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How, When, And Why IVGID Acquired Incline Village’s Beaches

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The history of how and why the Incline Village General Improvement District (“IVGID”) acquired Incline Village’s beaches is really a study insofar as how and why general improvement districts (“GIDs”) in general, and IVGID itself in particular, were created.

Many people think IVGID’s acquisition of our beaches1 goes all the way back to the District’s creation on May 20, 19612. But that’s not accurate. IVGID acquired our beaches more than seven (7) years afterwards on June 4, 1968. Between 1960-68 Crystal Bay Development Co.3 (“CBDC”), Incline Village’s developer, owned the beaches. During this period CBDC sold over three thousand (3,000) vacant Incline Village lots4. And insofar as every one of those sales were concerned, CBDC’s sales representative(s) expressly represented that Incline Village’s four (4) beaches5 would be a private homeowner amenity available to be used only by those purchasers of Incline Village property from CBDC6 and their guests. Some type of homeowners’ association [initially the Incline Beach Recreation Corporation (“IBRC”) and later the Incline Village Recreation Association (“IVRA”)] was “formed for the sole purpose of owning, developing and maintaining Incline Village beach propert(ies).”7

The way Incline Village lot sales were structured, each purchaser was contemporaneously sold a share in the IBRC8. And as a result, he/she/it became an owner-member in this corporation whose voting-interest ran with his/her/its lands7. In other words, IBRC membership could not be transferred separately nor retained after land ownership ceased. But because lot sales were not as brisk as initially projected, CBDC was forced to encumber the beaches. And as a result it did not have the financial means to transfer the beaches to the IBRC “free and clear.” Not to worry though. Since the IVGID Board was in essence made up of the the transferor’s (CBDC’s) principals, or those aligned with their common interests, and bonding had worked so well in passing the costs of infrastructure (streets, curbs and gutters, water, sewer, etc.) development onto those ultimate purchasers of Incline Village property, the “plan” became to have IVGID purchase the beaches from CBDC9 with the proceeds of a bond issue, and then assessing the owners of Incline Village property who were allegedly “specially benefited”10 the servicing costs associated with those bonds.

But a slight complication. When IVGID was created, no GID in the State had the power to furnish facilities for recreation11. This meant CBDC’s principals had to lobby the State Legislature to secure expansion of the basic powers12 a GID was authorized to exercise. Welcome Harold B. Tiller who as the reader will see, was ultimately successful, again, in lobbying the Nevada State Legislature13.

Shortly after the State Legislature added public recreation14 as a new possibly authorized GID basic power (on August 12, 1965), the IVGID Board adopted Resolution 279 which asked the County Board “to commence proceedings…for the addition of…powers of public recreation.”15 On September 27, 1965 the County Board adopted Ordinance No. 140 which initiated those proceedings, and on October 25, 1965 it held public hearings “similar, as nearly as may be, to those pro(ceedings) for the formation of the district, and with like effect.”16 And ultimately on November 15, 1965, a divided (3-to-2) County Board amended Ordinance No. 97 via Bill 13217 by granting IVGID the new basic power to furnish facilities for public recreation9. The only testimony in support of IVGID’s request came from Board member Harold Tiller who testified that if the District’s request were granted18:

1. The recreational facilities to be acquired would be limited to “park properties (including the two beaches19 only). “All (other)…recreational facilities…w(ould) be privately owned…operated” and presumably privately financed;

2. “The beaches c(ould) be acquired for $1.25 million;”

3. The “facilities…to (be)…acquire(d would be)…acquire(d)…as public property” (meaning “public to the property owners in the District”);

4. “A bond issue to (pay to) acquire these facilities” would be needed; and,

5. Ad valorem “taxes” based upon “the assessed value of IVGID20, together with its expected growth, w(ould be the source to) readily finance…acquisition and operation of the two19 beaches.”

Be that as it may, the County Board’s approval of IVGID’s request and the prior public run up in anticipation of this issue triggered a number of lawsuits involving the County Board, IVGID, CBDC, IVBC, and a number of prejudiced Incline Village parcel owners21. The writing was on the wall that local property owners were about to lose their private beaches contrary to what had been represented in conjunction with their purchases22. But like so many court cases which are filed, these ones never saw the light of day…. Instead, they were consolidated and eventually resulted in a comprehensive settlement and judgment of dismissal entered pursuant thereto23 filed with the court on April 11, 1968. The settlement provided, in part, that:

