Tech businesses from Doordash to Amazon push back against legislative oversight measures

A sign for an Amazon distribution center, including the company's logo

Major tech companies, from food delivery platforms Grubhub and DoorDash to online marketplaces Amazon and eBay, are pushing back on two measures introduced by Sen. Dina Neal (D-North Las Vegas) that would strengthen state regulation of online business.

The first of Neal’s bills, SB314, would introduce new reporting requirements for high volume sellers, and her other bill, SB320, would establish regulations for the relationships between restaurants and delivery platforms. Both bills were heard Tuesday in the Senate Commerce and Labor committee.

During the hearing, Neal emphasized that the proposals would ensure greater transparency from newer online companies and help protect consumers and small businesses.

“My [tenure] in this Legislature has been focused on supporting small businesses and trying to help them go to the next level,” Neal said. “This bill is about transparency.”

As part of the requirements under SB320, food delivery platforms would need to be transparent about all fees attached to an order, including a disclosure of the commission charged to the restaurant — expressed as a percentage of the food purchase price.

“Requiring the disclosure of that private information would hurt restaurants competitively,” Hannah Smith, a Grubhub government relations manager, said during the hearing. “And [it] is akin to having grocery stores disclose how much they paid for produce prior to having their customers check out.”

Other delivery platforms, including DoorDash and Uber Eats, voiced concern over the disclosure of that commission fee, as representatives of those companies said that fee is a part of the private contract terms negotiated between the delivery platform and the restaurant. They also pushed back against a provision enacting a 20 percent fee cap for online orders on the commission a delivery platform can charge a restaurant. However, that cap would only apply during an emergency declaration issued by the governor.

But Kristen Corral, a co-owner of Las Vegas-based restaurant Tacotarian, said that the standard practices of food delivery platforms are predatory.

“The average fee per order on the big three platforms is somewhere between 30 and 35 percent, and for most small businesses, and especially BIPOC businesses, these are non-negotiable.” Corral said. “During the beginning of the pandemic, our Tacotarian Southwest location paid nearly $7,000 in a few months in just third party delivery fees.”

Laura Curtis, a government relations manager for DoorDash, explained that the commission fee includes payment for other services beyond just the delivery service.

“When restaurants choose to partner with DoorDash, they agree to pay fees not just for delivery and pickup but for a wide range of optional services, such as advertising and marketing,” Curtis said. “For example, some restaurants may pay a higher fee for marketing options to attract new customers or expand their delivery radius.”

Proponents of the bill said the need for greater transparency from delivery platforms was crucial at a time when many restaurants are reliant on those platforms, with pandemic-related capacity restrictions still in place.

Neal’s other bill heard during the Tuesday meeting was SB314, which would require high volume online sellers — defined as marketplace sellers that make 200-plus sales exceeding $5,000 in gross receipts annually — to report specific business information to the online marketplace they operate through, including business name, address, phone number and email address.

The bill was opposed during the hearing by Amazon — which recently engaged in a Twitter spat with Sens. Bernie Sanders (I-VT) and Elizabeth Warren (D-MA), prominent critics of the company’s business practices. Another group of online marketplaces, including eBay, Etsy and OfferUp, sent in an opposition statement to the bill.

“A legitimate seller would be suspended from conducting business if they are unable to gather the materials required by this legislation,” said Mike Shutley, a public policy manager for Amazon. “The seller verification process in this legislation creates more bureaucracy, not more transparency.”

During the presentation of the bill, Bryan Wachter, a lobbyist for the Retail Association of Nevada, pointed to the financial impact of counterfeit goods and organized retail crime as reason for the measure — in 2019, the National Retail Foundation found that 97 percent of retailers had been victimized by organized retail crime.

The bill received support from the Vegas Chamber and Reno Sparks Chamber of Commerce, as well as Home Depot. John Dillon, a government relations manager for the company, said that Home Depot sees a need for the legislation because of the growth of organized retail crime and that the bill would help provide greater transparency to consumers, as they make decisions about making safe purchases online.

“This bill is about parity among businesses, greater transparency, protecting Nevada’s families and consumers from fraudulent products and goods [and] from criminal activity,” said Paul Moradkhan, vice president of government affairs for the Vegas Chamber.

Tuesday’s hearing marked the first presentations for both bills. The committee did not vote on either bill.

Amazon surpasses Walmart for most Nevada employees and dependents on Medicaid

A sign for an Amazon distribution center, including the company's logo

Amazon has surpassed Walmart to become the employer with the most employees and dependents on Medicaid in Nevada, according to a new report from the state. 

The number of Nevada Amazon employees and dependents on Medicaid nearly doubled year over year, increasing from 4,040 to 7,892, despite statements on the company’s website that they offer medical, prescription drug, dental, and vision coverage to all of their employees, regardless of their level or position. Amazon reports having more than 10,500 full and part time jobs in the state.

The massive jump in Amazon employees and dependents covered by Medicaid came alongside a significant jump for Integrity Staffing Solutions, a job placement company that has two of its three listed Nevada offices located at Amazon fulfillment centers.

Integrity Staffing Solutions was the fifth-largest Nevada employer of Medicaid-covered employees and dependents in the 2020 fiscal year, increasing from less than 500 in the previous year to 1,746.

Walmart, the leading employer of Nevada Medicaid recipients in the last three fiscal years, fell behind Amazon, but its number of Medicaid-covered employees and dependents also continued to rise, increasing about 11 percent from the previous year to 7,725 in the last fiscal year.

Of the nearly 8,000 Nevada Walmart employees and dependents on Medicaid, 3,429 were company employees. The company reports having 14,548 employees in the state. Amazon would not indicate how many people it employs in the state.

Quentin Savwoir, the political director of Make It Work Nevada, a progressive non-profit and advocacy group, sees a problem with these increasing numbers. 

“If these corporations like Walmart, like an Amazon, invested in things like paying families quality, affordable childcare, or even just paying their employees equal pay, that would go a long way to making the lives of the women and families we work alongside a little bit better,” said Savwoir. “They wouldn't have the need to rely on the social safety net.”

When asked for comment, Walmart’s communications department offered information about the pay and health care coverage provided to employees, including that the average total compensation and benefits for its hourly employees, both full- and part-time, is more than $18 an hour as of last January — and that eligible full- and part-time employees can receive medical coverage beginning at a cost of $30.50 per biweekly pay period. It also stated that the company’s goal is “moving people beyond entry-level jobs.”

An Amazon spokesperson said that the figures in the report are misleading because they include part-time workers and people who were only employed by Amazon for a short time, including seasonal employees.

"We have hundreds of full-time roles available, however, some prefer part-time for the flexibility or other personal reasons,” an Amazon spokesperson said.

In Nevada, households with annual incomes of up to 138 percent of the federal poverty level — $16,753 per year for an individual or $34,638 per year for a family of four — may qualify for Medicaid. A single adult with three children would have to earn almost $17 per hour while working 40 hours per week to no longer be eligible for Medicaid.

That means that even full-time employees working for companies like Amazon and Walmart could qualify. Amazon pays its employees a minimum wage of $15 per hour, and Walmart employees in Nevada earn an average wage of $14.84 per hour.

The report from the Department of Health and Human Services’ Office of Analytics, which was mandated by a bill the Legislature passed in 2017, comes on the heels of a nationwide report released last November by the Government Accountability Office (GAO) that showed some similar trends.

The GAO report found that across the 11 states studied, Walmart was consistently one of the top employers of Medicaid and SNAP recipients. The report also showed that Amazon was among the top employers of workers on Medicaid. 

Sen. Bernie Sanders of Vermont, who commissioned the GAO report, called the findings “morally obscene.”

“U.S. taxpayers should not be forced to subsidize some of the largest and most profitable corporations in America,” Sanders said in a press release.

The growth in Medicaid recipients from employers with 50 or more employees resulted in an increased cost to Nevada Medicaid of $2.8 million from the 2019 to 2020 fiscal year.

That increase was much less than the combined increase for Amazon and Walmart employees — which in 2020 was nearly $12 million more than the previous year. However, that was offset by the decrease in the number of employees and dependents covered by Nevada Medicaid at other companies, including Clark County School District, Smith’s Food and Drug and Wynn Resorts.

During the 2020 fiscal year, Amazon and Walmart employees and dependents’ cost to Nevada Medicaid was more than $43 million. In that same period, the cost to Nevada Medicaid from companies with 50 or more employees was approximately $737 million.
As of November, more than 761,000 Nevadans were enrolled in Medicaid, which was 120,000 more than the 2019 Legislature had predicted. To account for that growth, Nevada will spend an additional $153.5 million on Medicaid in fiscal year 2022, according to the latest state budget proposal.

