Because staff and current/past Boards want/have wanted our money so they can function, and they’re committed/have been committed to a “means justify(ing) ends”¹ philosophy, is it any surprise we’ve been told by staff that based upon the alleged authority of NRS 318.197(1)², the RFF/BFF represent “recreation (and beach) standby…charges…for the availability of use of the…beaches (and the District’s public)…recreational facilities…(therein) described?”³ Whether or not that’s what they really represent. But since “the nature of (a) tax or charge that a law imposes is not determined by the label given…but (rather)…its operating incidence,”⁴ and to determine that incidence we “look (to the RFF’s/BFF’s)…primary purpose,”⁵ here we examine what staff/past Boards, past/current auditors, and knowledgeable members of our community have admitted these exactions really represent. Because as the reader will learn is that today’s explanation differs from what staff, past Boards, and our current/past auditors have told us these exactions really represent. So with that said, consider the following admissions:

They Pay For Up to Five (5) Membership Cards: which entitle the bearer to preferred access and pricing at the District’s public recreation and beach facilities. For years staff have accompanied the District’s final budgets with a letter addressed to “the Board of Trustees and Citizens of Incline Village and Crystal Bay.”⁶ The letter, in part, expressly answers the question “What Privileges…Parcel Owners Get For Paying…Facility Fees?” Let us quote from a portion of the letter which appears at page 16 of the 2018-19 Budget:

“Each eligible parcel that pays the RFF can have five (5) cards issued in the form of picture passes…and/or punch cards…or a combination of both. The Picture Passholder (“PPH”) gets preferred pricing and/or preferred access to the District’s major (recreation) venues or programming…A Punch Card Holder receives the opportunity, at designated (recreation) venues, to reduce their user fees from the (retail) rack rate to the (preferred) PPH rate.”

In other words, staff have admitted the RFF/BFF pay for nothing more than up to five (5) membership cards similar to those sold by Costco, Sam’s Club, Prime, Best Buy Plus⁷ and now Walmart Plus⁸ which provide preferred access and pricing and other benefits to the District’s public recreation and beach venues. But given those venues (but for the beaches) are just as “available” to be accessed and used by anyone, whether or not a resident of Incline Village/Crystal Bay, and whether or not a local parcel owner or someone else who pays the RFF/BFF, here IVGID staff and the Board have admitted the RFF/BFF do not pay for the mere availability to access and use the District’s public recreation and beach facilities. Rather, they pay for a handful of membership cards most parcel owners we know don’t want.

They Pay For Up to Five (5) Pre-Loaded Debit⁹/Gift Cards: capable of paying down all or a portion of user fees charged at IVGID’s beaches and select District public recreation venues. In other words, it’s not just membership cards which provide preferred access and pricing at the District’s public recreation and beach facilities (see discussion above). In 2017 the District changed the way punch cards could be used. That was as a pre-loaded debit or gift card where the user fee at designated recreation facilities could be paid down (i.e., to lower than the preferred PPH rate) based upon the pre-loaded value of the card¹⁰, or multiple cards¹¹. Just listen:

“This spring promotion…allow(s) residents to use the remaining value of their…expiring Punch Card(s) towards the purchase of a Mountain Course Play Pass…(Initially) each $1 of expiring Punch Card value c(an) be applied as a $0.50 credit” towards the purchase price.

In 2018 the promotion was extended to “Incline Village Tennis Center Season Membership Pass(es)” with the proviso each $1 of expiring Punch Card value could be applied as a $0.35 credit towards the purchase price. Although this promotion ended in 2019, in 2023 our General Manager (“GM”) at the time attempted to resurrect it¹². Thus here IVGID staff and the Board have admitted that the RFF really does not pay for the mere availability to access and use the District’s public recreation facilities. Rather, it pays for the equivalent of one or more debit or gift cards whose expiring “value” can be redeemed for comparably valued goods and/or services.

They Represent The Proceeds of Non–Exchange Transactions: A local government’s “financial statements and other schedules required for (its) funds must be prepared in accordance with generally accepted accounting principles”¹³ (“GAAP”). Since “the Governmental Accounting Standards Board (‘GASB’) is (an) independent, private-sector organization…that establishes accounting and financial reporting standards for U.S. state and local governments that follow…GAAP(, and its)…standards are recognized as authoritative by state and local governments, state Boards of Accountancy, and the American Institute of CPAs”¹⁴ (“AICPA”). Insofar as the distinction between exchange and non-exchange transactions are concerned, Nevada’s Committee on Local Government¹⁵ (“CLGF”) instructs that:

“In a non-exchange transaction, a government gives (or receives) value without directly receiving (or giving) equal value in return, as opposed to an exchange transaction, in which each party receives and gives up essentially equal values. (Although) business-type activities financed in whole or in part by fees charged to external parties for goods or services are usually…reported in enterprise funds (as)…exchange transactions,”¹⁶ “non-exchange revenues (are)…characteristic of a governmental fund rather than a business-entity type fund.”¹⁷

As elsewhere explained, those whose parcels are assessed the RFF realize no “special benefit” in consideration of forced payment because that “so called” benefit is furnished to the general public as a whole rather than just those whose parcels are compelled to make payment. And insofar as the District’s beaches are concerned, those whose parcels are entitled to beach access realize no special benefit in consideration of forced payment of the BFF because of the use easement set forth in beach deed. For these reasons, combined with our discussion below of Special Revenue Fund reporting and the District’s prior auditors’ and Finance Director’s admissions that the RFF/BFF represent revenue as a result of non-exchange transactions, the District has admitted these “fees” are really derived taxes¹⁸ the proceeds of non-exchange transactions.

In Part Because They Have Been Reported in Special Revenue Funds: Page 2 of Guidance Letter 15-002 tells us that:

“Based on the definitions of proprietary fund and special revenue fund found in NRS 354.553 and 354.570, as well as GASB No. 34, a special revenue fund is a type of governmental fund, whereas an enterprise fund is a type of proprietary fund…A governmental fund, such as a special revenue fund, generally has activities which are financed through taxes, intergovernmental revenues, and other non-exchange revenues.”

In addition to NRS 354.570¹⁹, GASB 33²⁰ instructs “that in order to qualify for Special Revenue fund accounting a substantial portion of the fund’s revenues must come from nonexchange transactions…involving financial or capital resources (for example, most taxes, grants, and private donations). In other words, “in a nonexchange transaction, a government gives (or receives) value without directly receiving (or giving) equal value in return.”

The District’s current funds structure is explained at our Understanding The District’s Funds Structure page. Until fiscal year 2016 the District’s Community Service²¹ and Beach²² Funds were both enterprise funds²³. Yet at the Board’s May 21, 2015 meeting, it adopted Resolution No. 1838 which converted “the (District’s)…Community Services and Beach (enterprise) Funds (to)…Special Revenue¹⁹, Capital Projects and Debt Service funds…beginning July 1, 2015.”²⁴ Although staff misrepresented to a largely ignorant Board that this fund conversion would “result in…more disclosure of functional level expenditures (and)…clarity…from producing schedules based on sources and uses,” their real purpose was nothing short of circumventing the protective fund transfer provisions of NRS 354.613(1)²⁵. And that’s exactly what occurred after passage of this resolution paving the way for the massive increase [over 350% in ten (10) short years] in alleged central services cost transfers²⁶ from the District’s Community Services, Beach and Utility Funds to its General Fund. The net result of which was to massively increase [by nearly 680% in ten (10) short years] the General Fund balance from $886,664 on July 1, 2014¹⁹ to $6,013,261 on June 30, 2023²⁷. What we describe was creation of a de facto “slush fund” available to be spent on future unidentified, unbudgeted, and unappropriated pet projects such as a new Administration Building for which there would otherwise be no available funds.

Staff didn’t realize it at the time (unintended consequences) but changing these fund types represented another admission (by means of conduct) that the “primary purpose” of the RFF/BFF which funded these massive General Fund balance increases was revenue generation. Making them invalid taxes²⁸. And a further admission the RFF/BFF do not pay for the mere availability to access and use the District’s beach and public recreation facilities but rather, the proceeds of non-exchange transactions (see discussion above) expressly because they were deposited into special revenue funds.

By admitting the RFF/BFF were properly assigned to and reported in special revenue funds, staff and past Boards acknowledged those “fees” were and are the product of non-exchange transactions. In other words, derived tax revenues rather than fees for activities for which exactions are charged to external users for goods or services.

Auditor EideBailly‘s Opinion The RFF/BFF Represent Proceeds of Non–Exchange Transactions: The District’s previous auditor was EideBailly. And on December 16, 2015, testifying before the IVGID Board’s Audit Committee, in support of staff’s change in enterprise fund reporting to special revenue (see discussion above), Dan Carter, an EideBailly Audit Engagement Partner, testified²⁹ as follows:

“There is specific guidance in GASB about what can and cannot be accounted for in a Special Revenue Fund…GASB (i)s trying to put in some pretty strict guidance insofar as when a Special Revenue Fund can be used…It is unusual up here (Incline Village) when we use the word ‘fee,’ like the Community Services Fee or the Beach Fee, (be)cause actually, technically it is a tax…So the fact there’s a restriction on the use of that tax money³⁰ is exactly what a Special Revenue fund is used for. It’s a change in the funds but…(use of) Special Revenue Funds to account for taxes…seems like it will be a benefit to the organization to be able to break them out and show them separately…Right now if you guys want to save money for a capital project, it’s just building fund balance which isn’t necessarily what you should be doing in an enterprise fund.”

