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The History of The Incline Village General Improvement District’s (“IVGID’s”) “Central Services” Transfers

IVGID 101 Posted on by

As we’ve discussed elsewhere, every year when the District’s Board of Trustees (“Board”) approves a budget for the forthcoming year, it adopts1 an updated Central Service Cost Allocation Plan2 which provides for payment, via transfers, from its Utility, Community Services and Beach enterprise funds to its General Fund3 for an alleged “equitable distribution of general, overhead, administrative and similar costs4 (assigned by staff)…in conformity with…Nevada Revised Statute Section(s) 354.107(1)5, [354.613(8)6], and 354.613(1)(c)7.” Given NRS 354.613 did not become effective until July 1, 20118, and NAC 354.865, et seq. wasn’t even adopted until 2012, here we trace the genesis of these transfers to cover the financial shortfall between budgeted revenues and intentional overspending.

These Same Kinds of Transfers Existed Prior to Passage of NRS 354.613: Pardon us for beginning our discussion by strolling down memory lane. But for decades prior to passage of NRS 354.613, IVGID staff routinely transferred sums from the District’s enterprise funds to its General Fund, as a matter of course. And their admitted intent was was nothing more than to cover the difference between budgeted revenues and expenses so as to balance the budget9. Listen how the District freely admitted this practice at Note 12 to its various 2004-11 Comprehensive Annual Audited Financial Reports10 (“CAFRs”) under “Transfers:”

“Each year the District makes transfers between its General Fund and (its) Enterprise Funds in an amount equal to the excess or deficiency of revenues over expenditures11 of the General Fund. The purpose of th(ese) transfer(s) is to…cover General Fund expenses12…(and to) maintain the General Fund’s fund balance at a sufficient level to (financially) support operations13 from year to year.” In other words, a balanced budget9.

The Sources For The Costs of These Transfers Were Arbitrarily Determined: from the only revenue sources available to the District (rather than reimbursing the General Fund for the cost of services allegedly provided to operations assigned to the funds from which those transfers were made). That was the RFF assigned to the District’s Community Services Fund, and the rates and charges collected for the public water and sewer services furnished. Arbitrarily fixed in the ratio: 50% from the Utility Fund, and 50% from the Community Services Fund14.

On April 30, 2008, the District created the Beach Fund (see Resolution No. 1783) effective July 1, 2008. To avoid the appearance that beach expenditures were being paid by those whose assessed properties were denied beach access, necessary transfers to balance the District’s General Fund budget were modified just as arbitrarily: “50% to Utilities, 45% to Community Services and 5% to the Beach Funds.”15 No mention of “central services,” no equitable distributions nor allocations, and just as we have represented, nothing more than an arbitrarily allocated subsidy required to plug the financial deficiency between budgeted revenues and intentional overspending assigned to the General Fund.

The District‘s Justification For These Transfers: Because the District used these moneys for operating expenses, rather than reimbursing the General Fund for the cost of services allegedly provided to operations assigned to the funds from which those transfers were made, the simple answer to this query is it was used as a means to justify the ends. Similar16 to what the City of Ely was doing17 which was the subject of former Assembly person Marilyn Kirkpatric’s testimony before the Senate Committee on Government Affairs on such transfers on May 11, 201118 (see discussion below).

No One Came Forward to Argue The Law Does Not Declare IVGID Can Take Whatever Means: necessary to justify its ends simply because the law did not say it could not. For as far back as we’ve been able to research, rather than reducing expenses assigned to the District’s General Fund in order to live within their financial means, staff have simply transferred the monies required from its Utility and Community Services19 Funds20 in order to balance the General Fund budget9. Therefore just like Recreation (“RFF”) and Beach (“BFF”) Facility Fees21 are the financial subsidy for intentional overspending assigned to the District’s Community Services and Beach Funds, respectively, central services cost transfers are really the very same subsidy intended to pay for intentional overspending assigned to the District’s General Fund!

Yet That‘s Exactly What Dillon’s Rule Instructs: Given Nevada is a Dillon’s Rule state22, the Rule is applied to county, city and other local governments23. And as elsewhere stated, Dillon’s Rule24 instructs:

“That a (local government) possesses and may exercise only the following powers and no others: (a) Those…granted in express terms by the Nevada Constitution or statute; (b) Those…necessarily or fairly implied in or incident to the powers expressly granted; and (c) Those…essential to the accomplishment of the declared objects and purposes of the (local government) and not merely convenient but indispensable.”

