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Are There Limits on The Fees a General Improvement District (“GID”) May Fix?

IVGID 101 Posted on by

Given GID Boards have the power under NRS 318.197(1) to fix “rates, tolls and charges,”1 the question: are there limits on the “fees” a GID Board can adopt, and if so, what are they?

Prelude: As with the propriety of all governmental powers, we begin our discussion with the powers special districts like the Incline Village General Improvement District2 (“IVGID”) are authorized to exercise. And that takes us to…

Dillon’s Rule3: As elsewhere discussed, Nevada is a “Dillon’s Rule“ State4. As such, IVGID’s “powers are…limited and only extend to those…which are: 1) granted in express words; 2) necessarily implied or…incident to…powers expressly granted; and, 3) absolutely essential to the declared objects and purposes of the (municipal) corporation – not simply convenient, but indispensable.”5 The Rule also states that should there be “any reasonable doubt…as to whether a power has been granted(, it) will be ruled against the local government” and denied.6 In other words, “municipalities run by municipal codes (state laws) can only act where specifically authorized by state law.”7 This shouldn’t be a foreign concept to you the reader. After all, does not the federal government have powers State governments do not? So why would you think states have powers equivalent to or in excess of those of the federal government? What about states versus local governments? Why would you think counties and municipalities have powers equivalent to or in excess of those of State government? And why would you think limited purpose special districts like IVGID5 have powers equivalent to or in excess of those of counties and municipalities? So with that said…

Limitation No. 1 – NRS 318.197(1) Must Expressly Authorize The Particular Rate, Toll, or Charge Under Examination: As elsewhere explained, assuming a GID’s “rates,” “tolls” and “charges” are “fees” which is what IVGID tells us they are, in order to answer the question of the applicable limits thereon, we must first examine what kinds of exactments the District assesses and determine whether they are expressly permitted under NRS 318.197(1). Because if they are not, their adoption is in excess of the fee limits a GID may fix.

Limitation No. 2 – The Person/Property Assessed Must Realize Some “Special Benefit“ Above And Beyond That Furnished to Society as a Whole: As elsewhere stated, our Supreme Court seems to have adopted “a modified version of the test (above) articulated by the Massachusetts Supreme Judicial Court in  Emerson College [v. City of Boston, 391 Mass. 415, 421, 462 N.E.2d 1098 (1984). One] which analyzes whether the charge: (1) applies to the direct beneficiary of a particular service, (2) is allocated directly to defraying the costs of providing the service, and (3) is reasonably proportionate to the benefit received.”8 Where “those criteria fit the charge, it is a fee.”9 This is the test apparently approved by our Supreme Court10, and it means fees cannot exceed the reasonable costs government incurs to furnish the facilities and services for which they are assessed. Where it does not, the rates, tolls and charges a local government assesses are in excess of the fee limits a GID may fix.

Limitation No. 3 – Profits Are Prohibited: For the above reasons, profits are impermissible11. Which means IVGID cannot operate any of its facilities and the services it furnishes for a profit. If it is making a profit, the rates, tolls and charges a local government assesses are in excess of the fee limits a GID may fix. And rather than invalidating the excess, “the entire charge must…be declared invalid (because)…a court cannot apportion the charge or ascertain and allow such portion as it might find reasonable.”12.

Limitation No. 4 – The Assessment Cannot Exceed The Reasonable Costs Government Incurs to Furnish The Facilities or Service(s) Represented by Payment: Other than regulatory fees insofar as particular businesses or activities are concerned13, recall14 that fees are charged: in exchange for use of a particular governmental service15; which “benefits“ the party paying the fee16; in a manner “not shared by other members of…society17; and which are “allocated directly to defray…the costs of furnishing the service(s)“ for which they are assessed10. In other words,

“(T)he crucial factor in determining whether a municipal charge for services constitutes a…fee is whether the charge is intended to cover the cost of…providing a service.”18 Where “the ‘fee’ unreasonably exceeds the value of the specific services for which it is charged[,] it will be held (to be) invalid.”19

Therefore, “any payment exacted by the state or its municipal subdivisions as a contribution toward the cost of maintaining governmental functions, where the special benefits derived from their performance (are) merged in(to a)…general benefit, is a tax”20 rather than a fee. And their adoption is in excess of the fee limits a GID may fix.