Wow! After making this tax versus fee admission, understandably, staff and the then Board went into full damage control. After all, they couldn’t continue to promote their involuntarily RFF/BFF levy if those “fees” were invalid taxes. Right? So on May 23, 2016, in a memo to the Chairman of the Audit Committee, relying upon the distinction between exchange and nonexchange transactions (see discussion above), Mr. Carter attempted to “clarify” his prior December 16, 2015 testimony:

“Enterprise fund accounting is primarily used when exchange fees (for example, the fee to play a round of golf) support (enterprise)…fund(s). Special revenue fund accounting on the other hand, is used when imposed non-exchange fees [‘for example, property tax or other assessment(s)’]…result from assessments (here levies) imposed by governments on individuals.” Because the payor(s) of these fees receive nothing of value in return, Mr. Carter admitted again (seemingly unaware of the real reason for his being requested to draft a follow-up memo) that “classification…may be more appropriately accounted for in…Special Revenue Fund(s).”

Which again results in the conclusion the RFF/BFF are taxes (the product of non-exchange transactions) rather than activities for which fees are charged to external users for goods or services! Thus here our former auditor has admitted, twice fold, that the RFF/BFF do not pay for the mere availability to access and use the District’s beach and public recreation facilities as represented. Making them taxes.

Consultant MossAdams’ And Retired Deloittle Partner John Ciacchella’s Opinions The RFF/BFF Represent Proceeds of Non–Exchange Transactions: Accountancy consultant MossAdams LLP³¹ was engaged in 2020 to review Punch Card Accounting and provide a report on its observations and recommendations. During the engagement, this review was extended to incorporate how annual Facility Fees should be properly classified and reported in the District’s financial statements. Given “the historic issue and disagreement between IVGID management and citizens has been whether the Facility Fees are exchange or non-exchange transactions,” MossAdams concluded as follows:

“The District’s Facility ‘Fees’ are the product of a non-exchange transaction under guidance provided in GASB Statement No 33 which generally provides for asset recognition when a resource is received or at the time a legal right to resources exist, and revenues recognized when all eligibility criteria are met securing the entity’s (here IVGID’s) right to the resource³². Since the Facility Fee is collected by Washoe County, secured by liens on property and no requirement is placed on IVGID’s right to use the…Fees…the(y)…are deemed to be non-exchange transactions.”³³

At the audit committee’s June 1, 2022 meeting, and in response to the above-evidence, District Staff announced they disagreed and for this reason refused to implement the changes suggested (financial reporting in enterprise rather than special revenue funds). Which harkens us back to the May 2, 2022 written comments submitted by local resident John Ciacchella³⁴ to the IVGID Board at its May 11, 2022 meeting³⁵:

“Back in late 2020/early 2021 MossAdams made specific recommendations to the Audit Committee…Th(os)e recommendations were presented and accepted…The Audit Committee then sent these recommendations to the Board of Trustees where the Board accepted all the recommendations made…IVGID Management was then instructed…to adopt all of the recommendations…Not only ha(ve) IVGID Management failed to implement all (of) the MossAdams recommendations…IVGID Management (on their own) decided to hire…an outside auditor (DavisFarr)…at additional cost to IVGID…to review and comment on the Moss Adams recommendations and the direction…received (from) the Board…IVGID Management was not asked to secure this ‘second opinion’ and further has failed to follow all (of) the recommendations as instructed by the Board of Trustees. The Board needs to hold IVGID Management accountable (and) to follow…through on its instruction to (staff)…Not doing so is exposing the IVGID community to downstream financial risks and is not being transparent with the community on the true financial state of IVGID. Not to mention this is also a breakdown in governance between the Board of Trustees and IVGID management…Sincerely, John Ciacchella, Retired Partner – Deloitte.”

Two more admissions the RFF/BFF are taxes (the product of non-exchange transactions) rather than activities for which fees are charged to external users for goods or services!

Our Former Finance Director’s as Well as Auditor DavisFarr’s Opinions The RFF/BFF Represent Proceeds of Non–Exchange Transactions: Insofar as the propriety of reporting the RFF/BFF in our financials as general revenue, the question over the distinction between exchange versus non-exchange transactions again reared its head at the District’s December 8, 2021 Audit Committee meeting³⁶. Member Cliff Dobler questioned the propriety of staff’s proposed “change in net position” labeling³⁷ insofar as a page in the District’s proposed 2021 Comprehensive Annual Financial Report (“CAFR”) was concerned. Mr. Dobler commented as follows:

That this labeling was “really quite amazing (insofar as)…the…facility fee (was concerned,) being considered ‘general revenue’…given the resolution the Board adopts each year which assesses the RFF/BFF”³⁸ recites that “the (RFF/BFF are) charges for services.” Mr. Dobler questioned why (here these “fees”) were reported as “general revenues” if they were really charges for services³⁹? After all, page 22 of GASB Statement 9 instructs they are not properly reported as “operating revenues.”

Surprisingly, both Finance Director Paul Navazio and Auditor Jennifer Farr⁴⁰ responded by pointing to the distinction, again, between exchange and non-exchange transactions, “regardless of the terminology.” Mr. Navazio argued that:

The RFF/BFF were properly reported as “General Fund revenues…(specifically because they were not) generated by the activities of our (recreational) venues like…charge(s) for service(s such as)…skiing or golfing…(He reasoned that because) these (charges)…(we)re not tied to use of the venues…(and they we)re collected and assessed from property owners…they…(we)re properly reported where they (we)re;”⁴¹ that is, as “general revenues.”

Similarly, Ms. Farr instructed that

“For something to be (a) charge…for services it has to be an exchange transaction (which)…by (its) nature (the RFF/BFF are)…not.” She explained that “if you pay a fee to golf, that’s an exchange transaction. You’re paying a fee for a direct ‘something’ that is given to you. (In contrast) an assessment (such as the RFF/BFF) is never going to be an exchange transaction….because (these are not the product of) an exchange transaction…(For these reasons, she opined that facility fee revenue was) properly (reported) in th(e general revenue) category. (Moreover, and as additional evidence in support of her position, Ms. Farr referenced with agreement the opinion of) our prior auditors (who) agreed with this assessment (see the auditor EideBailly discussion above) as well.”⁴²

Mr. Navazio agreed stating that

The key to him was that the RFF/BFF are “considered…non-exchange transaction(s)…(because) under the NRS, if there (i)sn’t a (special) benefit we (can)not be assessing the recreation fee…(The RFF/BFF are) not the same as somebody paying for…services.” If that were the case, “we would not be allowed to charge the fee (because)…that’s a tax.”⁴³

Wow again! What both Mr. Navazio and Ms. Farr were admitting was that because the RFF/BFF are not generated through exchange activities at our recreational venues, they are taxes. And as such, they were properly reported as general revenue. But not necessarily legitimate fees charged to external users for goods or services!

They Represent Costs of Capital And Debt: associated with all District venues. As we’ve elsewhere explained, “standby service charges” represent, in part, some sort of monetary levy against real property for their availability to access services rather than facilities, whether those services are actually used or not⁴⁴. But as was argued in Keller, staff and the Board will likely tell you the RFF/BFF are “imposed exclusively to finance the capital costs or maintenance and operation expenses for” the District’s beaches and public recreation facilities. The reason being it makes the legitimacy of the RFF/BFF more acceptable to the masses⁴⁵. In other words, “do as I say, not as I do?”

It turns out our former Director of Community Services made this very representation at the Board’s March 8, 2023 meeting when discussing the “so called” preferred pricing offered to PPHs and their guests⁴⁶:

“Rates charged for…Picture Pass Holders (are less than)…the fully-loaded cost per round of golf (because)…the discounts afforded to residents and guests recognize that facility fees are assessed…specifically to cover costs of capital and debt associated with District venues.”

If staff and former IVGID Boards are going to play this game, we feel we should hold them accountable to their words. Which given the definition of standby service charges, represents another admission these charges are really not the exactions they represent.

They Represent User Fees at The District’s Public Recreation Venues Where No User Fees Are Charged: The District does not charge user fees at every one of its public recreation facilities. Besides its public parks and athletic fields, other examples include: the disc golf course, skateboard park, mountain bike pump track, fitness track, beach overflow parking lot, and other miscellaneous lesser venues. Therefore at the IVGID Board’s March 3, 2016 meeting, former Finance Director Gerry Eick offered an “executive summary” allegedly in the “context…need(ed) for (the then upcoming 2016-17) budget deliberations.” In that summary Mr. Eick presented a series of descriptive slides⁴⁷. These slides depicted Mr. Eick’s testimony as to the alleged benefits of the RFF. And insofar as the District’s public recreational venues where no user fees were assessed, Mr. Eick testified that:

Because there is essentially no other “user fee process (available) to generate a source” of revenue⁴⁸ (necessary) to pay for the costs associated with these facilities other than the RFF, those whose properties (a)re assessed should consider the RFF to be a user fee substitute⁴⁹.

