Running Sparks into the RED

The hits just keep on coming
More construction liens filed against RED Development / Sparks Marina project
Barbwire by Barbano / Expanded
from the 1-31-2010 Daily Sparks Tribune

RED flags flying low over Sparks
$1.7mm in construction liens filed against RED Development
Barbwire by Barbano / Expanded from the 1-10-2010 Daily Sparks Tribune

The empire strikes back
12-21-2009 and 12-22-2009


Building and Construction Trades Council of Northern Nevada/AFL-CIO

1819 Hymer Ave
Sparks, NV 89431
(775) 355-9200


PAUL McKENZIE (775) 355-9200

In the RED:
First of a long series of wage complaints filed against Sparks Marina project

Labor commissioner gives City of Sparks 30 days to investigate

SPARKS, Nev. (12-21-2009) — The first of what is expected to be a continuing series of wage and benefit complaints has been filed against the developers of the Sparks Marina project.

Earlier this month, the Building and Construction Trades Council of Northern Nevada/AFL-CIO filed five complaints with the Nevada labor commissioner against subcontractors who worked on the Scheels sporting goods store at the Marina development. The complaints allege that the subcontractors failed to properly compensate workers or to properly disclose wage rates on certified payroll reports submitted to the state.

"As these certified payrolls have been on file for over a year and not corrected, it is evident that fault also lies with the general contractor, Sampson Construction, the project owners, Scheels Allsport and RED Development, and the City of Sparks," stated Paul McKenzie, the council's executive secretary-treasurer.

"All bear responsibility under Nevada Revised Statutes (NRS) section 338 as well as section 9 of the city's agreement with the developer (1) which mandates that prevailing wages be paid and properly reported on the project," McKenzie added.

The complaints allege underpayment of prevailing wages, misclassification of workers and improper reporting of fringe benefits.

In a letter dated Dec. 17, the Nevada State Labor Commissioner's office notified Sparks City Attorney Chet Adams that the complaints had been received and that state law mandates that the city investigate and submit the results of its investigation to the labor commissioner within 30 days. (2)

"We have dozens of binders filled with certified payrolls which we are reviewing for violations," McKenzie says.

"One of the most troubling issues is the fact that the City of Sparks stands to gain thousands of dollars for enforcing the law, as both NRS 338 and the city's contract with the developer require the forfeiture of $20 to $50 per day for each day each violation exists. In a time when we are faced with large budget shortfalls, it is amazing that city officials are ignoring this potential source of revenue," McKenzie added.

Sparks has been very financially strapped due to the national recession and is especially deficient in police protection.

"We waited to begin filing these charges until the district court system had completed its review regarding the City of Reno's oversight of the similar Cabela's sporting goods project in Verdi," McKenzie added.

On Aug. 18, Washoe District Judge Steve Kosach ruled that Reno had failed in its duty to make sure that Cabela's complied with state law. Cabela's, like Scheels, received public financing with sales tax anticipation revenue ("STAR") bonds, where three of every four sales tax dollars produced by a project go back to the developer to pay off construction costs. Sparks also subsidized the Marina project with two other forms of taxpayer support.

"The court finds that the (Nevada state labor) commissioner has the clear authority to enforce prevailing wage laws on projects financed by STAR bonds, such as Cabela's," Kosach ruled, adding that state law "is unambiguous in that it provides that contracts for construction projects paid for by the proceeds of STAR bonds are subject to prevailing wages."

Prevailing wages are based on an annual survey of local area standards conducted by the labor commissioner. (NRS section 338)

"And yet," Kosach continued, "despite the labor commissioner's underlying findings that both the legislature and the parties intended prevailing wages to be paid on projects such as Cabela's, he went on to find that no prevailing wages were required to be paid in this case. The commissioner's opinion leads to an absurd result," Kosach concluded, ordering the City of Reno to comply with the law.

Reno has appealed to the Nevada Supreme Court.

A City of Reno staffer estimated that Cabela's and its contractors face potential fines and penalties of up to $2.5 million for not complying with state law. 

"These sanctions should have been assessed against Cabela's and its contractors when the violations occurred," McKenzie stated. "It was the city's responsibility to monitor the project."

In September, the Reno City Council discussed making Cabela's establish a $2.5 million escrow account to insure against any penalties for wage violations, but the council failed to follow through. Reno's agreement with Cabela's states that the parties will follow all applicable laws. (Section 4.10, agreement dated 11 Jan. 2006) [UPDATE: Establishment of the $2.5 million account was supposed to have been implemented in 2007.]

