AFL-CIO of Nevada Executive Secretary-Treasurer Rusty McAllister, consultant Danny Thompson, and former gaming executive and former UNLV President Don Snyder at a public hearing on proposed high-speed rail. (Photo by Dana Gentry)

Policy, politics and progressive commentary

The O’Jays — who enjoined people all over the world to start a love train — have nothing on Southern Nevadans who voiced their support Thursday for a passenger rail project with a sexy name and a decidedly unsexy destination.  

“For the first time I think we have a real deal to talk about here,” former gaming executive Don Snyder testified at a public hearing on a request by Virgin Trains USA to receive $100 million in federally-tax exempt private activity bonding authority from the State of Nevada.  

Virgin Trains USA, which is backed by Fortress Investment Group, intends to request an additional $100 million next year from Nevada and a total of $600 million from California, which has already approved half of that amount. 

Federal law allows Virgin Trains USA to parlay the $800 million in bonding authority it seeks from California and Nevada into four times that amount — $3.2 billion in bond debt to help finance the $4.5 billion dollar project. 

A company spokesman says Virgin Trains USA is seeking another $1 billion in private activity bonds from the U.S. Department of Transportation, which provided the PABs for its Florida project.  

“We intend to finance the project through a mix of equity and debt,” Ben Porritt, Senior Vice President of Corporate Affairs for Virgin Trains USA, told the Current. Porritt did not identify alternative financing in the event Virgin’s federal application is unsuccessful.  

The hearing was dominated by testimony from Snyder, chairman of the Regional Transportation Commission’s Transportation Resource Advisory Committee (TRAC), four other TRAC members, labor officials and Anthony Marnell, former chairman of XpressWest, the previous iteration of the train project, which sold to Brightline, now Virgin Trains USA.  

Snyder noted decades of “near misses” in the quest to connect Las Vegas and Los Angeles via rail.  The proposed project gets close but falls short of that goal, with terminals in Southern Nevada and Victorville, a remote town in California’s high desert.  

“It never happened before because no one could put the financing together,” said former AFL-CIO of Nevada executive director Danny Thompson. “This isn’t like you’re giving something away.  This project makes so much sense, both for the economy and the public good. It’s good for the environment.”  

A 2019 Congressional Research report on improving inter-city rail service notes “passenger rail lines rarely generate an operating profit.”

With the exception of Snyder, who noted he recently stayed near a Virgin Trains USA station in downtown Miami “in an area that had been a hardcore slum before the train,” those who testified were unfamiliar with the company’s Florida venture, which has been plagued by expansion delays and ridership falling short by fifty percent of company projections.  Initial plans called for the Miami to Orlando leg to be completed in 2018 in one phase.  The extension from West Palm Beach to Orlando is now slated for a 2022 completion.  

Thompson and his fellow TRAC members admitted they had not seen ridership projections for the local project, noting the demand can be seen in backed-up southbound traffic on Interstate 15.  

Conspicuously absent from the hearing was outgoing RTC Chief Executive Officer Tina Quigley, who confirms she will begin working for Virgin Trains USA in November as its Senior Vice President of Business Strategy.  Quigley says she has no cooling-off period, meaning she is not prohibited from representing her new employer’s interests before the agency she currently oversees.

Nevada, based on its population, received $318 million in tax-exempt bonding capacity from the federal government in 2019.  Half is allocated to local governments and half to the Director of the Department of Business and Industry, who has not granted any bonding authority this calendar year, Terry Reynolds of Business and Industry testified.  

“We have approved this calendar year almost over $100 million worth of housing projects in both Southern Nevada and Northern Nevada,” Reynolds said in response to the Current’s reporting that the train project would cut into available bonding capacity for developers of low-income housing, a commodity sorely needed at both ends of the state.  “These are affordable low-income housing projects for seniors or for workforce development. So a major amount of this money has gone into housing.”

The Clark County Commission is slated to vote next month on a resolution supporting the project.  

Commissioner Lawrence Weekly supports the project in concept but says anything that cuts into the government effort to identify and generate low-income housing opportunities would be a concern. 

“We gave direction to staff to go out and find affordable housing,” he said. “That would be a major concern.”  

Porritt pointed to Virgin’s practice in Florida of investing in the area surrounding its stations, where the company has developed workforce housing.  

