Brian Krolicki
Sun Coverage
The state Economic Development Commission has formally asked the state Attorney General’s Office for an opinion on whether the use of a catalyst fund to entice companies to relocate or expand in Nevada is constitutional.
Lt. Gov. Brian Krolicki, who chairs the commission, encouraged the board to seek the opinion in a discussion Tuesday on the implementation of Assembly Bill 449, which overhauls the state’s economic development strategy.
The commission is in the middle of a one-year transition from existing policy to the new one that is part of the bill approved in the 2011 legislative session.
The new law places economic development policy under a newly formed nine-member Board of Economic Development from the existing commission.
The commission is continuing to oversee requests for tax abatements and deferrals from companies relocating and expanding in Nevada through June. But the new board will administer the $10 million catalyst fund that would provide additional incentives and help “close the deal” for companies considering relocating to the state.
At issue is a section of the Nevada Constitution that says, “The state shall not donate or loan money or its credit, subscribe to or be interested in the stock of any company, association or corporation, except corporations formed for educational or charitable purposes.”
The current commission can offer economic incentives to companies because it awards tax deferrals and abatements, not cash.
While Krolicki said it has been presumed that AB 449 received proper review from the Legislative Counsel Bureau before the bill became law, he wanted the Attorney General’s Office concurrence before the commission developed regulations and an application for companies to apply for a catalyst fund award.
When reviewing a policy statement about the catalyst fund, commissioners spotted other concerns and have asked Economic Development Director Mike Skaggs to review them and report back to the commission next month.
“Projects that are considered for the catalyst fund must demonstrate a significant rate of return on the public dollars being invested in the project,” the statement says. “Additionally, there are several primary measures that every catalyst project must meet in order to be considered for an award.”
Among the measures to be considered – and some of the problems commissioners have with them:
• “Competition with another state for the project must exist and the business must not have already announced a location decision.” Commissioners were concerned that expansions by existing companies were not addressed.
• “Projected new job creation must be significant for the region.” Commissioners want “significant” to be defined. They also noted that the impact of the number of jobs created in rural counties could be different than those created in urban areas.
• “The new positions must be high-paying jobs, above the average wage of the county where the project would be located.”
• “Capital investment by the company must be significant.” Commissioners had similar concerns about defining “significant.”
• “The project must have community involvement from the city, county and/or school district.” Commissioners discussed the possibility that a city or county could have opposing views on a new project.
• “The applicant must be financially sound.” Commissioners felt that term needed to be better defined.
• “The applicant’s business sector must be an industry as identified by the state plan for economic development.” The state is refining a list of the types of companies it would like to recruit, but among the categories under consideration for recruitment are aerospace and national defense companies, health science and medicine, information technology, renewable energy, mining, and movie and television production that crosses into the city’s gaming and entertainment areas. [http://www.vegasinc.com/news/2011/oct/07/corporate-site-scouts-say-region-suffers-serious-s/]
The nine voting members of the new board will include Krolicki, Gov. Brian Sandoval, Secretary of State Ross Miller and appointees Rob Roy, CEO of Switch in Las Vegas; William Weidner of Las Vegas investment management firm Gaming Asset Management; Kathleen Drakulich, a lawyer with McDonald Carano Wilson in Reno; Heather Murren of the Las Vegas-based Nevada Cancer Institute; Benjamin Yerushalmi of Jewelers of Nevada in Las Vegas; and Sam Routson of Winnemucca Farms.
One of the first tasks of the new board will be to consider candidates for a director. Long-time Las Vegas Chamber of Commerce Government Affairs Director Steve Hill has been appointed interim director and is expected to be a candidate for the directorship. The board will submit the names of three candidates to the governor for consideration.