In a word, “Yes.” And what follows are the 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…which establish…the amount of the…RFF and…BFF to be collected,” and elects to have such charges collected on the county tax roll⁵. “At (a publicly noticed) meeting the Board…t(akes) action…which…(approves a final report⁶ 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.”⁷ That resolution and report describe the RFF/BFF as “standby and service charges⁸ (for)…the availability of the use of IVGID’s beaches” and other delineated public recreation facilities⁹. In other words, use of “IVGID’s beaches; boat launch ramp; Championship golf course; Mountain golf course; tennis facilities; the Chateau and Aspen Grove; Diamond Peak Ski Resort, and (the) Recreation Center.”⁹

But Are The RFF/BFF Really The “Fees“ Staff And Past Boards Represent? As we’ve demonstrated elsewhere, courts have oftentimes been asked to define the characteristics of a “fee,” and how they differ from other kinds of monetary exactions such as “taxes.” And

Just Because IVGID Staff And Past Boards Have Told Us The RFF/BFF Are Legitimate “Fees,” Doesn‘t Necessarily Make Them So: 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”¹⁰ or “effect”¹¹ “on the basis of realities.”¹² 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 past Boards have represented, or they are “taxes.”

The Legal Test For Determining Whether The RFF/BFF Are “Taxes:” As elsewhere explained, “the Hawaii Supreme Court in Medeiros adopted a modified version of the test¹³ articulated by the Massachusetts Supreme Judicial Court in Emerson College¹⁴ which analyzes whether an exaction: (1) applies to the direct beneficiary of a particular service, (2) is allocated directly to defraying the costs of providing the service, and (3) is reasonably proportionate to the benefit received.”¹⁵ “If those criteria fit the charge, it is a fee.”¹⁶ However, where it doesn’t, it is a tax¹⁷.

So with that said, we examine the “operating incidences” and “effects” of the RFF/BFF to determine whether they are “taxes.”

Trait No. 1: Is The Primary Purpose of The RFF/BFF to Raise Revenue? As elsewhere explained, the main pillar for determining the difference between a legitimate fee and a tax is whether the enactment is limited to covering the cost of providing a particular governmental service which expressly benefits the party who pays¹⁸. Where as here the primary purpose of the RFF/BFF is to raise revenue rather than to provide a particular governmental service which expressly benefits the parties who pay, the authorities¹⁷ are uniform in holding that this is the primary indicia of a tax because “it entitles the taxpayer to receive nothing except the governmental rights enjoyed by all citizens.”¹⁹ Recall that here the RFF is spent on public recreation facilities and programs which benefit the world’s tourists rather than just those local parcel owners whose properties are involuntarily assessed. And because the BFF is not spent on making the beaches available to be used by those with beach access²⁰, it too represents a “tax.”

Trait No. 2: Is The RFF Expressly Imposed to Benefit Those Who Are Not Justly Bound to Contribute? As elsewhere explained, taxes are spent on vital services which “benefit…the entire community,”²¹ and not just on those who pay²². In other words, what being a community is all about. But here, as we’ve elsewhere explained, the RFF is spent on public recreation facilities and associated services which benefit the world’s tourists. Moreover, unlike local Incline Village/Crystal Bay parcel owners who are involuntarily assessed the RFF, members of the general public as a whole are not required to pay the RFF. Which makes it a tax.

Trait No. 3: Are The RFF/BFF The Product of “Enforced Contribution?”²³ In other words, is the payor given a choice insofar as payment is concerned²⁴? Where as here those whose local parcels are involuntarily assessed the RFF/BFF, they “ha(ve no) option of not utilizing the governmental service and thereby avoiding the charge.”²⁵ Which makes them taxes.

Trait No. 4: Do The RFF/BFF Exceed The Cost Government Incurs to Furnish The Service(s) Allegedly Represented by Payment? “(T)he crucial factor in determining whether a municipal charge for services constitutes a valid…fee(, or something else,) is whether (it)…is intended to cover the cost of administering a regulatory scheme or providing a service.”²⁶ Where “the revenues collected exceed the costs of the program…the(y)…would have to be classified…(as) a tax.”²⁷

Here the RFF/BFF greatly “exceed…the value of the specific services for which (they are allegedly) charged.”²⁸ And because “a court cannot apportion the charge (n)or ascertain and allow (only) such portion…it may find reasonable,”²⁹ the entire charge must be deemed a tax.

District Staff‘s And Its Auditors‘ Admissions The RFF/BFF Are “Taxes:” District staff and its auditors have made a number of admissions to the effect 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. Rather, they represent the product of what the law labels “non-exchange transactions.” This makes them “taxes.”³⁰

Conclusion: So there you have it! Where as here the criteria recited by the Hawaii Supreme Court in Medeiros¹⁵ do not fit the RFF/BFF, they are taxes¹⁷. Given the presence of any one (1) of the above traits is sufficient to demonstrate that the RFF/BFF are “taxes,” and here we have at least four (4), the RFF/BFF must be and are in fact taxes.