This story was updated at 1:00 p.m. on January 22 to include comment from an Amazon spokesperson.

This story was updated at 2:00 p.m. on January 22 to include information about the number of jobs Amazon has in Nevada.

Nevada Interrupted: Vegas bookstore moves online only, says customers opting for escapist, dystopian reads during pandemic

Many Nevadans are adjusting to the proliferation of COVID-19 by practicing social distancing, stocking up on supplies and staying at home. The Nevada Independent is sharing their stories each day. 

If you are a Nevada business owner or worker whose job has been upended by the coronavirus, we would love to feature your story. Send an email to ideas@thenvindy.com for consideration.

***

At Writer's Block near Las Vegas' Arts District, boxes and book-packing assembly lines have replaced the scene of customers leisurely browsing through shelves stacked with carefully curated literary works.

Drew Cohen, a co-owner of the independent bookstore, said he and his husband Scott Seeley decided to move to only online orders after "a few awkward days" of watching customers wander through the store, "touching everything in sight." Since then, he estimated the store has gone from receiving one or two website orders a week to anywhere from 20 to 40 orders per day.

"I'm glad that people are using the online service, but it's been a total transformation of how we do business and kind of a baptism by fire where we've had to develop systems for order fulfillment overnight," Cohen said. "Before, we would just get one order here or there and could take our time packing it and bringing it into the post office."

Most of the orders that the store has been filling are escapist fiction in the science fiction and fantasy genres as well as "bucket list" classics, but Cohen said that he has also seen more "on the nose" purchases, including Albert Camus' "The Plague" and the post-apocalyptic novel "Station Eleven."

"I applaud their courage," he said with a laugh.

When the store shut down, Cohen also suspended the young writer's workshops and book club meetings that the shop regularly hosts. He is unsure whether he will move that programming online.

"Each of our transactions takes so much longer to process ... I have less time now than I did before we opened, so I've been too exhausted to even think about or do some of that programming," he said.

The majority of the deliveries are processed through the postal service. Still, Cohen said the store does have a curbside pickup program similar to other restaurants and businesses in Nevada. 

Even though Cohen can keep filling orders and his landlord is working with the store on their rent payments, he is nervous about the long term health of the business.

"We are still paying our employees while we're closed right now, and it is eating through our savings," he said. "We went into this in sort of healthy position, and this crisis has removed a lot of that buffer. And then of course, we still don't know how long it's going to last for."

Cohen said that the business applied for Small Business Administration loans, but that the process was not particularly easy.

"We have some friends in the community who are small business operators who are also applying for those loans," he said. "And we're kind of like, between all of us, waiting to see who manages to finish the process first and how it goes."

Another worry of Cohen's is that publishers and consumers will continue to rely more heavily on online systems rather than brick and mortar retailers, which could place financial stress on businesses such as Writer's Block because shipping and packaging costs drive up expenses.

He pointed out that Amazon is experiencing a surge in orders during the coronavirus, while local bookstores across the country are struggling to remain open.

"It almost feels like a preview of what we could be experiencing in several years anyway, which is that by the time we want to opt-out of a company like Amazon, the options to opt-out are no longer available," Cohen said.

Despite his fears, Cohen hopes that customers will order from local stores that are invested in the community. He said he is also trying to focus on the day-to-day functioning of the business and not to think about what may happen in the future.

"I'm grateful that we have these web orders because ... it's allowed me to not have to think about too far into the future when I'm just packing up a book and creating the postage for it," he said. "And when I'm not on the clock, I am trying not to consume too much media that is about the virus."

Water district linked to developer will consider reforms after eminent domain action revealed web of conflicts

Industrial Center GID Board President

After blurring the line between a private and public utility for nearly two decades, the water district that serves the world’s largest industrial park is looking to part ways with a developer.

That action comes after The Nevada Independent reported this month that the public water district, with the governmental power to seize private property, is operated by a private entity and governed by three board members who report income from companies connected to Lance Gilman, the face of the industrial park. The board members also reside at Gilman’s brothel, the Mustang Ranch.

The board’s structure and a recent vote to use eminent domain has raised concerns about the concentration of power at a public water district that has been operated by a private developer. 

At a meeting Thursday, the board plans to consider basic administrative rules for the water district, procurement protocols that comply with state law and conflict of interest disclosures. 

The public water district, a quasi-municipal entity, was formed to provide utilities to the Tahoe Reno Industrial Center. High-profile companies — Tesla, Amazon and Walmart — have set up footholds in what is advertised as the world’s largest industrial park, about 30 miles from Reno. 

Starting in 2001, Storey County allowed a developer’s private water company to operate the public water district, exempt from utility regulation and with many powers of a local government. A new document reviewed by The Nevada Independent shows the district’s elected governing board delegated many of its non-statutory responsibilities to the developer-controlled company.

“Most people were unaware of some of the details of potential conflicts of interest,” said Mike Kazmierski, the president and CEO of the Economic Development Agency of Western Nevada.

Through a spokesman, the Public Utilities Commission, which regulates private water utilities, declined to comment. Although Storey County formed the water district, it is a political subdivision of the state. A spokesman for Gov. Steve Sisolak said that his “office defers to the appropriate jurisdictional agencies for any review of these entities and their interrelationships.”

The sooner, the better

For years, the board operated under the radar. Now the conflicted water district has been thrust into the spotlight as it leads a regional project to construct a multimillion-dollar effluent pipeline. When completed, the 16-mile pipeline will connect the region’s wastewater facility with the park. The project could be a win-win for regional development, bringing recycled water to the thirsty industrial park while helping the cities of Reno and Sparks defer millions of dollars in upgrades for the sewer facility. 

To construct it, the water district wants to use eminent domain, a power that lets public entities seize private property for projects that benefit the public. Given the water district’s connection to the private developer, a property owner challenged the board’s use of the special public power

The water district failed to properly notice the affected property owner and asked a judge to dismiss the case. It could potentially reconsider its eminent domain request at a future meeting.

A new general manager for the water district is working to create more independence between the public entity and the industrial park’s private developer.

But present and past conflicts, some of which the board president denied last week, could continue to haunt the water district. It also calls into question whether it has negotiated in good faith and complied with state ethics rules. 

While pursuing the pipeline over the past several years, the water district has negotiated with state officials, city officials, regional water planners and companies at the park. Tesla and Switch, a data storage company pushing the pipeline, did not reply to requests for comment. 

A spokeswoman for Blockchains, the cryptocurrency company that now owns most of the land at the park, said company officials were “currently trying to familiarize ourselves with the facts.”

Kazmierski said he understood why the board was structured the way it was. Under state law, water districts — formed as General Improvement Districts (GIDs) — must have a governing board comprising elected local residents or the County Commission. The residents eligible to serve the industrial park’s water district almost exclusively live at Gilman’s brothel. In recent months, the Storey County Commission has considered assuming oversight of the board. 

“The sooner they get through the transition the better,” Kazmierski said.

The current structure, he said, “just doesn't smell right as they get into their larger role.”

Private and public

The water district is operated by the developer’s private water company, TRI Water and Sewer Company. That company began servicing the industrial park as a private utility. In 2001, Storey County allowed the company to keep servicing the park by taking over an existing water district. 

Even after the private company went public, the developer remained in the driver’s seat. 

Documents and interviews reveal that the 2001 deal allowed the developer to avoid regulation from the state’s utilities commission, while retaining most of its authority as a private company.

For instance, one clause in a 2001 Operating Agreement appears to hand over certain rights of the governing board, intended to comprise elected residents, to the private water company. 

According to the agreement, “any right or obligation not required by law to be performed by the [board] as a nondelegatable function is hereby delegated to the [private water company].”

Examples of authorities that the board has delegated to the company include the supervision of contractors and the handling of many of its finances, including expenditures and revenues. 

The district’s Operating Agreement also includes a section exempting the company from laws around purchasing, public works and prevailing wages, “to the furthest extent allowed by law.”

“There are a lot of portions to that document that are not legal,” argued Paul McKenzie, a former Reno councilman who works for a builders union. “They can’t sign public responsibilities away.”

Despite the inclusion of that provision, Bob Sader, an attorney for the developer and a former assemblyman, explained that the private water company was not involved in constructing the infrastructure. The master developer paid millions to construct the water infrastructure and dedicated it to the water district at no cost. Such projects are often exempt from public works requirements and that type of dedication practice is common in development projects.