“We invest where we do business,” he said, including providing free train fare to commuters in the area. 

A recent report detailed by the Miami Herald last week indicates the company’s fares are too high and predicts low ridership for its expanded Florida route.

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Slide from Virgin Trains presentation to the Clark County Commission.

Policy, politics and progressive commentary

The proposed financing for a plan to reduce traffic between Las Vegas and California and stimulate the economy by shuttling tourists via high-speed rail has no public funding, but would slash bonding capacity for a favored source of financing for low-income and affordable housing.  

Virgin Trains USA, which is backed by Fortress Investment Group, intends to sell tax-exempt private activity bonds to finance much of the $4 billion project.  

But the move would reduce financing options for developers of multi-family and senior housing projects for the next two years.

The federal government allows states to designate tax-exempt bonding authority to projects with a public purpose.  Nevada’s annual allocation of private activity bonds (PABs) is capped at roughly $300 million a year.

Last year, $200 million of the bonding authority was used to finance a variety of residential projects. The tax exempt feature of the bonds reduces the cost of financing for affordable and low-income housing projects. PABs are also what trigger eligibility for the 4 percent federal low income housing tax credit (LIHTC), rendering projects even more attractive to developers and investors.

The tax credits generated by the tax exempt bonds are “the most important resource for creating affordable housing in the United States today,” according to the U.S. Department of Housing and Urban Development.

Nevada is experiencing a low-income housing crisis.  The centerpiece of Gov. Steve Sisolak and Democratic lawmakers’ housing policy this legislative session was to allocate $10 million a year from a separate, state source — transferable tax credits — not to exceed $40 million over four years.    

The train project is seeking $100 million of Nevada’s PAB capacity this year and another $100 million next year. California has already approved bonding authority for $300 million in PABs for the train this year and is expected to approve the same amount next year.

Thanks to Congress, Virgin Travel can parlay the $800 million in bonding authority it seeks from California and Nevada into $3.2 billion in bond sales.    

“Federal law allows a private developer of a high-speed rail system to issue tax-exempt bonds in an amount equal to four times the allocation provided to the project from a state, significant leverage that is not available to other privately-owned projects,” said Teri Williams, spokesperson for the Nevada Department of Business and Industry.  

A public hearing on Virgin’s request is scheduled for Thursday morning.  

What does Sisolak think of allocating a third of the state’s $300 million private activity bond capacity to a private train for the next two years?  

“This is currently under review by state agencies,” spokesman Ryan McInerny told the Current via email. “The Governor looks forward to being briefed by them upon the completion of their review.”

Virgin Travel is the latest iteration of the venture known first as Desert Xpress and later as Brightline. Billionaire Richard Branson bought a minority share of the company and gave it the Virgin moniker.  The company’s Miami to West Palm Beach route began operations in January 2018 and is serving fewer than a million riders a year, less than half of Virgin’s projected ridership of 2 million.  

“We’ve always projected a steady ramp up over three to four years,” said Ben Porritt, Senior Vice President of Corporate Affairs for Virgin Trains USA.

Planned expansions have been delayed, as was an initial public offering scheduled for last February, according to Bloomberg.  The company sought as much as $538 million in that IPO, which would have valued the company at about $3.15 billion.

Ridership projections inherited from DesertXpress estimate the route between Victorville and Las Vegas will have 3 million round-trips in its first year of operation. A new ridership study is underway, according to Porritt.  

The Clark County Commission instructed staff this week to draft a resolution supporting the project for its November 5th meeting.

“I expect it to pass,” Commissioner Michael Naft said in an interview, although he admits he has not seen ridership projections. “Without seeing the numbers, I’m supportive of the concept of high speed rail. We’ve been talking about it my entire life. We finally have a partner in Virgin that isn’t seeking public money. They’ve done well in Florida. It’s a good solution.”

Whether it’s a good solution, as Naft says, remains to be seen. The plan would require visitors to make their way to Victorville and pay $60 for a one-way ticket to Las Vegas for a roughly one hour and fifteen-minute trip — less than half the three hours by car.  Expansions are planned to Palmdale and eventually Los Angeles.  

