As we’ve elsewhere stated, assuming the District’s solid waste “franchise fees” are actually fees, it would appear that the District’s solid waste franchise fees are permissible because NRS 318.116(13) gives general improvement districts (“GIDs”) the basic power to

“Furnish…facilities for the collection and disposal of garbage and refuse”

Where as here the Washoe County Board of Commissioners (“County Board”) has formally granted the District this basic power¹.

Given NRS 318.116(13) gives GIDs the power to furnish these facilities “as provided in NRS 318.142,” NRS 318.142 allows GIDs

“To…contract (with a third party collector), without calling for bids, for the collection and disposal of garbage and refuse from within the district,”

And NRS 318.197(1) allows

GID “Board(s to)…fix, and from time to time increase or decrease…garbage or refuse rates, tolls or charges…for services or facilities furnished by the district,”

At first blush then, it would appear that the District may assess a franchise fee on any collector it contracts with for the collection and disposal of garbage and refuse.

But not so fast.

As we’ve elsewhere explained,

“Fees imposed by a governmental entity tend to fall into one of two principal categories:

1. User fees, based on the rights of the entity as proprietor of the instrumentalities used…or

2. Regulatory fees (including licensing and inspection fees²) founded on the (municipal) police power³.”

Given GIDs are limited purpose special districts⁴, unlike true municipalities such as counties⁵, cities⁶ and unincorporated towns⁷, they possess no municipal police powers⁸. Meaning the only power they possess to charge a fee is as “user fees based on the rights of the entity as proprietor of the instrumentalities used.”⁹

Is The District‘s Solid Waste Franchise Fee a “Rate…Toll…or Charge…For Services or Facilities Furnished by The District¹⁰?” Since here we’re not talking about a fee for the collection and disposal of garbage or refuse, but rather a fee for the privilege of “allow(ing a utility)…to operate and use public rights-of-way¹¹ (ROW) such as roads, sidewalks, and utility corridors…or (other equivalent) municipal assets to provide…(an) essential…service…to the public,”¹² the answer is no.

So what ROWs does the District own, maintain and thus furnish to anyone so it is capable of granting ROWs? What facility or service has the District furnished to its garbage and refuse disposal collector in consideration of its payment of IVGID’s solid waste franchise fee? The answer is essentially none¹³! Because nearly all public streets and highways in Incline Village/Crystal Bay have been formally dedicated to the county or the State. Which has assumed jurisdiction for the maintenance and repair of thereof.

Thus the District’s solid waste franchise fee is nothing more than another improper involuntarily assessed revenue producing measure¹⁴ under the guise of a “fee.”

A Revenue Measure Paid by The District‘s Solid Waste Disposal Customers Rather Than Its Collector: Recall that due to the manner by which the District’s current solid waste disposal collector’s (Waste Management’s) “return on revenue”¹⁵ is calculated¹⁶, the District’s solid waste franchise fee is in effect “passed through” to local parcel owners¹⁷.

The District Has a Long History of Extorting Franchise Fees From Its Solid Waste Collectors: If one goes back to January of 1964, one will see where Robert McDonald, the Incline Village General Improvement District (“IVGID”) Board’s “president” at the time, offered to enter into a “a 10-year term…(agreement) for garbage disposal at Incline Village” with Nan Whiston and her soon to be husband Albert Ander. The offer required “payment…to the District…of 10 percent of the gross amount(s) collected…later to be increased to 15 percent and finally to 20 percent!”¹⁸ Although these payments were not labeled “franchise fees,” clearly, that’s exactly what they were.

Because Whiston and Ander were not able to make the refuse and garbage disposal business a profitable go¹⁹, and in order to assure the area would have garbage pickup, Incline Village founder Art Wood²⁰ formed Crystal Bay Disposal Co., Inc.²¹ hired Ander, and began providing refuse and garbage disposal services to the occupants of Incline Village. Although it is indeterminable what Crystal Bay Disposal paid to IVGID in the form of a solid waste disposal franchise fee, given Art Wood, Robert McDonald, Crystal Bay Development Co. and IVGID were one in the same²², it is difficult to conclude IVGID wasn’t realizing a solid waste disposal franchise fee of 20%!

On or about September 6, 1965 the IVGID Board “passed a resolution wherein the Board…enter(ed) into a contract with Reno Disposal Company for the hauling of…garbage in the Incline Village area.”²³ We can’t say what happened trash wise in Incline Village after September of 1965 until March 29, 2007 when the District entered into “an exclusive franchise for the operation of a solid waste collection and disposal service for all the areas within the District” with Independent Sanitation Company²⁴ (“Independent Sanitation”), however, on December 21, 2007 Independent Sanitation was dissolved and merged into Reno Disposal Co.²⁵ (“Reno Disposal”). On May 28, 2008 Reno Disposal and the District entered into a First Amended Franchise which amended and restated ¶¶4.01, 5.04, 6.01, 6.02, 6.04, 6.05, Exhibits “A” and “B” of the trash franchise²⁶. And per ¶4.01, the District’s solid waste disposal franchise fee increased to a whopping 15% of billed revenue! Effective October 1, 2016 the trash franchise with Reno Disposal was amended and restated again (“The Second Amended Franchise“) to its present form²⁷. Passed onto local parcel owners. The current trash franchise remains in effect until June 30, 2026²⁸.