So where in NRS 318 does it instruct, in express terms, that a general improvement district’s (“GID’s”) General Fund can subsidize the costs of an enterprise fund activity (whether through the guise of central services, or otherwise)? Where did it instruct back in 2011-12 that revenues realized from a GID’s enterprise fund’s activities could be transferred to its General Fund? What case opinions exist which construe the powers of GIDs in light of Dillon’s Rule25? The answers are nowhere, nowhere, and nowhere!

And not that there is any doubt, let alone reasonable doubt, but NRS 244.137(4) and NRS 268.001(4) instruct that should there be any, it “is (to be) resolved against the (GID) and the power…denied.” Therefore advancing the narrative that a GID may exercise any power of its choosing where the law does not expressly say it may not, simply doesn’t cut it! And it didn’t cut it prior to 2011-12.

And to Prove Our Point, Examine The Facts: The reader can see the above conclusions played out in the summary spreadsheet below which depicts relevant General Fund entries for the seven (7) year period immediately preceding 2012:

YearRevenuesExpensesDeficiencyTransfersExcess
(Deficient)
Transfers		Fund
Balance
200526$ 2,615,088$ 2,640,436$ 25,348($ 560)($ 25,348)$ 415,774
200627$ 2,694,291$ 2,589,711($ 104,580)$ 128,798$ 128,798$ 415,774
 200728$ 2,619,260$ 2,808,582 $ 189,322$ 389,322 $ 200,00029$ 615,774
200830$ 2,493,880$ 2,956,832$ 462,952$ 462,952$ 0$ 615,774
200931$ 2,227,172$ 3,090,704$ 863,582$ 863,532$ 0$ 615,775
201032$ 1,961,140$ 3,228,982$ 1,267,84233$ 1,267,842$ 0$ 615,775
201134$ 2,221,467$ 3,154,741$ 933,274$ 924,154($ 9,12035)$ 615,775

Note how the numbers in the Deficiency column above fairly consistently match those in the Transfers column. In other words, just as we have observed, transfers represented the amounts required to plug the financial shortfall between budgeted revenues and intentional overspending.

The Legislative Response to Enterprise Fund Transfer Abuse Like This: According to former Assembly person Kirkpatric18:

“Enterprise funds have become a mechanism for local governments to transfer funding from the intended use to be used for other things. It is happening in our smallest and largest cities. As an example, the City of Ely requested a (solid waste) rate increase and transferred the funding to (its) General Fund…In North Las Vegas, City officials have been practicing this type of transfer since 1977. My constituents have received an increase of 35 percent in their water and sewer rates, and most of the money is placed in the General Fund…This is a practice being utilized across the State. As ratepayers, we continue to pay these rates and the increases keep coming. The money brought in by the rate increases is being utilized for…new equipment, computers and other things rather than just water and sewer service…When enterprise funds were originally created, they were supposed to ensure (that) the money (generated from operations assigned to these funds would be)…used for specific items…Now enterprise funds are being transferred on a regular basis…This is not fair to the ratepayers who continue to pay these increased fees…We…need to change how the enterprise funds are being utilized. These entities need to stop using these enterprise funds as a revenue source because it has become a way to increase fees on constituents…Enterprise funds are not meant to be a mechanism for moving dollars from one category to another.”

Assembly person Kirkpatric’s legislation (which became NRS 354.613) was intended “to stop…these entities (from)…using…enterprise funds as a revenue source.”18 It is for this very reason, NRS 354.613(1)(c) instructs that:

“The governing body of a local government may (not)…loan or transfer money from an enterprise fund, money collected from fees imposed for the purpose for which an enterprise fund (i)s created36(,) or any income or interest earned on money in an enterprise fund (but)…(c) for a cost allocation for employees, equipment or other resources related to the purpose of the enterprise fund.”

Hence the birth of the “cost allocation exemption for (the costs of) employees, equipment or other resources related to the purpose of the enterprise fund.” Which explains why IVGID staff were quick to change their description of “interfund transfers” to “central services cost” transfers (see discussion below). In other words, staff’s current explanation for its enterprise fund transfers was “undoubtedly drafted with [NRS 318.197(1)] firmly in mind!”37

The Regulatory Response to Enterprise Fund Transfer Abuse Like This: Given NRS 354.613(8) instructs that:

“For the purposes of paragraph (c) of subsection 1, the (CLGF) shall adopt regulations setting forth the extent to which general, overhead, administrative and similar expenses of a local government of a type described in paragraph (c) of subsection 1 may be allocated to an enterprise fund,”