In other words, rather than being a legitimate “fee” the RFF is a “tax” because those whose properties are forced to pay receive nothing of value in return that all members of the general public don’t also receive. Stated differently, even though one of the earmarks of a user fee is the payor’s choice⁵⁰ inasmuch as the charge is “incident to a voluntary act,”⁵¹ here the payor has no choice. This truism is an admission by means of conduct that the Board has simply budgeted the RFF at a level sufficient to pay the costs associated with those venues which are “available” for free to the general public as a whole.

But The Beach Deed Tells Us Otherwise: As demonstrated above, each year “the Board specifically finds that…each parcel assessed (the BFF) pursuant to…Resolution³⁸ and in its report for…collection on the Washoe County tax roll⁶⁵…is specifically benefited (by)…the availability of the use of IVGID’s beaches (and) boat launch ramp.” But this statement is not true! Have you read the deed by which the District has taken title to the beaches (“the beach deed“)? If not, read the following language therein:

“Grantor…Village Development Co., formerly known as Crystal Bay Development Co…for the benefit of all other owners of property located within…the Incline Village General Improvement District as (then) constituted…(as well as) their respective successors and assigns in such ownership, hereby specifically reserves an easement to enter upon the (beaches)…and to use said real property for the recreational uses and purposes specified herein…The easement hereby created and reserved shall be appurtenant to all properties located within the Incline Village General Improvement District, as said district is (then) constituted(, and)…shall pass with any conveyance of real properties within said District as (then) constituted.”

Thus not only are today’s local parcel owners with beach access beneficiaries of an express easement to access and use the beaches, but the District has actually entered into a contract with these owners’ predecessors⁵² to:

“H(o)ld, maintain…and use…all improvements (then) or (t)hereafter located thereon…for the benefit of, property owners and their tenants…within the Incline Village General Improvement District as (then) constituted…This covenant shall be perpetuity, shall be binding upon the successors and assigns of (the District), shall run with and be a charge against the (beaches)…shall be for the benefit of each parcel of real property located within…(the) Incline Village General Improvement District, and shall be enforceable by the owners of such parcels and their heirs, successors and assigns.”

Yes we are mindful that the beach deed states the “Board of Trustees shall have authority to levy assessments and charges provided by law.” But is the BFF an assessment or charge provided by law? And if it is, is its payment a pre-condition to access and use of the beaches? For the reasons below, we say no.

Although the District tells the public, in part, that the BFF is a NRS 318.197 standby service charge for the availability to access and use beach facilities⁵³, it is not an “assessment provided by law.” Because NRS 318.197(1) expressly states that GID Boards shall not have the power to “fix, and from time to time increase or decrease…special assessments.” Although NRS 318.350(1) allows GID Boards to specially assess

“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 (an) improvement,”

the enabling statutory grant is not NRS 318.197(1). And given few local resident’s parcels abut the District’s beaches, no authority exists to formally assess parcel owners.

Nor is the BFF a “charge provided by law.” NRS 318.015(2) instructs that:

“As a matter of legislative determination…it is hereby…declared that the provisions of this chapter are not intended to provide a method for financing the costs of developing private property.”

Given for decades the District, past trustees and members of the public have described the beaches as private property, NRS 318.197 standby service charges cannot be adopted nor used to finance the costs of developing the beaches.

Therefore, although the District tells the public, in part, that the BFF is a NRS 318.197 standby service charge for the availability to access and use beach facilities², we know it’s not because of the express easement in the beach deed. Thus by admitting the beach deed‘s validity, IVGID staff and past Boards have admitted (by means of conduct) that the BFF does not pay for the availability to access and use the District’s beach facilities.

They Pay For The District‘s Legal Costs: Before we address this subject, we feel the reader needs to understand the District’s revenue model. As elsewhere explained, for decades the District has budgeted to intentionally overspend⁵⁴. The shortfall “required to (financially) support debt, capital expenditure(s) and operations for the District”⁵⁵ has traditionally been covered by “service charges collected…for facility use and program activities,” higher than “just and reasonable” utility rates and charges⁵⁶, and the RFF/BFF. Because the District is not a general government⁵⁷ like a county, city or unincorporated town, it is restricted in the service charges it may legitimately assess. And given the marketplace dictates the service charges the District can realistically collect for facility use and program activities, the reality is that the greater the financial shortfall, the greater the reliance upon the RFF/BFF and utility rates and charges. Once this reality is understood, one begins to understand that essentially every expenditure which contributes to this financial shortfall is subsidized by the RFF/BFF⁵⁸. And with this understanding firmly in mind, here we address one category of intentional overspending; legal fees.

The Wright and Kroll Lawsuits: Notwithstanding the District’s mantra of “one division – one team,” in 2007 two Crystal Bay residents (Frank Wright and Steve Kroll) sued the District over their non-access to its beaches. On May 14, 2007 when the Board adopted the BFF for fiscal year 2007-08, it voted to assess local parcel owners with beach access a $25/parcel fee to create a “beach access legal defense fund.”⁵⁹ Given this charge had nothing to do with the costs the District was budgeted to incur to make beach facilities available for access and use by those parcels which were assessed, and it represented a “revenue measure” and a tax rather than a “fee.”⁶⁰ By admitting the purpose of this portion of the 2007 BFF was primarily intended as a revenue measure for legal fees, the Board in essence admitted the BFF did not pay for the availability to access and use the District’s beach facilities. As represented³. And to further demonstrate this levy was a disingenuous revenue measure, after assessing local parcel owners the District made claim to its insurance carrier the the Pool Pact⁶¹ for a legal defense, and paid a $5,000 deductible. Did the District share these facts with the public? Did it refund this unnecessary levy to those parcel owners whose properties were involuntarily assessed? Of course not!

The Aaron Katz Litigation: Let’s move on to 2011 and local resident Aaron Katz. On August 12, 2011 Mr. Katz brought suit against IVGID advancing a number of theories: challenging the validity of the RFF/BFF under Nevada’s Uniform Declaratory Judgment Act⁶²; setting aside various Board resolutions⁶³ providing for allegedly preferential, discriminatory, unjust and unreasonable⁵⁶ water and sewer rates; construing local parcel owners’ with beach access rights, status or other legal relations under the the beach deed⁶²; removing IVGID as local parcel owners’ beach steward and fiduciary⁶⁴ because of its breach of trust⁶⁵; and, concealing public records⁶⁶. Although initially the Pool Pact provided a legal defense to Katz’s claims under a reservation of rights⁶⁷, early on it withdrew that defense because Katz was not seeking money damages against anyone. And there began a journey lasting some nine (9) years, culminating in an unsuccessful appeal of the Pool Pact‘s decision to not pay for the District’s legal defense, a judgment in favor of the District against Katz, two (2) appeals to the Nevada Supreme Court, and a petition seeking certiorari⁶⁸ to the United States Supreme Court. All told, an expenditure of well in excess of $650,000 of local parcel owners’ RFF/BFF⁶⁹!

The Kevin Lyons Litigation: Let’s move on to 2016 and local resident Kevin Lyons. “In 2016 IVGID contracted with (Mr. Lyons’) Governance Sciences Group Inc. (‘GSGI’), the creator of FlashVote, to conduct a series of scientific surveys on important IVGID community issues. Incline Village/Crystal Bay parcel owners and residents interested in participating were invited to contact FlashVote and were assured that their responses would remain anonymous to IVGID and their personal data would be private. Before year-end, there was a disagreement on how questions should be asked and GSGI terminated the contract…In April of 2017…(Chair Kendra) Wong convened a secret, closed-session meeting to discuss taking legal action against GSGI…Shortly thereafter a lawsuit was filed by IVGID against GSGI demanding that the citizen database be turned over to IVGID.”⁷⁰ GSCI responded on September 7, 2017 with its own cross-action against IVGID⁷¹. On March 9, 2018 both parties “participated in a confidential settlement conference with assigned settlement judge, Debbie Leonard, Esq…During the confidential settlement conference, the parties reached a mutual compromise, resolution and settlement of all issues (raised or)…which could have been raised…arising out of, or related to the Litigation.”⁶³ That resolution and settlement of the litigation was approved by the Board at its March 28, 2018 meeting. Simply stated, each party bore its own attorney’s fees and costs, and in addition thereto, IVGID agreed to make a $10,000 donation to the Incline High School “We the People” program on GSCI’s behalf⁷².

Since this was litigation initiated by IVGID, there was no Pool Pact coverage to pay the District’s litigation expenses. So how much did this endeavor cost local parcel owners? Unlike the Mark Smith litigation (see below), we can’t share a total number. However it appears that cost with attorney Guinasso was well in excess of $40,000.

The Mark Smith Litigation: Let’s move on to 2018 and local resident Mark Smith. “On October 19, 2017…Mr. Smith made a (public) records request asking for (a series of)…District…communications (13,000+) for a twenty-two (22) month period beginning January 1, 2016 and ending October 19, 2017…(The District responded that) all but 304…were privileged and confidential…Mr. Smith disagreed…and filed a lawsuit on July 30, 2018 naming (the District,) IVGID Board Chair Kendra Wong, and District Counsel (Jason Guinasso) as defendants (and)…costing himself and the District tens of thousands of dollars⁷³…As a consequence…the District was forced to retain outside legal counsel…(But) the Pool Pact declined to provide coverage (claiming)…there (wa)s no coverage…under the Nevada Public Records Act…After six months of litigation…the…Court…entered an order granting summary judgment in favor of Mr. Smith.”⁷⁴ Eventually at the Board’s June 29,2022 meeting members agreed to pay Mr. Smith $77,457.85 to settle his lawsuit⁷⁵.