But wait. There’s more.

Excessive Franchise Fees: Not only is IVGID’s solid waste franchise fee an impermissible “fee,” for at least three (3) reasons it is an excessive one. And why is this noteworthy? Because “if the charges (assessed) exceed the reasonable cost of the activity on which they are based,”²⁹ they “are…in substantial excess of the (value of the) benefits received,”³⁰ or as here (see below) they exceed a NRS maximum, “the(y)…are (deemed) levied for unrelated revenue purposes and are therefore taxes. Were this not the rule, excessive franchise fees would (simply) become a vehicle for generating revenue independent of the purpose of the fees.”³¹ Which is precisely what has happened in Incline Village/Crystal Bay. So let’s examine the three (3) reasons.

First and as stated above, municipal franchise fees represent “sums paid for the right to use public streets or rights-of-way.”¹¹ But because here IVGID owns essentially no such Incline Village/Crystal Bay public streets nor rights-of-way, this fact makes its solid waste franchise fee “excessive.”

Second is the amount of IVGID’s solid waste franchise fee. As the Nevada Public Utility Commission instructs,

“In 1995 the Nevada Legislature passed S.B. 568³² (which) establish(ed) a 5% cap on the fees³³…a local government can impose on the gross revenues of public utilities…derived from customers located (with)in the local government’s jurisdiction.”³⁴

Technically this limitation on franchise fees extends to IVGID’s solid waste franchise fee³⁵ because the District is a “public utility”³⁶ which “provides electric energy,”³⁷ and its fee exceeds 5% of the District’s gross revenue from customers located within its jurisdiction.

Finally, if the District’s solid waste franchise fee had been adopted by a city or county, it could not exceed 5% of its collector’s gross revenue from its customers³⁸. To construe IVGID can get away with overcharging its solid waste disposal collector, whereas if it were a city or county it couldn’t, would be violative of public policy. Meaning again, the District’s ten percent (10%) solid waste franchise fee is excessive.

Conclusion: Given IVGID essentially owns no public streets nor rights-of-way, its solid waste franchise fee cannot be construed to offset the costs it allegedly incurs in maintaining and repairing those streets and rights-of-way. This fact demonstrates that the purpose of IVGID’s franchise fee is nothing more than to raise revenue. Moreover, whatever benefits are derived from pass through of IVGID’s solid waste franchise fee, they accrue to society as a whole. Whether or not an individual is the one paying the fee, or a local parcel owner who is involuntarily responsible for payment. Therefore, “the (subject solid waste franchise fees)…levied…(by IVGID can)not survive scrutiny under the first prong of (the)…Medeiros test because the (services provided)…directly benefit…the public-at-large…and th(os)e (who are assessed) themselves are, if anything, only incidental beneficiaries.”³⁹ Only if the above criteria fit the charge, is it a fee⁴⁰. Otherwise, it “is a tax, not a legitimate NRS 318.197(1) fee”³⁹ aka “rate, toll or charge,” “and therefore it is invalid.”⁴¹

And now you know!