Effective December 20, 2012 the CLGF adopted NAC 354.865 – NAC 354.867 which sets forth the extent to which general, overhead, administrative and similar expenses of a local government of a type described in NRS 354.613(c)(1) may be allocated to an enterprise fund. Those regulations mandate that “the costs which may be allocated to an enterprise fund of a local government pursuant to paragraph (c) of subsection 1 of NRS 354.613 must:

1. Be “reasonable;”38

2. Be “of a type generally recognized as ordinary and necessary for the operation of the…fund(s)”39 from which they have been transferred;

3. “Provide…for an equitable distribution of general, overhead, administrative and similar costs of the local government;”40

4. Be “necessary…for the proper and efficient administration and performance of th(os)e…fund(s);”41

5. Be properly “assignable or chargeable to the cost objective(s) of th(os)e…fund(s)” from which they have been transferred42;

6. “Be limited to indirect costs for services and property provided by the local government on a centralized basis;”43

7. Be “consistent with sound business practices;”44

8. Be “determined in accordance with generally accepted accounting principles”45 (“GAAP”);

9. Be an “indicia of an arm’s length transaction;”46

10. Not exceed “market prices for comparable services or property;”47

11. They and their allocation must be “documented adequately for independent verification;”48 and,

12. Evidence that staff have “acted with prudence under the circumstances considering their responsibilities to each pertinent governmental unit (they have assessed)…its employees, and…(we) the general public.”49

Moreover, to assure the Department of Taxation and the public that any central service cost allocation plan50 adopted by a local government51 complied with the aforesaid regulations, the chief financial officer of the local government, or his or her designee, was required to attest “that the central service cost allocation plan complies with the provisions of NAC 354.865 to 354.867, inclusive.”52

Thus Everything Changed With The District‘s 2011–12 Transfers: On June 10, 2011 NRS 354.613 was adopted. This legislation provided that after July 1, 2011 “loan(s) or transfer(s of) money from an enterprise fund” were made unlawful53 unless the loan or transfer were made:

“(a) In accordance with a medium-term obligation issued by the recipient in compliance with the provisions of chapter 350 of NRS…

(b) To pay the expenses related to the purpose for which the enterprise fund was created;

(c) For a cost allocation for employees, equipment or other resources related to the purpose of the enterprise fund…or

(d) Upon the dissolution of the enterprise fund.”

And unsurprisingly, the District’s description of these transfers changed54 as well:

Because “the District’s General Fund(‘s) primary function is to provide administrative support for (its) Proprietary Funds (and) the General Fund incurs costs for Executive Management, Accounting, Information Technology, Human Resources, Risk Management and other activities(,) these costs, net of other revenues received by the General Fund, are recovered through an allocation plan that results in maintaining a static fund balance for the General Fund.”55

Then for fiscal year 2012 the District’s practice of transferring funds from its Utility, Community Services and Beach enterprise Funds to its General Fund continued, however, the labeling of these transfers changed to “Central Services Cost Allocation(s).” And their description changed56 as follows:

“The District allocates the shared costs of Accounting and Human Resources…under a plan which considers wages, benefits, full time equivalents and services and supplies as…bas(e)s for determining charges. The charges are (treated as)…budgeted expenses. (And) the revenue generated by the allocation is recorded separate of…expenses.”57

Not to worry though. Because your Incline Village General Improvement District (“IVGID”) is up to the challenge. And the artifice is called central services cost transfers58 from funds which benefit from a steady revenue source. Like the Recreation Facility Fee (“RFF”) assigned to the Community Service Fund. Or the Beach Facility Fee (“BFF”) assigned to the Beach Fund. Or water or sewer rates and charges assigned to the Utility Fund. And here that vehicle is the District’s “Central Service(s) Cost Allocation Plan.”59 Once one adopts a formula of recoupment associated with the Plan, one can use it to generate the required deficient funds. Easy peasy.

Although Until Fiscal Year 2012 The District Didn‘t Have a Central Services Cost Allocation Plan, It Intentionally Budgeted to Overspend in Its General Fund And to Plug The Deficiency With Transfers From Its Enterprise Funds: Listen how the District admitted this practice at Note 12 to its various Comprehensive Annual Financial Reports60 (“CAFRs”) labeled “Transfers:”

“Each year the District makes transfers between its General Fund and (its) Enterprise Funds in an amount equal to the excess or deficiency of revenues over expenditures61 of the General Fund. The purpose of th(ese) transfer(s) is to maintain the General Fund’s fund balance at a sufficient level to (financially) support operations62 from year to year.”

