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Behavioral Health Board Backs Bump in Property Transfer Tax to Fund Affordable Housing

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by Camalot Todd, Nevada Current
January 19, 2023

Proposed state legislation backed by the Clark Regional Behavioral Health Board would increase the real property transfer tax by 20 cents for every $500 of value to build affordable housing for Nevadans with mental health conditions, disabilities, and who are lower income.

Senate Bill 68, which was requested by the Senate Committee on Revenue and Economic Development on behalf the behavioral health board, would need the support of a two-thirds majority in both houses of the state legislature since it involves a tax increase. The newly elected governor has promised that the state would see no new taxes under him.

Despite those odds, Robin Reedy, the Nevada executive director at the National Alliance on Mental Illness (NAMI), believes there’s a case for the proposal. 

“You have the whole conservative state, nobody wants to be taxed, and any revenue stream is a tax, and all of those mantras that are out there, but the biggest part of this is if we spend the money upfront, we will save more money,” Reedy said.

The bulk of Americans and Nevadans receive mental and behavioral health care through emergency room visits, according to state data, or through law enforcement encounters, according to a report by the U.S. Substance Abuse and Mental Health Services Administration (SAMHSA).

Taxpayers are footing the bill regardless, it’s just a matter of where that money is going, Reedy said. 

Three days at UMC cost taxpayers the same as three months at the Clark County Detention Center (the region’s largest prescriber of behavioral health medications) which would cost the same as one year for a single unit in supportive housing, according to a report by Sarah Adler, the NAMI Nevada Policy Specialist. 

Adler, who crafted the proposed legislation, has a sister in Michigan who lives with a bipolar diagnosis and a godson, Jamie, in Carson City who lives with schizophrenia. Both are serious mental illnesses, and people with serious mental illnesses account for one-third of America’s homeless population.

“Jamie is never going to be able to live independently, he is always going to need medication management and other forms of support,” Adler said. “Right now his 72-year-old mother allocates about 25 hours a week and more than $2,000 a month to retaining his housing stability and he has, fortunately, a housing choice voucher.”

If any of those things fall apart, so would his housing, she said.

In addition to those with mental illnesses, people exiting treatment facilities for addiction, people who are struggling with addiction without treatment, and people experiencing chronic homelessness also need supportive housing, Adler said.

The proposed legislation would address those populations and those who live with disabilities, including those with behavioral health conditions and mental disabilities who account for one in five Social Security Disability Insurance claims.

Providing housing can prevent exacerbation of mental health and substance use conditions and is one of the base needs for recovery, according to SAMHSA. 

The 20 cents for every $500 worth of value would amount to an additional $160 on a $400,000 sale and would apply to residential, commercial, and retail space sales. The revenue generated would use existing federal, state, and philanthropic sources to help fund supportive housing.

“It will not change the opportunity for people to become homeowners,” Adler said. 

The funds would be certified by the Nevada Housing Division with no more than 10% of those funds used for administrative purposes, and then allocated to the five Regional Behavioral Health Policy Boards (Clark, Washoe, Northern, South Rural, and Rural) in the state, with a minimum of $500,000 per region.

For example, the Clark Regional Behavioral Health Board, which serves  73% of the statewide population, would receive an estimated $10.2 million in funding annually.

The boards would determine what percentage of their allocated funds will be used for rental assistance and home repair assistance and what percentage will be used for supportive housing and services – with a minimum of 25% of the funds being used for each of them. The boards can then use the remaining funds as they see fit for their communities. 

Nevada’s real property transfer tax has come under scrutiny after a Las Vegas Review-Journal investigation last May found that buyers and sellers in multi-million dollar Strip real estate deals have used existing loopholes to avoid paying it, resulting in millions in lost revenue to the state.

‘Every time the economy goes down…’

Adler said the lawmakers she has discussed the bill with support it, but recent legislative history suggests the path forward is complicated, even when political power isn’t split between parties.

During the 2019 session, the City of Las Vegas backed a bill to authorize the city to use a sewer surcharge fee and a real property transfer tax to fund homeless services and affordable housing. That bill was amended into a task force to study the issue. That task force suggested recommendations ahead of the 2021 Legislature, but none of the recommendations were adopted.

“Every time the economy goes down (lawmakers) cut behavioral health services,” said Reedy, who prior to joining NAMI worked for the state treasurer’s and Republican Gov. Jim Gibbons’ offices. “They cut health and human services because that’s one of the few places they actually can because there are so many services that are mandated and then there are others that if you cut you lose federal matching funds.”

She added: “When the economy gets better they never replenish it.” 

But Reedy said that there are factors that may be different this time, including how the COVID-19 pandemic exasperated mental health concerns among a wider population, the impact that homelessness will have on tourism in Las Vegas and Reno, the implementation of 988, and more law enforcement agents speaking out on incarceration not being the solution to mental health.

Newly inaugurated Gov. Joe Lombardo and former Clark County sheriff has gone on the record stating he supports diverting funding away from police to social services. 

Nevada’s systemic and long-standing divestment in community services and oversight for children not only lands them at the bottom in the nation for mental health prevalence in children but is also under investigation by the Department of Justice, which found that Nevada unnecessarily institutionalized children with behavioral health needs in facilities that violate their Title II disability rights.

Some of NAMI’s main policy goals include expanding housing for those with mental health conditions, decriminalizing mental illness, and increasing services for 988, said Sheldon Jacobs, a family therapist in Southern Nevada and national board member for the NAMI. SB 68 would address all three of those policy goals.

State Sen. Fabian Donate (D-Clark) sits on the Clark Regional Behavioral Health Board, is the vice chair of the Senate Revenue and Economic Development Committee, and is the chair of the Senate Health and Human Services (HHS).

Donate wouldn’t comment on the impact of this legislation before it reaches his committee.

“I look forward to vetting this proposal and all legislation that comes before Senate HHS and the other committees that I have the opportunity to serve on,” he said in a statement to the Current. “I am very optimistic about this upcoming legislative session and getting the opportunity to have deep conversations on the nexus between improving access to mental health services and reducing the social determinants of health [like housing] present throughout Nevada.

The legislative session begins Feb. 6.

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