1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 MONTEREY PLAZA HOTEL AND SPA, CYPRESS BALLROOM 3 400 CANNERY ROW, MONTEREY 4 5 6 7 8 TRANSCRIPT OF PROCEEDINGS 9 (Prepared from audio recording) 10 OCTOBER 11, 2016 11 12 13 14 15 16 17 ANNUAL BOARD MEETING WITH COUNTY ASSESSORS 18 19 20 21 22 23 24 25 26 27 PREPARED BY: Kathleen Skidgel 28 CSR NO. 9039 1 1 P R E S E N T 2 3 For the Board of Equalization: Fiona Ma, CPA 4 Chairwoman 5 Diane L. Harkey Vice Chair 6 Saba Shatara 7 Appearing for Jerome E. Horton 8 Member 9 Michele Brown Appearing for Sen. 10 George Runner (Ret.) Member 11 Yvette Stowers 12 Appearing for Betty T. Yee, State Controller 13 (per Government Code Section 7.9) 14 Joann Richmond 15 Chief Board Proceedings 16 Division 17 18 ---oOo--- 19 20 21 22 23 24 25 26 27 28 2 1 INDEX OF SPEAKERS 2 SPEAKERS PAGE 3 Kristen Spears President 4 California Assessors' Association 12 5 Richard N. Benson President-Elect 6 California Assessors' Association 15 7 Leslie Morgan Chair 8 Education Committee California Assessors' Association 17 9 Don Gaekle 10 Chair Standards Committee 11 California Assessors' Association 20 12 ---oOo--- 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 1 MONTEREY PLAZA HOTEL AND SPA 2 CYPRESS BALLROOM 3 400 CANNERY ROW, MONTEREY 4 OCTOBER 11, 2016 5 ---oOo--- 6 MS. MA: Okay, who's starting? 7 MS. HARKEY: You are. 8 MS. MA: Oh. Okay. Sorry. Excuse me. 9 I'm like, "Who's starting?" I guess me. 10 So, um, and it's our honor to be here 11 joining you again this year. Last year was Ms. 12 Harkey and my first time coming to the Annual 13 Assessor/BOE Meeting. 14 We had a really good breakout session; I 15 know I did, with some of my assessors last year. 16 And I thought that was really helpful and so we 17 decided to do the breakout sessions again later on. 18 And we're going to have kind of like a speed dating 19 thing where, you know, we're going to go from room 20 to room and you guys can give us some feedback. 21 I also represent 23 counties, and I went to 22 visit all 23 of my county assessors personally and I 23 got additional feedback on things that perhaps need 24 to be changed in our Assessor Manuals, things that 25 they -- you all would like to maybe propose in terms 26 of legislation. And I hope to continue that 27 dialogue this year. And as I meet with all of you 28 in your breakout sessions, I will share with you 4 1 some of the feedback we received. 2 We subsequently met with David Yeung and 3 downloaded with him all of the different comments so 4 that he also, as the new Chief Deputy, could make 5 some of those changes to make not only the BOE more 6 efficient, but your job as well. 7 So I am really looking forward to today. I 8 got elected Chair, I think, April 1st and one of the 9 things that I like to do as Chair is question the 10 status quo. Just because we've been doing it a 11 hundred and fifty years doesn't mean we have to 12 continue doing things the same way. 13 And so we've really been drilling down at 14 our agency, trying to meet with all of our different 15 divisions, trying to see how we can improve the 16 agency moving forward. 17 It's been a great honor to work with our 18 new Vice Chair Diane Harkey. We also served in the 19 Legislature together, so we have a prior working 20 history together. And I think this Board of 21 Equalization with Member Horton, Member Runner, as 22 well as Yvette Stowers representing Ms. Yee, we are 23 very, very serious about the job, about our roll 24 here on these -- on the BOE, our relationships with 25 all of our stakeholders, including the assessors. 26 And so I look forward to today's meeting. 27 We kind of changed the format up a little bit as 28 well 'cause we kind of wanted to hear what, you 5 1 know, you all are working on in terms of your 2 committees since we don't attend all three days. 3 And so, you know, I hope we find this 4 useful today, helpful. And if you need any -- you 5 would like to see any changes for next year, you 6 know, please give us feedback as we're always trying 7 to improve. 8 So, Ms. Harkey. 9 MS. HARKEY: Thank you. 10 Am I on? Can you hear me? 11 There we go. 12 Okay, thank you very much for all of your 13 attendance. It's really good to see you all for the 14 second time. 15 Ms. Ma has been an amazing Chairwoman. 16 She's gotten us organized and we have changed a lot 17 of the format of our meetings. I think that they're 18 more predictable by the taxpayer's appearing and 19 also more predictable by us. And I think that just 20 comes with looking at systems and we all had some 21 input, and so we made a lot of changes. 22 We also have almost totally hired a new 23 executive team. You may note we have some new 24 people in the room, some that have been around that 25 chose to retire, and so brining new people on board. 26 And it's created a lot of work for us. I think 27 about probably fifty percent of my time is spent on 28 administration and administration issues and 6 1 interviewing 'cause we appoint certain people. We 2 actually hire them or appoint them to CEA positions. 3 And I just -- I just want to say what we're 4 really doing is looking at policies, procedures in 5 audit areas, as well as in assessor's areas; people 6 are bringing to us issues that, you know, might 7 streamline things, might make it a little more 8 uniform so that we're not operating like fifty-eight 9 different states but actually one, one state on just 10 some of the policies. 