Author: Myles Riner, MD
This post covers four related issues: the hiring and subsequent dismissal of Mr. Walrack as GM of IVGID; the question of the legality of the Incline Village General Improvement District (IVGID) Facility Fee; the hiring of Mr. Harrison to replace Mr. Walrack; and the recent actions of the Nevada Tax Department’s Committee on Local Government Finance (CLGF).
All four issues have in common one overriding factor: they impact the ability of IVGID, its leadership, and its staff to fulfill its mission to invest in and improve the quality of life of the residents and property owners in the District, as directed by the Nevada Legislature and the electorate of the community.
The Walrack Appointment and Contract
When Mr. Walrack was hired on the vote of Trustees Schmitz, Dent, and Tulloch over the objections of a packed roomful of Incline Village/Crystal Bay residents at an IVGID Board Meeting in November, several ethical issues arose.
First, there was the question of why these Board members felt compelled to hire someone when it was well known that in less than two month’s time, four of the five Trustees who would be appointed to the new Board in January of 2025 did not feel this candidate for GM was qualified for the job, and would likely be dismissed by the new Board majority.
When Mr. Walrack’s contract was considered in November, the candidate insisted that his contract include a full year’s severance payout of $250,000 plus should he be dismissed before his 18-month contract term was completed. His argument was that prior IVGID GMs were offered a full year’s severance because of the risk they would have to assume in moving to Incline and quitting their current job. The fact that Mr. Walrack already lived in Incline, and was retired from his prior job, was apparently not relevant. Schmitz, Dent, and Tulloch granted this payout provision over the strong objections of Trustees Noble and Tonking.
The questions raised by these actions cannot be overlooked. Why would Mr. Walrack, or any candidate for a leadership position, accept that position knowing that four of five incoming Board members of the organization did not feel he was qualified for the job? Hard to ignore the incentive of a quarter-million-dollar payout, but frankly such a decision by the candidate is in itself, I think, disqualifying.
Why would these three Trustees undermine the in-coming Board’s prerogative to choose their preferred candidate to lead the organization into the future, or saddle this new Board with a poison pill severance package that is intended to hamstring them? Could this have been spiteful payback for the fact that 75% of the votes cast for Trustees in the November election rejected the preferred Trustee candidates of these three Board members in favor of Trustees Tonking, Jezycki, and Homan?
In addition, there is strong evidence to suggest that Trustee Schmitz, at the time she voted to approve the Walrack appointment and contract, had already moved her primary residence away from Incline Village by obtaining a new driver’s license, new personalized auto plates, and registering to vote in Minnesota; and thus she may not have been eligible to cast these votes. Should the new Board be forced to cave to these coercive tactics?
The Legality of the Facility Fee
Several residents of Incline Village and Crystal Bay have for years, decades even, been attempting to have IVGID’s Facility and Beach Fees declared illegal taxes. Aaron Katz and his wife, Judith Miller, have tried in vain to get some traction in court and in Nevada regulatory agencies for this position. In a recent letter to the NV Department of Taxation Committee on Local Government Finance, Mr. Katz cited NRS 318.197(1) as a key provision supporting his argument as follows:
“Although a general improvement district has the authority to fix and from time-to-time adopt ‘service charges and standby service charges, for …. the availability of service’, it has no authority to adopt such charges for the availability of facilities.”
He goes on to argue that “without the involuntary subsidy of the District’s recreation fee, its finances are a house of cards ready to collapse”.
Note that, in this recitation of the statute, Mr. Katz has conveniently left out the words ‘for services or facilities furnished by the district’. Thus, the authority to levy these fees was expressly granted to GIDs by the Nevada legislature. This deceptive cherry picking is so typical of the arguments made by Mr. Katz and his cadre of IVGID detractors that it completely undermines their credibility. For years he tried unsuccessfully to sell these arguments to the Second Judicial District Court, which noted that “Mr. Katz’s actions are motivated by a desire to disrupt the operation of the District as a means of punishing it for refusing to accede to his desires” and that he “has demonstrated a pattern and practice of pursuing vexatious harassing lawsuits against public entities.” This court, and the Department of Taxation, have heard these arguments over and over, and have either rejected or ignored them; but it is clear that the proponents will continue to harp on this question until they get what they want, which is the dissolution of IVGID.
