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 exercise, 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”) have been granted in Nevada. 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 IVGID² have powers equivalent to or in excess of those of counties and municipalities? So with that said…

Does NRS 318.197(1) Expressly Authorize The Rate, Toll or Charge Under Examination? Because if it doesn’t, their adoption is in excess of the fee limits a GID may fix.

Well We’re Really More Like a Homeowners’ Association (“HOA”) Than a Local Government: We can’t tell you the reader how many times we’ve had to listen to past District General Managers (“GM”) and senior staff who have compared IVGID to an HOA. They argue we’re really not like a traditional GID, but rather, we’re more like a HOA. Then they try to make the leap that our Recreation (“RFF”) and Beach (“BFF”) Facility Fee(s) are a bargain. They point to the Tahoe-Donner Homeowners’ Association (“TDHOA“) where HOA dues for 2022 were a whopping $2,349/annually⁸ (who knows how much they are now?)! But the problem is we’re not a HOA. Unlike HOAs we don’t have Conditions, Covenants and Restrictions (“CC&Rs”) recorded against each of our Incline Village/Crystal Bay parcels. And unlike a municipality, we don’t have a charter. We’re a GID. Moreover, we’re not located in California like the TDHOA. We’re located in Nevada. But we guess these proponents want us to not bother us with the particulars.

In Nevada, HOAs are regulated by NRS 116.001. GIDs are regulated by NRS 318.197(010). So why are proponents pointing to the rates, tolls and charges legitimately fixed under NRS 116 when the applicable statute is NRS 318.197(1)? Like we have asked, are the HOA assessments the District exacts in excess of the fee limits a GID may fix?

Well We’re Really More Like a Series of Commercial “For Profit” Business Enterprises Than a Local Government: When it comes to utility water, sewer and solid waste collection/disposal rates in particular, the rules are an expansion of those for fees in general (see discussion above). Which means those rules are really an expression of the limits imposed on all fees generally. Where a municipal corporation has a monopoly⁹, its only justification for going into the utility business is that public welfare will be subserved¹⁰ Therefore because providing utilities “to private consumers for gain cannot in any sense be (considered)…performance of governmental function(s),”¹¹ “when a municipal corporation owns…operates…and sell(s)…water (or sewer services)…to consumers, it…act(s) in a business capacity and is (required to be)…treated as if it were a private utility company.”¹² Since the Nevada Public Utility Commission (“NPUC”) need not grant deference to a private utility’s unlawful¹³, unjust/unreasonable rates¹⁴, neither need you the reader. And for the same reasons, the other functions IVGID exercises (providing recreation facilities and services “to private consumers for gain”) “cannot in any sense be (considered)…performance of governmental function(s).”If not, because there is no justification for government to furnish any facilities and services for gain, to the extent IVGID realizes a gain, the rates, tolls and charges it assesses are not legitimate fees, and their adoption is in excess of the fee limits a GID may fix.

Therefore to Be a Legitimate Fee, Toll or Charge, The Assessment Cannot Exceed The Reasonable Costs Government Incurs to Furnish The Facilities or Service(s) Represented by Payment: 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 limits on those “fees,” we must first examine what kinds of exactments the District assesses, and determine whether they are permitted under NRS 318.197(1). Because if they are not legitimate fees, their adoption is in excess of the fee limits a GID may fix.

Other than regulatory fees insofar as particular businesses or activities are concerned¹⁵, recall¹⁶ that fees are charged: in exchange for use of a particular governmental service¹⁷; which “benefits“ the party paying the fee¹⁸; in a manner “not shared by other members of…society¹⁹; 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.”²⁰ Where “the ‘fee’ unreasonably exceeds the value of the specific services for which it is charged[,] it will be held (to be) invalid.”²¹ Stated differently, “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”²² rather than a fee.

“The Hawaii Supreme Court in Medeiros adopted a modified version of the test (above) articulated by the Massachusetts Supreme Judicial Court in Emerson College, 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.”²³ Where “those criteria fit the charge, it is a fee.”²⁴ This is the test apparently approved by our Supreme Court²⁵, and it means fees cannot exceed the reasonable costs government incurs to furnish the facilities and services for which they are assessed.