Limitation No. 5 – The Assessment Cannot Exceed “Just And Reasonable Rates:” Given the District is a public utility21, common law22 as well as public policy23 dictate its rates must be “just and reasonable.”24 Since the NPUC need not grant deference to a private utility’s unjust and unreasonable rates25, neither need you the reader. And for the same reasons, the rates IVGID charges for the recreation facilities and services it furnishes must be held to this just and reasonable standard. Because if they’re not, their adoption is in excess of the fee limits a GID may fix.

Limitation No. 6 – Discriminatory/Preferential Assessments Are Prohibited: A public utility’s21 rates cannot be “unduly discriminatory (n)or preferential.”26 Common law was in accord27. If they are, their adoption is in excess of the fee limits a GID may fix.

Limitation No. 7 – The Fee Limits Described Above Cannot Be Discarded Because Some Think We‘re More Like an Homeowners‘ Association (“HOA”): We can’t tell you the reader how many times we’ve had to listen to past District General Managers (“GMs”) and senior staff who have compared IVGID to an HOA. Specifically, the Tahoe-Donner HOA (“TDHOA”). Because like us, the TDHOA owns and manages beaches, a ski area, tennis courts, a recreation center, golf course, retail sales facility and at least one restaurant28. But we’re government29, and the TDHOA is not! And we don’t have to maintain and snowplow our community’s streets like TDHOA. Consequently the rules and regulations GIDs may exercise are provided by statute30. Whereas the rules and regulations HOAs may exercise, at least in Nevada, are provided by a different statute31 as well as the Conditions, Covenants and Restrictions (“CC&Rs”) recorded against each member parcel-unit. And lest we not forget, we’re not located in California like TDHOA.

But why are these differences immaterial to proponents? Because they have an agenda. They want us to believe our Recreation (“RFF”) and Beach (“BFF”) Facility Fee(s) are a bargain compared to TDHOA‘s HOA dues32! And we should be happy! As if that’s supposed to be relevant insofar as the District’s fees allowed under NRS 318.197(1) are concerned. Or within the limits a GID may fix. Which they’re not.

Limitation No. 8 – The Fee Limits Described Above Cannot Be Discarded Because We Operate More Like a Series of Commercial “For Profit” Business Enterprises Than a Government: When it comes to utility water, sewer and solid waste collection/disposal rates in particular, limitations are an expansion of the rules for fees in general (see discussion above). Which means those rules are really an expression of the limits imposed on all fees generally. And where a municipal corporation has a monopoly33, its only justification for going into business is that public welfare will be subserved34 Because providing utilities “to private consumers for gain cannot in any sense be (considered)…performance of governmental function(s),”35 “when a municipal corporation owns…operates…and sell(s services)…to consumers (such as)…water (or sewer services)…it…act(s) in a business capacity and is (required to be)…treated as if it were a private utility company.”36 Since the Nevada Public Utility Commission (“NPUC”) need not grant deference to a private utility’s unlawful37, unjust or unreasonable rates38, neither need you the reader. And for these same reasons, those other functions IVGID exercises39 “to private consumers for gain…cannot in any sense be (considered)…performance of governmental function(s).” Given there is no justification for government to furnish any facilities and services for gain, to the extent IVGID realizes gain, its adoption of rates, tolls and charges as a result is in excess of the fee limits a GID may fix.

So are there limits on the “fees” a GID Board can adopt? Now you know!