The Hiring of Robert Harrison as General Manager
The new Board majority has offered the position of General Manager (GM), replacing Mr. Walrack, to Robert Harrison, their preferred candidate, who has considerable experience in managing government entities and their financial issues. I believe he has the support of IVGID’s staff and senior management, and the appointment of someone with his scope of credentials is consistent with the advice of the Department of Taxation’s staff.
IVGID detractors argue that Mr. Walrack had received high praise from the CLGF for progress made in correcting the deficiencies identified in recent audits of IVGID’s finances and internal controls; but in fact this praise was directed primarily to the IVGID Finance Department, which has done an incredible job (according to this CLGF subcommittee assigned to assist and monitor IVGID’s progress in meeting these goals) in a short time with less than full staffing. These detractors also argue that replacing Mr. Walrack will cost IVGID over $250,000, and this is true, but the prior Board majority has left the current Trustees little choice, as noted above. The blame for this debacle lies fully on Trustees Schmitz, Dent, and Tulloch.
Even if the current Board had “given Mr. Walrack a year to prove himself,” as the detractors argued, a decision to replace him at that point would still have cost the District the $250,000 in severance. The detractors also argued that if dismissed, Mr. Walrack would also have grounds to sue IVGID, but if he wants this severance, he will have to sign away any right to sue the District per a provision in his contract. Having to pay this severance to get Mr. Harrison on board is undoubtedly frustrating for, and injurious to, IVGID and taxpayers alike, but I for one believe it will be worth it in the long run.
Actions of the Department of Taxation
The Nevada Department of Taxation has rightfully expressed concern about the state of IVGID’s financials, audits, and internal controls. Though some of these issues can be traced to past Boards and managers, much of the current state of affairs is directly attributable to the loss of nearly all of the department heads and many staff members of IVGID, especially in the Finance Department. In turn, much of this degradation of staff is the result of the demeaning and unrelenting public attacks by a few disgruntled property owners, the micromanagement and abusive treatment by the three aforementioned Board members (and their multiple failed efforts to replace Mr. Winquest), and the toxic work environment that IVGID employees have had to endure.
Nevada Department of Taxation’s Committee on Local Government Finance (CLGF) has established a subcommittee to assist IVGID staff in addressing these issues, completing the delayed 2024 audit, establishing better internal controls, and working through the problems with the implementation of the Tyler Munis auditing system which underlies many of these concerns.
This subcommittee has been effusive in its praise for IVGID staff’s recent and remarkably swift progress in dealing with these deficiencies. Nonetheless, a few IVGID detractors have demanded that the CLGF place IVGID on Fiscal Watch, and notify Washoe County that IVGID is incapable of self-management, in the hope that this will expedite the dissolution of the District. Fortunately, the members of the CLGF, at their last meeting, chose to grant an extension to give the staff, the new GM and Director of Finance, and the new Board additional time to complete these tasks, but no doubt IVGID is under the gun. What is clear is that despite the blizzard of arguments and demands from Mr. Katz and his cadre; these appear to have little credibility with the Department of Taxation and the CLGF.
I, for one, am confident that IVGID will properly address these outstanding issues, and under new management and a new Board majority, will be able to successfully take on the many improvements and restorations of our amenities and services that the prior Board majority ignored, delayed, or obstructed. Incline Village and Crystal Bay voters have spoken with the landslide election of the new Board majority. If only those IVGID detractors would accept this strong vote of confidence and affirmation, and work with the District, or find another distraction.
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UPDATE:
Mr. Katz, mentioned in this article, shared his thoughts with us. Ideally, he could present his perspective without resorting to personal attacks or name-calling. As he requested, we have posted his remarks in their entirety.
“Hey stupid. You state “that, in (my) recitation of the statute, (I)…ha(ve) conveniently left out the words ‘for services or facilities furnished by the district’. Thus, the authority to levy these fees was expressly granted to GIDs by the Nevada legislature.” I never said GIDs don’t have the power to adopt fees for services or facilities furnished by the district. Examples are user fees at our facilities, and fees for services such as programs. Elect to realize either, and you pay a fee. Elect to realize neither, and you’re not forced to pay the fee.
What I’ve actually said is that there is no statutory authority for GIDs to adopt standby rates, tolls or charges for the availability of facilities (rather than the availability of services). Examples for the availability of services would be standby service charges for the mere availability of water or sewer services. Which we should be assessing vacant lots. Moreover, listen to what the district actually tells us the RFF/BFF represent. NOT fees for facilities you state. But rather, standby service fees for the availability of facilities.