And to affirm the arbitrariness of these transfers, they were fixed in the ratio: 50% from the Utility Fund, and 50% from the Community Services Fund63. Once the Beach Fund was created in 2009, the ratio changed slightly to: 50% from the District’s Utility Fund, 45% from its Community Services Fund, and 5% from its Beach Fund64.

Just As We Contend The RFF/BFF Represent The Financial Shortfall Between Budgeted Revenues And Expenses Assigned to The District‘s Community Services/Beach Funds, Respectively65, Today The District‘s Transfers From These Enterprise Funds Provide The Only Possible Funding Source to Continue Intentional Overspending Assigned to The General Fund: Starting in fiscal year 2012 the District’s practice of transferring funds from its Utility, Community Services and Beach Funds continued notwithstanding passage of NRS 354.613. However, the labeling of these transfers changed to “central services cost” transfers. And as General Fund overspending increased, unsurprisingly, the amount of central services cost transfers increased by a like amount. The reader can see this from the summary spreadsheet created below which depicts relevant General Fund entries for nearly the last twenty (20) years. Note how the numbers in the Deficiency column have fairly consistently matched those of the Central Services Cost Transfer column. Until starting in 2011-12 when overspending escalated, and the need to shore up the financial deficiency comparatively increased.

YearRevenuesExpendituresDeficiencyCentral Services
Cost Transfers		Excess
(Deficient)
Transfers		Fund
Balance
200566$ 2,615,088$ 2,640,436$ 25,348($ 560)($ 25,348)$ 415,774
200667$ 2,694,291$ 2,589,711($ 104,580)$ 128,798$ 128,798$ 415,774
 200768$ 2,619,260$ 2,808,582 $ 189,322 $ 389,322 $ 200,000$ 615,774
200869$ 2,493,880$ 2,956,832$ 462,952$ 462,952$ 0$ 615,774
200970$ 2,227,172$ 3,090,704$ 863,582$ 863,532$ 0$ 615,774
201071$ 1,961,140$ 3,154,747$ 1,267,842$ 1,267,842$ 0$ 615,775
201172$ 2,109,201$ 3,507,420$ 1,398,219$ 1,395,963($ 2,256)$ 615,774
201273$ 2,458,945$ 3,164,826$    705,880$ 1,074,000$ 368,120$ 983,893
201374$ 2,547,137$ 3,648,330$ 1,032,060$ 1,000,200($ 100,930) $ 886,667
2014 75$ 2,618,192 $ 3,196,367 $  577,370$ 1,068,996 $ 490,821 $ 1,391,021
2015 76$ 2,793,122$ 3,783,856$ 990,734$ 1,101,000$ 110,266$ 1,501,287
2016 77$ 3,035,284$ 3,589,578$ 554,294$ 1,123,020$ 568,706$ 1,819,993
2017 78$ 3,017,379$ 3,752,102$ 734,723$ 1,177,200$ 442,477$ 1,862,249
2018 79$ 3,266,537$ 3,700,016$ 433,479$ 1,094,000$ 600,521$ 2,522,786
2019 80$ 3,653,450$ 4,054,406$ 400,956$ 1,169,400$ 768,444$ 3,765,586
2020 81$ 3,876,422$ 4,079,259$ 202,837$ 1,367,400$ 1,164,563$ 4,630,149
2021 82
2022 83
2023 84
2024 85

Follow The Money:

An Example of The Kinds of Costs The District Assigns to Its General Fund Having Nothing to Do With: General Administration, Planning, Budgeting, Payroll, Legal, Legislation, Accounting, Internal Audits, Accounts Payable, Human Resources, General or Emergency Services, Public Relations, Public Works, Property Management, Building And Grounds Maintenance, Procurement And Contracts, Grants Management, Risk Management, Motor Pool, Road Maintenance, Water And Sewer Service(s), Telecommunications, Automatic Data Processing Services, Printing, Maintaining a Library, Records Maintenance, Storage And Warehousing, And Animal Control86, Which Are Paid With Central Service Cost Transfers: For decades revenues and expenses associated with the District’s parks and athletic fields were assigned to its “Parks” Fund87, a sub-fund of the District’s Community Services Fund. For fiscal year 2023-24 the Board decided to transfer “Parks'” meager revenues and assign its out-of-control expenses to the District’s General Fund. The reason being that the District’s parks are “public” facilities available to be accessed and used by the general public as a whole, and without assessment of user fees. There was the belief at the time (one in which we agree by-the-way) that facilities and services provided to the general public should be paid for from general revenues (such as taxes) rather than assessing local parcels/dwelling units for the alleged “availability” to access and use the same. But this meant there was then a shortage of approximately $1.2 million in the District’s General Fund88. So how did staff propose covering this shortfall? It’s “preferred means (wa)s to (create) budget capacity in (the) General Fund” by disingenuously increasing the amount of central services cost transfers. The alleged justification for this increase became “adding Information Technology to (the District’s) Central Services Overhead Allocation Plan.”89 In other words, rather than making $2,362,441 in central services cost transfers from the District’s Utility, Community Services and Beach Funds, staff proposed increasing the same by a whopping 50.8% to $3,562,441 or what eventually became even more!