1. The IVRA would be dissolved;

2. CBDC’s four (4) beaches would be sold to IVGID for $2.1 million24;

3. Local property owners’ obligation to pay an annual $50 fee to IVRA would end;

4. To finance purchase of the beaches, pay all expenses associated with bond issuance, pay the first year’s worth of debt servicing, and to create a sufficient reserve fund, IVGID would issue and sell $2.685 million of revenue bonds25 labeled “the Revenue Bonds of 1968;”

5. For the period July 1, 1968-June 30, 1979 the following annual NRS 318.197(1) rates, tolls and charges would apply26: $50 for each developed single family lot, $50 for each developed multiple unit lot, $25 for each developed hotel/motel room27, from $1-$15 per acre for each undeveloped single family parcel, and from $5-$200 per acre for each undeveloped multiple family parcel;

6. The parties would use their best efforts to fulfill each and every commitment expressed in a March 7, 1968 letter to Incline Village property owners which was attached to and incorporated into the settlement agreement23; and,

7. The various lawsuits21 would be dismissed with prejudice.

With no further obstacle to IVGID’s purchase of the beaches, on May 9, 1968 the IVGID Board adopted Resolution 485 which approved entry into what became a May 20, 1968 agreement to purchase Incline and Burnt Cedar beaches19 from CBDC. On the same day the IVGID Board adopted Resolution 482 which further modified Resolution 451’s modified Recreation Facility Fee28 (“RFF”). On June 3, 1968 the IVGID Board adopted Resolution 493 which approved “the form of the Deed relating to the transfer of the Incline and Burnt Cedar Beaches19 unto the District.” And on June 4, 1968 IVGID formally acquired the beaches29.

Rather interestingly, when the State Legislature added public recreation as a new possible GID basic power, in its haste it must have “forgotten” to provide a funding source for that power to be exercised. Although NRS 318.200(1) at the time read that GID “board(s had)…the power to fix, and from time to time increase or decrease sewer, water, lighting, garbage or refuse rates, tolls or charges,” no express power existed associated with fees or charges of any nature associated with access or use of public recreation facilities30! In 1967 this “mistake” was remedied as NRS 318.200(1) was amended30 to expressly allow GIDs to charge rates, tolls and charges for “other recreational facilities” in addition to “electric energy, swimming pool…television, sewer, water, lighting, garbage or refuse” services.

Even more interestingly, when IVGID acquired the beaches there was no express statutory entitlement to acquire “beaches” per se. Rather, NRS 318.143(1) read that GID “board(s could)…acquire, construct, reconstruct, improve, extend and better (generic) lands, works, systems and facilities for recreation.” However in 1971 the Legislature must have felt it was necessary to expressly identify the types of recreation facilities a GID could acquire. So NRS 318.143(3) was added to expressly allow GIDs to furnish the following “recreational facilities…exposition buildings, museums, skating rinks, other type rinks, fieldhouses, sports arenas, bowling alleys, swimming pools, stadiums, golf courses, tennis courts, squash courts, other courts, ball fields, other athletic fields, tracks, playgrounds, bowling greens, ball parks, public parks, promenades, beaches, marinas, levees, piers, docks, wharves, boat basins, boathouses, harborages, anchorages, gymnasiums, appurtenant shower, locker and other bathhouse facilities, amusement halls, dance halls, concert halls, theaters, auditoriums, aviaries, aquariums, zoological gardens, biological gardens and vivariums (or any combination thereof).”31

As the reader can see, the funds used to purchase the beaches didn’t come from IVGID nor its ad valorem taxes. Rather, they came from those property owners whose Incline Village properties were involuntarily assessed the Beach Facility Fee32 (“BFF”) which was derived from the original RFF. Moreover, given Harold Tiller’s October 25, 1965 representations to the County Board and the public that ad valorem taxes based upon “the assessed value of IVGID, together with its expected growth, w(ould) readily finance the acquisition and operation of the…beaches,” as elsewhere discussed, a number of local property owners believe the BFF/RFF are really the product of fraud.

Regardless, now you know when, how and why IVGID acquired our1 beaches!