At the Board’s September 28, 2022 meeting the full extent of the District’s legal defense costs were revealed; an unbelievable $236,938.88 plus a final payment to Mr. Beko of $18,293.87⁷⁶! Therefore including the settlement payment to Mr. Smith, local parcel owners were compelled to involuntarily pay⁷⁷ a grand total of $332,690.60 for staff’s concealment of public records. And this sum didn’t even include the many tens of thousands of dollars of unreimbursed staff time!

Conclusion: Because in each of these examples there was no other source of funds to pay for these litigation/defense costs other than the RFF/BFF, the District’s conduct represents another admission (by means of conduct) that the RFF/BFF do not pay for the mere availability to access and use the District’s beach and public recreation facilities, as represented³.

They Pay For All Sorts of Other Overspending: having nothing to do with the availability to access and use the District’s beach and public recreation facilities, as represented³. How about the District’s annual audit mandated⁷⁸ of all local governments⁷⁹? How about the hiring of lobbyists to influence statewide legislation? How about replacing the loss of annual real property tax revenue offset by Washoe County to pay for court mandated refunds due local parcel owners as a result of the State v. Bakst, 122 Nev. 1403, 148 P.3d 717 (2006) court decision⁸⁰? How about membership in the League of Cities? How about membership in the North Lake Tahoe Chamber of Commerce? Or the Incline Village Crystal Bay Community and Business Association? Or the Bear League? How about building up a “slush fund” to pay for a new administrative building? We could go on-and-on but we hope we’ve made our point. The RFF/BFF pay for all sorts of expenditures having nothing to do with the availability to access and use the District’s beach and public recreation facilities.

Pre–Determining The Amount of RFF/BFF Subsidies Before Budgeting Overspending Assigned to The District’s Community Services And Beach Funds: It’s not so much that the RFF/BFF represent the shortfall between budgeted revenues and intentional overspending systemwide⁸¹. But rather, it’s that the Board first determines what the RFF/BFF will be, and only afterwards does it budget its overspending to a level which results in a balanced budget. Just listen to staff’s admission this is the process the Board goes through as a pre-cursor to adopting a budget:

“A significant component of the final…budget impacting the District’s Community Services and Beach funds is the adjustment to the Recreation…and Beach Facility Fee(s) assessed on property owners for the coming fiscal year.”⁸² Consistent with “Board of Trustees direction (which) has been provided to retain the combined Facility Fee at $780 for FY 2022-23⁸³…the Recreation Facility Fee (was pre)set at $450, and (the) Beach Facility Fee (was pre)set at $330.”⁸⁴

Given the above admission, how can anyone conclude that the primary purpose of the District’s BFF/RFF is for any reason other than raising revenue to balance the budget? Just like a tax rather than a NRS 318.197 standby service charge for the availability to access and use the District’s beach and public recreation facilities².

They Pay For Alleged Benefits to Persons: Before we address staff’s, past Boards’ and others’ admissions the RFF/BFF are not the “standby service charges” they represent³, we feel the reader might benefit from a refresher insofar as understanding what this charge really is. As we’ve elsewhere explained, “standby service charges” represent, in part, some sort of monetary levy for a direct benefit furnished to real property⁸⁵. In other words, its assessment connotes some sort of benefit not shared by other members of society⁸⁶ directly to those who are assessed [i.e., “the direct beneficiar(ies) of a particular service”⁸⁷]. But here instead of furnishing special benefits to real property, staff and past Boards have admitted the beneficiaries of those benefits are people. Consider the following:

“Each year (the District’s Board)…establishes…annual Recreation…and Beach Facility Fee(s)…As part of the annual budget process the Board traditionally approves a resolution³⁸ which…establish(es) the amount of the…RFF and…BFF to be collected.”⁸⁸ In accordance with NRS 318.201(1), that resolution “specifically finds that: the availability of the 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 Recreation Center⁸⁹, including reduced rates for season passes and reduced daily rates, are all benefits which inure to the owners of properties (i.e., people) assessed hereunder.”⁹⁰ Therefore “the owners of the parcels (i.e., people) set forth (t)herein are (the ones) directly benefited(, and they are the ones benefited) in a fair and reasonable way;”⁹¹ and, “Ordinance No. 7 sets forth in detail the specifics of the benefits available to property owners (again people) of all properties.”⁹²

Additionally, that resolution incorporates:

“A written ‘Report’ (for collection on the county tax roll which describes those charges as)…Recreation Standby and Service Charges [also known as the Recreation…and Beach Facility Fee(s)⁹³…for the availability of use of the recreational facilities (therein) described”⁹⁴] which “contain(s) a description of each parcel of real property (allegedly) receiving…services and facilities and the amount of the charge for each parcel for such year, computed in conformity with the charges prescribed by the resolution.”⁹⁵

But parcels of real property are not capable of accessing and using any facilities, let alone the District’s beach and public recreation facilities. People are. Moreover, since user fees imposed by a governmental entity are supposed to be “based on the rights of the entity as (the) proprietor of the instrumentalities used,”⁴ is it not appropriate to ask what recreation or beach “instrumentalities”⁸⁷ the District furnishes to those real properties which are assessed? The answer is none.

Finally, as we’ve referenced above, letters addressed to “the Board of Trustees and Citizens of Incline Village and Crystal Bay” which used to accompany the District’s final budgets⁶ expressly answer the question of “What Privileges…Parcel Owners (rather than their parcels) Get For Paying…Facility Fees.”

Given the definition of a standby service charge, and the fact staff and past Boards have repeatedly found and represented to the public that the RFF/BFF pay for direct benefits furnished to people rather than property, they have admitted these exactions are really not the standby service charges they represent³.

The District‘s Improper Use of NRS 318.201 to Collect The RFF/BFF: As stated above, “each year (when the District’s Board)…establishes…annual Recreation…and Beach Facility Fee(s it)…traditionally approves a resolution³⁸…(which incorporates) a written ‘Report’ (which)…contain(s) a description of each parcel of real property (allegedly) receiving…services and facilities⁹⁶ and the amount of the charge for each parcel for such year, computed in conformity with the charges prescribed by the resolution.” But since we’ve demonstrated the RFF/BFF pay for alleged benefits to persons rather than property, the District has in essence admitted the parcels of property assessed receive no services nor facilities and therefore, reliance upon NRS 318.201 is improper. Combined with the definition of a standby service charge, the District has again admitted the RFF/BFF are not the exactions they represent³.

They Pay For The Availability of Facilities Rather Than Services: As we’ve demonstrated above, according to staff and past Boards the RFF/BFF represent “recreation (and beach) standby…charges…for the availability of use of…recreational facilities…(therein) described.”³ But as we’ve elsewhere explained, standby service charges represent, in part, some sort of monetary levy for the availability and access to services⁹⁷; namely, water and sewer services⁹⁸. And let’s not forget there’s nothing in NRS 318.197(1) which recognizes standby service charges for the availability of facilities. Rather, it recognizes “standby service charges standby service charges…for the availability of service(s).”

Given the definition of a standby service charge, and the fact staff and past Boards have represented that the RFF continues even when those whose properties are assessed pay user fees at District owned public recreation venues where such fees are charged, they have again admitted these exactions are not the standby service charges they represent³.

They Do Not Terminate Once The Payor Becomes an Actual Recreation Facility or Program Customer: Putting aside the fact the payors of the RFF/BFF are persons rather than their real properties which are assessed, as we’ve elsewhere explained,

“Standby service charges” disappear once those whose properties are assessed become actual District recreation customers. Because those recreation facilities, by definition, are no longer “standing by or immediately available to be connected to the propert(ies) to be benefited(. Instead they are) in fact (actually) providing the benefit.”⁹⁷

But here staff and past Boards have admitted that those whose properties are assessed the RFF continue to be assessed even when they become actual District customers evidenced by their paying user fees at District owned recreation venues where user fees are charged⁹⁹, regardless of whether the RFF is paid. The IVGID Board has adopted a “Recreation Roll Policy” (see ¶1.0 of Policy No. 16.1.1) which instructs that “the Incline Village General Improvement District will charge the prescribed Recreation…and if applicable…Beach Fee, to all qualifying real properties” regardless of whether additional user fees are paid.[/efn_note]. In other words, the RFF doesn’t disappear. And because it doesn’t, and given the definition of a standby service charge, staff and past Boards have admitted (by means of conduct) that the RFF is not the standby service charge they have represented³.

They Are Excessive, Unjust, And Unreasonable: As we’ve elsewhere explained,

“Standby service charges” represent, in part, some sort of monetary levy which recoups the costs government actually incurs to make services addressing public health and sanitation⁹⁸ available to those properties which are assessed⁹⁷. “The only (limitation on the power to fix such charges) is that such rates be (just¹⁰⁰ and) reasonable.”¹⁰¹ In other words: amounts which are allocated directly to defraying the costs of providing the furnished service; and…reasonably proportionate to the benefit received¹⁰². Because “[i]f the ‘fee’ unreasonably exceeds the value of the specific services for which it is charged[,] it will be held (to be) invalid” as something other than a fee (like a tax¹⁰³).