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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. See page 103 of the 5/27/2020 Board packet.
6. An example of that report (for fiscal year 2022-23) appears at pages 232-237 of the 5/26/2022 Board packet.
7. See NRS 318.201(8) and (9).
8. See ¶4 at page 229 of the 5/26/2022 Board packet.
9. See ¶4(b) at page 230 as well as ¶I at page 234 of the 5/26/2022 Board packet.
10. See the reasoning in State v. Medeiros, 89 Hawai’i 361, 366, 973 P.2d 736, 741 (1999), adopted the Nevada Supreme Court in Clean Water Coalition v. The M Resort, LLC., 127 Nev. 301, 310, 255 P.3d 247, 257 (2011).
11. See Emerson College v. City of Boston, 39 Mass. 415, 424, 462 N.E.2d 1098, 1105 (1984).
12. See Hukle v. City of Huntington, 134 W.Va. 249, 58 S.E.2d 780, 783 (1950).
13. The “modification” omits the enforced contribution identifying factor (see the discussion above).
14. In other words, courts will not allow the ends (i.e., intentional overspending) to justify the means (i.e., raising revenues through an invalid exactment). Exactly what staff, past and present Boards do every budget season!
15. See Medeiros, supra, at 973 P.2d 742.
16. See Medeiros, supra, at 973 P.2d 742-45.
17. See Clean Water Coalition, supra, at 127 Nev. 315; 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); 71 Am. Jur. 2d  §13, State and Local Taxation (2001).
18. See Medeiros, supra, at 973 P.2d 741.
19. See U.S. v. City of Huntington, W.Va., 999 F.2d 71, 74 (4th Cir. 1993).
20. Recall that such availability is provided by the express use easement in the beach deed.
21. See Hawaii Insurers Council v. Lingle, 120 Haw. 51, 60, 201 P.3d 564 (Haw. 2008).
22. See Clean Water Coalition, supra, at 127 Nev. 322 quoting State v. Boyd, supra, at 21 Nev. 255,
23. 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.
24. 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).
25. See Executive Aircraft Consulting, Inc. v. City of Newton, 252 Kan. 421, 426-27, 845 P.2d 57 (1993). “Subsequent to its opinion in Emerson College, the Massachusetts Supreme Judicial Court…weakened its adherence to th(is)…identifying factor…(the) voluntary receipt of the ‘service’ – holding that (in very specific and limited circumstances, unlike here,) ‘the element of choice is not a compelling consideration which can be used to invalidate an otherwise legitimate charge” (see Medeiros, supra, at 89 Haw. 361, 366-67). Notwithstanding, but for one possible type of charge, the cases relied upon by the Medeiros court do not support the proposition advanced. Rather than making the argument, we simply make this observation and expressly discuss the one possible type of charge which may weaken this identifying factor.

    The Medeiros court pointed to Ripperger v. City of Grand Rapids, 338 Mich. 682, 62 N.W.2d 585 (1954) as evidence that enforced contribution for the availability to connect to municipal sewer services should not be an identifying factor. But that case started out with the premise “no one can be compelled to take water (as well as sewage disposal given sewer rates were based upon water usage) unless he(/she) chooses…Citizens may take it or not as the price does or does not suit them” [Id., at 338 Mich. 686 quoting Jones v. Water Commission of Detroit, 34 Mich 273, 275 (1876)]. If the citizen has the choice to use or not use municipal water and sewerservices, how can it be argued there is no enforced contribution identifying factor?Nevertheless. legitimate standby service charges for the availability to connect to and use public health and sanitation (water and sewer) services can be compelled absent the user’s choice under specific, limited circumstances. For a discussion of this subject, the reader is referred to our What Are Standby Service Charges discussion. However in this particular circumstance [general improvement districts (“GIDs”) when exercising their power, assuming it has been granted, to furnish facilities for public recreation], none of these exceptions apply. Which means that in refusing to adopt Emerson’s enforced contribution identifying factor, it seems the Medeiros court may have painted with far too broad a brush. Thus it is our position that but for legitimate standby service charges for the availability to access and use public health and sanitation (water, sewer and possibly solid waste disposal) services, enforced contribution continues as an identifying factor when determining whether a local government’s monetary exaction is a fee or a tax.

26. See Rizzo, supra, at 668 A.2d 238.
27. 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,” and City of Madera v. Black, 181 Cal. 306, 313-15, 184 P. 397 (1919) where “charges (a)re excessive…in order to…accumulat(e)…revenue…on profit therefrom…for the general benefit of the city…(the charge is an impermissible) tax.”
28. 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).
29. See City of Madera, supra, at 181 Cal. 315.
30. Since this subject is thoroughly examined at our Staff’s Admissions The RFF/BFF Are Not The Standby And Service Charges They Represent page, rather than repeating ourselves, we simply refer the reader to this discussion.