General Fund Balance “Creep:” The term “fund balance” means “the excess of assets over liabilities in a governmental fund”90 at a given point in time. Given the increase in fund balance over time, the District’s central services cost transfers have represented more than that necessary to merely “plug” the difference between estimated revenues and deliberate overspending assigned to the District’s General Fund. A LOT MORE! Let us explain.

“At the end of the (2010-11) fiscal year(, the beginning of the 2011-12 fiscal year), the District’s General Fund balance remained unchanged at $615,774.”91 The following fiscal year the General Fund Balance (began its steady) increase. Initially…by $368,119.”92 “As of June 30, 2022 (the)…unassigned fund balance…in the General Fund (stood at)…$6,010,867.”93 This represents a $5,395,093 increase over ten (10) short years (hence the term “General Fund balance creep”), or an average yearly increase of $539,509 for each and every one of those ten (10) years! Given ¶2.1 of Board Policy No. 7.1.0 instructs that “the policy of the District shall be to maintain a target fund balance within the General Fund equal to 15% of annual budgeted expenditures (less transfers and debt),” budgeted expenses less transfers and debt assigned to the General Fund “for the year ended June 30, 2022 (totaled)…$3,741,1487, 15% of this number totals $561,172. And the reader can see that what staff have been doing is grossly in conflict with Board Policy No. 7.1.0. Please explain to us how this can happen when the District intentionally budgets to spend more in its General Fund than the revenues it budgets to receive? There’s only one answer. It can’t!

The above facts demonstrate that the District has been systematically budgeting for central services cost transfers well in excess of amounts required to merely balance the General Fund budget. Just as we have alleged94, to build a “slush fund” to be spent on future unidentified, unbudgeted and unappropriated “pet” projects! In other words, the District’s central services cost transfers represent a vehicle primarily intended to raise revenues, just like a tax95, and they’re not what staff/the Board represent.

The District‘s Central Services Cost Transfers Are Excessive:

IVGID “Trustees must…be deemed to have known…that the (transfers) established were far in excess of the needs for (central services)…Persons, even when acting officially, are presumed to intend the necessary consequences of their acts…It must therefore be presumed that the high (transfers) were imposed in order to bring about the known and inevitable result — that is, the accumulation of a fund for the general benefit of the (GID)…This would be an unjust discrimination and an unfair burden upon those who (pay the RFF/BFF and whose properties are connected to the District’s public water or sewer systems)…and it is clearly beyond any power possessed by” IVGID96.

Moreover, it’s not just the unreasonably excessive portions of the transfers which are invalid.

“A court cannot apportion the charge,(n) or ascertain (n)or allow such portion as it might find reasonable, assuming, but not deciding, that (IVGID)…is authorized to (transfer)…charges (for central services)…The entire charge, therefore, is…invalid.”97

Is it Any Wonder Then That in 2014 Staff Circumvented the Protections of NRS 354.613 by Bamboozling The Then Board Into Converting the District’s Community Services and Beach Funds From Enterprise Into Special Revenue? Evidence of this behavior represents consent by means of conduct that IVGID staff agree that the District’s central services cost transfers represent nothing more than another financial subsidy (just like the RFF/BFF) intended to “plug” the financial difference between estimated revenues and deliberate overspending assigned to its General Fund.

Faced with added scrutiny over the “so called” central services allegedly provided to the District’s funds other than its General Fund, and the disingenuous explanations like those recited elsewhere, starting in fiscal year 2014-15 staff chose to eliminate the inquiry altogether by convincing the Board to change the District’s Community Services and Beach Funds from Enterprise98 to Special Revenue99. The justification given for this change appears at Note 19, on page 46 of the District’s 2014-15 Comprehensive Annual Financial Report (“the 2014-15 CAFR“): “Effective July 1, 2015, with its new fiscal and budget year, the District began utilizing Special Revenue, Capital Projects and Debt Service governmental fund accounting for (its) Community Services…and…Beach Fund(s), which have to date been accounted for as enterprise funds. The District has changed its approach to the pricing of services and in particular recognizes that the use of the facility fee to provide (financial) resources for capital expenditure and debt service (allegedly) cannot be displayed in a readily understandable fashion for its constituents” in enterprise funds.