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1. Recall that the only basic powers a GID may exercise are those expressly granted by the County Board pursuant to the provisions of NRS 318.055(4)(b), et seq. Here this power was granted to the District pursuant to the authority of NRS 318.077, via March 5, 1964 County Ordinance No. 97, Bill No. 102 which permits GID “Board(s to) elect to add basic powers not provided in (their) formation, in which event the(y) shall cause proceedings to be had by the Board of County Commissioners similar, as nearly as may be, to those provided for the formation of the District, and with like effect.”
2. “Proprietary fees do not implicate the taxation power (as long as they are)…commensurate with governmental expenditures occasioned by the regulated party” [see Emerson College v. City of Boston, 391 Mass. 415, 425, 462 N.E.2d 1098, 1105 {fn. 16} (1984)].
3. Those incredibly broad regulatory powers related generally to “[p]ublic safety…health, morality, peace and quiet, (and) law and order” [see Berman v. Parker, 348 U.S. 26, 32, 75 S.Ct. 98 (1954)]. These powers flow from the Tenth Amendment  to the U.S. Constitution which states that “powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.”
4. See our What Are GIDs discussion.
5. See NRS 244.143(2)(a).
6. See NRS 268.003(2)(a).
7. See NRS 269.128, and 269.185, et seq.
8. Art. VIII, §8 of the Nevada Constitution instructs that “the Legislature shall provide for the organization of cities and towns by general laws, and shall restrict their power of taxation, assessment, borrowing money, contracting debts and loaning their credit, except for procuring supplies of water.”
9. See Emerson College, Id.
10. See NRS 318.197(1).
11. Which is supposed to be its purpose [see Jacks v. City of Santa Barbara, 3 Cal.5th 248, 262, 219 Cal.Rptr.3d 859 (2017)].
12. Go to https://www.cityofnorthlasvegas.com/business/franchise-agreements.
13. The only exception we’re aware of is the approximate 1.3 mile portion of Ski Way at its intersection with the Big Water Grill Restaurant, heading northeast to the entrance to the Tyrolean Village condominium project at Tirol Drive. This portion of Ski Way is actually part of Diamond Peak Ski Area.
14. Just like Defensible Space, Recreation (“RFF”) and Beach (“BFF”) Facility Fees.
15. See ¶1.26 at page 4 of the current solid waste franchise agreement with Waste-Management.
16. See ¶10 at page 11 of the current solid waste franchise agreement with Waste-Management whereby “the ratio of net income to gross receipts” is calculated (according ¶1.23 at page 4 of the current solid waste franchise agreement with Waste-Management “net income is defined as gross receipts minus allowable expenses.” And ¶1.1 at page 1 of the current solid waste franchise agreement with Waste-Management defines “allowable expenses” as “those…incurred by the Collector in the performance of this franchise.”
17. See ¶5.9 of Ordinance No. 1 which instructs “all charges, fees and amounts due and payable shall be billed to the owner of the premises, whether or not the owner is also the occupant.”
18. See Whiston v. McDonald, 85 Nev. 508, 458 P.2d 107 (1969).
19. “Largely because of their difficulty in collecting from the customers…(and their inability) to get a business license” (see Whiston, supra, at 85 Nev. 510).
20. See our Early Years discussion.
21. See Whiston, supra, at 85 Nev. 513.
22. See Whiston, supra, at 85 Nev. 509, 514.
23. Whiston, supra, at 85 Nev. 517.
24. See the first “whereas” paragraph under Recitals in the “Second Amended and Restated Franchise to Provide Solid Waste and Recyclables Collection Services” (“the trash franchise“).
25. See the second “whereas” paragraph under Recitals in the trash franchise. Reno Disposal has been a subsidiary of Waste-Management since at least 2012 (go to https://www.wastedive.com/news/antitrust-lawsuit-against-waste-management-dismissed-in-reno/424910/), if not before.
26. See the third “whereas” paragraph under Recitals in the trash franchise. Also see the third “whereas” paragraph under Witnesseth under the First Amended Franchise.
27. See the fourth “whereas” paragraph under Recitals in the trash franchise.
28. See paragraph 3 of the trash franchise.
29. See Sinclair Paint Co. v. State Bd. of Equalization, 15 Cal.4th 866, 874, 879, 881, 64 Cal.Rptr.2d 447 (1997).
30. See https://www.investopedia.com/terms/s/specialassessmenttax.asp.
31. See Jacks, supra, at 3 Cal.5th 257.
32. See SB568, Chapter 591, pages 2187-2192, 1995 Statutes of Nevada.
33. NRS 354.598814 defines a “fee” for purposes hereof to “mean…a charge imposed by a city or county upon a public utility for a…franchise or right-of-way over streets or other public areas.”
34. See NRS 354.598883(3)(b)
35. See NRS 354.598817(1)(a) which instructs a public utility subject to the above-franchise fee limitations is limited to one which “provides electric energy or gas.”
36. NRS 354.59881 instructs that “as used in NRS 354.59881 to 354.59889, inclusive, unless the context otherwise requires, the words and terms defined in NRS 354.598812 to 354.598818, inclusive, have the meanings ascribed to them in those sections.” And NRS 354.598817(1)(a) defines “public utility” as “a…local government that provides electric energy or gas, regardless of whether the…local government is subject to regulation by the Public Utilities Commission of Nevada.” As we will demonstrate below, IVGID provides electric energy.
37. See May 5, 1969 County Ordinance No. 97, Bill No. 227 which pursuant to the authority of NRS 318.077 granted IVGID the NRS 318.116(1) basic power for the distribution of electric light and power.
38. See NRS 354. which states a city or county shall not adopt “a fee to which (an) ordinance applies (which) will be based upon any revenue of a public utility other than its revenue from customers located within the jurisdiction of the city or county the total cumulative amount of all fees the city or county imposes…to which the ordinance applies will exceed…5 percent of the utility’s gross revenue from customers located within the jurisdiction of the city or county.”
39. See State v. Medeiros, 89 Haw. 361, 370, 973 P.2d 736, 745 (1999).
40. See Clean Water Coalition v. The M Resort, LLC, 127 Nev. 301, 315, 255 P. 3d 247 (2011).
41. See Medeiros, supra, at 973 P.2d 742.