098 (1984).
24. Which authorizes GID “board(s to)…fix, and from time to time increase or decrease, electric energy, cemetery, swimming pool, other recreational facilities, television, FM radio, sewer, water, storm drainage, flood control, snow removal, lighting, garbage or refuse rates, tolls or charges other than special assessments, including, but not limited to, service charges and standby service charges, for services or facilities furnished by the district, charges for the availability of service, annexation charges, and minimum charges.”
25. See National Cable Television Ass’n v. United States, 415 U.S. 336, 341, 94 S.Ct. 1146 (1974).
26. See Emerson College, supra, at 391 Mass. 425 (fn. 16).
27. See Vanceburg, Kentucky v. FERC, 571 F.2d 630, 644 fn. 48 (D.C. Cir 1977), cert. denied at 439 U.S. 818 (1978).
28. See Jacks, supra, at 3 Cal.5th 257.
29. See Sinclair Paint Co. v. State Bd. of Equalization, 15 Cal.4th 866, 874, 879, 881, 64 Cal.Rptr.2d 447 (1997).
30. See SB568, Chapter 591, pages 2187-2192, 1995 Statutes of Nevada.
31. See NRS 354.598883(3)(b)
32. See NRS 354.598817(1)(a) which instructs a public utility subject to the above-franchise fee limitations is limited to one which “provides electric energy or gas.”
33. See State v. Medeiros, 89 Hawaii 361, 370, 973 P.2d 736, 745 (1999).