11 So I think as we go forward you'll hear a 12 few of those changing. Um, and, you know, we'll 13 want your input to them; you know, one of the deals 14 with the appeals process and how they're treated so 15 differently in a variety of different counties, and 16 so things that we can do that actually make it 17 easier for those individuals as well as businesses 18 that work across county lines. I think that's what 19 the Board was established for and that's what we'll 20 be running by you. 21 So, um, it's always a pleasure to meet with 22 you, and I want to thank you so much. 23 I did work with Fiona and we had some 24 really late-night sessions. That was at the end of 25 Governor Schwarzenegger's term and you know how 26 chaotic everything was. And we stayed very late 27 sometimes, and -- and Fiona taught me what the honey 28 badger was. 7 1 She's an amazing leader, an amazing person, 2 and I've really enjoyed -- I've enjoyed working with 3 her in the Legislature, and I really have enjoyed 4 working with her on the Board. She keeps us going. 5 And, uh, you know, I -- I think we've got a good 6 group of people. I hope that we earn your respect; 7 respect is earned. And I plan on continuing the 8 dialogue and communication with all of you. 9 I only have five county assessors. So my 10 task is a little easier when meeting around. But I 11 think we still -- we all represent the same number 12 of people. 13 So thank you very much for your attention. 14 Thank you. 15 MR. SHATARA: Good afternoon. My name is 16 Saba Shatara and I'm the newest member of Board 17 Member Horton's legal staff, and I've been given the 18 privilege of addressing you all today. 19 As you know, Board Member Horton is a huge 20 fan of this event, of the annual meeting. And 21 unfortunately, to his dismay, this is the first time 22 he's missing it in, I believe, seven years. He 23 sends his apologies that he couldn't be here today. 24 But on his behalf, let me extend his thanks 25 to President Kristen Spears for organizing the 26 meeting. I'd also like to thank the other Board 27 Members for allowing me to appear on his behalf. 28 This is a particular treat for me. I'm coming from 8 1 private practice where I spent more time than I'd 2 care to admit avoiding reassessment for clients, so 3 I'm making up for it now. 4 But, uh, Board Member Horton is extremely 5 interested in learning how we can help each assessor 6 accomplish their goals within their districts, as 7 well as ensuring uniformity in property tax 8 assessments throughout the state. 9 As a member of Team Horton, I encourage you 10 to please engage our office early and often, as well 11 as the rest of Board Member Horton's staff; please 12 see us as a resource and feel free to contact us 13 directly and we'd be happy to meet with you. 14 Board Member Horton also asked me to extend 15 his feelings that these are extraordinary times. 16 Every district faces a fair share of economic 17 challenges, and the state is grappling with how to 18 pay for deferred infrastructure needs and meet the 19 social and economic challenges of the future. 20 That's why the Board Member is currently 21 studying the federal concept of repatriation of tax 22 capital, the redistribution of exemption and 23 credits, and the tax reform policies that stimulate, 24 instead of just taxing the economy. He's met with 25 the Chairs of both the Assembly and Senate Tax 26 Committees who agree that there is a fiscal need to 27 restructure California's tax policy. 28 Member Horton hopes you share your ideas 9 1 and thoughts on reshaping and restructuring 2 California's tax code and regulatory process. The 3 Board Member and our entire team look forward to 4 working with you to implement and advocate for these 5 necessary changes. 6 Thank you. 7 MS. STOWERS: Good afternoon. I'm Yvette 8 Stowers, Deputy Controller for Taxation, 9 representing Controller Yee. Ms. Yee says hello, 10 wishes you well, and hope we have a great 11 conference. 12 In respect to paying the state bills, 13 Controller Yee has championed the need for a 14 comprehensive tax reform. She is encouraging each 15 and every one of you to consider how our tax 16 structure is outdated and the needs that we have. 17 She would like for all of us to focus on a stable 18 revenue source, the ability for local jurisdictions 19 to control and raise revenue. It's critical that 20 they have that control because they are the ones 21 that are on the front line, taking responsibility 22 for so many citizens and businesses. 23 She would like us to focus on a tax 24 structure that would encourage business growth and a 25 tax structure that will help those who are in most 26 need. 27 As you know, she had her Council of 28 Economic Advisors. The council did put together a 10 1 report, did not come up with any solutions, uh, but 2 wanted to put out there all of the problems that we 3 are currently facing and encourage everyone to take 4 a part in restructuring our tax system. 5 Thank you. 6 MS. MA: Thank you. And I know that 7 Michele Brown is here, representing Senator Runner, 8 and she will be participating in the breakout 9 sessions as well, to bring back feedback for 10 Mr. Runner. 