As part of the agreement, the developer helped subsidize the water district. In an email last week, Gilman noted that the developer operated the district “at a loss for over a decade.”

But McKenzie remains concerned about whether the board provided adequate oversight.  

“[The board members] have a fiduciary responsibility to those people,” McKenzie said, referring to customers. “That’s why they have to approve the budget and not the operating company.”

Kris Thompson, the board president, pushed back in a recent interview. Thompson said that the board was independent and has always acted in the best interest of the industrial park. 

He said forming the water district was one of the reasons the park was successful, noting that Storey County did not have the financial wherewithal to build an extensive water system in the late-’90s. When asked why the developer did not operate a private company, he said that would have subjected it to state utility commission regulation and delayed the industrial park’s growth. 

“If it’s a private company, it’s governed by the [Public Utilities Commission of Nevada], which is so expensive and so onerous in terms of legal requirements and regulatory requirements that no one could have set that up in a financially doable manner,” Thompson said on Wednesday.

The district, Thompson noted, is regulated by the Department of Taxation and the Nevada Division of Environmental Protection. The firms it contracts with are some of the best, he said.

Disclosure statements

There are numerous cases in which public boards, such as medical licensing agencies, present inherent conflicts for those that serve on them. But Yvonne Nevarez-Goodson, the executive director of the state’s Commission on Ethics, said that does not absolve board members from disclosing conflicts or abstaining from votes when they affect the direct interests of their employer.

It is not necessarily a conflict for a dentist to serve on a dental board. But if dentists are voting on issues that involve their business or the business of someone with whom they have a significant relationship — a household member or an employer — it could merit a disclosure or abstention.

“Just because it's a developer-governed board doesn't mean there isn't the potential to have this crossover of interests that could trigger conflicts,” Nevarez-Goodson said in a phone interview.

Meeting minutes reviewed by The Nevada Independent last month did not show instances in which board members abstained from votes or disclosed their relationships with the developer. 

That is starting to change. 

Last week, two board members read disclosure statements before voting on a utility rate study.

A third board member and a contractor at Gilman’s brothel, verbally agreed with the disclosure because her statement was stored on her phone, which she was using to call into the meeting. 

Despite the planned reforms for the district, Thompson, the board president, offered a pointed defense of the water district board before he read his prepared disclosure statement last week.

He said that there have been “gratuitous comments flying around” about the board’s apparent conflicts of interests. Thompson lives at Gilman’s brothel, works as an independent contractor for the industrial park, as an independent contractor for Lance Gilman Commercial Real Estate Services — the park’s exclusive broker — and as the risk manager for Gilman’s family trust. 

“I met personally with one of the top ethics attorneys in Nevada,” Thompson said at the board’s Nov. 4 public meeting. “And we went through the statutes word-by-word, line-by-line. I am absolutely 100 percent convinced that there is no violation of any conflict-of-interest statute by any of the board members to vote on the matter at the last meeting or to vote on these matters. And so anybody that says or insinuates that there is a conflict of interest obviously has not read those statutes.” 

At the last meeting Thompson references, the board approved an eminent domain action for the pipeline. His employer, the industrial park developer, has signed numerous contracts discussing the project. Thompson has signed several contracts involving the pipeline on behalf of the district. 

Nevada’s ethics law requires public officers to avoid conflicts when a public duty is affected by a personal interest. A conflict could consist of a financial interest or a close personal relationship. Public officials are required to inform the public of the nature and extent of those conflicts. 

A second test is used to decide whether a reasonable person would view the conflict as material so as to disqualify a public official from voting on a matter. The Ethics Commission responds to complaints filed by the public or initiates its own investigations, pending sufficient evidence.

Gilman is closely connected to the industrial park’s development. In a separate lawsuit, his attorneys have stated that he is a principal in and Director of Marketing for the Tahoe Reno Industrial Center. His lawyers have stated that his company, Lance Gilman Commercial Real Estate Services, where two water district board members report working, is the park’s broker.

Gilman said the district’s structure and the board’s composition was the only option, given the circumstances when the park was first being developed, and statutory requirements for the board. 

"We followed the state rules and regulations to the letter,” he said in an interview Wednesday. “We didn't cut corners. We did exactly what we had to do. We maintained compliance. It might not have been the ultimate best circumstances. But it was the only circumstances [that were] available to pull off what is one of the best industrial parks in the United States."

On Nov. 4, all three board members voted to approve a utility rate study for the park. They said that the items on the agenda did not directly affect the pecuniary interest of their employers.

At the meeting, Thompson said “there’s been a lot of sensationalism” about “brothel people” serving on the water district board. But he said it was a reality of the statute that board members had to live within the district. Without them, he said the water district “would’ve gone into chaos.”

“For them to join the board as they did to keep us legal, to keep this governing board sufficient and to help the park grow” was a “brave act on their part,” Thompson stated during the meeting, “because they probably knew that they were going to get some insinuations at some point.” 

Thompson did not elaborate on how they came to join the board. “Had Lucy and Jennifer not stepped up to the plate and joined our board, this [district] would've gone into chaos,” he said.

Administrative changes

The rate study is one step in helping the water district cut ties with the developer. With higher rates, it expects to hire an independent administrative assistant and an operations manager.

It could also get a new board. 

At the request of the water district, Storey County is considering a takeover of the board. The county is conducting due diligence, and the commission has yet to vote on the issue. Gilman is one of three members on the Storey County Commission, presenting another potential conflict.

Until recently, the water district had no staff. It was operated by the developer and contracted out its services. After nearly two decades, the district hired its first general manager, Shari Whalen, in July. 

Whalen, a former Fernley City councilwoman and a professional engineer, is now responsible for the difficult task of negotiating with the developer over its exit and building up the district.

At Thursday's meeting, she is asking the board to establish administrative policies and procurement procedures. An agenda says the board members will also consider “conflict of interest scripts.”

The procurement policy will ensure that the water district follows laws governing public works projects and purchasing. Whalen said she wants to ensure it is operating in a transparent way. She could not speak to how the water district had bid contracts or procured services in the past. 

Finally, the board will consider the approval of a contract with the UNR Center for Economic Development “for assessment and technical assistance” with the water district’s transition.

The district has hired its own attorney with experience in Nevada water law. The water district is the owner of most of the industrial park’s water rights, but the developer, which dedicated many of those water rights, has largely controlled how the interest in those water rights are allocated.

“What I'm trying to do is create some level of confidence in sustainability and the operations of the [water district,]” Whalen said. “There is a transition plan that is being implemented.”

For years, a public water district blurred the line between business and government — with a developer’s brothel workers at the helm

Lance Gilman seated at a table

Officials who oversee a water district exempt from state regulation work and live at a brothel owned by the public face of the world’s largest industrial park, raising questions about whether governmental powers such as eminent domain are being wielded by a private entity. 

District documents, election records and interviews show an insular county — next to Reno and where Lance Gilman, the brothel owner, now serves as a commissioner — gave a private water company controlled by the Tahoe-Reno Industrial Center (TRIC) the power of a public entity. 

How workers on Gilman’s payroll came to lead the public board, charged with serving water to some of the world’s top firms, reflects greater tensions about whether certain companies are benefiting from the region’s rapid growth and which politicians have given them an upper hand.

As billions of dollars of capital have flowed into the park with investments from online retailers such as Amazon and big tech companies such as Google, the arrangement has prompted concerns about the role of government and the concentration of power, especially with the fate of a multimillion-dollar pipeline at stake. Where does the business end and the government start? With TRIC’s water district, it is often hard to tell.

In at least one instance, Gilman signed for both the master developer and the water district, through its private operator, on the signature page of an agreement, district records show.

“They want to be public when it benefits them,” said Paul McKenzie, a former Reno councilman who works for the construction trade union. “But the rest of the time, they want to be private.”

Gilman confirmed with The Nevada Independent that all of the board members work and live at the brothel. He said in an interview last week that Nevada law required a board comprising local residents. Few, if any, residents live in the industrial district other than those at the brothel. Asked whether the arrangement posed a conflict, Gilman demurred, casting blame on state law.

“Let me ask you this,” he said, “would you rather shut [the park] down and not have it? That’s the ultimate. It you want to have [the park] and you want to have a utility company, you got to have residents and the state makes us do that. So really it’s the state’s fault, not the developer.”

