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How, When, And Why Incline Village General Improvement District (“IVGID”) Was Created

IVGID 101 Posted on by

As Incline Village’s largest property owner, why would Crystal Bay Development Co. (“CBDC”), Incline Villager’s developer1, ever choose to abdicate operation and regulation of its holdings to anyone, let alone a general improvement district (GID)? Wouldn’t this frustrate its intent2 to develop Incline Village into “a complete recreational area (consisting of)…two great golf courses; the finest tennis facilities in the world…a major ski development; riding stables…trails to the very crest of the (Sierra) mountains…gaming and related night club entertainment…a cultural center with related youth programs…(and) use of Lake Tahoe, the most important and actually the very heart of a complete recreational base…(complete with) family parks for picnics…swimming and…boating access to the Lake for fishing and water skiing?” Art Wood and his colleagues (primarily fellow Oklahoma CPA Harold Tiller) must have gotten the idea from former President John F. Kennedy’s January 20, 1961 inaugural address3. Or iconic Hyman Roth’s prophetic words of wisdom in the 1974 Godfather Part II movie4!

Why: Because if a partnership could be forged with a governmental subdivision which had the power to issue bonds to pay for infrastructure improvements (such as systems for drinking water, sewerage, solid waste disposal and the construction of roads) Incline Village’s developer would normally have been required to finance and construct, CBDC could avoid spending millions of dollars associated with that development and assess the servicing/repayment costs associated with those bonds directly onto local property owners who would be the ultimate beneficiaries of these “special benefits.” Thus with this “goal” understandably in mind, the name of the game for CBDC became surrounding ones’ self with “friends in high places” who could lobby the Nevada State Legislature to enact legislation which would allow for the creation of what would eventually become a GID authorized to exercise these powers.

One of these “friends” became attorney Robert McDonald; founding partner in the firm Bible, McDonald, Carano and Wilson (now known simply as McDonald Carano) of Reno, NV. “Bob McDonald and former United States Senator Alan Bible created the firm in 1949. Prior to its launch…Alan Bible served as Attorney General for the State of Nevada with Bob McDonald serving as his Deputy” Attorney General5. And subsequent to its launch (1954-1974), Mr. Bible served as United States Senator for the State of Nevada.

How: Thus is it any surprise that given Mssrs. McDonald’s and Bible’s governmental “connections” and “assistance,” on April 30, 1959 the State Legislature enacted Nevada’s General Improvement District Law6? And because GIDs were a new form of local government, and “there were no criteria to guide county commissioners…as to whether or not a (GID) should be created,”7 undoubtedly by design, residential real estate developers such as CBDC were free to use the artifice of a GID to transfer the financial and other obligations of constructing public infrastructure improvements (such as streets, gutters, storm drains, sewerage and water services) onto persons other than themselves.

As elsewhere discussed, GIDs are initiated at the prerogative of County Boards8 either by a resolution: “adopted by the…County” Board9, or…proposed by any owner of property to be located (with)in the (new) district.”10

When: Insofar as IVGID is concerned, on April 20, 1961 an emergency11 resolution was proposed at the urging of Incline Village’s initial developer (Crystal Bay Development Co.) by Commissioner J.C. McKenzie of the Washoe County Board12. The alleged necessity for IVGID’s creation was the creation of an entity which could “provid(e) for (the) exercise of the power(s like those) of a GID.”13 Thus on May 20, 1961, effective June 1, 1961, the Incline Village GID (“IVGID”) was created14 via County Board Bill No. 5715, Ordinance No. 9716. Initially IVGID’s boundaries encompassed just “the unincorporated rural areas of Incline Village, (within) Washoe County, Nevada.”17 Its first trustees16 were: Raymond Plunkett18, Raymond Smith19, Robert McDonald20, Harold Tiller21, and John M. Uhald22. All were either principals of CBDC, or closely aligned to their common interests23.

Ignition: Armed with domination of a “governmental” unit24, CBDC was poised to sell encumbered Incline Village real property25 using IVGID as its conduit to issue bonds26 to pay for public infrastructure improvements any other real estate developer would normally have been required to pay him/her/itself, and assess local property owners for the servicing/repayment costs associated with those bonds. And that’s exactly what happened in Incline Village!