What you had here was nothing short of circumventing the protections created by NRS 354.613 so District staff no longer had to concern itself with the validity of transfers from its Utility, Community Services and Beach Funds. After all, if transfers to the District’s General Fund are made from a fund other than an enterprise one, how can they be prohibited or limited by NRS 354.613 which speaks to enterprise funds? They can’t! And to further demonstrate that the conversion of these funds from/to enterprise/special revenue represents circumvention, for fiscal year 2021-22 a new IVGID Board took charge and transitioned the District’s Community Services and Beach Fund(s) back to enterprise fund-types100.

And now you know!

  1. See NAC 354.8668(7)(a).
  2. See NAC 354.8654 which defines that plan as “documentation of a local government that identifies, accumulates, allocates or develops billing rates for the allocation of the cost(s) of services and property provided by the local government on a centralized basis to its departments, agencies and enterprise funds.”
  3. See pages 43-44 of the packet of materials prepared by staff in anticipation of the Board’s May 26, 2022 meeting (“the 5/26/2022 Board packet“).
  4. See NAC 354.8668(5)(a) which mandates these costs adhere to this requirement.
  5. Which instructs that “the Committee on Local Government Finance (“CLGF”)…adopt…regulations as are necessary for the administration of this chapter.”
  6. Which instructs that or the”for purposes of paragraph (c) of subsection 1, the CLGF shall adopt regulations setting forth the extent to which general, overhead, administrative and similar expenses of a local government of a type described in paragraph (c) of subsection 1 may be allocated to an enterprise fund.”
  7. For an example of the allocated central services costs the Board approved for 2022-23, the reader is directed to page 045 of the 5/26/2022 Board packet.
  8. See NRS 354.613(1).
  9. ¶1.1 of Board Policy No. 6.1.0 mandates adoption of a balanced operating budget.
  10. See page page 44 to the District’s 2004-05 CAFR, page 43 to its 2005-06 CAFR, page 42 to its 2006-07 CAFR, page 38 to its 2007-08 CAFR, page 43 to its 2008-09 and 2009-10 CAFRs, and page 42 to its 2010-11 CAFR.
  11. Isn’t this an admission staff used these transfers to plug the financial shortfall between budgeted revenues and intentional overspending just as we have represented?
  12. See page 17 of the District’s 2004-05 CAFR.
  13. In other words, to “maintain” intentional overspending while keeping the General Fund fund balance static. And if the fund balance remained static, year after year, weren’t the transfers to the General Fund intended to cover the shortfall between budgeted revenues and intentional overspending? Exactly what we’ve represented!
  14. See pages 23, 25 and 26 of the District’s 2007-08 CAFR.
  15. See Note 12 at page 42 of the 2010-11 CAFR.
  16. In 1964 IVGID was forcing its solid waste collector to pay a twenty-percent (20%) fee (i.e., a “franchise fee”) in consideration of a ten (10) year franchise because the District needed money to pay for other intentional overspending [see Whiston v. McDonald, 85 Nev. 508, 512, 458 P.2d 10 (1969)]. Given that fee was passed through to rate payers, solid waste disposal customers were in essence indirectly paying the fee.
  17. There “the City of Ely (had) requested a (solid waste) rate increase and transferred the funding to (its) General Fund. When asked how they could increase the rates for trash pickup and then deposit the money into the general fund, Ely officials indicated (because) the law does not say they cannot” (see page 39 of Marilyn Kirkpatric’s May 11, 2011 testimony). In other words, the ends justified the means.
  18. See pages 39-40 of the minutes of the May 11, 2011 public hearing session for AB471 before that Committee.
  19. That is, recreation other than the beaches.
  20. The only sources available from which revenues were and currently are consistently generated.
  21. The precursors to today’s central services cost transfers.
  22. In Nevada’s jurisprudence, the Nevada Supreme Court has adopted the Rule[see Tucker v. Mayor and Bd. of Alderman, 4 Nev. 20, 26 (1868); State ex rel. Rosenstock v. Swift, 11 Nev. 128 (1876)].
  23. See Waltz v. Ormsby County, 1 Nev. 370, 377 (1865). In fact to cement the case Dillon’s Rule is the mainstay in Nevada, it has been formally embodied into the NRS [see NRS 244.137(2) and 268.001(2)].
  24. See NRS 244.137(3) and NRS 268.001(3).