11 Also, as part of our new leadership team, 12 David Gau officially took over as Director on April 13 1st. Many of you know he's a CPA. He's been with 14 the Board 30-plus years and has worked pretty much 15 in every department except one. So he's got a wide 16 and vast experience here at the BOE and it's been 17 great working with David. 18 I also want to give a shout out to Gregg 19 Cook. Where is Gregg? There he is in the back, 20 your advocate for many years. I served very closely 21 with him when I was in the Assembly. I think we 22 passed four or five bills sponsored by the 23 assessor's office, not thinking that I would be 24 here, sitting here today. But, you know, he does a 25 great job. 26 My Chief of Staff is also here, Genevieve 27 Jopanda. She is usually with me when we travel and 28 have done the assessor visits with me. 11 1 Seth Doulton is my Agriculture Outreach 2 person. He has also met with many of you, worked 3 with many of you in your offices about potential 4 legislation that we would like to work on this 5 coming year. 6 Joey Luiz handles my seven north counties. 7 He was on the City Council of Clear Lake, so some of 8 you also have met with him, especially during the 9 many fires that have happened up in the north 10 county. 11 And then Tim Morland is my Leg. Director. 12 He was here last year. But, again, if there are any 13 legislative ideas, you know, please bring it forward 14 to us. We are very active, not only as the Leg. 15 Chair, but also making sure that we are either 16 actively supporting or opposing bills that have some 17 sort of nexus to the BOE and potentially your 18 offices. 19 So again, thank you all for your service. 20 We love working with you and look forward to a 21 productive dialogue today. 22 ---oOo--- 23 KRISTEN SPEARS 24 ---oOo--- 25 MS. SPEARS: Well, good afternoon. My 26 name's Kristen Spears and I'm the President of the 27 California Assessors' Association for 2016. Welcome 28 to Monterey. 12 1 My year as President of the California 2 Assessors' Association is flying by. My goal when I 3 spoke to you last year at the Annual Board Meeting 4 with County Assessors, as the President-elect my 5 stated goal was to improve communication across the 6 board. And as President-elect I was excited to 7 implement improvements to the CAA website that could 8 increase communication, sharing of information 9 between CAA members. This goal was realized with a 10 vital new website. 11 I also mentioned the goal of improving 12 communication between the CAA and the Board of 13 Equalization. I mentioned a goal of working 14 together to improve assessment procedures and laws 15 for the public good. 16 Today I'm pleased to have this opportunity 17 to meet with the Board of Equalization Members. 18 After almost a year as CAA President, going through 19 the various officer positions prior to that, I truly 20 recognize the challenges of the assessors and the 21 Board Members working together. Sometimes we are on 22 the same page on issues, sometimes we are not. 23 So this meeting is important to all of us 24 because it's an opportunity to better understand 25 each other, where we share common ground, why we 26 have differences. Elected officials having 27 different opinions is certainly not a new or 28 different problem. We come at issues from different 13 1 perspectives. 2 Over 1800 years ago Marcus Aurelius, one of 3 the good Roman emperors and a philosopher said, 4 "Everything we hear is an opinion, not fact. 5 Everything we see is perspective, not the truth." 6 Over the years the Annual Board of 7 Equalization Meeting with Assessors has taken on 8 different formats: Presentations, panel discussions 9 on specific topics. In discussions with assessors, 10 they have a common theme that they really valued the 11 breakout sessions with the Board of Equalization 12 Members. So this year I really applaud the Board 13 for expanding this breakout session time. I think 14 we all appreciate that. 15 In a few minutes you will hear briefly from 16 the chairs of the Education and Standards CAA 17 Committee chairs. They're going to share some of 18 the larger issues or accomplishments that they faced 19 in 2016. And we hope that this review will provide 20 some conversation starters for our breakout sessions 21 so we can take advantage of this time together. 22 So with my year as President almost over, I 23 wish to express my appreciation to the Board Members 24 for their willingness to meet and engage, and for 25 supporting the outstanding contributions of Board of 26 Equalization staff members who all of us appreciate 27 the countless hours that they spend with local 28 assessors working cooperatively. 14 1 And with that, I will turn it over to 2 President-elect Benson for his comments. 3 ---oOo--- 4 RICHARD N. BENSON 5 ---oOo--- 6 MR. BENSON: Thank you, President Spears. 7 My name is Rich Benson. I'm Marin County 8 Assessor and President-elect for CAA for 2017. 9 Good afternoon, Chairman Ma, Board Members, 10 colleagues and friends here this afternoon. 11 I am both honored and humbled to be here 12 with you today. My participation with the 13 California Assessors' Association started nearly 30 14 years ago, and I'm pleased to say that the 15 institution continues to be one to be most proud of. 16 Accordingly, my experience with Board staff 17 and Board Members has both been enjoyable and 18 rewarding. Working with Board staff over 30 years 19 has consistently demonstrated their dedication, 20 commitment and professionalism. 