Within days of IVGID’s creation, its initial Board declared the public infrastructure improvements the District would be constructing. Unsurprisingly, water [project 61-1 (Resolution No. 6)], sewer [project 61-2 (Resolution No. 7)], and roads [project 61-3 (Resolution No. 8)]; as well as the source for their payment [bonds27 (Resolution Nos. 21-23) whose premiums would be paid by way of special assessment levied against those properties specially benefited28]. And within two (2) months the IVGID Board had approved the issuance and sale of the equivalent (in today’s dollars) of over $45 million in infrastructure bonds; $1,881,74429 of water bonds (Resolution No. 24), $1,631,89030 of sewer bonds (Resolution No. 25), and $1,881,74429 of road bonds (Resolution No. 26). In fact within seven (7) short years IVGID had amassed over $16 million of bonded and other public indebtedness31! This means of spending and financing, augmented by the District’s subsequent Beach (“BFF”) and Recreation (“RFF”) Facility Fee(s)32 enacted for similar purposes, became the playbook for CBDC’s development of Incline Village.

And now you know.

  1. See our discussion in IVGID’s Early Years.
  2. See Harold Tiller’s October 25, 1965 letter testimony presented to the Washoe County Board of Commissioners (“County Board”) in support of the IVGID Board’s request the District be granted the supplemental basic power of public recreation [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“)].
  3. Where he “asked not what your country can do for you (but rather)…what you can do for your country.”
  4. “Here we are…free to make our profits without Kefauver [a former U.S. senator who  chaired the Senate’s Special Committee to Investigate Organized Crime in 1950 and 1951 (go to https://www.senate.gov/senators/FeaturedBios/Featured_Bio_KefauverEstes.htm)], the God Damn Justice Department and the F.B.I. ninety miles away, in partnership with a friendly government…We’re bigger than U.S. Steel…We (now) have…what we have always needed, (a) real partnership with the government” (see https://www.imdb.com/title/tt0071562/characters/nm0833448)!
  5. See https://www.mcdonaldcarano.com/news/nevada-law-firm-mcdonald-carano-celebrates-70-years/.
  6. See SB20, Chapter 319, page 457, 1959 Statutes of Nevada.
  7. See the top of page 9 of Legislative Counsel Bureau Bulletin 77-11, Creation, Financing and Governance of General Improvement Districts (“LCB Bulletin 77-11“).
  8. See NRS 318.070(2).
  9. See NRS 318.055(1)(a).
  10. See NRS 318.055(1)(b).
  11. The “substantial shortage of improved lands along the shore of Lake Tahoe to meet the demands of the growing influx of people therein.”
  12. See Washoe County Board Bill No. 57, Ordinance No. 97 adopted May 20, 1961.
  13. Initially, “paving, curbs, gutters, sidewalks, storm drainage, sewer disposal and water supply….Since the area is subject to heavy winter storms, it is necessary that these proceedings be had without delay so that the proposed improvements may be made available before the winter snows.”
  14. In fact, it very well may have been the first GID created in the State!
  15. After adoption of the resolution or receipt of the petition…organization of the district must be initiated by…adoption of an ordinance by the board of county commissioners” [see NRS 318.055(2)].
  16. See https://www.yourtahoeplace.com/ivgid/about-ivgid/history-of-ivgid.
  17. See ¶1(A) at page 35 of IVGID’s 2019 Comprehensive Annual Financial Report (“the 2019 CAFR”).
  18. Former general manager of the Crystal Bay Club, and owner of the former Tahoe Mariner Hotel/Casino (both located in Crystal Bay).
  19. A master land planner from Gardnerville, Washoe County’s first Planning Director (go to page 30 at https://issuu.com/justimagine/docs/lwpnl_hol22), CBDC’s initial vice-president who was recruited to design Incline Village, and thus known as the “architect of Incline Village.”
  20. CBDC’s attorney (see discussion above).
  21. One of Art Wood’s Oklahoma CPA colleagues, a fellow Board member of CBDC, and known as “the father of Incline Village.”
  22. CBDC’s project manager (go to https://www.yourtahoeplace.com/ivgid/about-ivgid/history-of-ivgid).
  23. By way of example, consider the case of Whiston v. McDonald, 85 Nev. 508, 458 P.2d 107 (1969). Notwithstanding Art Wood was not an IVGID trustee, and IVGID had been granted the basic power to furnish facilities for the collection and disposal of garbage and refuse services [see sec. 3(j) of No. 102, Ordinance No. 97], the predecessor to today’s NRS 318.116(13), he and his attorney Robert McDonald [who was also an IVGID trustee (president of the IVGID Board no less) and CBDC’s attorney] negotiated agreements on behalf of IVGID, CBDC, Nan Whiston dba Crystal Bay Disposal Co., and Crystal Bay Disposal Co., Inc. (an entity formed by Art Wood “to assure” garbage disposal services in Incline Village. “On May 14, 1965, for…reason(s) not clearly shown nor understandable from the record, Mr. Wood wrote (to) the District confirming an agreement between the District and (his)…Crystal Bay Disposal Co., Inc…for an exclusive 10-year franchise (for the)…collect(ion of) garbage within the District. The letter recounted that the District was to be responsible for the billing and collection (of charges), to be remitted to Disposal Co., Inc., in accordance with a certain (rate) schedule. The letter asked (that) the District…signify its acceptance (of this ‘so called’ arrangement) by signing and returning a copy…On February 18, 1965, Mr. Wood, (wearing his hat) as President of Development Co., wrote (to) Security First National Bank…[where (Ms. Whiston) had financed two of the garbage trucks she had purchased (to collect Incline Village garbage)] advising the Bank that ‘the Incline Village General Improvement District (wa)s not in a position to legally enter into a long term contract with Crystal Bay Disposal Co. (and that)..until such time as a long term contract c(ould) be negotiated, Crystal Bay Development Co. (would be) subsidizing (garbage collection)…operations…at its development known as Incline Village.'”