  25. “The absence of cases involving…application (of Dillon’s Rule to) special districts…most probably…stems from the fact that such districts are created to carry out relatively narrow, statutorily specified purposes with the method of financing those activities also prescribed by the underlying statute. This is far different from the situation Nevada cities and counties face: an increasing myriad of functions imposed by the state or federal governments, with a taxing regime almost fully centralized and controlled by the state government” (see page 7 of the June 2013 edition of the Nevada Lawyer magazine, Dillon’s Rule in Nevada).
  26. See page 26 of The District’s 2004-05 CAFR.
  27. See page 24 of The District’s 2005-06 CAFR.
  28. See page 25 of The District’s 2006-07 CAFR.
  29. For 2006-07 staff retained its description of these transfers (see Note 12 under “Transfers” at page 42 of the 2006-07 CAFR). However, it expanded their purpose to “increase the District’s governmental fund balance…accomplished through ‘Residual Fund Equity Transfers’ (as)…part of the financial plan to provide coverage in (the) General Fund if an extraordinary event occurred” (see page 17 of the 2006-07 CAFR). Thus resulting in an increase in the amount required to balance the District’s General Fund by $200,000.
  30. See page 23 of The District’s 2007-08 CAFR.
  31. See page 23 of The District’s 2008-09 CAFR.
  32. See pages 23 and 24 of The District’s 2009-10 CAFR.
  33. The reason for the increase over 2008-09 was $450,907 of one time capital expenditures.
  34. See pages 23 and 24 of The District’s 2010-11 CAFR.
  35. This deficiency was covered by the gain on the sale of assets.
  36. That is, user fees.
  37. See Rider v. County of San Diego, 1 Cal.4th 1, 15, 820 P.2d 10 (1991) for evidence of similar behavior.
  38. See NAC 354.867(1) which mandates these costs adhere to this requirement.
  39. See NAC 354.867(2)(a) which mandates these costs adhere to this requirement.
  40. See NAC 354.8668(5)(a) which mandates these costs adhere to this requirement.
  41. See NAC 354.867(1)(a) which mandates these costs adhere to this requirement.
  42. See NAC 354.8668(5)(b) which mandates these costs adhere to this requirement.
  43. See NAC 354.8668(2) which mandates these costs adhere to this requirement.
  44. See NAC 354.867(2)(b) which mandates these costs adhere to this requirement.
  45. See NAC 354.867(1)(c) which mandates that these costs adhere to this requirement.
  46. See NAC 354.867(2)(b) which mandates these costs evidence “an arm’s length transaction.”
  47. See NAC 354.867(2)(c) which mandates these costs not exceed these prices.
  48. See NAC 354.867(1)(d) which mandates these costs be adequately documented for independent verification.
  49. See NAC 354.867(2)(d) which mandates these costs adhere to these requirements.
  50. According to NAC 354.8654, “documentation of a local government that identifies, accumulates, allocates or develops billing rates for the allocation of the cost of services and property provided by the local government on a centralized basis to its departments, agencies and enterprise funds.”
  51. NRS 354.613(1)(c) instructs that “except as otherwise provided in this section, the governing body of a local government may, on or after July 1, 2011, loan or transfer money from an enterprise fund, money collected from fees imposed for the purpose for which an enterprise fund was created or any income or interest earned on money in an enterprise fund…for a cost allocation for employees, equipment or other resources related to the purpose of the enterprise fund… only if the loan or transfer…is approved by the governing body under a nonconsent item that is separately listed on the agenda for a regular meeting of the governing body.”
  52. See NAC 354.8668(8).
  53. NRS 354.626(1) was amended to read that “no governing body or member thereof, officer, office, department (n)or agency (could), during any fiscal year…willfully violate…NRS 354.470 to 354.626.”
  54. See Note 12 at page 42 of the 2010-11 CAFR.
  55. In other words, another way of saying a subsidy to plug the financial deficiency between revenues and expenses assigned to the General Fund.
  56. See Note P at page 33 of the District’s 2011-12 CAFR.
  57. Although this description has slightly changed in the last nearly fifteen (15) years, today it essentially reads the same (see Note S at page 34 of the District’s 2022-23 CAFR).
  58. Since central services cost transfers are expressly permitted by NRS 354.613(1)(c), is it any wonder District staff have proclaimed (whether or not it is accurate) that the purpose for these transfers is to pay for “general, overhead and administrative costs incurred by the District’s General Fund” [see page 520 of the packet of materials prepared by staff in anticipation of the Board’s May 25, 2023 meeting (“the 5/25/2023 Board packet“)]?
