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Reno’s Perspective

Redevelopment Agency hires counsel, voting to move forward with filing lawsuit

December 16, 2011

The Reno Redevelopment Agency voted to hire special counsel and move forward with filing a lawsuit against the Washoe County Treasurer, et al., regarding the allocation of property taxes to the Redevelopment Agency.

The Redevelopment Agency selected to hire Fahrendorf, Viloria, Oliphant & Oster LLP, with an initial litigation budget of $100,000. Funding would come from the City of Reno’s stabilization fund with a mechanism in place for reimbursement.

On August 31, 2011 the State of Nevada’s Attorney General’s Office issued the written legal opinion that the Redevelopment Agency was entitled to receive at least $2.7 million dollars per year pursuant to NRS 279.676(3), which reads: “[t]he taxing agencies shall continue to pay to a redevelopment agency any amount which was being paid before July 1, 1987, and in anticipation of which the agency became obligated before July 1, 1987, to repay any bond, loan, money advanced or any other indebtedness, whether funded, refunded, assumed or otherwise incurred.”

After receiving the Attorney General’s legal opinion, on October 4, 2011, the Agency issued a demand letter to Washoe County for payment. On October 14, 2011, the Washoe County District Attorney’s Office issued a written legal opinion that conflicted with the Attorney General’s opinion. In the opinion of the District Attorney, the Redevelopment Agency is entitled to receive an amount substantially less that $2.7 million dollars per year pursuant to NRS 279.676(3). The Washoe County Treasurer has indicated she intends to follow the District Attorney’s opinion. The Department of Taxation has indicated that they have no ability to compel the County to comply with the Attorney General’s opinion.

Once the amount owed to the Redevelopment Agency is determined the funds would come from Washoe County, the Washoe County School District, the City of Reno, and the State of Nevada.

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Washoe’s Perspective

On October 14, 2011, the Washoe County Treasurer received an opinion from the Washoe County District Attorney’s office regarding the allocation of property taxes to redevelopment agencies.

Specifically in question is the provision in NRS 279.676(3), regarding payments to redevelopment agencies to cover indebtedness incurred prior to July 1, 1987, which reads as follows:

The taxing entities shall continue to pay to a redevelopment agency any amount which was being paid before July 1, 1987, and in anticipation of which the agency became obligated before July 1, 1987, to repay any bond, loan, money advanced or any other indebtedness, whether funded, refunded, assumed or otherwise incurred.

The District Attorney’s Office opinion clarifies that the minimum allocation of property taxes to redevelopment agencies, therefore, is intended to cover debt obligations incurred before July 1, 1987, because statutes must be read in their entirety.

“It is unfortunate that taxable values and the resulting tax revenues have fallen to the point that we have to impact other agencies in order to meet the minimum allocation to the redevelopment agency,” said Treasurer Davis. “This is an unprecedented occurrence, which is causing a very close examination of the allocation methods used in the State, and we will work with Reno Redevelopment and other agencies to assure that the allocations are done fairly and in accordance with our understanding of the law.”

Providing an allocation to the Reno Redevelopment Agency to cover the current payment for indebtedness incurred prior to July 1, 1987 would only be required for the current fiscal year, since prior year allocations were sufficient to cover the indebtedness incurred prior to July 1, 1987. The funds to provide an additional allocation would have to come from all the entities which share in the distribution of these tax revenues, which includes the Washoe County School District, the State of Nevada, the City of Reno, and Washoe County.

Click here for District Attorney’s Opinion.

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