  1. See our What Kinds of Rates, Tolls and Charges Are GID Boards Authorized to Fix discussion.
  2. Given IVGID is a “general improvement district, (and a)…quasi-municipal corporation,” it is special district [see NRS 308.020(2)].
  3. Judge John Forrest Dillon served on the Iowa Supreme Court from 1863 to 1869, before being appointed to the Federal Eighth Judicial Circuit. He was also a noted legal scholar, publishing extensively on municipal law. In two opinions for the Iowa Supreme Court he laid out a rule of law which was subsequently adopted by other state supreme courts and eventually…the U.S. Supreme Court” (go to https://www.nvbar.org/wp-content/uploads/NevLawyer_June_2013_Dillon’s_Rule.pdf).
  4. See page 5 of A Discussion of Home Rule in Nevada, Committee to Study Powers Delegated to Local Governments (February 18, 2010).
  5. This is Dillon’s Rule. See https://www.nvbar.org/wp-content/uploads/NevLawyer_June_2013_Dillon’s_Rule.pdf. Also, see NRS 244.137(3).
  6. See NRS 244.137(4).
  7. Go to https://en.wikipedia.org/wiki/Home_rule_in_the_United_States.
  8. See State v. Medeiros, 89 Haw. 361, 973 P.2d 736, 742 (1999).
  9. Id., at 973 P.2d 742-45.
  10. See Clean Water Coalition v. The M Resort, LLC, 127 Nev. 301, 255 P.3d 247, 257 (2011) insofar as “applying the Medeiros test”).
  11. See Clean Water Coalition, supra, at 255 P.3d 256; City of Madera v. Black, 181 Cal. 306, 313, 184 P. 397 (1919).
  12. See City of Madera, supra, at 181 Cal. 315.
  13. Such as “a request that a public agency permit an applicant to practice law or medicine or construct a house or run a broadcast station” [see National Cable Television Ass’n v. United States, 415 U.S. 336, 340, 94 S.Ct. 1146 (1974)] although please understand that as a limited purpose special district, IVGID has no power to charge regulatory fees, nor license businesses, nor charge fees in consideration thereof.
  14. See our Characteristics of a “Fee“ discussion.
  15. See U.S. v. City of Huntington, W.Va.,999 F.2d 71, 74 (4th Cir. 1993); National Cable Television, supra, at 415 U.S. 341, 94 S.Ct. 1149; United States v. La Franca, 282 U.S. 568, 572, 51 S.Ct. 278 (1931); City of Gary, Ind. v. Indiana Bell Tel., 732 N.E.2d 149, 156 (Ind. 2000); Clean Water Coalition, supra, at 127 Nev. 318.
  16. National Cable Television, Id.
  17. See Medeiros, supra, at 89 Haw. 366.
  18. See Rizzo v. City of Philadelphia, 668 A.2d 236, 238 (Pa. Commw. Ct. 1995).
  19. See Executive Aircraft Consulting, Inc. v. City of Newton, 252 Kan. 421, 426, 845 P.2d 57, 62 (1993) quoting National Cable Television Ass’n, Inc. v. F.C.C., 554 F.2d 1094, 1106 (D.C. Cir. 1976).
  20. See Dickson, Sheriff v. Jeff. Co. Bd. of Education, 311 Ky. 781, 786, 225 S.W.2d 672 (1949).
  21. See NRS 704.020(2)(a); Springfield Gas & Electric Co. v. City of Springfield, 292 Ill. 236, 126 N.E. 739, 744, (1920) [aff. at 257 U.S. 66; cited with approval at A.G.O. 53-231 (February 9, 1953)].
  22. See Austin View Civic Association v. City of Palos Heights, 85 Ill.App.3d 89, 94-95, 405 N.E.2d 1256, 1262 (1980); 64 Am.Jur.2d §297, p.496.
  23. See NRS 704.040(2).
  24. That is, “simply high enough to produce revenue sufficient to bear all costs of maintenance…operation…interest charges on bonds and…accumulation of a surplus…sufficient to (service) all outstanding bonds” (see Springfield Gas, Id.).
  25. NRS 704.040(1).
  26. See 64 Am.Jur.2d §78, p.480; Springfield Gas, supra, at 126 N.E. 746-48; NAC 704.7563(2).
  27. See Amalgamated Trust & Savings Bank v. Village of Glenview, 98 Ill.App.3d 254, 261, 423 N.E.2d 1230 (1981); Austin View, supra, at 405 N.E.2d 1262.
  28. Although notably, the TDHOA doesn’t provide water, sewer or trash disposal services.
  29. Specifically, “a body corporate and politic and a quasi-municipal corporation” (see NRS 318.015).
  30. See NRS 318.010, et seq.
  31. See NRS 116.001, et seq.
  32. Where for 2025 they are a whopping $3,300/annually (go to https://www.tahoedonner.com/community/general/faqs/general/).
  33. As IVGID does insofar as sewer and trash disposal services are concerned [NRS 318.170(1)(b)].
  34. See Springfield Gas, supra, at 126 N.E. 748.
  35. See Springfield Gas, supra, at 126 N.E. 745.
  36. See Austin View, supra, at 405 N.E.2d 1262; In re Hawaiian Electric Co., Inc., 107 PUC.4th 221, 223 (1989); 64 Am.Jur.2d §297, p.496.
  37. See NRS 704.040(2).
  38. See NRS 704.040(1).
  39. That is, providing recreation facilities and services.

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