“If I get involved in a project like that, having seen what went on in Florida, I would have to be somewhat suspect of the perfect ending and perfect outcome,” Jim Colby, senior municipal strategist at Van Eck Associates Corp., a company that holds some of the Florida securities, told Bloomberg last month. 

Financial analyst Guy Hobbs of Hobbs Ong and Associates is preparing findings on the project for Clark County that would allow the bonds to go to market.  

“It’s one thing to get the bond allocation by the state.  It’s another to actually sell the bonds,” says Hobbs, who has been commissioned by the state to produce, among other things, findings of financial feasibility on a tight timeline.   

“Meeting that timeline and doing the due diligence to make the findings isn’t going to happen overnight.”

Hobbs says key findings, including a ridership study, have not been provided by the state.  

“Ridership studies are an engineer’s professional opinion of what ridership can be.  We can’t attest to financial feasibility without a ridership study,” Hobbs added.

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Illustration of workers who have been affected by the "wage theft epidemic." (Illustration by Tiffany Lin a Visiting Assistant Professor of Design and Illustration at the University of Nevada, Las Vegas.)

Policy, politics and progressive commentary

Immigrant workers in Nevada are suffering from a wage theft “epidemic,” and the state office charged with protecting workers is ineffective and unresponsive, says Bliss Requa-Trautz, director of the Arriba Las Vegas Workers Center.

In March, a group of working Nevadans met with state Labor Commissioner Shannon Chambers at the Workers Center in an effort to push for more responsive solutions from her office.

Since that meeting, every worker at the March meeting received a phone call or an appointment with the state Office of the Labor Commissioner, but not one case was taken up by the office, Arriba staff said at a forum last week.

Taking matters into their own hands over the last several months, the Center has been more successful than they anticipated with direct community mediation.  

As part of their community-based strategy, the Center sends a letter to employers who workers say have withheld pay, refused to pay overtime or otherwise deprived employees of wages. If employers fail to respond, Arriba follows up with phone calls to the employer.

If neither of those tactics work, the Workers Center sends in delegations to confront the employer in person, and collect video and audio recordings of the engagement. At times even the threat of showing up with a camera has been effective, says Requa-Trautz.

Yesenia Mejia and her husband were hired by verbal agreement for a construction job laying drywall and adding wall texture in a restaurant along with her husband. The contractor refused to pay them for their completed work and claimed he had never hired them. Mejia says she originally went to the Labor Commissioner’s office, but she did not have a W-2 showing verification of employment, and says the commission office did not accept texts, photos, and voicemails exchanged between the employer and Mejia as evidence of the theft, on the grounds that they could not verify if the contractor in the evidence was the same company that hired and refused to pay them.

“We’ll certainly consider all of that [evidence] but at the end of the day if it’s just one version versus another version, it goes through a legal process. A judge decides ‘I believe this person and I don’t believe that person,’” Chambers said during a meeting with workers in March.

“It’s like they closed all of the doors on us. And we said ‘well how are we supposed to prove to you guys that we did the job? We have the pictures of before and after’,” of the completed work Mejia said. 

So at times, recovering wages have needed a more creative approach.

Mejia was finally able to open up negotiations and recover her wages after Arriba’s staff threatened to publish a graphic of the employer portrayed as the Grinch who stole Christmas.

“Because we were being successful through the community pressure model we began to receive more cases than we had the capacity to handle,” Requa-Trautz said. “So we pivoted. Our job is not to fulfill the role of the Office of the Labor Commissioner. So we need to look at structural changes to make sure workers across the city and across the state have access to resources.”

Systemic defects

They’ve drawn the conclusion that challenges workers face when confronting wage theft stem from ineffective implementation and execution of existing laws.

The Arriba Workers Center is working on draft proposals to change how the Office of Labor Commissioner interprets and enforces laws that are on the books, with a goal of getting the policy changes approved during the next Legislative session in 2021.

This year, legislators passed, and the governor signed into law, legislation pushed by the Center and unions to create a task force to study the issue and establish a standard for independent contractors.

Mejia said as a laborer she has witnessed other workers who have been refused payment for their work, many of who fear reporting to the Office of Labor Commission due to their immigration status. The issue of wage theft is more widespread than reported, say construction industry experts and union leaders, who argue the Labor Commissioner’s office is poorly equipped to handle the epidemic and does little to punish contractors who rip off employees, leaving the policing largely to labor unions.