21 In most ways the institution of the Board, 22 Board staff, and the assessors is the same. We are 23 guided by the same principles: To uphold and 24 administer the most important principles of equal 25 protection. More specifically for us, equal 26 taxation, uniformity, and equalization. For our 27 country these standards are embedded with our 28 freedom and liberty. 15 1 2017 promises to bring new opportunities 2 and new challenges, and every year there are changes 3 from the last. When I look forward to the year, and 4 actually years ahead, my attention focuses on some 5 common denominators for most contemporary 6 institutions. 7 First to mind is the imminent reality of 8 succession planning and stewardship. These bring 9 huge risks and huge opportunities. Most profound is 10 the loss of institutional knowledge and experience. 11 The time to address this is now. We should 12 capitalize on training, knowledge transfer, 13 development of tools, and providing resources that 14 leaves no county behind. 15 2017 also exposes us to some uncertainty as 16 each year does, but differently today than in each 17 year before. In my opinion, what is more 18 significant today than in past years is the health 19 and life expectancy of Prop 13. 20 I don't mean to point to any single point 21 of view in that regard. Prop 13 is nearly 40 years 22 old and aging more each year. Since 1978 it has 23 been through changes in appraisal developments, 24 social expectations, legal challenges, legislative 25 changes and administrative twists and turns. 26 Today might we ask if it is performing 27 better today than yesterday? Is it meeting the 28 public's contemporary expectations? Perhaps some 16 1 may say no. 2 Controller Yee recently produced a message 3 on comprehensive tax reform. Considering what we 4 can expect with the prospects of boomer retirements 5 and the ballot pressures on 13, like increasing 6 fees, taxes, bonds on balance and tax bills, we have 7 opportunities and responsibilities to explore our 8 strengths and our weaknesses and apply principles of 9 responsible stewardship. 10 Indeed, by four years of experience, we now 11 know more today than we did in 1978 when Proposition 12 13 began. So there are opportunities to make 13 13 work better today. 14 In this light, I look forward to a robust 15 collaboration, dialogue, and recommend that we 16 capture the institutional knowledge of our common 17 resources to see how we might leave it better than 18 we found it. 19 Thank you. 20 ---oOo--- 21 LESLIE MORGAN 22 ---oOo--- 23 MS. MORGAN: Good afternoon. Leslie 24 Morgan, I'm the Shasta County Assessor/Recorder. 25 And I've been the Education Chair both last year and 26 this year, however, I got the dynamics of the CAA 27 liaison role this year as well. 28 The Education Committee was enhanced a few 17 1 years ago so that it became a more integral part of 2 our business meeting aspect; and that's been very 3 important because it really has highlighted how in 4 our everchanging world we need to keep continual 5 education to all of our staff. 6 I don't know about you, but I don't have 7 data entry positions. We always have to have staff 8 who are fully trained in what their function is 9 within our offices. And so it's extremely critical, 10 and the CAA organization recognized that. 11 In addition, the role that we interact with 12 the Board has been extremely critical, and we've 13 been trying to enhance that relationship as well 14 with the pre-meeting so that we can be most 15 efficient in our business meetings here by giving 16 the dynamics from those meetings which last a 17 couple, three hours occasionally. And then we can 18 summarize that for everyone. 19 So during my last couple years, I've got to 20 participate in the creation of the audit exam that 21 the Board's put together. And the Board does an 22 amazing job. Just as us with our staff, really it's 23 our staff who makes us look good. No offense, but 24 your staff makes you look really good. So I know 25 that that's related to you as well, but your staff 26 does an amazing job out there. 27 Um, they've made a lot of things happen. 28 When we had the dynamics of certification when the 18 1 CAA was reaching out for the certification of our 2 staff, the Board was not only able to integrate that 3 and get a system to track it, but they were also 4 able to meet the -- the needs of both the small 5 county concerns and the large county concerns, for 6 those counties who are going to opt in and 7 participate in it. And that's been really important 8 for all of us. 9 The -- the CAASA liaison role that I got to 10 participate in last year, I want to give you some of 11 those statistics from that because you have Board 12 staff there as well. And not only through the 13 tracking but through the helping in the creation of 14 the training material so that we're presenting a 15 more uniform practices throughout the state is just 16 extremely critical. 