Stick to medicine and don’t be such an ignorant and narcissistic person in asserting with authority legal matters for which you know nothing. If you were a moral and ethical person, you’d either remove your deceitful remarks, or you’d include my remarks next to yours so your readers had the benefit of both sides of the issue you have created. But the fact you don’t, really explains the kind of person you really are.“
~ Arron Katz
Dr. Riner’s official response to Mr. Katz is as follows:
“Mr. Katz,
Any time you begin a letter to someone with the words ‘Hey, stupid’, it says volumes about you and your character, none of which is complimentary. When you throw around accusations that claim I am immoral, narcissistic, ignorant, unethical, and deceitful, it not only reflects very badly on you, it undermines the validity of any argument you try to make. Someone with a legal background should know that.
The full quote of NRS 318.197(1) is:
1. The board may fix, and from time to time increase or decrease, electric energy, cemetery, swimming pool, other recreational facilities, television, FM radio, sewer, water, storm drainage, flood control, snow removal, lighting, garbage or refuse rates, tolls or charges other than special assessments, including, but not limited to, service charges and standby service charges, for services or facilities furnished by the district, charges for the availability of service, annexation charges, and minimum charges, and pledge the revenue for the payment of any indebtedness or special obligations of the district.
IVGID defines its facility fees as “standby service charges for the availability of the use of the district’s recreational services and facilities”.
What you said is “that there is no statutory authority for GIDs to adopt standby rates, tolls or charges for the availability of facilities (rather than the availability of services).” If the facility isn’t available, how can a service provided at the facility be used? For example, this could mean ‘standby charges for the availability of the swimming pool in the rec center for swimming lessons’. Why in your logic does the word standby, which also means available, apply only to the swimming lesson and not the pool? It seems that your argument rests on the assertion that standby service charges cannot be assessed for the availability of a facility until it is used. Of course, a facility cannot be used if it isn’t available to use, and in IVGID’s case, the standby service charge is levied to ensure that the facility is available so that the services provided at the facility are also available. (By the way, this availability is a ‘reasonably proportionate’ benefit to the property owner in exchange for paying the facility fee.) If a standby service charge can not be used to make sure the facility is available, and can only be used to ensure the service at the facility is available, why would the legislature use both the terms ‘service charges’ and ‘standby service charges’ and not just say ‘charges for the use of services or facilities’? Isn’t standby just another way of saying available, as in: ‘this standby battery is available in case the primary battery runs dry’? If this argument seems convoluted, trust me, it is no more convoluted to you than yours are to me.
You might wish to quibble over the definition of a fee versus a charge, but they are often used interchangeably: “While often used interchangeably, a “fee” generally refers to a specific, fixed cost for a particular service, while a “charge” can be a broader term encompassing any cost associated with a product or service, including fees” (from Google). You might wish to quibble over the definition of ‘standby service charge’, but in fact this term is used in any number of ways, to include a charge for the availability of a facility, such as a private airplane hanger or a rental car.
Face it, despite many years of trying, your overly narrow interpretations of 318.197(1) have found NO traction with any court or government agency. I don’t know if this is because of the convoluted arguments you make, the boorish and demanding way you make them, or your lack of credibility; but my sense is no one in authority is interested in hearing from you about this anymore. Finally, why would you leave out the words ‘or facilities’ in your quote of 318.197 if not for the fact that including the words might undermine your argument? You might as well have said: ‘if you want to know the weakness in my argument, read the original carefully to find what the …. refers to’. I notice you do this often.”
~ Myles Riner, MD
Let’s encourage civil discourse in our community. Constructive conversations thrive on respect and understanding — name-calling and personal attacks only hinder progress.
Related Posts:
- CLGF Reviews IVGID’s Financial Progress Amid Audit Delays
- IVGID Board of Trustees Terminates General Manager Kent Walrack, Appoints Interim Leadership
- Trustee Overreach: How Micromanagement Disrupted IVGID Operations and Led to the Recall Effort
- IVGID’s General Manager Starts on Shaky Ground
- Backroom Deals or Thoughtful Governance? IVGID Board Majority Faces Scrutiny Over GM Appointment
- IVGID Faces Financial Scrutiny in Front of the Nevada Department of Taxation