  1. We state “our beaches” because in reality, equitable ownership is not vested in IVGID. If one reads the beach deed one will see that the beaches were granted to IVGID as beach steward and fiduciary for the direct benefit of the then and all successor owners of Incline Village property within IVGID’s then boundaries. Equitably, that makes the beaches our beaches rather than IVGID’s. Additionally, the reader will see that the beaches were paid for by those local property owners with beach access. Given none of IVGID’s revenues from other sources (such as taxes) paid for the beaches, where does it get off asserting the beaches are theirs?
  2. See Washoe County Ordinance 97, Bill 57.
  3. Remember. CBDC acquired all 9,000 acres destined to become Incline Village, including the beaches, on June 1, 1960.
  4. See https://www.clubtahoe.com/history-of-incline-village/.
  5. Incline, Ski, Hermit and Burnt Cedar.
  6. Many people do not know that prior to George Whittel’s sale of these 9,000 acres to Art Wood and company, approximately 45 lakefront lots had been sold. Although all of these lots had their own Lake access, they did not have access to the beaches ultimately acquired by IVGID. In fact, they weren’t part of IVGID when it was created. Because of sanitation reasons, over the years these lots were annexed into IVGID.
  7. See CBDC’s 1961 “Community Beaches” sales brochure. This document was given to all prospective purchasers of Incline Village property as part of the former’s sales materials.
  8. “The initial purchase…(price for a share in the IBRC wa)s $50(, and each lot was to be)…assessed…a maximum of $50 per year thereafter, beginning July 1, 1961.”7
  9. So CBDC could realize another pay day and release its beaches from their underlying indebtedness.
  10. But how were they specially benefited? Hadn’t they purchased interests in the IBRC which supposedly owned the beaches and would make their exclusive use available for members’ use? If not, then why the purchase?
  11. The only basic powers GIDs were authorized to assume at that time were those: “to grade…regrade…surface and,,,resurface streets, alleys and public highways” (see sec. 23 of Chapter 319, SB20, page 462, 1959 Statutes of Nevada); “to improve streets within the district by grading and regrading, and by the construction and reconstruction of…curb and gutter, in combination with sidewalk or otherwise, and to acquire improvements necessary and incidental to the foregoing improvements, including…drains, catch basins, valley gutters, (and) driveway inlets” (see sec. 24 at page 462); “to construct, reconstruct, replace or extend sidewalks” (see sec. 25 at page 462); “to construct, reconstruct, replace or extend storm sewer and other drainage facilities…including…the laying of pipes and the erection of catch basins, drains and necessary inlets and outlets” (see sec. 26 at page 463); and, “construct, reconstruct, improve, extend or better the sanitary sewer system or any part thereof, including…mains, laterals, wyes, tees, meters and collection, treatment and disposal plants” [see sec. 27(1) at page 463].
  12. That is, in particular, the power to furnish facilities for public recreation [see NRS 318.116(14)] “as provided in NRS 318.143.”
  13. The principals of CBDC were successful because they and their colleagues who were committed to a common goal packed the IVGID Board. Additionally, they had friends in high places. One of those principals was attorney Robert McDonald; a partner in the firm of Bible, McDonald, Carano and Wilson of Reno, NV. “Bob McDonald and former United States Senator Alan Bible created the firm in 1949. Prior to its launch Senator Bible had served as the Attorney General for the State of Nevada, (along) with Mr. McDonald acting as his Deputy Attorney General” (see https://www.mcdonaldcarano.com/news/nevada-law-firm-mcdonald-carano-celebrates-70-years/). Is it any wonder then that they were well acquainted with the Legislature and its legislators?
  14. Although the word “public” (see SB297, Chapter 413, section 21.5, page 1088, 1965 Statutes of Nevada) was deleted from NRS 318.143(1) in 1967 and restated simply as “recreation” during the fifty-fourth (54th) Session of the Legislature [see former NRS 318.116(13) {SB408, Chapter 542, sections 23 and 24, page 1693, 1967 Statutes of Nevada} and NRS 318.143(1) {SB408, Chapter 542, section 63, page 1714, 1967 Statutes of Nevada}], no retroactive intent was expressed [Sandpointe Apts. v. Eighth Judicial Dist. Court, 129 Nev. Adv. Op. 87, 313 P.3d 849 (2013)]. Nevertheless, either intentionally or as an unintended consequence, the reader will see that the furnishing of facilities for non-public recreation has become a new de facto basic power exercised by IVGID notwithstanding the Washoe County Board of Commissioners (“County Board”) never granted IVGID this new basic power as required by NRS 318.077.
  15. See that August 26, 1965 letter from attorney Thomas E.A. Wilson to the County Board in support of the IVGID Board’s request the District be granted the power to furnish facilities for public recreation.
  16. See NRS 318.077.
  17. See sec. 1(k) of Ordinance 97, Bill 132, as initially authorized by NRS 318.143(1) [see SB297, Chapter 413, at page 1088, Statutes 1965].
  18. See pages 159-160 of the packet of materials prepared by staff in anticipation of the Board’s May 27, 2020 meeting (“the 5/27/2020 Board packet”).