    Thus the question why Art Wood was involved in these matters? The dissenting opinion of Justices Collins and Mowbray asked: “What authority, if any, did the District and the Development Co. have to enter into a 10-year franchise for garbage collection?” “What authority, if any, did Arthur Wood have…negotiating with (Mr. Whiston) through the Development Co?” “(Wa)s Disposal Co., Inc., merely the alter ego of Development Co?” “What control does Arthur Wood exert over the District?” “And why was Mr. McDonald simultaneously representing CBDC, Crystal Bay Disposal Co., Inc. and IVGID?” As this dissenting opinion further observes, “nothing (wa)s shown in the record…by what authority Mr. Wood had the right to bargain on behalf of the District!” And is it any wonder then that Ms. Whiston “testified…she was confused in dealing with so many companies (and)…that Mr. Wood seemed to be in control of them all?” Well in retrospect, don’t we now know the answer?

  24. According to NRS 318.075(1), GIDs are  “governmental subdivision(s) of the State of Nevada…body corporate(s) and politic and a quasi-municipal corporation(s).”
  25. In 1960 CBDC accomplished its initial subdivision of the acreage purchased from George Whittell into 1,700 lots. And by 1968 over three thousand (3,000) homes had been built (see https://www.clubtahoe.com/history-of-incline-village/).
  26. NRS 318.275(1)(c) authorizes GIDs to issue revenue bonds.
  27. NRS 318.325(1) as originally enacted (see SB20, Chapter 319, sections 54-55, pages 469-470, 1959 Statutes of Nevada) authorized by “the affirmative vote of four trustees…to borrow money without an election (by issuing)…the following securities…revenue (and)…special assessment bonds.”
  28. NRS 318.350(1) as originally enacted (see SB20, Chapter 319, section 67, page 473, 1959 Statutes of Nevada) permitted “such part of the expenses of making any public improvement (authorized, in a general way, in the ordinance creating any district authorized by this chapter) as the board determine(d to)…be defrayed by special assessments upon…such…lands as in the opinion of the board (would) be benefited by the improvement.”
  29. $16,387,410 in today’s dollars.
  30. $14,211,524 in today’s dollars.
  31. Nearly $140,000,000 in today’s dollars.
  32. See NRS 318.197(1) and 318.201.

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