“The Labor Commissioner’s job is not to put companies out of business but to impose disciplinary action and fines as allowed by state law,” Teri Williams, a spokeswoman for the Office of the Labor Commissioner told the Current in July. “And the Labor Commissioner’s office, in particular, strives to ensure that all workers are treated fairly under the law.”

On Friday, Williams said the Labor Commissioner cannot investigate or enforce wage laws for certain types of workers, and a lot of the tension between workers and the commission is a result of these limitations.

However, Requa-Trautz says employees are often “misclassified” as contractors by employers who illegally try to avoid certain legal obligations, such as the payment of taxes or other benefits to their workers. 

“It’s a very conservative definition of employee versus independent contractor,” said Requa-Trautz. “There is a conservative interpretation for employee when in fact many of the folks employing day laborers could not run their business without that labor and are misclassifying individuals.”

“Simply not having a W-2 does not mean someone is a contractor instead of an employee in circumstances where workers are working by the hour, contribute no materials, or take on a personal cost, and don’t control their schedules,” she said.

Requa-Trautz and Arriba staff, along with Mejia and other workers, discussed wage theft issues and strategies for moving forward at a forum Friday.

On Thursday, the Current informed the state Office of Labor Commissioner that the forum was taking place, and that the office would be asked to comment on issues raised at the forum. When provided specific questions after the forum, an office spokesperson said they were not prepared to respond.

Help wanted: ‘Bigger voice’

Even cases that follow the process through the Labor Commissioner’s office can languish for months or years, says Requa-Trautz. 

Jose Aguirre said he filed a case with the Labor Commissioner in June when his employer for a home construction job blocked his phone number after Aguirre attempted to contact him for his pay. The commission did issue a final order in Aguirre’s favor, but the employer claimed he was never asked for payment, despite repeated calls from the Center requesting payment, and the order was withdrawn.

Aguirre still not been paid back. A settlement conference has been scheduled later this month, and four months after filing the initial complaint, he is hopeful for a resolution.

The Arriba Las Vegas Workers Center got its start a little more than a year ago by surveying 300 day laborers. One-third had been a victim of wage theft in the two months prior to the survey.

Amaka Ozobia the director of The Office for New Americans — a new office Gov. Steve Sisolak signed into law — said their goal is to address these gaps in services for immigrants and are currently looking for strategies to ensure labor laws are equitable regardless of language barriers among other issues. She said her office plans to draft a survey to understand the extent of wage theft. 

“We are currently in the process of coming on board,” Ozobia said. during the form “We are hoping in the coming months that we’ll have a definite strategy to address this issue. For the governor, this is something that’s really important.”

Maria Mendoza was a domestic worker for a family with three children before her employer eventually stopped paying her. Mendoza said she had lost hope of being paid back before she connected with Arriba, which is following her case.

Requa-Trautz said Mendoza’s case was the first domestic worker’s case they took on as a test of the domestic worker’s legislation passed in the Nevada Legislature last year.

Nevada’s “Domestic Workers’ Bill of Rights” places several requirements and restrictions on anyone who employs a domestic worker. The law is meant to protect workers rights and ensure that domestic workers are paid at least the Nevada minimum wage and are paid for all working hours.

Requa-Trautz said in Mendoza’s case, the Labor Commissioner’s office did not take up the issue because the employer’s home was not registered as a business, meaning it was out of their purview.

“What are they going to do to help us?” said Mejia. “Like I said, Labor Commission isn’t doing anything. We need the help out there. We need a bigger voice and that bigger voice happens when we all speak together.”

The post Group fighting wage theft succeeds where state fails, but wants tougher laws appeared first on Nevada Current.

SHari Kassebaum, president of the Correction Officers unit, turns over the guards' petition to the state to be represented by AFSCME.. Photo by Nevada Current.

Policy, politics and progressive commentary

Now that state lawmakers have cleared the way for collective bargaining by state employees, Nevada’s prison guards are the first to sign up a majority of employees and file with the state for recognition as members of the American Federation of State, County & Municipal Employees (AFSCME).  The union has represented some state workers for years, but was previously unable to bargain contracts. AFSCME represents 1.4 million government employees throughout the U.S. 