17 Last year in 2015 they had their first 18 round table format which was more of a work group, 19 much like our work groups this afternoon. And there 20 were 22 counties represented, with 66 attendees. In 21 the '15-'16 year they had over 4,000 attendees to 22 their classes, up 48 percent. And this is mostly 23 through the WebEx piece of it now as well, which, 24 again, the Board plays an instrumental role in. 25 This year in 2016 at that round table we 26 had 36 counties and BOE present, with 104 attendees, 27 and they have scheduled for us eight courses this 28 year. That's just amazing for our ongoing training 19 1 as Rich alluded to, to keep all of us educated. 2 Because after 21 years I still don't have all the 3 answers all the time. And we're constantly asking 4 ourselves, "Well what -- what do we do with this?" 5 So as a Committee Chair, the other piece of 6 that training is I know that during the last two 7 years we've been putting together hotel valuation 8 and intangibles. As you heard from Steve Vagnini 9 earlier, they have a lot of experience in that here. 10 And the gas stations. And it blows me away how well 11 CAASA does at creating these courses every single 12 year because it's a struggle for us in the creation 13 of these three courses that we're putting together 14 as groups. 15 So with your staff and the support with 16 the -- with the support of our staffs on each 17 county-wide, I'm just very, very proud to have 18 participated as an Education Committee Chair for the 19 CAA. 20 ---oOo--- 21 DON GAEKLE 22 ---oOo--- 23 MR. GAEKLE: Thank you. Well, uh, Tom 24 Bordonaro's not here today. 25 MS. SPEARS: He is not here. 26 MR. GAEKLE: So I guess I'll, uh, take 27 over. 28 Chairwoman Ma, Members of the Board, Don 20 1 Gaekle, Standards Committee Chair. 2 I took over this year; I had big shoes to 3 fill. At the end of last year Leslie Davis gave me 4 a big rundown on what my responsibilities were as 5 Standards Chair and she did a very good job. I 6 think I remembered some of them. 7 So, uh, we did have a busy year. I want to 8 acknowledge the fact that we had a great working 9 relationship with Board staff. I want to 10 acknowledge Dean Kinnee, David Yeung, Sherrie 11 Kinkle, who is probably not here, but we've had a 12 great year working closely with them to resolve 13 issues that, uh -- that come up. 14 Also want to acknowledge, we've got a 15 number of standing subcommittees, and we've got 16 assessor liaisons for those. I want to acknowledge 17 Aircraft Advisory Jeff Prang; Brian Donnelly has 18 been doing the heavy lifting on that. But I haven't 19 really felt that that's a part of the Standards 20 Committee this year because they've been doing so 21 much heavy lifting in Leg. on airline valuation. 22 Sue Horne, Forms Committee, Nevada County. 23 Dan Goodwin, Natural Resources, Ventura 24 County. 25 Exemptions, Kathleen Kelleher, but the 26 Committee's been handled by Christina Wynn, 27 Sacramento County. 28 Mapping GIS, Peter Aldana, Riverside 21 1 County. 2 Real Property, Jon Lifquist, Kern County. 3 And Business Property, Barbara Levey, 4 Merced County. 5 And I want to thank them for the work 6 they've done this year. 7 Special shoutout to our Exemptions 8 Subcommittee who worked in overdrive this year with 9 many legislative issues, bills that were -- some of 10 which passed, some didn't. But they were asked 11 repeatedly to give an analysis and establish an 12 opinion -- a position for the California Assessors' 13 Association, which they did very well. And, uh, 14 appreciate the work that they did. 15 And also, um, I want to talk about -- most 16 of what we have -- a lot of what we have done this 17 year is reacting to court cases that have come up. 18 Foremost among them was Jewish Community Center 19 versus Los Angeles County which changed the, uh -- 20 which ended up changing the Board's recommendations 21 on welfare claim process. And we recently went 22 through the -- the interested parties process on 23 that. Board staff did a great job of putting 24 together forms in a pretty short time frame, and 25 were very receptive and worked well with, uh -- 26 through the interested parties process to come up 27 with what I think would be some pretty good forms. 28 And I think those will be on your agenda later this 22 1 month. 2 So that's a lot of what we did. 3 Other court cases, Ellis versus Calaveras 4 County is particularly bothersome to Leslie Davis in 5 Calaveras County. But it's also pointed out some 6 contradictions in the tax code, some rec- -- 7 legislation that will be recommended this year to 8 kind of clean up the tax code and make it clear that 9 percent complete construction on a lien date does 10 not create a base value. We're hoping to get that 11 through to avoid future confusion. 12 Also, one of the -- one of the best, uh -- 13 one of the things I did at the very beginning, I 14 thought I was being really clever and being 15 administratively -- administratively efficient was 16 disbanding the Possessory Interest Ad Hoc Committee. 17 But there've been a number of things, including 18 Seibold versus Los Angeles County, that have come up 19 regarding possessory interests. And Brian Donnelly 20 reported that he may be bringing something to the 21 Standards Committee tomorrow regarding possessory 22 interests. So it may be my last act as a Standards 23 Chair this year to recommend reinstating the 24 Possessory Interest Ad Hoc Committee. We'll see. 25 We'll see what happens. 26 There are some -- there are some other 27 things on the horizon for Standards, including some 28 of the things that the voters might do in November. 