When Gilman was asked if he felt members of the board, who also work for him, would vote against him, he said: “It really hasn’t come to that so for me to speculate, would that happen? I wouldn’t expect it to, no.”

“But on the other hand, they’re individuals. But it hasn’t come to that because you have to understand where we stand right now: It’s not that big yet,” he added, referring to water use in the park.

The industrial district serves about 150 companies with roughly 800 acre-feet of water, a fraction of the water rights Gilman says it is entitled to. Now it is looking to add to its supply at the park.

The water district wants to seize private property, through eminent domain, for a multi-million dollar project to pipe effluent from a regional wastewater facility. The pipeline will deliver an additional 4,000 acre-feet of water, Gilman noted. That amount could serve about 8,000 households every year. Under the deal, the water district would take on a larger role.

But it is far from being a sleepy operation.

The water district has negotiated an agreement with the city of Reno, the city of Sparks and the region’s water purveyor. It has negotiated with the state and the Governor’s Office of Economic Development. It has applied for water rights and fought to protect them in court. It has entered into agreements with companies to be the exclusive provider of their water. 

Over the past year, the water district has taken steps to professionalize its operations, hiring a general manager and requesting the County Commission take over the board’s oversight role. The public water district is working through a transition so it is not operated by the developer.

Robert Sader, a lawyer for the industrial park’s developer and the water district’s private operating company, said in an interview that conflicts are unavoidable because board members must be residents. 

“This is a circumstance we have discussed at length with Storey County and it’s one of the primary reasons we have encouraged Storey County to assume governance,” Sader said.

Current board members report income from at least one of Gilman’s companies. In the past, his former partner and a person who identifies himself on LinkedIn as Gilman’s director of security, have served on the water district’s board, according to election records. 

"They are vested with powers of a public entity and their ability and apparent willingness to use those powers, particularly as it relates to the taking of private property is incredibly significant, not just to the individuals whose property is potentially at risk but to the integrity of the process itself," said Ben Kieckhefer, a Republican state senator who represents parts of Reno.

Storey County Commissioner Lance Gilman, owner of the Mustang Ranch, speaking at a meeting on Aug. 22, 2019. (Andrea Laue/The Nevada Independent)

Thirsty for water

The district, operated by a developer-controlled company, wants more water to sustain and grow the park. To do so, it is looking down the highway. For years, the water district has been negotiating an agreement with the city of Reno, Sparks and a regional water provider to build a pipeline that would bring treated effluent to the park. 

The deal was cast as a win-win that could help local governments defer costly upgrades while boosting the industrial park, considered an integral part of diversifying Nevada’s gaming-reliant economy. 

In order to construct the pipeline, the board members — closely tied to Gilman — recently voted on three resolutions to seize private property through eminent domain. That is a special power prohibited by the Nevada Constitution if private land is being seized for another private party. 

If the title for the easement was in the name of the district — and a judge said there was a need and necessity for the project that was in the public interest — it might not violate the provision.

But the court, which must approve the eminent domain action, has yet to review the case. The water district board failed to notify the affected property owner, a requirement under state law. 

In a statement, the water district acknowledged a “defect in the public notice.” It is planning to reconsider the action at a meeting next month. Based on statements from Gilman and the board president, Thompson, the district still sees eminent domain as necessary to build the pipeline. 

“We’ve been working with the property owners for more than two years,” Gilman said, noting that the property owner would be compensated. Thompson, in a statement, said the property owner was offered a “premium price” and argued the pipeline would cause “minimal impact.”

When Gilman was asked if he thought using eminent domain was fair, he replied: “Is it fair for one property owner out of a 20-mile run that has a few acres to stop the whole project when it’s for the community good?... It’s basically going to benefit the entire Northern Nevada economy.”

The board president, Kris Thompson, does not appear to have recused himself from any negotiations, despite serving three potentially conflicting roles. He is the industrial park’s project manager, the risk manager for L. Lance Gilman Family Trust and a Storey County planning commissioner. 

Minutes from board meetings show that the board — comprising Gilman’s employees — has authorized Thompson to sign multiple agreements concerning the pipeline. As board president, he also filed an affidavit for the eminent domain case.

A sign for land at the Tahoe Reno Industrial Center on Sept. 12, 2018. (David Calvert/The Nevada Independent)

The private operator

Thousands of companies incorporate in Delaware each year. In September 1998, one of them happened to be the TRI Water and Sewer Company (TRI is an acronym for the industrial park).

On Feb. 1, 2000, Storey County signed a development agreement with that company, giving TRI Water and Sewer Company the exclusive authority to operate as the area’s water utility.

Then the company went public — sort of.

In an ordinance that same day, Storey County formed a General Improvement District (GID). In Nevada, there are dozens of GIDs that provide essential public services — water, power, sewer — to fill the gaps where local government cannot. They are public quasi-municipal entities that are separate from the counties that form them. Free from state oversight, GIDs are governed by an elected Board of Trustees or by county commissioners required to follow open meeting law.

Gilman was not elected to the Storey County Commission until 2012.

By 2001, TRI Water and Sewer Company was once again running the water service, but this time within a public entity after the district board approved an operating contract with the firm. 

That meant the private utility company would now be exempt from state regulation. The Public Utilities Commission of Nevada regulates the rates, planning and compliance of 27 private water utilities, but it does not oversee political subdivisions, where the board often fulfills that role. 

From the outset, the industrial park’s developer ran TRI Water and Sewer Company. The district rules also gave the company some oversight responsibility. In effect, the water district, a political subdivision of the state of Nevada, was controlled by the private developer of the industrial park. 

Storey County approved the deal, but it is a governance structure that could be seen as presenting some inherent conflicts between what is in the public and private interest.

TRI Water and Sewer’s president is Don Roger Norman, a primary funder of the park’s infrastructure. In 2017, records show Norman signed a contract on behalf of the developer and the water district, a political subdivision, through TRI Water and Sewer Company, its operator.

The water supply agreement, which discusses the pipeline, was signed with another regional developer. It appears to have been approved by the water district’s board, all of whom receive income from Gilman. But the board minutes are not specific, and they show several deals have been submitted to board members “pursuant to a nondisclosure and confidentiality agreement.”

Until 2015, state filings show that the private water company was run by Vincent Griffith, who played a critical role in the industrial park’s genesis. In addition to operating the water company, Griffith helped design the park’s infrastructure through another company, Reno Engineering.

Griffith said he has not been involved in the utility for five years and could not speak to its recent activities, such as the eminent domain action. Griffith added that he did not see a conflict with the setup, noting that it had been approved by the county and vetted by the park’s companies. 

In a one-hour interview earlier this year, Gilman described himself as a spokesman for Norman. Gilman said he views himself as less of a developer and more of a broker at the park.

“I’m a spokesperson for Roger Norman, and Roger Norman is really the puppetmaster behind the curtain,” Gilman said. “I did all of the marketing, all of the advertising, [and] all of the selling.”

Lance Gilman, a Storey County Commissioner, and business partner Roger Norman, during an interview following a meeting with wild horse advocates in Reno on Oct. 23, 2019. (David Calvert/The Nevada Independent)

Checks on power

Regulation is a central check on utilities, meant to protect ratepayers and the public interest. It's the price utilities pay for getting a monopoly to service an area. And in the case of water utilities, they can exercise significant power through the acquisition, control and use of their water rights.

At some districts, boards clash with developers or project proponents over issues.

Take Coyote Springs, the long-attempted master-planned community outside of Las Vegas. The developer has water rights and pays the cost of its infrastructure. But its water service operates within a GID, and its board provides a regulatory check on what it can and cannot do. Last year, that board raised concerns about whether Coyote Springs could start constructing new homes. 

The Nevada Independent went to the TRI water district’s office Wednesday and reviewed hundreds of pages of minutes and contracts from recent board meetings. Meetings often ran about ten minutes, despite votes on complex agreements with companies and other governmental entities about the use of water. The minutes that were reviewed did not show that board members disclose financial interests in the industrial park or their employment relationship with Gilman. 

The current board members all report income from at least one of Gilman’s enterprises, and Gilman has disclosed an interest in the private water company on his state election forms. 

The Mustang Ranch on Aug. 22, 2019. (Andrea Laue/The Nevada Independent)

The brothel board

When the board’s composition changes, Gilman’s brothel is usually at the center of it.