Shari Kassebaum, the president of the 1,800 member unit, says she’s hoping the union will end a culture of lawlessness in the Department of Corrections.

“No one in that department is ever held accountable,” Kassebaum told the Current.  “If you’re a lieutenant or above, you can do whatever you want.  Now we will be able to hold them accountable.” 

“Our officers recognize there’s a need for a union to come in and reorganize our department, bring standards, change the staffing levels and make it a safe working environment for everybody,” Kassebaum said.  

“NDOC takes allegations about management misconduct seriously,” department spokesman Scott Kelley told the Current.  “At the same time, NDOC disputes the validity of Ms. Kassebaum’s allegations which cast a shadow on the hard-working men and women at Nevada’s prisons and correctional camps.”

Kassebaum says the Department of Corrections endures extremely high turnover.  

“What’s making them leave?  It’s not just the pay. If we make the job so unbearable that people don’t want to come to work, we need to change the morale of our employees.  That starts with standards, fair practices and fair promotions,” she said.  

“Every correctional officer knows the job is demanding and sometimes requires long hours in challenging environments,” Kelley explained. “COs (correctional officers) do this important work in order to protect Nevada through the incarceration and rehabilitation of the state’s inmates.”

On Friday, corrections officers submitted their petition to the State of Nevada, seeking to be represented by AFSCME when the time comes for contract bargaining.   

“We’ll assign it a case number, house stamp it, and give you a copy back,” Bruce Snyder of the Government Employee Management Relations Board told the workers. 

“Right now we’re trying to determine which jobs are in which of the eleven units,” Snyder said, explaining multiple unions are vying to represent workers in 64 job classifications.     

“We’re going to have some settlement conferences in the next few weeks and those that don’t settle, the board will decide who is right — Human Resources or the union,” Snyder said.  

The state can’t act on any of the petitions, according to Snyder, until the process is done — something he’s hopeful will happen in October.

Note: This story was updated on August 26 to include comment from the Department of Corrections.  

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People gathered in Carson City March 25 for a vigil recognizing Nevadans who have died while homeless. (Photo courtesy ACTIONN)

Policy, politics and progressive commentary

Homeless and affordable housing advocates were blindsided last week after proposed legislation to use taxes and fees to fund homeless services and affordable housing was neutered.

Assembly Bill 73, as originally backed by the City of Las Vegas, would have authorized the city to use a sewer surcharge fee and a real property transfer tax to fund homeless services and affordable housing. Democratic assemblywoman Dina Neal introduced a conceptual amendment during the bill’s hearing April 11 that stripped all the original language and now requires cities and counties to form a task force to study solutions for alternative funding for homeless services and affordable housing.

“I am disappointed by the amendment,” said Emily Paulsen, the executive director for the Nevada Homeless Alliance. “This was a huge missed opportunity. We have a crisis. We know what solutions we need. The problem is there isn’t enough resources to meet the demand.”

Neal said the intent of the new language is for municipalities to work together to identify new revenue streams to deal with shared crisis. “Counties and cities should work together in a shared and cooperative way around funding strategies because the problem is not isolated to a single city or unincorporated area,” she said. “I strongly believe we’re not going to make a dent in reducing homelessness without working together to solve this problem.”

The City of Las Vegas had been rallying behind the sewer charge and real property transfer tax.

In a presentation before the city council in October, city officials said the intent was to increase the sewer surcharge, which is currently about an estimated $255 per household with a pool each year, by about 8.6 percent — roughly $22 — to generate an estimated $5 million. By raising the real property transfer tax by 25 cents — it is currently $2.55 per $500 of property value — officials estimated they could rake in an additional $15 million.

Neal said the policy proposal wasn’t feasible specifically because of the sewer surcharge and tax and that there was “a lack of agreement among certain entities” about increasing those — she didn’t specify which jurisdiction she was referencing. Assemblywoman Teresa Benitez-Thompson additionally called this kind of tax increase “problematic.”

If the bill passes, cities and counties would appoint an official to be a part of a “working group” to study, assess and develop a strategy for additional funding sources. Neal argued there isn’t enough collaboration between cities and counties to come up with solutions together now.