  59. See NAC 354.8654 which describes this term as “the documentation of a local government that identifies, accumulates, allocates or develops billing rates for the allocation of the cost of services and property provided by the local government on a centralized basis to its departments, agencies and enterprise funds.”
  60. See page page 44 to the District’s 2004-05 CAFR, page 43 to its 2005-06 CAFR, page 42 to its 2006-07 CAFR, page 38 to its 2007-08 CAFR, page 43 to its 2008-09 and 2009-10 CAFRs, and page 42 to its 2010-11 CAFR.
  61. Isn’t this an admission staff use these transfers to plug the shortfall between budgeted revenues and intentional overspending?
  62. In other words, to “maintain” intentional overspending while keeping the General Fund fund balance static.
  63. The only District funds generating revenue from which to transfer.
  64. See page 42 to the 2010-11 CAFR under ¶12 Transfers: “the allocation has been 50% to Utilities, 45% to Community Services and 5% to the Beach Funds.”
  65. See our What Are Our RFF/BFF According to Us discussion.
  66. See page 26 of The District’s 2004-05 CAFR.
  67. See page 24 of The District’s 2005-06 CAFR.
  68. See page 25 of The District’s 2006-07 CAFR.
  69. See page 23 of The District’s 2007-08 CAFR.
  70. See page 23 of The District’s 2008-09 CAFR.
  71. See page 23 of The District’s 2009-10 CAFR.
  72. See page 23 of The District’s 2010-11 CAFR.
  73. See page 22 of The District’s 2011-12 CAFR.
  74. See page 23 of The District’s 2012-13 CAFR.
  75. See page 23 of The District’s 2013-14 CAFR.
  76. See page 23 of The District’s 2014-15 CAFR.
  77. See page 28 of The District’s 2015-16 CAFR.
  78. See page 26 of The District’s 2016-17 CAFR.
  79. See page 27 of The District’s 2017-18 CAFR.
  80. See page 27 of The District’s 2018-19 CAFR.
  81. See page 25 of The District’s 2019-2020 CAFR.
  82. See page 27 of The District’s 2020-2021 CAFR.
  83. See page 27 of The District’s 2021-2022 CAFR.
  84. See page 27 of The District’s 2022-2023 CAFR.
  85. See page 2? of The District’s 2023-2024 CAFR.
  86. See NAC 354.8668(2).
  87. For fiscal year 2022-23, the reader can examine staff’s financial reporting of this sub-fund at pages 160-163 of the packet of materials prepared by staff in anticipation of the Board’s May 26, 2022 meeting (“the 5/26/2022 Board packet“).
  88. See pages 150-151 of the packet of materials prepared by staff in anticipation of the Board’s February 22, 2023 meeting (“the 2/22/2023 Board packet“).
  89. See page 150 of the 2/22/2023 Board packet.
  90. See NRS 354.533.
  91. See page 16 of the 2010-11 CAFR.
  92. See page 13 of the 2011-12 CAFR.
  93. See page 14 of the 2021-22 CAFR.
  94. For 2010-11 the District made $933,274 of transfers from its Utility, Community Services and Beach Enterprise Funds to its General Fund under the guise of central services costs (see page 23 of the 2010-11 CAFR). For 2023-24, the Board has just approved a Central Services Allocated Cost Plan which calls for doubling ($1,956,300 to be exact) of central services cost transfers [see ¶III(1) at pages 503-504 of the packet of materials prepared by staff in anticipation of the Board’s May 25, 2023 meeting (“the 5/25/2023 Board packet“)].
  95. See our What is a Tax? discussion.
  96. See City of Madera v. Black, 181 Cal. 306, 314, 184 P. 397 (1919).
  97. See City of Madera, supra, at 181 Cal. 315.
  98. NRS 354.517 defines an enterprise fund as one: “established to account for operations: 1. Which are financed and conducted in a manner similar to the operations of private business enterprises, where the intent of the governing body is to have the expenses…of providing goods or services on a continuing basis to the general public, financed or recovered primarily through charges to the users; or, 2. For which the governing body has decided that a periodic determination of revenues earned, expenses incurred and net income is consistent with public policy and is appropriate for capital maintenance, management control, accountability or other purposes.”
  99. NRS 354.270 defines Special Revenue Fund to mean one “used to account for specific revenue sources, other than sources for major capital projects, which are restricted by law to (the) expenditure for specified purposes.”
  100. See page 38 of the packet of materials prepared by staff in anticipation of the Board’s May 26, 2021 meeting (“the 5/26/2021 Board packet“).

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