In 1999, the Internal Revenue Service confiscated the Mustang Ranch during legal proceedings with its former madam, an ex-county commissioner, after its former owner Joe Conforte fled the country facing tax evasion charges. Conforte, an infamous figure once called the Al Capone of Storey County by The Los Angeles Times, was known for his tight control over local politics. 

Gilman bought the brothel buildings in 2003 through an auction from the federal government. He outbid the late brothel magnate Dennis Hof by about $50,000. Gilman once told The Economist that cash from the brothel helped keep the industrial park afloat during the Great Recession. 

“Without Mustang Ranch, there might not be TRI,” he told the magazine.

It turns out the Mustang Ranch was supporting the industrial park in more ways than one.

By 2004, Susan Austin had filed to serve on the water district’s board. In numerous media reports, Austin has been named as the brothel’s head madam and Gilman’s former partner. 

Gilman does not appear to have ever served on the board, according to election records.

But he said he lives at the Mustang Ranch in an interview this year about a defamation suit against a blogger questioning his residency. The current board members, he said, do too. 

Thompson, the board president, works as a risk manager for the Mustang Ranch, Gilman said. After the publication of this story, Thompson said in an email that the information was incorrect. He said he was the risk manager for L. Lance Gilman Family Trust.

In election filings, he reports income from Tahoe Reno Industrial Center, LLC and L. Lance Gilman Commercial Real Estate. He does not report receiving income from the brothel, nor does Jennifer Barnes, a board member Gilman identified as the brothel’s head madam. The final board member lists Cash Processing Services, the firm behind the Mustang Ranch. 

Election law requires candidates to report all sources of income.

Two brothel workers were originally appointed by the other board members to fill vacancies. Most of the board members list the same lawyer under the contact section of their financial disclosures. 

Within the water district’s service territory, only 10 residents are registered to vote or eligible to serve on the district board. The Storey County clerk said in an email that one voter might live “at a property as onsite security,” but the brothel is otherwise the primary place of residence.

Across the state, district elections are rarely competitive. In many cases, they are never held because there is only one candidate for an open seat. The water district has struggled to find board members, operating with three board members when the law suggests a board have five. 

But the unique setup means that Mustang Ranch workers — all paid by a developer — have had an outsized role on the public board, meant to regulate how the water monopoly operates.

Loose oversight has led to conflicted boards before. In 2016, a district attorney accused South Lake Tahoe’s sewer district, controlled by three casino executives who did not live in the district, of hatching a plan to discredit a county planner and advance a controversial effluent project.

Where that board comprised competing casinos, power appears to be even more concentrated with the entire district board working for Gilman while also living at his residence and business. 

Thompson, in an email, said the attorney for the property owner affected by eminent domain was behind the criticism of the district. He conceded that the district board comprised “local folks,” but Thompson said that it was no different than any other general improvement district. The lawyer,  Thompson said, sought to try his case “through the media and publicity seeking.” 

Kris Thompson, project manager for the Tahoe Regional Industrial Center on Wednesday, Sept. 12, 2018. (David Calvert/The Nevada Independent)

Public and private benefit

After remarks to wild horse advocates last week, Gilman said in an interview that the developer would pay for the effluent pipeline, and the companies would eventually pay back those costs. 

“Roger Norman and our group have to build it,” Gilman said, standing in front of Norman. “That’s a requirement. But the people that are going to pay for it ultimately are the companies that are going to use the water. And they have all kinds of expansion plans and things going on.”

At Storey County Commission meetings, existing companies, including Tesla and Switch, have testified in favor of the effluent pipeline project. Other developers, including Reno Land, Inc. and Emerald Lake Town Center, a retail project, have said in the past that they support the pipeline. 

The public could benefit too. By supporting the park, the pipeline could generate more economic activity in the region. Sending it water would also relieve the pressure on local municipalities to do upgrades on a wastewater treatment plant. Upgrades to the plant are expected to cost millions. 

Sader is not aware of whether the water district's structure has precedence anywhere else in the state. But he said that the water district has operated within compliance of the requirements for forming such an entity.

Still, Sader said that the water district is in a place of transition with the goal of phasing out the developer’s involvement so that the water district can serve as an independent public entity. It now has a dedicated office at the park, and the board hired a general manager earlier this year.

"It's time for this transition to take place with the water and sewer — for it to be run separately and independently without the master developer being involved,” he said.

Wild horses at the Tahoe Regional Industrial Center on Wednesday, Sept. 12, 2018. (David Calvert/The Nevada Independent)

For years, McKenzie, the former Reno councilman and an advocate for the construction union, attempted to get information about how the water district operated, who got contracts and how the projects were being put out to bid. He said policymakers mostly brushed off his concerns.

But for him, the issue strikes deeper than the water district. It is about what happens when private interests exert control over a county and muddy the lines of government in the process. It’s not just the attempt to use eminent domain. He is also concerned that the way the industrial park was set up was meant to circumvent regulation and labor laws for public works projects. 

“That stuff out there hasn’t been done right,” he said.

Update: This story was updated at 10:33 a.m. on Nov. 1 after Kris Thompson clarified in an email that he is the risk manager for the L. Lance Gilman Family Trust, not the Mustang Ranch, as its owner Lance Gilman had stated in a recorded interview.

Breaking down nearly $2 million of congressional campaign cash

Voter registration forms

Through the third quarter of 2019, more than $1.9 million filled the campaign coffers of nearly a dozen candidates across Nevada’s four congressional districts, according to filings made this week with the Federal Election Commission. 

Roughly $800,000 stayed among the incumbent Democrats looking to defend their competitive seats in the South, with much of the rest flowing to the fractured Republican primary field in those same districts — District 3, represented by Rep. Susie Lee, and District 4, represented by Rep. Steven Horsford. 

Just 10 percent, roughly $200,000, was raised by the other two incumbents in safe districts, Democratic Rep. Dina Titus in Las Vegas’ District 1, and Republican Rep. Mark Amodei in the sprawling District 2 in Northern Nevada.

But with the 2020 race to control the House of Representatives still distant — Nevada’s filing deadline doesn’t come until next March and primary voters won't hit the polls until June — early fundraising through 2019 may prove key in deciding which congressional campaigns, challengers or otherwise, make it over the finish line. 

Below is a breakdown of third-quarter fundraising data by congressional district, in order by the total money raised by declared candidates in that district. 

District 3

Lee led the congressional candidates in third-quarter fundraising, bringing in more than $490,000. Most of that money, about $304,000, came in the form of individual donations. That includes dozens of donations which hit $2,800 individual maximum, including contributions from Wynn Resorts co-founder Elaine Wynn and Walt Disney Studios co-chairman and chief creative officer Alan Horn. 

There were also a number of smaller — though still large — donations from a handful of Las Vegas regulars, including William Hill CEO Joseph Asher ($1,000) and Boyd Group President William S. Boyd II ($500). 

And though the vast majority of Lee’s fundraising was comprised of small-dollar contributions —  including nearly $170,000 brought in through the Democratic fundraising platform ActBlue and another $10,000 from a similar platform called Democracy Engine — she also received a number of large donations from political action committees. 

That includes contributions by pro-choice group Emily’s List ($11,300 bundled together, including earmarked donations funneled through Emily’s List), the New Democrat Coalition, a coalition of House Democrats billing itself as pro-fiscal responsibility ($10,000 total) and the Nancy Pelosi-affiliated “PAC to the Future” ($10,000 total).  

Also among those group-donations was an eclectic collection of corporate, industry and issue-based PACs ranging from Walmart ($5,500) to Exxon-Mobil ($1,500) to the League of Conservation Voters ($2,000) to the national arm of the plumbers and pipefitters union ($5,000).

On the spending side of Lee’s report, tens of thousands went to online ads and digital consulting, including nearly $40,000 to the Colorado firm 4Degrees, Inc. Another $9,000 went to fundraising consulting from Virginia-based Fiorello Consulting, and $6,000 went to Seattle-based Blue Wave Political Partners for compliance consulting. 

Among Republicans vying for Lee’s seat, former Treasurer Dan Schwartz — who also launched an unsuccessful bid for governor in 2018 — held a narrow fundraising edge, bringing in $264,000 in Q3. Only $84,000 of that sum came from individual donations, however, with the bulk coming from $180,000 in personal loans to his campaign. Of those individual donors, 22 gave him the $2,800 maximum.

The other Republican contender, former pro-wrestler and Fox News regular Dan Rodimer, followed closely behind Schwartz, raising $251,000, of which $65,000 came through loans. 