23 1 As interested -- I know that this has been a major 2 topic in our county and I think counties all over 3 the world -- all over the state, and probably even 4 at the state level of wrangling with what they're 5 going to do on marijuana legalization. 6 We're not directly affected by some of the 7 sales tax concerns on that, but it may come up in 8 our Williamson Act valuations. I know that the 9 Department of Conservation has identified medical 10 marijuana as a compatible use under the Williamson 11 Act and there's no reason to believe that they 12 wouldn't consider regular cultivation of 13 recreational marijuana as a, uh, compatible use 14 also. I know they're -- that's generally an annual 15 crop and we wouldn't be concerned about the, uh -- 16 generally on the plants themselves, although it may 17 impact rents on Williamson Act land and therefore 18 affect the values. 19 There is some discussion about existing 20 mother plants that people use; those would be 21 perennials. I don't know if we'd consider those 22 growing improvements or not, but it's something that 23 we may have to face. 24 So, that was, um -- as one assessor said, 25 "Sounds like a smoking hot issue." So, at any 26 rate -- 27 The, uh -- that is pretty much the wrapup 28 on the year. It's been a lot of, uh -- a lot of 24 1 work, again, with staff and reacting as much as 2 acting. And I think that's kind of the role of the 3 Standards Committee is to make sure that when things 4 come up that we're responding appropriately, working 5 with Board staff to, uh -- to make sure that the 6 law's applied fairly and accurately across the 7 state. 8 MS. SPEARS: Thank you. And -- 9 (Applause.) 10 MS. SPEARS: Unfortunately, our Chairman, 11 our Legislative Committee Chairman for the last two 12 years, Assessor Tom Bordonaro will not be here 13 today. I know that some of the Legislative 14 Committee Members are very interested in talking to 15 the Board Members at the breakout sessions. And so 16 we will definitely have some coverage on that. But 17 we may have worn Tom out a little bit. So that was 18 two years of pretty heavyduty lifting on some 19 issues. 20 So we certainly appreciate his efforts. 21 Hope to see him later in the conference, but he was 22 unable to -- to attend this meeting. 23 MS. MA: So thank you very much for your 24 reports. This has been very, very helpful just to 25 get a snapshot of some of the issues. And I'm just 26 going to make a couple of comments, and perhaps the 27 other Members would like to, before we go to our 28 next session. 25 1 Courses. It's great to hear that, you 2 know, we're working on more courses. That's one 3 thing I heard from the assessors, especially those 4 in kind of the far rural counties, how hard it is 5 for them to get the necessary training, so to the 6 extent that we are doing more on the web and making 7 it available. 8 And I know even in our department, the 9 folks who want to promote need to take certain 10 courses. And when those courses aren't available, 11 they are not able to continue and -- in their career 12 advancement. So we have been really working on 13 making it more available. And also, you know, some 14 other options perhaps if we can't provide in-person 15 training, that perhaps, you know, there's other 16 options, working with other universities so that 17 people could get the training that, um -- that they 18 need. 19 We're also very active in updating our 20 forms and publications, as well as our regulation 21 changes, especially when it's confusing, right, to 22 our taxpayers. But if there are any forms and -- 23 and issues that, you know, we need to address, you 24 know, please bring it forward and we are working 25 diligently to try to make those changes as soon as 26 possible versus, you know, dragging it through a 27 process, stakeholders, meetings. I mean I think if 28 it needs to be changed, let's figure out how to 26 1 change it, you know, quickly, so we're all on the 2 same page. 3 Prop 64 obviously is -- is looming out 4 there, whether cannabis legalization is going to 5 pass or not. Many of you know that we have been 6 struggling with the cash payments since this 7 industry is not legally able to bank and use the 8 banks and credit unions like everybody else. And we 9 have really, really been trying to figure out a 10 solution to remove all of the cash coming to our 11 offices. 12 That's probably going to be a concern for 13 all of you as people, you know, may have to come and 14 pay certain fees to your offices in cash. We're 15 more than happy to work with those who are 16 concerned, especially in certain counties, about the 17 amount of cash that may come in if Prop 64 passes. 18 And so we just had a meeting with David and Tim 19 Morland and Seth and Joey. They're always 20 participating in different cannabis conferences 21 around the state and that's the one big elephant in 22 the room is, you know, banking, access and the 23 amount of cash that's out there. 