Here the RFF/BFF are “excessive and unreasonable in that (they) provide revenue substantially in excess of that needed (to make the District’s beach and public recreation facilities available to be accessed and used by those parcels which are assessed⁸¹. So)…profits (can be)…transferred out of the (Community Services and Beach) Funds (and) into the General Fund”¹⁰⁴ through the artifice of central services cost transfers. After all, “such practice is unlawful under the (California) Supreme Court’s decision in City of Madera v. Black, 181 Cal. 306, 314, 184 P. 397 (1919) wherein the court held that a city had no power to operate sewers for the purpose of (generat)ing revenue or profit therefrom.”¹⁰⁴ And it is probably unlawful in Nevada¹⁰³ as well. If not, it certainly violates Article 4, Section 20 of the Nevada Constitution according to the Nevada Supreme Court’s decision in Clean Water Coalition, supra, at 255 P.3d 259¹⁰⁵. So the question: Are the RFF/BFF used to generate revenues in excess of those required to make the District’s beach and public recreation facilities available to those parcels which are assessed? We believe the answer is yes.

As we’ve elsewhere demonstrated, the RFF/BFF represent far more than the just and reasonable amounts necessary to make the District’s beaches and public recreation facilities merely available to be accessed and used by those whose parcels are involuntarily assessed. Where have staff and past Boards ever shared with the public those amounts? Instead, haven’t we demonstrated that “the RFF/BFF represent nothing more than the difference betwin Clean Water Coalition, supra, at 255 P.3d 259een budgeted revenues and intentional overspending assigned by staff to the Community Services (insofar as the RFF is concerned) and Beach (insofar as the BFF is concerned) Funds, respectively?” In fact, haven’t we demonstrated that they represent 120% or more of those amounts because of the intentional build up of “slush funds” in both of these Funds? In other words, rather than compensating for the actual cost of recreation/beach facilities the District allegedly furnishes³, the RFF/BFF primarily represent additional revenue sources intended to pay for subsequently budgeted overspending! Making neither a fee²⁸.

Given the definition of standby service charges, and the fact staff and past Boards have used the RFF/BFF as a vehicle to generate revenues for purposes other than the mere availability of beach and public recreation facilities, they have admitted (based upon their conduct) these exactions are not the standby service charges they represent³.

Their Value is De Minimis Compared to Their Cost: Even where a PPH or Punch Card holder is able to realize “preferred pricing” at a District public recreation facility, in many instances that preference is de minimis. Two simple examples prove the point: Daily adult membership rates at the Rec Center stand at $18. But if one presents a PPH or Punch Card, the rate can be reduced by a whopping $4 (22.2%) to $14. Daily adult court reservation fees at the Tennis Center also stand at $18. But if one presents a PPH or Punch Card, the rate can be reduced by $3 (16.67%) to $15. The RFF (which currently stands at $450¹⁰⁶) is nowhere proportionate in amount compared to the de minimis preference in pricing benefit allegedly available at these two recreation facilities!

Rather than addressing the RFF’s/BFF’s “proportional and reasonable” amounts, listen how past Boards have addressed the proportionate prong of the Emerson College test:

“The rates charged for natural, intrinsic and fundamental distinctions 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.”¹⁰⁷ What?

Given all fees must be “reasonably proportionate (in amount compared) to the benefits received,”¹⁰² and here we’ve demonstrated the RFF/BFF are not (rather, they allegedly “are reasonable in their relation t the object of the charges imposed”), staff and past Boards have admitted (based upon their conduct) that these exactions are not the standby service charges they represent³.

Most People Think They’re Taxes: On numerous occasions when budget matters have been discussed by the Board, staff (primarily the District’s former Finance Director, Gerry Eick) have given testimony to the effect that “most people think the RFF/BFF are taxes.” Knowing this is the way the public views the RFF/BFF, yet doing nothing to correct their thinking, staff and past Boards have been guilty of omitting material facts as to the true nature of the RFF/BFF. Which only perpetuates the public’s mistaken view, and as far as we are concerned, constitutes deceit¹⁰⁸. When you know most of the public thinks the RFF/BFF are taxes, and you do nothing to correct their view, this constitutes an admission by means of conduct that deep in your heart, you too think the RFF/BFF are taxes.

Staff’s/Board’s Twentieth Admission The RFF/BFF Are Not What They Represent – They’re Treated as Taxes on Most Parcel Owner’s Income Tax Returns: It’s not just Mr. Eick’s representations to the Board and the public which demonstrate he knows the public does not think of the RFF/BFF as “fees” (see the discussion above). Follow us closely on this one.

Many staff members (like Mr. Eick’s wife) and most Board members, own Incline Village or Crystal Bay properties which are assessed the BFF and/or RFF. Presumably they file, and in the past have filed, federal income tax returns. And presumably in the past, they have claimed or claim itemized personal deductions on Schedule A of those returns. One of the deductions available on Schedule A is ad valorem real estate taxes paid. Given “the County Treasurer…include(s) the (District’s BFF and/or RFF)…on bills for taxes levied against…lots and parcels of land,”¹⁰⁹ what number (i.e., one which includes or deletes the RFF/BFF) do you think they have inserted? Assuming it’s the number which includes the RFF/BFF (which we assume because everyone we know does this), haven’t they declared to the IRS that the RFF/BFF represent real estate taxes paid rather than simpl “fees” their resolutions represent? And if so, haven’t they lied to the public when they have told us the RFF/BFF represent “fees” rather than “taxes?”

The position of IVGID trustee is one in the nature of public trust¹¹⁰. Our trustees are our fiduciaries and “hold office for the sole benefit of the people.”¹¹¹ Each has taken an oath of office whereby he/she has taken and subscribed to the official oath whereby he/she has “solemnly swear(ed or affirmed) that (he/she) will…bear true faith, allegiance and loyalty to the…United States and…the State of Nevada…and…any ordinance, resolution (such as No. 1889³²) or law of any state…so help (him/her) God (if an affirmation) under the pains and penalties of perjury.”¹¹² Members of our community have gone on record asking staff and trustees to disclose whether they have deducted the RFF/BFF on their federal income tax returns? And as you might suspect, none has been willing to answer the question. Members of our community have even asked trustees to provide a redacted Schedule A to their personal federal income tax returns to reveal whether they have deducted IVGID taxes including the RFF/BFF paid. And again, none has been willing to provide the same. Now why is that? If you are itemizing deductions on your personal federal income tax return, deducting the RFF/BFF under the guise they represent “taxes,” and signing that return under penalty of perjury, while contemporaneously telling the public these exactions are really “fees,” we assert this represents an admission you really believe they are the former.

To those naysayers who criticize us because we have no direct evidence to demonstrate that a number of staff and past trustees are guilty of such conduct, we say prove us wrong! After all, when you are a fiduciary¹¹³ and you are charged with deceit or constructive fraud¹¹⁴, the victim “always satisf(ies) the standard of fraud”¹¹⁵ entitling him/her to demand the “shift(ing of)…the burden (of proof)…to the other party to negate some element of the prima facie case.”¹¹⁶ Translation: we don’t have to prove that past staff and trustees have declared the RFF/BFF to be taxes on their federal income tax returns. They must prove the opposite!

Conclusion: So there you have it. At least twenty (20) examples of where staff, past Boards, and the District’s auditors have all admitted the RFF/BFF are not the NRS 318.197(1) service and standby service charges staff and the Board currently represent/have represented³. And now you know.

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Trait No. 6: The Primary Purpose of The RFF/BFF is to Raise Revenue: This is another one of the necessary traits which differentiate “fees” from other kinds of monetary exaction. In fact, it is the most important. As aforesaid, legitimate fees “are collected not to raise revenues” but rather, “to compensate the governmental entity providing the service(s) for its expense.”³⁵ But insofar as the District is concerned, the RFF/BFF simply plug the financial shortfall between budgeted revenues and intentional overspending assigned to the District’s Community Services and Beach Funds, respectively. To prove the point listen to the District’s current Finance Director, Paul Navazio: “Each year, the District establishes an annual Recreation…and Beach Facility Fee…These fees are established based on the revenues required¹¹⁷ to (financially) support debt, capital expenditure and operations for the District’s various recreation and beach facilities¹¹⁸. These revenues, combined with service charges collected by the District for facility use and program activities, serve to (financially) support (all of) the operations of the District funded by the Community Services Fund (insofar as the RFF is concerned) and the Beach Fund (insofar as the BFF is concerned), respectively.”¹¹⁹ In other words, the difference between budgeted revenues and intentional overspending assigned to these funds just as we represent.

Not enough evidence? How about ¶II of the report¹²⁰ the Board adopts each year pursuant to NRS 318.201(9)? There the report finds that “the amount of moneys required for the (forthcoming) fiscal year…for the Recreation…and…Beach Facility Fee(s)” and what they pay for¹²¹. What’s the difference between budgeted revenues and intentional overspending assigned to the District’s Community Services and Beach funds, respectively, and the costs incurred for “the proper servicing of said identified bonds and…the administration, operation, maintenance and improvement of said real properties, equipment and facilities?” In other words, exactly what other costs are there which are assigned to the District’s Community Services and Beach Funds which won’t be paid by the RFF/BFF? We believe the answer to be NONE! Which means there is no difference.