Among those who maxed their contributions to Rodimer, a significant chunk — seven of 23 — came from his one-time home of Florida. Many of those donors also donated additional funds to Rodimer’s hoped-for general election campaign, doubling their contributions from $2,800 to $5,600 — standard practice among large congressional campaigns and something no donor did for Schwartz.

Two other Republican challengers in District 3, real estate agents Tiger Helgelien and Zach WalkerLieb, both quit their congressional bids during the third quarter, filing termination paperwork in October and August, respectively. WalkerLieb had managed to raise nearly $40,000 early in the year, including a $10,000 loan, while Helgelien reported raising roughly $12,000 before ending his campaign. 

District 4

Like Lee, Horsford far outpaced individual Republicans in his district, raising roughly $300,000, or more than double the next-closest Republican fundraiser.  Unlike Lee, however, much of Horsford’s fundraising has come from PAC spending, including about $142,000 in Q3 2019 and more than $637,000 through the election so far — good for roughly 57 percent of Horsford’s total fundraising for the 2020 cycle. 

And much like his fellow Democrats across the country, Horsford raised a sizable chunk of his individual contributions through ActBlue, totaling nearly $112,000 in the aggregate. 

Separately, among his big-money third-quarter donors are the Credit Union Legislative Action Council ($6,500 in Q3 with $10,000 given overall), cable-giant Comcast ($5,000 in Q3 with $7,500 overall) and U.S. Anesthesia Partners Inc. ($5,000)

The largest single chunk of Horsford’s spending was focused on digital consultant Mothership Strategies, which received more than $38,000 between July and September. Horsford also spent an additional $15,000 on the Strathdee Group and more than $12,000 on Woods Strategies, both for fundraising consulting.

Former Miss Nevada and Las Vegas business-owner Lisa Song Sutton led the increasingly-crowded pack of Republicans jockeying for Horsford's seat, hauling in $127,000, with $108,000 individual contributions — the most of any Republican candidate. No PAC money or loans were necessary for Sutton to end the quarter with $99,000 cash on hand. 

She was closely followed by veteran and Las Vegas businessman Sam Peters, who brought roughly $112,000, with $42,000 coming from individual donors and an additional $69,000 from candidate loans for the campaign. And though Peters' filing reported more than $135,000 cash on hand to end the quarter, his actual remaining cash is likely closer to $73,000. That accounts for roughly $49,000 in spending subtracted from about $123,000 in total funds, leaving Peters with the fourth-most cash on hand in the field.

Another veteran, ex-congressional staffer Charles Navarro, raised $80,000, including almost $23,000 in individual contributions. Navarro took out $75,000 in loans for his campaign and currently has close to $77,000 cash on hand. 

Former Summerlin-area Assemblyman Jim Marchant — the top fundraiser among Republicans in Q2 — fell to $58,000 raised, just about half the $118,000 he raised through July. Though he has still raised the most of any Republican so far this cycle, his $92,000 cash on hand now puts him behind both Song Sutton and Peters in the fundraising race. 

Among Republicans, Marchant has become the biggest spender, doling out more than $51,000 through September. Almost half of that money — nearly $21,000 — went to local political consulting firm McShane LLC, while another $16,500 went to North Carolina-based fundraising consultant Saligram and Associates 

Northern Nevada business woman Randi Reed brought in a total of $47,000 from individual donors, without any PAC contributions or loans. As of now, her cash on hand is almost $41,000 with many contributions coming from construction companies.  

Nye County Commissioner Leo Blundo, the only candidate hailing from outside populous Clark County, raised a total of $45,000, almost exclusively with Nevada-based contributions and without any PAC support or loans. His cash on hand now sits at $28,000.

And Nurse Catherine Prato, a late addition to the primary field, raised  $29,000, spent $1,000 and was left with $28,000 cash on hand. More than $8,000 has come from one donor, Todd Lefkowitz, who donated to both the primary and general campaigns. 

District 2

In ruby-red District 2, Amodei has fundraised in the absence of a hard push from either his right or left to unseat him, ultimately pulling in more than $91,000 in the third quarter. 

More than half of his contributions, almost $54,000, were made by individuals, while the remaining $37,000 came from PACs. Notable contributors to Amodei included Dollar Shave Club CEO Michael Dubin ($2,700), Washoe County Commissioner Jeanne Herman ($1,000) and PACs connected to Amazon ($1,000), AT&T ($4,000), Comcast ($2,000), General Motors ($5,000) and Exxon Mobil ($2,500).

Amodei reported expenditures on a variety of typical campaign and fundraising expenses, but he also contributed $500 to Republian state Sen. Heidi Gansert’s re-election campaign, $3,000 to the Douglas County Republican Party to sponsor a BBQ, $214 to former Attorney General Adam Laxalt’s Morning in Nevada PAC for tickets to the annual Basque Fry and nearly $32,000 to a Carson City marketing company for radio advertising.

Still, the congressman maintains the notable distinction of having spent more than he’s raised through 2019, bringing in roughly $288,000, but spending more than $334,000.

The biggest third-quarter beneficiaries of that spending: consultants. Amodei paid $17,000 to Reno consultant Danielle Cherry, another $32,000 to the Carson City marketing firm Wyman and Associates for radio ads, more than $10,000 to the M Group for fundraising consulting and another $10,000 in accounting fees. 

Amodei still substantially outraised likely Democratic opponents, including his 2018 general election opponent Clint Koble. Koble, who is mounting another bid, reported raising more than $23,000 and spending $21,600 during the October fundraising period, and has just $403 in available cash on hand at the end of the reporting period.

District 1

Titus, whose district encompasses the deep-blue urban core of metropolitan Las Vegas, fundraised through the third quarter with no declared challengers, bringing in nearly $99,000 through the end of September.  

About 49 percent of the contributions to her campaign, or $48,250, came from PACs. The largest donation was $10,000 from UNITE HERE Tip Campaign Committee — affiliated with the umbrella organization of the Culinary Union — while the second-largest donation this quarter was $3,000 from Credit Union National Association PAC. Three other PACs including National Elevator Constructors, SABRE Holdings Corp. (whose subsidiaries provide travel technology and booking services) and U.S. Travel Association gave $2,500 each.  

Contributions from individuals amounted to $50,733. The president and CEO of Arcata Associates, a Nevada-based company that supports federal government agencies and commercial aviation companies, gave the largest individual donation of $2,800. The American Association for Justice Politics, the American Hotel and Lodging Association and the Asian American Hotel Owner Association gave contributions of $2,500 each. Former Las Vegas Councilman Bob Coffin contributed $1,000. 

Her campaign committee spent $6,585 each month of the quarter on a fundraising consultant, as well as $6,400 in digital consulting fees over that period. Her campaign also spent more than $400 on event tickets for the Las Vegas Greek Food Festival hosted by St. John the Baptist Greek Orthodox Church. 

Correction - 8:30 p.m. - An original version of this story included fundraising figures for candidate Sam Peters for all of 2019 and not fundraising in the third quarter. It has been updated to reflect Peters' third-quarter fundraising only.

Correction - 10/22, 8:30 a.m. - An earlier version of this story did not identify a misfiling for candidate Sam Peters, who, though he reported $135,000 cash on hand, actually maintains $73,000 cash on hand.

Sacrificing our kids on the altar of woke

The Washoe County School District's logo as seen on an office building

Earlier this week, the Washoe County School District sent out passionate, almost blubbering apology, and no one knew what it was for.

The statement was about an “incident” that while “unintentional,” was “clearly” offensive, and had something to do with Damonte Ranch High School’s homecoming. But in spite of the “clearly” part, no one actually seemed to know about what the district was groveling (that word doesn’t quite begin to describe the floor-licking silliness of the statement).

If one didn’t know any better, one would describe it as a marketing ploy to actually generate interest in whatever they were supposedly embarrassed about. It was so vague that the Reno Gazette-Journal had to file a public records request just to figure out just what in the hell they were apologizing for after direct requests were ignored.

A few days later, we learned via an investigation (that was probably more thorough than many actual criminal cases I handle) that a poorly constructed parade float was the culprit. The kids wanted their cowboy mascot to lasso an inflatable mannequin dressed up as their opponent’s medieval “Lancer” mascot. Quelle horreur! They wanted a gray dummy, because that was one of their opponents’ school colors. But all Amazon had was a black one, so that’s what they used. The lassoing was supposed to all be done on the float, but the inflatable knight didn’t stay put after being lassoed, and was drug along behind the float. I blame the fact that DRHS converted all of its shop classrooms to dance studios a few years back.