24 I think -- oh, also, the Possessory 25 Interest Ad Hoc Committee, yes, I would also 26 recommend reestablishment. One of the issues when I 27 went around to talk to the fairs is this possessory 28 interest. And the fairground managers, you know, 27 1 put it on our radar that they didn't feel like this 2 fee -- sometimes they would have to go back and 3 collect from their vendors, you know, many months 4 later, sometimes years later and it's not that much 5 of an amount. And as I went and spoke to the 6 assessors in my district, many of you also said 7 it's -- it's sometimes very small, it's trivial, the 8 amount of time it takes to administer this fee and 9 go after all these folks is not really worth it and 10 we'd rather just get dinged on our, um -- you know, 11 our report versus allocate the amount of 12 resources. 13 So I would really like to work on 14 legislation this year to see how we can make it 15 easier for not only the assessors, but the people 16 who are supposed to be charging their vendors this 17 possessory interest. So that is something that I am 18 interested in. So, thank you for bringing that up. 19 Ms. Harkey. 20 MS. HARKEY: Hi. Thanks -- thank you very 21 much for your comments. It's interesting to hear 22 what you've been working on over the year. And we 23 have been, you know, up to here in legislation as 24 well. There's a lot going on. And a lot that the 25 Board has to review and try to implement. 26 And as Ms. Ma, our Chairwoman, hit on was 27 primarily the cash payments and how we're going to 28 monitor this marijuana tracking system. A lot of 28 1 what's been done with it has been done at the "How 2 to write the policies." And so I think we're going 3 to be caught in a bureaucratic policy writeup just 4 to get the policies in place by the deadline. But 5 I'm not so sure that the implementation is behind 6 it. 7 So we've been working to try to be sure 8 that the Board is included along the way, because 9 each group seems to have its own little -- little, 10 uh, duty with regard to regulation. And the Board 11 will be, you know, probably tasked with a lot of 12 administration and collection of the taxes and -- 13 and distributions and we want to be sure that we're 14 capable, able. And especially since we've got this 15 new CROS system that we're implementing, we need to 16 have -- to be able to -- 17 Our CROS is our new -- our new computerized 18 system that's going to bring us up into the 21st 19 century, we hope. It's supposed to be really, 20 really, you know, a good -- a good computerized 21 system in a way that will help us because right now 22 we use old systems, uh, DOS systems, uh, paper. 23 It's -- it's a very -- you know, it's not -- it's 24 not the best, let's put it that way. And you have 25 to have experienced people, which we are losing 26 because they're retiring, that know all the codes so 27 they can go from one to the other. 28 So we are implementing this CROS program. 29 1 It's going to be really, I think, very, very 2 helpful. Any issues that you have with the Board 3 that are from any type of computer generation, you 4 may want to get your two cents in while we're -- 5 'cause we are -- we have contracted -- right? 6 MS. MA: Mm-hmm. 7 MS. HARKEY: Yes, we have contracted with a 8 firm that's going to be implementing the program for 9 us. 10 So, you know, we've got a lot going on. 11 And conformity and transparency are really, really 12 important. And so that's -- those are the things. 13 Taxpayers and -- they need to know what the State of 14 California's doing and how we're doing it; how they 15 can get their responses a lot sooner; how they can 16 get through their appeal processes; how they can 17 have a recourse through all of these processes. And 18 I look forward to working with all of you so that we 19 can just become a little leaner and meaner at the 20 state and -- and more, uh -- more -- more in 21 conformity. 22 MS. MA: Yeah. 23 MS. STOWERS: Yes, I wanted to follow up. 24 Last year's meeting there was a discussion about 25 property tax postponement and I didn't talk about 26 it. 27 So, we do have it. We are -- the 28 Controller's office managed that program. We are 30 1 accepting applications; we started in September. 2 Also, the Controller sponsored cleanup 3 legislation AB 1952 which did not pass. But I have 4 been informed that she is going to sponsor 5 legislation again next year. And that legislation 6 had three prongs to it: 7 Cleanup, just to make it easier to 8 administer, which is extremely important; 9 And then she also wanted to increase the 10 capital funding from twenty -- to $20 million, and 11 then for the cap to go back down to 15 million; 12 And then finally, she wanted to increase 13 the budget overall. 14 Like I said, it didn't pass, but our Leg. 15 Director is indicating that we are going to look for 16 an author again next Leg. session. 17 The other item I wanted to talk about was 18 Prop 64, whether it's medical or recreational 19 marijuana. And it's actually to Member Ma and Ms. 20 Harkey. I started to send you guys a text last week 21 because Hollywood has recognized the problem that we 22 have with this industry and them not being able to 23 be banked. 24 There was a show on, the new Lethal Weapon, 25 and they showed large quantities of cash being 26 transported, and guess what happened? They got 27 robbed. And then they showed all the problems with 28 this industry. And that until we can get them 31 1 banked, it's going to be a nightmare. 2 I didn't send the text because I thought I 3 might be violating Bagley-Keene. 4 MS. HARKEY: You can -- you can tell us to 5 watch a program. 