Or how about ¶3 of the resolution¹²² the Board adopts each year pursuant to NRS 318.201(9) which similarly recites that the RFF/BFF pay “for the costs of the acquisition, administration, operation, maintenance and improvement of the (District’s) recreational (and beach) facilities, including the improvements thereon, and of the servicing of bonds issued or to be issued therefor?” In other words again, the difference between budgeted revenues and intentional overspending assigned to the District’s Community Services and Beach funds, respectively.

Still not enough evidence? Recall we told you we would go through a financial analysis which proved the point³⁰? Well let’s see what the RFF/BFF actually pay for by examining the budgets for the District’s Beach and Community Services Funds which were approved for fiscal years 2020-23. Let’s first discuss The District’s Budgets For its Beach Fund.

The BFF represents the financial shortfall between revenues and intentional overspending assigned to the Beach Fund. In fact, to the penny no less! And more recently, it pays for even more. Let’s begin by examining the Beach Fund budget for fiscal year 2020-21. If one removes the BFF subsidy ($648,974) staff assigned to actual revenues¹²³, one sees that total revenues from all other sources totaled $803,975. Let’s compare this number to actual expenses ($1,700,380). Although the reported difference ($896,405) is more than the BFF subsidy, we see that $247,431 was covered by a reduction in (i.e., a transfer from) excess fund balance. When we subtract this transfer from actual overspending, the reader can see we’re left with…$648,974! The exact amount of the BFF subsidy!

Let’s go through the same exercise for fiscal year 2021-22. Again if one removes the BFF subsidy ($5,268,640) staff assigned to actual revenues⁷³, one sees that total revenues from all other sources totaled $898,125. Let’s compare this number to actual expenses ($5,595,750). Although the reported difference ($4,697.625) is less than the BFF subsidy, we see that $571,015 was transferred to fund balance¹²⁴. When we subtract this number from actual overspending, the reader can see we’re left with…$5,268,640! Again, the exact amount of the BFF subsidy!

Finally, let’s go through the same exercise for fiscal year 2022-23. Again if one removes the BFF subsidy ($2,556,840) assigned to budgeted revenues⁷³, one sees that total revenues budgeted from all other sources total $635,290. Let’s compare this number to budgeted expenses ($2,631,439). Although the reported difference ($1,996,149) is less than the BFF subsidy, we see that $560,691 is budgeted to be transferred to fund balance⁷⁴. When we subtract this number from budgeted overspending, the reader can see we’re left with…$2,556,840! Again, the exact amount of the BFF subsidy⁷³!

For all the above-reasons, the RFF/BFF are not fees.

The Intentional Funding Source For Future Unappropriated, Unbudgeted, Unrestricted Pet Projects: Because District staff don’t have enough work to do to warrant their over compensation and over benefits, they regularly engage in pie-in-the-sky, esoteric, overly priced “master plans” with fancy names like the “IVGID Beaches Recreation Enhancement Opportunities Plan” (“the Opportunities Plan“). Plans like this one come about because of alleged “feedback from beach guests to the IVGID Board of Trustees and staff requesting improvements to…existing beach facilities.”¹²⁵ And they incorporate proposed improvements like “a ‘scramble’ style food and beverage layout similar to Sand Harbor” labeled the Incline Beach House.”¹²⁶ But at an estimated cost in the range of several millions of dollars, where will the money come from?

From 2009-10 through 2019-20 the BFF totaled between approximately $100-$125 annually¹²⁷. Then all of a sudden for 2020-21 the BFF increased fourfold to $500 annually. And for 2021-22 the BFF increased again to $650 annually⁷⁷. Why the massive increase? Because the District wanted to create a funding source for a future possible Incline Beach House project. So the BFF was increased to create this funding source in the form of an excess Beach Fund balance.

…by virtue of having (public services)…available to (them), even though (those services)…might not actually be used at the present time.”⁹⁷ As for example the physical connection¹²⁸ to a public drinking water¹²⁹ or sewer disposal system¹³⁰.