And to Be a Legitimate Fee, Toll or Charge, The Assessment Cannot Exceed “Just And Reasonable Rates:” Given the District is a public utility²⁶, common law²⁷ as well as public policy¹³ dictate that its utility rates must be “just and reasonable.”²⁸ Since the NPUC need not grant deference to a private utility’s unjust and unreasonable rates²⁹, 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 the just and reasonable standard. Because if they are not, their adoption is in excess of the fee limits a GID may fix.

And to Be a Legitimate Fee, Toll or Charge, Profits Are Prohibited: For the above reasons, profits are impermissible³⁰. Which means IVGID cannot operate any of its facilities and the services it furnishes for a profit. If it is making a profit, then it means that the rates, tolls and charges it assesses need to be reduced to eliminate the profit³¹.

And to Be a Legitimate Fee, Toll or Charge, Discriminatory/Preferential Assessments Are Prohibited: Finally, public utility²³ rates cannot be “unduly discriminatory (n)or preferential.”³² Common law is in accord³³. If IVGID’s rates, tolls and charges are discriminatory or preferential, they are invalid.

And to Be a Legitimate Fee, Toll or Charge, The Person/Property Assessed Must Realize Some “Special Benefit“ Above And Beyond That Furnished to Society as a Whole: As stated above, our Supreme Court seems to have adopted²⁵ the “.modified version of the test articulated by the Massachusetts Supreme Judicial Court in Emerson College²⁴, which analyzes whether the charge(,in part): (1) applies to the direct beneficiary of a particular service.”²³ Where it does not, the rates, tolls and charges a local government assesses, are in excess of the fee limits a GID may fix.

Conclusion: So now you know.

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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. Go to https://www.tahoedonner.com/community/general/faqs/general/.
9. As IVGID does insofar as sewer and trash disposal services are concerned [NRS 318.170(1)(b)].
10. See Springfield Gas & Electric Co. v. City of Springfield, 292 Ill. 236, 126 N.E. 739, 748 (1920) [affirmed at 257 U.S. 66, 42 S.Ct. 24; cited with approval at A.G.O. 53-231 (February 9, 1953)].
11. See Springfield Gas, supra, at 126 N.E. 745.
12. See Austin View Civic Association v. City of Palos Heights, 85 Ill.App.3d 89, 94-95, 405 N.E.2d 1256, 1262 (1980); Re Hawaiian Electric Co., Inc., 107 PUR.4th 221, 223 (1989); 64 Am.Jur.2d §297, p.496.
13. See NRS 704.040(2).
14. See NRS 704.040(1).
15. 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.
16. See our Characteristics of a “Fee“ discussion.
17. 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 v. The M Resort, LLC, 127 Nev. 301, 318, 255 P.3d 247 (2011).
18. National Cable Television, Id.
19. See State v. Medeiros, 89 Haw. 361, 366, 973 P.2d 736 (1999).
20. See Rizzo v. City of Philadelphia, 668 A.2d 236, 238 (Pa. Commw. Ct. 1995).
21. 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).
22. See Dickson, Sheriff v. Jeff. Co. Bd. of Education, 311 Ky. 781, 786, 225 S.W.2d 672 (1949).
23. See Medeiros, supra, at 973 P.2d 742.
24. Id., at 973 P.2d 742-45.
25. See Clean Water Coalition, supra, at 255 P.3d 257 in “applying the Medeiros test”).
26. See NRS 704.020(2)(a); Springfield Gas, supra, at 126 N.E. 744.
27. 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.
28. 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.).
29. NRS 704.040(1).
30. See Clean Water Coalition, supra, at 255 P.3d 256; City of Madera v. Black, 181 Cal. 306, 184 P. 397 (1919).
32. See 64 Am.Jur.2d §78, p.480; Springfield, supra, at 126 N.E. 746-48; NAC 704.7563(2).
33. 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.