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How, When, And Why IVGID’s Recreation Facility Fee Was Created

IVGID 101 Posted on by

As elsewhere discussed, since general improvement districts (“GIDs”) are not general governments1, they have no power to charge regulatory nor excise fees. And only limited power to tax2. And because tax rates must be equalized according to law amongst overlapping taxing authorities3, and yearly tax increases are abated to the extent they exceed statutory maximums4, the amounts left over for GIDs which do levy ad valorem taxes5 are shockingly small6.

Moreover, many GIDs do not have the adequate size nor tax base to support the extensive services some attempt to provide7. And to magnify the negative effect of these revenue inadequacies, many County Boards of Commissioners (“County Boards”) have transferred demand for services from the county to GIDs7. Because IVGID has gone on record opining that the addition of new basic powers must be “economically sound and feasible,”8 when the IVGID Board asked the Washoe County Board to grant it the new basic power to furnish facilities for public recreation (so it could use that power to acquire two Lake Tahoe beaches), Board member Harold B. Tiller represented9 that if this new power were granted:

a) The only recreational facilities to be acquired would be “park properties (including…two beaches)…”

b) “All (other contemplated)…recreational facilities…w(ould) be privately owned…operated” and presumably financed;

c) “A bond issue to acquire these (beach) facilities” was contemplated;

d) “Operating expense(s) will average $20,000 annually;”

e) Ad valorem “taxes” based upon “the assessed value of IVGID, together with its expected growth, w(ould) readily finance…costs, acquisition and operation…working capital, and reserve(s).”

In other words, the District’s ad valorem taxes would be the revenue source used to acquire the beaches, service the contemplated bond issue, and pay the beaches’ anticipated operational costs.

But the moment IVGID was granted this requested new basic power, everything changed.

On October 5, 1967, in anticipation of entering into a contract to purchase the beaches from Crystal Bay Development Co. (“CBDC”), the IVGID Board adopted Resolution No. 419 [pursuant to NRS 318.197(1)] which fixed rates, tolls and charges associated with acquisition and operation of the beaches10. That resolution recited that it was necessary said charges be fixed prior to adoption of a resolution providing for the issuance of revenue bonds (see Resolution No. 420 below) in order to create the funding source for the acquisition of Burnt Cedar and Incline Beaches and the services and facilities thereof (i.e., the lands and facilities of the community beaches), and to pledge the net revenues to be derived from those rates, tolls and charges11.

Contemporaneous with the adoption of Resolution No. 419, the IVGID Board adopted Resolution No. 420 which authorized the issuance of $3.6 million12 of revenue bonds13 expressly for the acquisition of Burnt Cedar and Incline Beaches. ¶8.03 of Resolution No. 420 recited that as a revenue source for the furnishing of said recreational facilities, and the availability of service (at) said facilities, the IVGID Board had or would thereafter establish “standby charges” (pursuant to Resolution No. 419) as to all privately owned properties within the District. And ¶8.34 pledged those and other revenue charges as a prior first charge and lien against the beaches. These actions marked the birth of IVGID’s Recreation Facility Fee (“RFF”); what is today labeled a NRS 318.197(1) standby service charge for the mere “availability of use” of the District’s public recreation facilities.

As past Boards decided to acquire more-and-more, the reader begins to understand “why” there is a RFF given it has become the District’s “go to” funding source for overspending of all kinds. Example, As explained elsewhere, in 1976 IVGID decided to purchase Diamond Peak, the golf courses and Bowl Incline. Since the playbook for acquisition of the beaches had worked so well, why not use it to acquire more and more? So on July 19, 1976 the then IVGID Board adopted Resolution No. 1262 which authorized the issuance of $5.71 million of revenue bonds (labeled “the Special Obligation Bonds of 1976”) to: pay off the then outstanding principal due under the Revenue Bonds of 1968 [the proceeds of which had been issued to purchase the beaches (see above)]; pay the seller [Japan Golf Promotions (U.S.A.), Inc. (“JGP”)] of Diamond Peak, the two (2) golf courses and Bowl Incline: $1.2 million for Incline Village’s two (2) golf courses, The Chateau, and Bowl Incline; another $1.5 million for Ski Incline and the chipping area adjacent to the Championship Golf Course driving range14; and, to provide a $600,000 funding source to pay for contemplated improvements/repairs to the Championship Golf Course and Ski Incline. And a week later (on July 12, 1976) in anticipation of servicing the Special Obligation Bonds of 1976, the IVGID Board adopted Resolution No. 1261 which instantly doubled the RFF. The die was cast for everything which has followed. And has followed.

And now you know!

  1. Those with municipal police powers to provide for the health, safety and welfare of its inhabitants.
  2. The only taxes a GID can permissibly levy are general ad valorem taxes (see NRS 318.225).
  3. See section D of 2020-21 Nevada Department of Taxation (“NDOT”) Redbook, Property Tax Rates For Nevada Local Governments.
  4. See NRS 361.4723, et seq.
  5. Although NRS 318.225 gives GID “board(s the)…power and authority to levy and collect general (ad valorem) taxes on and against all taxable property within the district, not all GIDs levy ad valorem taxes.
  6. For example, Washoe County reports that for fiscal year 2020 it collected nearly $220 million in ad valorem taxes county wide. The portion collected from just Incline Village and Crystal Bay properties totaled in excess of $20,455,067.15 (see February 23, 2021 e-mail from Jeri Renshaw, Administrative Secretary in the Washoe County’s Comptroller’s Office). In comparison, the amount of IVGID ad valorem taxes separately collected was estimated at roughly $1.77 million (see schedule B-9, page 8 of the 2020-21 IVGID Budget),
  7. See ¶II, page 9 of the Legislative Commission of the Legislative Counsel Bureau, State of Nevada, Bulletin No. 77-11, Creation, Financing and Governance of General Improvement Districts, September 1976 (“LCB Bulletin 77-11”).
  8. See NRS 318.055(4)(c) which instructs a GID’s “initiating ordinance must set forth…a statement that the ordinance…will be based on the board’s finding…that…creation of the district is economically sound and feasible,” and NRS 318.077 which instructs a GID “board may elect to add basic powers not provided in its formation, in which event (it)…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.” On August 26, 1965, IVGID’s then attorney, E.A. Wilson, sent a letter to the Washoe County Board wherein he urged it “retake proceedings for (granting IVGID)…recreation powers” pursuant to the IVGID Board’s Resolution No. 279 request adopted August 12, 1965, to “include a statement that (it)…would be based upon the findings of convenience and necessity…economy and feasibility.”
  9. 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”).
  10. See pages 410-411 of the packet of materials prepared by staff in anticipation of the Board’s August 27, 2018 meeting (“the 8/27/2018 Board packet”). Subsequently (on April 8, 1968), the IVGID Board adopted Resolution No. 451 which amended the service charge(s) adopted in Resolution No. 419 (see pages 413-414 of the 8/27/2018 Board packet).
  11. In other words, Mr. Tiller’s representations to the County Board and the public were false!
  12. Subsequently (April 16, 1968), the IVGID Board adopted Resolution No. 450 which authorized issuance of $2.685 million in bonds in accordance with pages 612-616 of that settlement agreement between the Washoe County Board, IVGID, CBDC, Incline Village Beach Corporation (“IVBC”), and a number of prejudiced Incline Village parcel owners filed with the Second Judicial District Court on April 11, 1968.
  13. NRS 318.275(1)(c)  authorizes GIDs to issue revenue bonds.
  14. See our separate discussion on Why, When and How IVGID purchased Diamond Peak.

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