1. See https://www.merriam-webster.com/dictionary/the%20end%20justifies%20the%20means.
2. Which allows general improvement district (“GID”) Boards to “fix…recreational facilit(y)…rates, tolls or charges…including…standby service charges for…the availability of service.”
3. See pages 230-237 of the packet of materials prepared by staff in support of the Board’s May 26, 2022 meeting (“the 5/26/2022 Board packet“) as well as Resolution No. 1889 (for fiscal year 2022-23).
4. See State v. Medeiros, 89 Haw. 361, 973 P.2d 736, 741 (1999).
5. Go to https://taxfoundation.org/blog/how-money-used-federal-and-state-cases-distinguishing-taxes-and-fees/#:~:text=Taxes%20Are%20Imposed%20for%20Revenue,Cost%20of%20Providing%20a%20Service.
6. The last such letter was dated May 23, 2018, and the reader can find it at pages 10-18 of the 2018-19 Budget. Once members of the public learned of this admission and publicized it as evidence the RFF is a “tax,” uncoincidentally the admission ceased to exist.
7. That’s right. Best Buy has entered the fray (“pay a fee and become a member” game). It’s called My Best Buy Plus and Total Memberships. Pay a yearly fee (either $49.99 for “Plus” membership, or $179.99 for “Total” membership), become a member, and now you’re entitled to preferred (i.e., “exclusive”) access and preferred “member pricing!”
8. Similar to Best Buy Plus, pay a yearly fee ($49 for a year’s worth of “Plus” membership), become a member, and now you’re entitled to “free delivery from your store, member prices on fuel at select stations, and use of mobile scan & go, which enables you to scan items as you shop in-store, streamlining your checkout process. (And) we’re working on adding even more great perks, too!”
9. When Ordinance No. 7 was initially adopted (on November 21, 1987), “punch cards” were described as “identification card(s) linked to a parcel (and) used like a debit card to buy down rates” [see that overview of Ordinance No. 7 presented by former GM Steven Pinkerton at a Special Meeting of the IVGID Board held October 11, 2016 {the District livestreams its Board and Audit Committee meetings (go to https://www.yourtahoeplace.com/ivgid/board-of-trustees/streaming-video), and the Board’s livestream of its October 11, 2016 meeting (“the 10/11/2016 Board meeting livestream”) appears at https://livestream.com/ivgid/events/6483108. Mr. Pinkerton’s overview quoted above appears at 15:45-109:08 of the 10/11/2016 Board meeting livestream}].
10. According to a District “promo flyer,” “this promotion…(wa)s an initiative to incentivize additional play” at under-utilized recreational venues.
11. “Multiple Punch Cards (could expressly) be used (for) purchases!”
12. “The current process only allows the card to discount the rate from the non IVGID passholder rate to the IVGID passholder rate….Staff has determined…the District can administer…allowing recreation punch cards the ability to purchase the full daily value for access…(Therefore) if the Board wants to pursue this concept, it’s recommended…staff implement a one year pilot/trial program” [see pages 742-743 of the packet of materials prepared by staff in anticipation of the Board’s March 8, 2023 meeting (“the 3/8/2023 Board packet“)].
13. See NRS 354.612(2).
14. Go to https://gasb.org/about-us/about-the-gasb.
15. The Committee on Local Government Finance has been created at NRS 354.105. NRS 354.594 instructs that the Committee “shall determine and advise local government officers of regulations, procedures and report forms for compliance with NRS 354.470 to 354.626, inclusive.”
16. See page 2 of CLGF Guidance Letter 15-002 issued October 27, 2005 (“Guidance Letter 15-002“).
17. See page 7 of Guidance Letter 15-002.
18. Examples of “derived tax revenues…[for example, (are) income taxes, sales taxes, and other assessments on earnings or consumption” (see GASB 33)].
19. Which defines a “special revenue fund” as “a fund used to account for specific revenue sources, other than sources for major capital projects, which are restricted by law to expenditure for specified purposes.”
20. “Accounting and Financial Reporting for Nonexchange Transactions”
21. The fund where the RFF is assigned and reported.
22. The fund where the BFF is assigned and reported.
23. NRS 354.517(1) defines an enterprise fund as one “established to account for operations 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 (including depreciation) of providing goods or services on a continuing basis to the general public, financed or recovered primarily through charges to the users.” ¶67 of GASB 34 states that an enterprise fund may be used to report any activity for which a fee is charged to external users for goods or services.
24. The Board livestreams its meetings. And the livestream of its May 21, 2015 meeting where this action was taken appears at https://livestream.com/ivgid/events/4067570 (“the 5/21/2015 livestream”). Mr. Eick’s (our previous Finance Director’s) disingenuous arguments in support of that fund conversation as well as members of the public’s opposition thereto, appear collectively at 32:27-50:33 of Part 3 of 6 of the 5/21/2015 livestream.
25. See NAC 354.8668 and 354.867.
26. $1,068,996 for fiscal year 2014 [see page 23 of the 2014 Comprehensive Annual Financial Report (“the 2014 CAFR“)] to $3,742,044 for fiscal year 2024 [see the Supplemental Item G.3.B page to the packet of materials prepared by staff in anticipation of the Board’s May 31, 2024 meeting (“the 5/31/2024 Board packet“)].
27. See page 7 of Schedule B(9) to the 2024 Budget.
28. See our Are The District’s RFF/BFF The “Service And Standby Service Charges” Staff And Past Boards Represent/Have Represented discussion.
29. The District’s livestream of its December 16, 2015 Audit Committee meeting appears at https://livestream.com/ivgid/events/4594653/videos/107172532 (“the 12/16/2015 Audit Committee livestream”). Mr. Carter’s testimony appears at 13:03-15:29 of the 12/16/2015 Audit Committee livestream.
30. The alleged restriction that the proceeds of that tax are paying for the “availability” of use of beach and public recreation facilities.
31. MossAdams is “composed of government auditors (CPAs) and tax specialists” [go to https://www.mossadams.com/industries/government-services].
32. MossAdams “find(s) that the classification of the Facility Fees in the government-wide statement of activities since 2015 as a general revenue is inconsistent with GAAP in that the Fees are assessed specifically to finance the District’s recreational activities. As such it meets the criteria to be reported as a program revenue in the statement of activities (GASB Code Sec 2200.137)…If the District reports the recreational activities in enterprise funds, we recommend the fee be reported as non-operating revenue” [see pages 057-061 of the packet of materials prepared by staff in anticipation of the audit committee’s June 1, 2022 meeting (“the 6/1/2022 audit committee packet“)].
33. See page 055 of the 6/1/2022 audit committee packet.
34. Mr. Ciacchella knows a little bit about what he’s talking about as a retired partner in the powerhouse accounting firm Deloittle.
35. See pages 193-194 of the packet of materials prepared by staff in anticipation of the Board’s June 8, 2022 meeting (“the 6/8/2022 Board packet“).
36. The District’s livestream of its December 8, 2021 Audit Committee meeting appears at http://appears at https://livestream.com/ivgid/events/9991610 (“the 12/8/2021 Audit Committee livestream”).
37. See page 4 of the packet of materials prepared by staff in anticipation of the Audit Committee’s December 8, 2021 meeting (“the 12/8/2021 Audit Committee packet”).
38. An example of that resolution (for fiscal year 2022-23, i.e., No. 1893), appears at 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“).
39. Mr. Dobler’s comments appear at 38:27-40:03 of the 12/8/2021 Audit Committee livestream.
40. The principal of the District’s DavisFarr auditing firm.
41. See 40:07-41:24 of the 12/8/2021 Audit Committee livestream.
42. See 41:25-42:44 of the 12/8/2021 Audit Committee livestream.
43. See 43:10-43:28 of the 12/8/2021 Audit Committee livestream.
44. See Keller v. Chowchilla Water Dist., 80 Cal. App. 4th 1006, 1011, 96 Cal.Rptr.2d 246 (2000).
45. In other words, it fits staff’s narrative that the District’s various recreation business enterprises are operationally revenue neutral, when in reality they’re not. And why wouldn’t we want to subsidize capital and debt service costs associated with commercial business enterprises which are operationally break even?
46. See page 606 of the packet of materials prepared by staff in anticipation of the Board’s March 8. 2023 meeting (“the 3/8/2023 Board packet“)
47. See pages 127 and 129 of the packet of materials prepared by staff in anticipation of the Board’s March 3, 2016 special meeting (“the 3/3/2016 Board packet”).
48. Remember that as we’ve elsewhere demonstrated, one of the main distinctions between a “fee” and a “tax,” is that the primary purpose of the latter is to generate revenue.
49. The Board livestreams its meetings (see http://new.livestream.com/accounts/3411104) and the portion of the Board’s March 3, 2016 meeting (“the 3/3/2016 livestream”) where Mr. Eick gave the testimony attributed above, can be viewed at 29:24-29:38 of the 3/3/2016 livestream.
50. See National Cable Television Assn. v. U.S., 415 U.S. 336, 340, 94 S.Ct. 1146 (1974)].
51. In other words, the party paying the fee has the option of not utilizing the governmental service and thereby avoids the charge [see Vanceburg v. Federal Energy Regulatory Comm’n, 571 F.2d 630, 644 n.48 (D.C. Cir. 1977), cert. denied at 439 U.S. 818, 99 S.Ct. 79 (1978)].
52. Because the District has expressly “accepted and approved” the terms, conditions and covenants set forth in the body of the beach deed in writing, a third party beneficiary contract has been entered into between the District and today’s local parcel owners with beach access.
53. See page 224 of the 5/26/2022 Board packet.
54. As an example, take a look at pages 7-8, Schedules B-9 and B-10 of the District’s budgeted revenues and expenses assigned to its General Fund for 2022-23 (“the 2023 Budget“). $4,068,514 of tax revenues, and $7,242,000 of expenses.
55. See pages 224-225 of the packet of materials prepared by staff in anticipation of the Board’s May 26, 2022 meeting (“the 5/26/2022 Board packet“), and pages 999-1000 of the packet of materials prepared by staff in anticipation of the Board’s April 12, 2023 meeting (“the 4/12/2023 Board packet“).
56. NRS 704.040(2) makes it unlawful for a public utility to charge unjust and unreasonable rates for utility services.
57. In other words, one which may exercise municipal police powers. That is, to provide for the health, safety and general welfare of its inhabitants.
58. In other words, it’s disingenuous to “cherry pick” which particular expenditures are being subsidized, and which are not.
59. See Resolution No. 1779.
60. See Clean Water Coalition v. The M Resort, LLC, 127 Nev. 315, 255 P.3d 247, 258 (2011) [“when it appears…that revenue is its main objective…the enactment is a revenue measure” {see Douglas Co. Contractors v. Douglas Co., 112 Nev. 1452, 1457, 929 P.2d 253, 256 (1996)}] which makes it a tax [see Clean Water Coalition, supra, at 929 P.2d at 257; Medeiros, supra, at 89 Haw. 367, 973 P.2d 742-745].
61. The District maintains the equivalent of a liability insurance policy through the Nevada Public Agency Insurance Pool Pact (“the Pool Pact“)
62. See NRS 30.040(1) which instructs that “any person interested under a deed (i.e., the beach deed), written contract or other writings constituting a contract, or whose rights, status or other legal relations are affected by a statute, municipal ordinance, contract or franchise, may have determined any question of construction or validity arising under the instrument, statute, ordinance, contract or franchise and obtain a declaration of rights, status or other legal relations thereunder.”
63. See NRS 318.199(6) which instructs that “any person who has protested…(a GID Board’s) resolution…establishing…new or changed rates, tolls, charges, services to be performed or products to be furnished…may commence an action in any court of competent jurisdiction to set aside the resolution.”