No one believed that this was intended to be a racist threat. No one believed there was any malice involved, beyond that which has routinely been leveled by any red-blooded American high school student at a homecoming rival. The complaints by various activists was that they should have been “better educated” so that they would know how naughty they were being. In other words, it wasn’t that the students were racist, but that they were so not racist that it didn’t even occur to them that dragging a mannequin around would offend anyone except the other school’s sports fans.

So why did school officials apologize as if their student body had donned white hoods and burned a cross while chanting racial slurs as a sanctioned official activity? Why were the kids involved punished (as we were assured they would be)?

That, at least, we know the answer to. First, it seems that, once again, the demand for hate crimes has outpaced the supply, so we have to make ‘em up where they don’t exist. But more broadly, we’re creating a culture where no past mistake must ever be forgotten, where taking offense is a commodity to be exploited, and where subjective intent of the speaker is irrelevant because “woke” scolds get to move their offensiveness goalposts around at will in order to ensure maximum control over what everyone else does, says, and (most importantly) thinks. 

This garbage needs to be called out, early and often. And hard. Otherwise, it leads us to some very, very dark places. None of this is about sensitivity – it’s about power, pure and simple.

When I was a kid, the woke scolds were generally religious people who were discovering political power. Many were on the right, but things were less partisan back then, and moralizing busybody church lady types could be found everywhere, looking to save us all from ourselves. Their standard-bearer was, after all, Tipper Gore, who used her husband’s political fame to launch herself into the national consciousness as the censor-in-chief of popular music. And further to the left could be found the identity-politics-wallowing proto-PC crowd, altering language periodically and randomly to purposely blur the lines between actual bigots and those who simply used older phrases.

I had no patience for them then. I have less now. These people do real harm to real people.

I suppose that the students involved with the lassoing should probably have recognized their unintentional symbolism, although the fact that they didn’t is actually a good sign in terms of the laudable goal of a colorblind culture being closer than ever. 

They didn’t, because all teenagers, regardless of IQ or goldenness of heart, have, are, and will always be stupid and/or thoughtless for significant portions of their waking hours. This is why we don’t let most of them vote, rent cars, run for office, buy cigarettes or alcohol, dictate global environmental/economic policy, gamble or sign contracts. Admit it – you said and did some regrettable stuff when you were in high school at one point or another, and if you are beyond a certain age, Dear Reader, you thank God social media wasn’t around during YOUR homecoming weeks, although most of those things were cause for eye rolling, not trembling genuflection in the newspaper by your principal.

But intent matters. Context matters. Where a speaker means no harm, the listener does not – or at least ought not – get to punish the speaker as if he did. Kids (and adults, for that matter) should never have to worry that an overheard conversation could be reported to the authorities, and that they’ll be drug off for reeducation, or publicly humiliated. It’s bad enough if the busybody tattler is honestly offended, but wait until bullies of all descriptions learn they can ruin a classmate’s life just by clutching at some pearls with enough fervor. That’s not a society any freedom loving person is willing to live in. We’re already experiencing these little “terrors” with cancel culture among our entertainers because they tweeted something off-color years ago and their careers are being ruined now on account of it.  Is it any wonder that Donald Trump’s “Oh, go boil your head” attitude resonates so powerfully across middle America?

I want our kids to be taught math and science and social studies and English. But it is equally important to teach them how to be good citizens. We want them to know enough history so as to know, for example, why casually throwing around racial slurs is a bad thing, but also enough history to know why banning even vile and offensive speech is an even worse thing (and always counter-productive in the end). 

I want them to learn, by the example of the adults who mete out consequences in their school, that intent matters, that punishments should fit crimes, and that public statements of outrage and apology should only come after people know with accuracy what they’re supposed to be upset about. They must learn that going around looking for reasons to be upset is a pretty crummy way to go through life. They must be taught that their feelings or opinions don’t give them heckler’s vetoes over the expressions or actions or life-choices of others. Most importantly, they should live in a world where youthful mistakes are not fatal to prosperous adulthood. Blacklists and thoughtcrime witch hunts are a pretty stupid way to model tolerance.

The Washoe County School District’s unctious groveling conveyed exactly the opposite of all of these things. If public education is – as it must be – a way to ensure future generations can keep the prosperous and free society we now enjoy, our public educators owe it to our kids to handle things like this so much better the next time a teenager acts his or her age.

In the meantime, the only apologies owed are to the students who have now been unfairly and publicly maligned as closeted bigots by school officials who themselves lack the perspective or maturity to put the things teenagers do in their proper context.

Orrin Johnson has been writing and commenting on Nevada and national politics since 2007. He started with an independent blog, First Principles, and was a regular columnist for the Reno Gazette-Journal from 2015-2016. By day, he is a criminal defense attorney in Reno. Follow him on Twitter @orrinjohnson, or contact him at orrin@orrinjohnson.com.

Nevada gave millions in tax incentives to businesses with many employees on Medicaid

A sign for an Amazon distribution center, including the company's logo

Gov. Brian Sandoval called it a “major boost for Southern Nevada.” Las Vegas Global Economic Alliance CEO Jonas Peterson said it marked a “reflection of our friendly business climate, favorable workforce, and aggressive approach in recruiting companies.”

News of Sutherland Global Services’ 2016 expansion into Las Vegas was met with wide acclaim by state leaders and economic development officials, who touted the company’s decision to build and expand a business center that came with the promise of 2,163 full-time jobs. Sutherland’s decision was aided by roughly three-quarters of a million dollars in tax abatements approved for the company by the Governor’s Office of Economic Development.

Since then, the company has indeed created thousands of jobs — but it’s still costing the state today.

In 2018, the state reported that 1,024 of the company’s employees earning full-time wages and 1,116 of their dependents were on Medicaid — the state-run health insurance program for low-income Nevadans — at a cost of upwards of $5.7 million a year to taxpayers. (Those numbers include any employees who worked full-time for Sutherland as well as those who made the equivalent of full-time wages but may have split their time between Sutherland and another company.)

Sutherland, which didn’t respond to a request for comment, isn’t alone. According to an analysis by The Nevada Independent, more than 60 businesses given tax incentives by the state over the past four fiscal years had about 13,000 employees — and their dependents — enrolled in Medicaid in 2018, with the government spending upwards of $34.5 million to care for them.

Those funds aren’t all state dollars — the federal government pays about 65 percent of costs for the traditional Medicaid program and 93 percent for those covered under Medicaid expansion — but it still represents a sizeable hit to the state’s general fund budget.

Data showing that thousands of companies have shifted at least some of the burden of providing health insurance to their employees to Medicaid, compiled as a result of 2017 legislation from Democratic state Sen. Yvanna Cancela, comes as lawmakers and national groups debate the effectiveness of tax incentive programs, as well as structural issues that make employer-sponsored health insurance more expensive and less accessible than it was in the past.

“I would have concerns that we're giving a company a privilege of a tax abatement but yet we're picking up the cost of health care for their employees,” Democratic Assemblywoman Maggie Carlton said. “That's just not a good deal for the state.”

Economic incentives

Since its major overhaul in 2011, the Governor’s Office of Economic Development (GOED) has been active in granting tax incentives and a variety of abatements on property, sales and real estate taxes to businesses that meet certain qualifications of job growth, wages and capital investment.

In total, the state has granted more than $395 million in tax abatements and “Catalyst Fund” grants from the state to incentivize nearly 170 companies over the past four fiscal years, many of which have few or no employees receiving government-backed health insurance. That total doesn't even include a $1.25 billion special tax incentive, abatement and credit package approved by lawmakers for Tesla in 2014.

To receive economic incentives, companies are required to pay at least 65 percent of health insurance costs and meet requirements set out by the Affordable Care Act for large employers, including offering a health insurance plan with an employee premium no more than 9.86 percent of their household income. Even so, those plans can be pricey for minimum wage workers trying to make ends meet, especially if they have high deductibles, copays and coinsurance.

Many of the more than 60 employers who received tax incentives and were listed as having a large number of full-time equivalent employees on Medicaid have large-scale warehouses or logistics and distribution centers in the state.

A prime example is Amazon, the employer with the third highest number of people on Medicaid in the state, which received a $1.8 million tax incentive in 2016 for construction of a logistics center in Clark County.