6 MS. STOWERS: Yeah. 7 MS. HARKEY: We're not going to vote on 8 that program. 9 MS. STOWERS: But it was so timely. 10 MS. MA: Yeah. So, again, this is like one 11 of the biggest issues in our district. I think last 12 year we collected $14 million in cash. That's only 13 cash. Some of the industry is banked, you know, 14 through their other banking relationships. But 15 still, taxpayers did come in with $14 million of 16 cash into our 23 offices. 17 So we are working on solutions. David is 18 working with our bank, Bank of America, right now. 19 I know the Governor's office, business and oversight 20 in banking, also has another proposal. And, of 21 course, you know I've been talking about some sort 22 of state bank or depository where at least taxpayers 23 can, you know, deposit their money and pay their 24 taxes -- right -- easily, electronically, instead of 25 having to go around to all of our offices, you know, 26 with their cash payments. 27 So this is a huge, huge issue for us. Um, 28 and we will know in less than 30 days whether this 32 1 problem becomes bigger for us or, you know, we kind 2 of go back to trying to solve the existing problem. 3 MS. HARKEY: I would just -- I would just 4 like to say that all of you need to understand that 5 the cash -- cash in large quantities brings a 6 variety of risks, not in the least are to your -- 7 you know, if it's coming into your office, if 8 somebody's observing it, if you've got staff 9 members, uh, you know, it just -- it's -- it's a 10 magnet for criminal activity. 11 So to the extent we're doing medical 12 marijuana now at lower levels, you know, I think 13 we're able to function and work it out. But if this 14 goes full recreational, it's going to be huge. And 15 I know in my district we do not accept cash payments 16 because we're -- we have three offices: One in San 17 Diego, one in Irvine, and one in Riverside. And the 18 Riverside is in a mid-rise in the middle of the 19 city, you know, I mean, right across from the 20 Mission Inn. The one in -- in Irvine is in a 21 business park, um, you know, with heavy traffic, a 22 lot of people, you know, working and whatnot. It's 23 not anywhere where it's safe and secure. And I 24 think those are -- those are the issues. 25 And so if we end up getting -- having some 26 kind of facility with some kind of bank which seems 27 it might be difficult for them because, you know, 28 they're subject to federal laws that still have this 33 1 classified as an illegal substance. 2 Um, we still, um -- you know, we still may 3 have to look at maybe some off-site locations, armed 4 security, et cetera, and then maybe we can use some 5 kind of a coordinated effort. That's what I'm 6 looking at because I really don't want it coming 7 into our offices where we've got a couple hundred 8 people or people in and out. 9 So it's -- it's -- it's a -- it's an 10 interesting case, interesting case. Thank you. 11 MR. SHATARA: Just wanted to echo the -- 12 wanted to echo the, uh -- the comments of the Board 13 Members earlier, the importance of uniformity and 14 conformity and issues like the JCC decision that is 15 changing the forms. We're committed to facilitating 16 these changes that are going to help assessors. And 17 we're basically here just to get your feedback and 18 to make these -- make these changes work for 19 everybody. 20 So we're here to listen. 21 MS. MA: And I'd also, um, like to just let 22 you all know we all have newsletters that we send 23 out to our constituents. So to the extent that you 24 would like folks to know about any new law changes, 25 any new forms, um, any other issues that they, you 26 know, should be conforming to or knowing about, you 27 know, please feel free to utilize our offices to get 28 that information out. 34 1 The BOE also has a centralized email system 2 for anyone who is registered with us, either as a 3 retailer or a wholesaler, that we can also send out 4 information to taxpayers. 5 And I'd also like to recognize Rob 6 Grossglauser. I saw Rob here. Rob also, I worked 7 very closely with Mr. Cook on legislation. And so 8 it's great to see you here, Rob, as well. 9 Any other questions from the audience 10 maybe? Otherwise, we will adjourn for now, and then 11 we will be going into our breakout sessions in about 12 15 minutes. 13 There's Northern California Assessors' 14 Association will be in Carmel Room 1, and I will be 15 in there with Michele Brown from Mr. Runner's 16 office, and I believe Ms. Stowers will be joining 17 us. 18 And then the second group is Bay Area and 19 Central Southern California Assessors' Association, 20 they will be in Carmel 2. And Ms. Harkey and 21 Mr. Shatara from Mr. Horton's office will be in that 22 room. And then we will flip, um, the Members going 23 into the other room. 24 So, we will see you in 15 minutes. Okay. 25 Thank you. 26 ---oOo--- 27 28 35 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, Kathleen Skidgel, Hearing Reporter for 8 the California State Board of Equalization state 9 that I transcribed from recorded audio, to the best 10 of my ability, the proceedings in the above-entitled 11 hearing; and that the preceding pages 1 through 35 12 constitute my transcription of the proceedings. 13 14 Dated: November 4, 2016 15 16 17 ____________________________ 18 Kathleen Skidgel, CSR #9039 19 Hearing Reporter 20 21 22 23 24 25 26 27 28 36