64. NRS 163.115(3)(b), (d), (e) and (h) instructs that a trustee of a trust may be “enjoin(ed)…from committing a breach of trust and/or removed and replaced by a receiver or temporary trustee to take possession of…trust property and administer the trust…(and) an equitable lien or a constructive trust…(may be) impose(d)…on trust property.”
65. See NRS 163.115(2)(a) which instructs “a…beneficiary of the trust may request the court to remove a trustee (where he/she/it)…commits or threatens to commit a breach of trust.”
66. See NRS 239.310 which makes it unlawful for “a(ny) person (to) willfully and unlawfully…conceals…a record, map, book, paper, document or other thing filed or deposited in a public office, or with any public officer, by authority of law.”
67. “A reservation of rights permits an insurer to fulfill its broad duty to defend while avoiding waiver, estoppel, or forfeiture of rights…and (it) serves to warn the policyholder to take steps to protect oneself from the reserving insurer” (go to https://en.wikipedia.org/wiki/Reservation_of_rights#:~:text=A%20reservation%20of%20rights%20permits,oneself%20from%20the%20reserving%20insurer).
68. “A writ of certiorari is the legal document the Supreme Court issues when it agrees to hear a case” (see https://pacificlegal.org/what-is-a-writ-of-certiorari/?gad_source=1&gclid=Cj0KCQiAouG5BhDBARIsAOc08RQEKczwh4Shje20q9MweGgAvGMIhF5SDCKQKcTWCnkUUJ3BP4XT4jcaAgPkEALw_wcB).
69. One has to askWe ask why the District so utterly failed to consider the cost-benefit of this expenditure in comparison to the settlement outcomes reached with Kevin Lyons and Mark Smith (see the below discussion).
70. Go to https://www.moonshineink.com/sections/the-incline-village-general-improvement-district-keeps-citizens-in-the-dark/.
71. See page 15 of the packet of materials prepared in anticipation of the Board’s March 28, 2018 meeting (“the 3/28/2018 Board packet”).
72. See page 16 of the 3/28/2018 Board packet
73. Actually as you will see, hundreds of thousands of dollars!
74. See pages 286-296 of the packet of materials prepared by staff in anticipation of the Board’s December 11, 2019 meeting (“the 12/11/2019 Board packet“).
75. See page 380 of the packet of materials prepared by staff in anticipation of the Board’s April 14, 2021 meeting (“the 4/14/2021 Board packet“).
76. See page 083 of the packet of materials prepared by staff in anticipation of the Board’s September 28, 2022 meeting (“the 9/28/2022 Board packet”).
77. The vehicle used by the Board to fund these payments was a draw down of fund balance in the District’s General Fund (which had been created from previous transfers of the RFF/BFF), and enhanced central service cost transfers of RFF/BFF subsidies from the District’s Community Services and Beach Funds.
78. See NRS 354.624(1).
79. This is one of the expenditures assigned to the District’s General Fund.
80. “On October 6, 2009 a Washoe County District Court ordered that a refund (of excess Incline Village/Crystal Bay ad valorem taxes paid to Washoe County was) due…taxpayers. On July 7, 2011 the Nevada Supreme Court denied Washoe County’s Appeal (of this decision) and ordered (the) tax refund. On August 23, 2011 the Washoe County Board voted to reduce future tax settlements to governments that (had) received property taxes during the periods covered by the Court Ordered Refunds (i.e., IVGID), to recover their proportionate share…The final offset occurred September 2013 (which) completed…payment of the recorded…$1,244,628…obligation” [see note 15 at page 45 of the District’s 2014 Comprehensive Annual Financial Report (“the 2014 CAFR“)]. In other words, the District was deprived of $1,244,628 of prospective ad valorem tax revenue because of Washoe County offsets. So what did the District do to address this loss of revenue? The District assigned each parcel/dwelling unit a RFF which included: $40 for 2011-12, $75 for 2012-13, and $49 for 2013-14 to make up for the loss [see page 90 of the District’s 2020 CAFR (“the 2020 CAFR“)].
81. See our What Are Our RFF/BFF (According to Us) discussion.
82. See page 033 of the 5/26/2022 Board packet.
83. See pages 033-034 of the 5/26/2022 Board packet.
84. See pages 034 and 225 of the 5/26/2022 Board packet.
85. See Solvang Mun. Improvement Dist. v. Board of Supervisors, 112 Cal.App.3d 545, 552, 169 Cal.Rptr. 391 (1980).
86. See National Cable Television Ass’n v. United States, 415 U.S. 336, 341, 94 S.Ct. 1146, 1149 (1974)
87. See Medeiros, supra, at 973 P.2d 742; Clean Water Coalition, supra, at 127 Nev. 315.
88. See pages 102-103 of the packet of materials prepared by staff in anticipation of the Board’s May 27, 2020 meeting (“the 5/27/2020 Board packet”).
89. In other words, all facilities.
90. See ¶4(b) at page 230 of the 5/26/2022 Board packet.
91. See ¶4(c) at page 230 of the 5/26/2022 Board packet.
92. See ¶4(a) at page 229 of the 5/26/2022 Board packet.
93. See page 232 of the 5/26/2022 Board packet.
94. See ¶I at page 234 of the 5/26/2022 Board packet.
95. An example of that Report (for fiscal year 2022-23), appears at pages 232-237 of the 5/26/2022 Board packet.
96. In accordance with NRS 318.201(1) and (9) for collection on the county tax roll.
97. See Kennedy v. City of Ukiah, 69 Cal.App.3d 545, 553, 138 Cal.Rptr. 207 (1977).
98. See Medeiros, supra, at 973 P.2d 742; Chapman v. City of Albuquerque, 65 N.M. 228, 335 P.2d 558, 562 (1959); Graham v. City of Lakewood Village, 796 S.W.2d 800, 801 (1990); Lakeside Utilities Corp. v. Bernum, 5 Ohio.St.3d 99, 449 N.E.2d 430, 431 (1983).
99. Recall that independent user fees are charged at most of the District’s public recreation facilities [see ¶104(b) of Ordinance 7].
100. See NRS 704.040(2).
101. See City of Ukiah, supra, at 69 Cal. App. 3d 552.
102. See State v. Medeiros, supra, at 973 P.2d 742. “Proportional and reasonable” in amount is the third prong of the Emerson College v. City of Boston, 391 Mass. 415, 417, 462 N.E.2d 1098 (1984) test.
103. See Executive Aircraft Consulting, Inc., 252 Kan. 421, 845 P.2d 57, 62 (1993) quoting National Cable Television, supra, at 554 F.2d 1106.
104. See City of Ukiah, supra, at 69 Cal. App. 3d 554.
105. “While (initially) the (RFF/BFF) were collected as…fees…they were (impermissibly) transformed into a local and special tax [see Douglas Co. Contractors v. Douglas Co., 112 Nev. 1452, 1457, 1459, 929 P.2d 253, 256, 257 (1996) and State v. Boyd, 27 Nev. 249, 255, 74 P. 654 (1903)]…fees assessed as legitimate fees can be transformed into impermissible taxes if they are later transferred to the (District’s) General Fund (to raise revenues)…because they would no longer bear any relationship to the purpose for which they were assessed once mixed into the General Fund.”
106. Go to https://www.yourtahoeplace.com/uploads/pdf-ivgid/G.2._-_Recreation_Standby_and_Service_Charges.pdf.
107. See  ¶5 on page 230 of the 5/26/2022 Board packet.
108. “Deceit is the intentional act of misleading a person of ordinary prudence by giving false impression” (see https://definitions.uslegal.com/d/deceit/).
109. See NRS 318.201(11).
110. See Nev. Atty. Gen. Op. 2005-01 (January 21, 2002).
111. See NRS 281A.020(1).
112. See NRS 282.020.
113. The term “fiduciary includes…public officer(s), or…other person(s) acting in a fiduciary capacity” [see NRS 162.020(1)(b)] such as “public employees” who “perform…public duties under the direction and control of a public officer for compensation” [see NRS 281A.150(1)]. “1. Public officer means a person who is: (a) elected…to a position which: (1) is established by the Constitution of the State of Nevada (or) a statute of this State…and (2) involves the exercise of a public power, trust or duty…2. As used in this section, ‘the exercise of a public power, trust or duty’ means: (a) actions taken in an official capacity which involve a substantial and material exercise of administrative discretion in the formulation of public policy; (b) the expenditure of public money; and, (c) the administration of laws and rules of (any)…political subdivision” [see NRS 281A.160]. GID trustees are public officers given they are elected [NRS 318.0951(1)] and have the power “to manage, control and supervise all the business and affairs of the district” [see NRS 318.175(1)] and “levy and collect taxes…and…other revenues…required…to supply money for paying: (a) the expenses of organization and the costs of operating and maintaining the works and equipment of the district; and, (b) the costs of acquiring the works and equipment of the district” [see NRS 318.230(1)].
114. “In Nevada, constructive fraud is ‘the breach of some legal or equitable duty which, irrespective of moral guilt, the law declares (to be) fraudulent because of its tendency to deceive  others or to violate confidence.’ Constructive fraud is characterized by a breach of duty arising out of a fiduciary or confidential relationship. A ‘confidential or fiduciary relationship’ exists when one reposes a special confidence in another so that the latter, in equity and good conscience, is bound to act in good faith and with due regard to the interests of the one reposing the confidence” [see Perry v. Jordan, 111 Nev. 943, 947, 900 P.2d 325, 337 (1995)]. Constructive fraud differs from actual fraud in two respects. First, it is based on a confidential relationship [see Executive Mgmt. v. Ticor Title Ins. Co., 114 Nev. 823, 841, 963 P. 2d 465, 477 (1998)] rather than a specific misrepresentation [see Barger v. McCoy Hillard & Parks, 346 N.C. 650, 666, 488 S.E.2d 215, 224 (1997)]. And second, intent to deceive is not an essential element [see Terry v. Terry, 302 N.C. 77, 85, 273 S.E.2d 674, 678-679; Link v. Link, 278 N.C. 181, 192, 179 S.E. 2d 687 (1971)].
115. See Sanguinetti v. Strecker, 94 Nev. 200, 206-208, 577 P.2d 404 (1978).
116. See Pacific Maxon, Inc. v. Wilson, 96 Nev. 867, 871, 619 P.2d 816 (1980).
117. That is, the shortfall caused by overspending.
118. In other words, Mr. Navazio is admitting the RFF/BFF are “subsidies.”
119. See pages 224-25 of the 5/26/2022 Board packet.
120. See page 235 of the 5/26/2022 Board packet.
121. That is “the proper servicing of said identified bonds and…the administration, operation, maintenance and improvement of said real properties, equipment and facilities.”
122. See page 229 of the 5/26/2022 Board packet.
123. See page 172 of the 5/26/2022 Board packet.
124. In other words, here we see that the BFF is not just a revenue source for the financial shortfall between budgeted revenues and intentional overspending. It is also the funding source for future unappropriated, unbudgeted, unrestricted pet projects [an example being creation of a fund t0 pay for future replacement of the Burnt Cedar Pool or the Incline Beach House (see discussion below)] or unforeseen expenses [an example being the loss of ad valorem tax revenues caused by the District’s liability for its share of county real property tax refunds necessitated because of the landmark State Ex Rel. Bd. of Equalization v. Barta, 124 Nev. 612, 188 P.3d 1092 (2008) property tax refund case (see discussion below), and its progeny] to be assigned to the Beach Fund.
125. See page 2 of the Opportunities Plan.
126. See pages 50-54 of the Opportunities Plan.
127. See page 049 of the 5/26/2022 Board packet.
128. This view comports with the definition of standby service charge provided above; that is, that the available service must be physically connected or immediately adjacent and capable of connection to those real properties which are assessed [see NRS 318.197(3) which requires GID “board(s to)…prescribe and enforce regulations for the connection with and the disconnection from properties of the facilities of the district and the taking of its services“].
129. See Medeiros, supra, at 89 Haw. 367, 973 P.2d 742; Chapman v. City of Albuquerque, 65 N.M. 228, 335 P.2d 558, 562 (1959); Graham v. City of Lakewood Village, 796 S.W.2d 800, 801 (1990); Lakeside Utilities Corp. v. Bernum, 5 Ohio.St.3d 99, 449 N.E.2d 430, 431 (1983).
130. See McMillan v. Texas National Resources Conservation Comm’n, 983 S.W.2d 359, 365 (1998).