According to the application, the company planned to employ 1,000 full-time employees at the center at an average hourly wage of $14.64. Although Amazon met GOED’s required standards for annual out-of-pocket maximums — $4,000, beneath the $6,000 threshold at the time — and covered 78 percent of employee health insurance costs, the company’s average annual wage was just a little more than $30,400 a year. If that was the sole income source for a family of four, they would be considered below the poverty level and eligible for Medicaid.

Amazon did not respond to a request for comment for this story.

A similar situation occurred for customer service company Sitel, which in 2016 received $136,000 in tax incentives to expand operations in Las Vegas by hiring an additional 153 employees at an average wage of $15.49. But the company — which also didn’t return a request for comment — pays for only 65 percent of employee health insurance costs, with out-of-pocket maximums for employees running up to $6,350 per year and premiums costing 8.6 percent of annual wages. As with Amazon, a family of four would be considered to be eligible for Medicaid if that $15.49 an hour wage was the household’s sole source of income.

Even Tesla, which received a record-breaking $1.25 billion mix of tax incentives, abatements and credits from the state in 2014, is high on the list of employers with workers on Medicaid. In 2018, the company had 426 employees and 439 dependents on Medicaid — the 13th highest total for any employer in the state.

Derek Armstrong, deputy director of the Governor’s Office of Economic Development, said that the office does not directly track any relation between companies receiving incentives and the number of employees on Medicaid. But he said that the number of companies receiving tax breaks with employees on government health insurance was concerning.

“If they're hiring one person, and it's the sole income for a family, is it possible that somebody making $15 or $16 an hour could then qualify if they have a family of five or more?” he said. “I think it might be possible. I wouldn't rule out that possibility.”

Armstrong said the agency can’t pick winners and losers, noting that it’s required to approve any applications that meet standards laid out in state law, regardless of how close to the cutoff line they are in terms of average wage or size of investment.

Republican state Sen. Ben Kieckhefer said the initial creation of the tax incentive menu offered by the state came during a period of such high unemployment that “we needed jobs, period.”

“We have since made changes to our incentives structure to increase wage thresholds and things like that based on various unemployment rates. So we've tried to make it more difficult to qualify for incentives as the labor market has tightened,” he said.

Trends in employer-sponsored health insurance

For companies, the cost of providing health insurance to employees has become an increasing burden as premium increases outpace wage growth. According to a recent Kaiser Family Foundation report, the average employer-sponsored health insurance premium in 2018 was $6,896 for a single person, a 3 percent increase over the prior year, and $19,616 for family coverage, a 5 percent bump. In the same time period, wages grew about 2.6 percent.

In Nevada, those premiums are only a little lower: $5,756 for a single person and $17,221 for family coverage, according to a 2017 fact sheet from the State Health Access Data Assistance Center.

Employers have long offered health insurance as a benefit in order to keep their employees happy. But Gary Claxton, a vice president at the health policy non-profit Kaiser Family Foundation, said that companies may make the cost-benefit analysis that higher wages are going to make their workers happier than better health benefits.

“If they can go on Medicaid and it doesn’t cost you anything, why would you take some of their compensation that could go to wages and turn it into health benefits they can’t appreciate anyway because they’re not very good?” Claxton said.

Last year, nearly 230,000 full-time workers in Nevada and their children received care through Medicaid, which provides health insurance to families making up to 138 percent of the federal poverty level, and Nevada Check Up, the equivalent program for children in families that make up to 205 percent of the federal poverty level. A family of four needs to make $35,535 a year or less to qualify for Medicaid and $52,788 or less for Nevada Check Up.

With Medicaid caseload sitting at about 670,000, that means that roughly a third of Nevadans covered by the state’s health-insurance program for low-income individuals were either adults working full time or their children. (Medicaid also covers pregnant women, the elderly and people with disabilities.)

The state’s latest report on Medicaid recipients working full time concluded that caring for these full-time workers and their children cost the state $638.5 million in 2018. The average company with 50 or more employees had 26 employees and 30 dependents on Medicaid.

Suzanne Bierman, the state’s Medicaid administrator, said the data speaks to some of the challenges of rising insurance premiums for workers, and the way that Medicaid, which was expanded in 2014 to fill in historical eligibility gaps for adults, has stepped in.

“It really shows the importance of expansion, especially when you look at some of the affordability issues that go hand in hand with employer-sponsored insurance,” Bierman said.

Nationwide, a shrinking number of working-age adults are covered under health insurance plans offered by their employers. A little less than three in five nonelderly adults were covered under employer-sponsored health plans in 2017, down nine percentage points from the turn of the millennium, according to the Peterson-Kaiser Health System Tracker.

Kieckhefer noted that businesses have to juggle other labor costs — including federal and state taxes — beyond just the hourly wage paid to workers.

“Mandates for health insurance on top of that add significant cost,” he said. “So when someone's making $10 an hour, the cost to that employer is a lot more than just $10.”

The situation is worse for the lowest-income workers, whose wages put them beneath the federal poverty line. Only 33.2 percent of people below the poverty line are covered by employer-sponsored health coverage.

The Affordable Care Act, by requiring large employers to offer affordable health insurance to their full-time employees and dependents, provided a small boost to the employer-sponsored insurance market. But rising premiums with high employee contributions have left those plans out of reach for some of the lowest-paid workers, with the average employee contribution to health insurance in Nevada for individual coverage at $1,255 a year and family coverage at $5,528.

For context, someone working full time at a $7.25 an hour minimum wage would only make about $15,000 total in an entire year.

To address those concerns, the ACA defined “affordable plans” as those that don’t exceed 9.86 percent of the employee’s household income for individual coverage. But those plans, while required to cover all of the ACA’s essential health benefits, can be less protective of catastrophic expenses, and come with high deductibles, coinsurance and copays that low-income workers can’t afford.

Given a choice between a high deductible employer-sponsored plan they have to pay for and Medicaid, which they don’t, many workers are going to choose Medicaid.

“Everyone would like to have health insurance, but you’d also like to eat and you’d also like to have a place to live. That’s not going to be their first choice,” Claxton said. “They need to feed their kids and get them to school and all those things.”

Looking forward

After several sessions of expanding and creating new tax incentives, lawmakers in 2019 appear eager to see the pendulum swing back and take a more critical look toward how the state offers tax breaks.

In addition to two bills reducing abatements or adding oversight, legislators said they were eager to take a more critical look at the overall effectiveness of abatements. Democratic Assemblywoman Dina Neal is sponsoring AB444, which would create a legislative committee to regularly review and oversee existing tax abatement programs offered by the state.

“Instead of this report … that we see every two years, it’s going to create a committee to do a deeper dive,” she said.

Although a similar concept backed by former Assemblywoman Irene Bustamante Adams failed to make headway last session, Neal said she thought the 2019 version had more support among legislative leadership. She said she was still reviewing the connection between companies granted incentives and employees on Medicaid, but said her initial reaction was concern.

“We want to know if the wage that is being paid to those employees is pretty much keeping them in poverty,” she said.

In 2017, Nevada’s oversight of tax abatements was described as “trailing” by the Pew Charitable Trust, which identified 31 other states that have some structure in place to regularly review tax incentives. Chaaron Pearson, a Pew researcher who helped compile the report, said state budgets generally benefited by the regular review, especially as economies change over time.

“A lot of times, these incentives get baked into the tax code and so they're there in perpetuity,” she said.

Additionally, Democratic Assemblywoman Teresa Benitez Thompson is sponsoring AB400, which would prevent GOED from approving any new abatements reducing the local school support tax, and prohibit any double-dipping from companies applying more than once for abatements related to a business expansion or initial move to the state.

Carlton, chair of the powerful Assembly Ways and Means Committee, said that there isn’t any appetite at this point for additional tax abatements. If there ever were in the future, she said that “there would be much stronger language in there about making sure that the state didn’t pick up the tab.”

“I would hope that we would stop this race to the bottom on tax abatements,” Carlton said. “We don't necessarily want everybody in our state. If they're not a good corporate citizen and they're not going to take care of the citizens of the state, if you're going to be more of a burden than an asset, then we need to re-evaluate.”

Cancela, sponsor of the bill that created the report on employers and Medicaid, said it’s a different conversation when talking about small businesses and startups trying to make ends meet than it is for the “Walmarts of the world.” Walmart has the most workers and dependents on Medicaid in Nevada — 6,464 in total — which cost the state $18.6 million in 2018, although the company has not received any recent tax abatements.

But she said that the state shouldn’t be sacrificing Nevadans’ financial stability or ability to access affordable health care when it decides to bring new companies and jobs here.

“It should be about quality economic development and not just quantity,” Cancela said.