The escrow account would have avoided any need to pursue contractors who left the state. The responsibility of tracking them down would have rested on Cabela's, as the city would have been able to go to the escrow account and recover whatever fines and penalties might come out of the final investigation. 

The Building and Construction Trades Council went to court to force the labor commissioner to uphold the law and assess fines and penalties based on the evidence. This process did not include any possible fines against the City of Reno which the labor commissioner also has the power to assess.

"City lawyers seem unclear on the concept," McKenzie said.

"The city attorney claims that Reno must appeal Judge Kosach's decision in order to protect the city from $2.5 million in fines and penalties. However, those are not city liabilities but possible income for the city and the state," he added.

Fines of $20 to $50 per day go to the cities, fines up to $5000 per offense go to the state.

Texas does it right: Cabela's refunds tax breaks for breaking job creation promises
(The Free Press 6-27-2007)

Under the STAR bonds law, developers must assert that their projects will generate at least half of their traffic from tourists.

Cabela's promised three million new tourists per year from its 150,000 square-foot store. RED Development promised 800,000.

Both were estimates from the same paid experts, Meridian Consultants. There is no penalty in the law for failure to perform. Nevada lawmakers talked about tightening the law in this year's legislative session, but did not do so.

The Reno-Sparks Convention and Visitors Authority reported that the entire 2006 visitor count for Reno-Sparks-Incline/Tahoe was 5,180,692. The RSCVA reported 5.1 million in 2007 which dwindled to 4.6 million in 2008.

Both cities hired consultants to monitor wage payments at the Cabela's and Marina projects, shelling out more than $750,000.

"The results speak for themselves," McKenzie said.

"Cabela's made a big selling point of creating local construction jobs, but then hired an out-of-state general contractor who retained subcontractors who imported workers from other regions, some all the way from Tennessee," McKenzie said.

"It adds injury to insult when these itinerant laborers have not been properly compensated according to law and contract," he added.

"We are just trying to make sure that all the workers, union or not, get paid properly for their labor rather than having some of their hard-earned money stuff their employers' Christmas stockings," McKenzie stated.

The Building Trades Council plans on filing more complaints this week and continuing until all certified payrolls in the council's files have been reviewed.

Established in 1903, the Sparks-based Building and Construction Trades Council of Northern Nevada/AFL-CIO is comprised of 19 affiliate unions representing a wide range of skills.

The history of the Cabela's project and the full text of Judge Kosach's decision may be accessed at

1. This refers to the city's Disposition, Development and Financing Agreement, or DDFA, with the developer.

2. NRS 338.070(1)
    Nevada Administrative Code (NAC) 338.110(1)

The above references are in the letter sent to the City of Sparks dated 12-17-2009. The complete letter may be downloaded from

Additional legal references:

NRS 338.015 outlines the labor commissioner's ability to fine parties in violation of NRS 338 up to $5000 per offense.

NRS 338.090 makes it a criminal offense to violate the provisions of NRS 338.

NRS 338.070 requires the public body investigate possible offenses and report their findings to the labor commissioner.

NRS 338.060 requires the public body to assess penalties against the contractor for each day a contractor is in violation.


Back to Read More About It

The Empire Strikes Back

Trades council claims prevailing wage violations at Legends project
Daily Sparks Tribune/ 12-21-2009

Wage complaints made against Sparks Marina project, city
Sparks disputes allegations
Reno Gazette-Journal / 12-21-2009

Judge rules for labor, Reno goes Cabellyup again
The star-crossed history of STAR bonds
Money for nothing and the kicks for free

Barbwire / Daily Sparks Tribune /

Windows of stained glass and futures passed
Barbwire / Daily Sparks Tribune / 4-26-2009

Cabela's corporate welfare fails to pay off in a down year
Barbwire / Daily Sparks Tribune / 3-1-2009

Toljaso, long time ago

City of Sparks won't touch "responsible contractors" issue
Daily Sparks Tribune 3-15-2008
Painters Union pickets Scheels store at Sparks Marina Legends development Breaking News & Bulletins 3-14
2007: Building Trades Council criticizes Cabela's contractors and sales tax projections
BARBWIRE: Let It Bleed
Daily Sparks Tribune 2-25-2007
Sparks City Council hires consultant to review prevailing wages on Scheels sporting goods construction
Daily Sparks Tribune 11-13-2007
BARBWIRE: Comeuppance for corporate welfare queens
Reno City Council rolls over and plays dead for the mighty hunter
Daily Sparks Tribune 9-25-2007, Updated 9-26-2007
BARBWIRE: Welfare Are Us
Daily Sparks Tribune 1-15-2006

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