This April Nevada restauranteurs were caught off guard when the Southern Nevada Health District SNHD sent notice detailing a new fee proposal which would be presented to the Board of Health for approval at the June 25th meeting. The Nevada Restaurant Association NvRA sent notice to operators and stakeholders notifying them of the changes, provided clarification on calculations, and dates of workshops. The SNHD planned to raise the permit fees for all food handling businesses, from high-end restaurants and taverns to convenience stores. Depending on the nature of the business’s food processes, the fees would be raised from 55% to 300% per permit, with many establishments holding multiple permits. Cost for re-inspection would also be affected. Permit fees are paid annually and the fee increase was slated to be implemented July 1, 2017. Restaurant profit margins range from 3-6% as reported by the National Restaurant Association. With these limited profit margins, an increase of this magnitude and the short notice would result in a drastic negative impact on the food industry. Increased food prices and staff reduction are the potential unintended consequences of the rate hike. Restauranteurs provided compelling testimony on why this would be harmful to their business. One operator commented, “As a small business it was important for us to understand the new fee formulation on permits requested by the Health Dept. Our analysis showed the new permit fee structure would increase our current fees 100%. Bottom line, this new permit fee structure will have a serious negative impact on our small business.”

Adding to the surprise, the proposed fees are based on a new methodology. The increase is based on the establishment’s risk level and square footage. Operations are assigned a risk category based on complexity of operations by types of food service provided, presence of FDA identified risk factors present in the facility and the population served by the facility. The District stated that this risk category determines the level of service that the need to provide to the facility. In addition, the calculation for the increase is based on size with the assumption that the larger the size, the more time is needed for inspection. Previously, size was not considered when determining fees.

NvRA testified that they want the agency to be properly funded but take issue with the current proposal. Regarding the process and methodology, the trade association noted that a significant increase with short notice is an unreasonable request. An incremental increase over time allowing operators to plan would curtail negative impacts on the industry. The FDA model is a recommendation and many aspects do not apply to the unique culinary operations in Nevada. Many facilities have full time risk managers and practice self-inspection. Size is not necessarily an indication of time needed. A large buffet with several permits does not take equivalent time as independent permit areas. NvRA has suggested examining an inspection method by licenses rather than permits, similar to the FDA model. The model does not offer consideration for history of compliance or outbreaks for the establishment. Regarding the budget need for the fees, the association feels further explanation is needed to justify the increase. The budget presented demonstrates that the current fees collected cover the costs of operations and they have maintained a surplus for several years. The district does not have long-term debt; the new facility is complete. The Nevada Resort Association provided a detailed financial examination at the hearing.

The Southern Nevada Health District removed the proposal from the June 25th Board of Health meeting agenda and has stated that they will not present the proposal at the July 22nd meeting. NvRA and other stakeholders have requested a series of meetings with a working group to vet a revised proposal.