  19. Given three (3) of those beaches are located adjacent to one another (Incline, Ski and Hermit), there really were four (4) beaches5 (the other being Burnt Cedar).
  20. GID Boards “have power and authority to levy and collect (their own) general (ad valorem) taxes on and against all taxable property within the district” (see NRS 318.225).
  21. See Connick v. Commissioners of Washoe County, IVGID, CBDC and IVRA, Second Judicial District Case No. 240307; CBDC v. Connick and others, Second Judicial District Case No. 240863; CBDC v. Connick and others, Second Judicial District Case No. 240864; and, Seamount, Inc. v. Connick and others, Second Judicial District Case No. 231359.
  22. IVGID Trustee Harold Tiller’s October 25, 1965 testimony to the County Board in support of the District’s request for the addition of powers of public recreation expressly represented that “with the acquisition of the two pieces of Lake frontage19…the property owners of…IVGID (rather than the general public) would be assured forever of (private) access to and use of Lake Tahoe” (see page 159 of the 5/27/2020 Board packet).
  23. See pages 612-616 of the packet of materials prepared by staff in anticipation of the Board’s June 23, 2020 meeting (“the 6/23/2020 Board packet”).
  24. Interestingly, IVGID Trustee Harold Tiller’s October 25, 1965 testimony to the County Board in support of the District’s request for the addition of powers of public recreation represented “the beaches c(ould) be acquired for $1.25 million” (see page 160 of the 5/27/2020 Board packet). How and why then did the purchase price eventually double?
  25. See pages 618-624 of the 6/23/2020 Board packet. Interestingly, Resolution 420 (adopted October 5, 1967) authorized the issuance of $3.6 million of revenue bonds. However, after IVGID could find no takers, the IVGID Board scaled back the District’s proposed bond offering by nearly $1 million to $2.685 million (see Resolution 450 adopted April 8, 1968).
  26. Note that here IVGID was modifying Harold Tiller’s October 25, 1965 testimony to the County Board and the public that ad valorem taxes based upon “the assessed value of IVGID, together with its expected growth, w(ould be the financing source to) readily finance the acquisition and operation of the…beaches.”
  27. Assessing each hotel/motel room was the consideration exacted from hotels/motels in consideration of giving their occupants beach access.
  28. The IVGID Board had previously adopted Resolution 420, on October 5, 1967, which authorized the issuance of revenue bonds (subsequently labeled “the Revenue Bonds of 1968”) to purchase and improve the beaches.
  29. IVGID’s acquisition of the beaches was “only for the purposes of recreation by, and for the benefit of, property owners and their guests (specifically including occupants of hotels and motels27) within the boundaries of the Incline Village General Improvement District as (then) constituted, and, as the Board of Trustees of the District (could) determine, the guests of such property owners” (see page 1, line 28-page 2, line 6 of the beach deed), and subject, in part, to “an easement…for the benefit of all other owners of property located within said boundaries, and their respective successors and assigns in such ownership…to enter upon (the deeded beaches) and to use said property for the recreational uses and purposes specified (t)herein” (see page 2, line 27-page 3, line 2 of the beach deed).
  30. See AB408, Chapter 542, page 1700, 1967 Statutes of Nevada.
  31. See AB631, Chapter 507, page 1054, 1971 Statutes of Nevada. Doesn’t the reader find it interesting how many of the public recreation facilities Incline Village’s founders envisioned ended up becoming expressly permitted by NRS 318.143(3)? Moreover, how many GIDs in the State out of a total of 84 (see University of Nevada Cooperative Extension Fact Sheet 13-32, Funding Economic Development in Nevada: General Improvement Districts) does the reader envision are even capable of furnishing “beach, marina, levee, pier, dock, wharf, boat basin, boathouse, harborage, (and) anchorage” facilities?
  32. A number of past resolutions dealing with the subject matter are missing from the District’s records. Notwithstanding, it appears that on May 31, 1968 the Board adopted Resolution 491 which provided for the issuance of $2.685 million of revenue bonds to purchase the beaches. Since this resolution amended Resolution 420, in order to understand the revenue source for repayment of the Revenue Bonds of 1968, one needs to examine Resolution 420 (which thankfully does exist). ¶8.03 of Resolution 420 states that the IVGID Board intended to “establish standby charges…for the furnishing of…recreational facilities, and…the availability of service of said facilities…(which would be assessed against)…all…privately owned propert(y) within the District.” ¶8.34 states that “all of the gross revenues” realized from those charges would be “pledged as a prior first charge…used and applied” towards repayment of the predecessor to the Revenue Bonds of 1968. Once Resolution 420 was adopted, as amended on April 16, 1968 by Resolution 451, it was clear (see ¶4.01) that the RFF would be used to service (the) bonds whose proceeds would be used to acquire and improve Burnt Cedar Beach and Incline Beach.

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