Arash Ghafoori, the executive director for Nevada Partnership for Homeless Youth, said groups and jurisdictions are already working together and there is already a Southern Nevada Homeless Continuum of Care looking at ways to tackle homelessness. “We have already been working together and making plans,” he said “The issue of homelessness is in a dire state. It’s a crisis. It is an epidemic. We need to be bringing more resources to the table now. The original proposal would have done exactly that.”

Despite being the originator of the bill, the City of Las Vegas supported the conceptual amendment adding that it looked forward to “getting in a room to identify the best strategy to address funding.” That strategy still could ultimately include a sewer surcharges or property taxes if all parties agree.

While nobody was in outright opposition, that appeared to be because groups testifying were shocked by the last-minute changes. Instead, they testified as neutral on the bill.

That included Felipe Silva, a housing justice organizer with Make the Road Nevada — he told lawmakers several members of the group planned to testify in support of the bill before finding out during the presentation the language had been changed.

Nevada is facing an affordable housing crisis as well as a homeless crisis — those two things are interconnected.

During several bill presentations during the session, lawmakers were briefed on both the extent of the crisis and potential solutions.

According to the Nevada Homeless Alliance, Nevada ranks “last in the country in terms of affordable rental units available.”

Nevada only has nine homes available for every 100 needed for those who are earning about 50 percent of the area median income — area median income is about $55,000. For extremely low income households, or those making about 30 percent of area median income, there are only 15 affordable units for every 100 needed.

The United States Interagency Council on Homeless estimates on any given day, more than 7,500 Nevadans are experiencing homelessness — an estimated 6,100 are in Southern Nevada.

According to the U.S. Department of Housing and Urban Development’s 2018 Annual Homeless Assessment Report, the state has one of the highest rates of unsheltered homelessness in the nation — an estimated 56 percent of the state’s homeless population has no access to any sort of shelter.

To deal with the affordable housing crisis, lawmakers proposed legislation to allocated $10 million per year in transferable tax credits for affordable housing development, Senate Bill 448, and reducing or waiving certain fees, such as sewage fees, to aid developers, Senate Bill 103.

State Sen. Julia Ratti also introduced SB398 to clarify what authority county and city governments have to address affordable housing issues. The bill was originally a conceptual amendment attached to SB103. 

While other states, like Oregon, have mandated tactics such as rent control and stabilization statewide as one potential solution to the affordable housing crisis, Ratti doesn’t think it would work in Nevada.

“I think the diversity in our communities would make something like that a challenge,” Ratti told the Current in March. “When we do something statewide, we have to do things that make as much sense in Winnemucca as it does in North Las Vegas. It needs to make as much sense in Sparks as it does in Pahrump. It’s very important that policies that support affordable housing are market-driven. We need to be responsive to specific market conditions of that community.”

Even though the intent is to give municipalities the tools to respond to the affordable housing crisis, rent control and inclusionary zoning have never been welcomed by players in Nevada’s powerful housing and development industries.

“For rent control, I don’t know if there is political interest to create such policies,” Kate Thomas, the assistant county manager for Washoe County, told the Current in March. “Inclusionary zoning would be more palatable.”

Thomas added that inclusionary zoning, when done correctly, can be a good tool that has been shown in other places to address affordable housing issues.

As far as homelessness, lawmakers proposed Assembly Bill 174 to create the Nevada Interagency Council on Homeless — former Gov. Brian Sandoval created the initial council through executive order, but it is set to expire in 2020. The legislation solidifies the council beyond the executive order.

During its bill hearing in March, Assemblyman Tyrone Thompson said without the council, the state wouldn’t qualify for certain federal dollars, such as the Cooperative Agreements to Benefit Homeless Individuals grant. The council would additionally call for the creation of a statewide strategic plan to tackle Nevada’s homeless problem.

Neal said AB73 would be a companion piece to AB174, not a rival.

Lawmakers also proposed multiple bills to aid homeless youth in graduating high school — an estimated 17,000 students in Nevada schools are homeless and the state also has the highest unsheltered youth populations. Neither bill provided additional funding.

No legislation specifically allocated state money to tackle homelessness or provide steady revenue for municipalities to address the lack of affordable housing. AB73, as it was originally proposed, was the only legislation that added a specific revenue stream — a tax and fee — to address both crisis.

That is now dead.

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