1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 8 REPORTER'S TRANSCRIPT 9 JUNE 20, 2017 10 11 12 13 14 15 PROPERTY TAX COMMITTEE 16 17 18 19 20 21 22 23 24 25 26 27 REPORTED BY: Kathleen Skidgel 28 CSR NO. 9039 1 1 P R E S E N T 2 3 For the Committee: Jerome Horton Chair 4 Fiona Ma 5 Member 6 Diane Harkey Member 7 George Runner 8 Member 9 Yvette Stowers Appearing for Betty T. 10 Yee, State Controller (per Government Code 11 Section 7.9) 12 Joann Richmond 13 Chief Board Proceedings 14 Division 15 For Board of 16 Equalization Staff: David Yeung Chief 17 County-Assessed Properties Division 18 Bradley Heller 19 Tax Counsel IV Legal Department 20 Isaac Cruz 21 Senior Specialist Property Auditor 22 Appraiser Property Tax Department 23 24 ---oOo--- 25 26 27 28 2 1 INDEX OF SPEAKERS 2 SPEAKER PAGE 3 Peter Michaels Law Offices of Peter Michaels 7,8 4 Kristen Broyer 5 Avangrid Renewables 7 6 Cheryl Cramer Berkshire Hathaway Energy Co. 8 7 Madeline Manelski 8 Next Era Energy 7 9 ---oOo--- 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 JUNE 20, 2017 4 ---oOo--- 5 MS. HARKEY: Ms. Richmond, please introduce 6 our next item. 7 MS. RICHMOND: Our next item is the 8 Property Tax Committee. Mr. Horton is the Chair of 9 that committee. 10 Mr. Horton. 11 MR. HORTON: Thank you, Madam Chair. Thank 12 you, Ms. Bridges. 13 Property Tax Committee is hereby called to 14 order. We would ask the staff introduce the issues 15 and give a general review. 16 Members, this is basically an effort to 17 bring conformity to the 2006 legislation that was 18 passed relative to wind energy properties. 19 There has been a number of interested 20 parties meetings. Given the last committee 21 discussion, I thought I'd bring that out in front. 22 Also, in addition to interested parties 23 meetings, my compliments to the staff who has worked 24 diligently to engage all the parties subsequent to 25 the meetings. They've had numerous discussions with 26 all of the parties who I understand are in agreement 27 as it relates to the alternative that they are 28 supportive of. 4 1 Also, Members, there are three alternatives 2 before us, just for the purpose of identifying what 3 those are alternative are. 4 With that, we would ask that staff please 5 introduce the issues before us. 6 MR. YEUNG: Yes, Chairman Horton. You wish 7 to move with the wind energy first? 8 MR. HORTON: Yes. 9 MR. YEUNG: Thank you. 10 Hello, Property Tax Committee Chairman 11 Horton and Committee Members of the Board. My name 12 is David Yeung, Chief of the County-Assessed 13 Properties Division in the Property Tax Department. 14 With me is Mr. Isaac Cruz. 15 I bring before you today the proposed 16 guidelines for the assessment of wind energy 17 properties to provide county assessors, assessment 18 appeals boards, taxpayers and others interested in 19 the administration of property tax in California. 20 After receiving inquiries from county 21 assessors' staff and industry representatives 22 regarding the assessment of wind energy facilities, 23 the Wind Energy Working Group was formed. The 24 working group consisted of staff from three county 25 assessors' offices, representatives from three 26 energy-related companies and staff from the Board 27 Property Tax Department. 28 In addition to drafting the proposed 5 1 guidelines, the working group also drafted the wind 2 energy generation property statement, which was 3 adopted by the Board on January 17th, 2014. The 4 working group members from the county assessors' 5 offices and from industry also reached out to other 6 county assessors' staff and to other industry 7 representatives respectively. 8 The guidelines are a product of a 9 collaborative effort by county assessors, industry 10 and Board staff. The guidelines provide definition 11 and discussion on approaches to value and topics 12 relevant to the evaluation of wind energy 13 properties, including discussions on different 14 federal tax incentives available, property 15 purchase -- I'm sorry -- power purchase agreements, 16 and the California Renewable Portfolio Standards. 17 Most importantly, the guidelines prescribe 18 the treatment of the government incentives as they 19 relate to the assessment of wind energy property. 20 As a consequence, we believe there are no unresolved 21 issues remaining. Therefore, staff recommends that 22 the Board adopt Alternative Number 1. 23 I'm available to answer any questions you 24 may have and ask the Board to adopt the proposed 25 guidelines, Board assessment of wind energy 26 properties. 27 MR. HORTON: Thank you. 28 Members, we have several guests here with 6 1 us. I would ask that they introduce themselves for 2 the record. And then upon -- subsequent to the 3 introduction, we would have them speak in the order 4 in which they have introduced themselves. 5 We'll start off with Mr. Michaels. 6 ---oOo--- 7 PETER MICHAELS 8 ---oOo--- 9 MR. MICHAELS: Very well. My name is Peter 10 Michaels, and I'll just defer here to Ms. Broyer. 11 ---oOo--- 12 KRISTEN BROYER 13 ---oOo--- 14 MS. BROYER: Hi. I'm Kristen Broyer. I'm 15 property tax manager for Avangrid Renewables. And 16 we are second largest renewable energy or wind 17 developer in the United States or leader around the 18 world. 19 We have four wind farms in California and 20 another one currently under construction. And we 21 have valued all of the effort that's gone into this 22 collaboration and are supportive of getting 23 guidelines that will help in the evaluation of this 24 complex technology. 25 MR. HORTON: Thank you. 26 ---oOo--- 27 MADELINE MANELSKI 28 ---oOo--- 7 1 MS. MANELSKI: Good morning. I'm Madeline 2 Manelski from Next Era Energy Resources. Next Era 3 has a large portfolio of generating facilities in 29 4 states and Canada, and we are the largest owner and 5 developer of wind and solar projects in the world. 6 We have quite a bit of presence here in 7 California with our solar and our wind. And we're, 8 on behalf of Next Era, here to support the adoption 9 of the wind assessment guidelines. 10 MR. HORTON: Thank you. 11 ---oOo--- 12 CHERYL CRAMER 13 ---oOo--- 14 MS. CRAMER: I'm not sure if this one's on. 15 Oh. 16 I'm Cheryl Cramer and I'm with Berkshire 17 Hathaway Energy Company based in DeMoine, Iowa. 18 We have generation -- renewable energy 19 generation and rate regulated generation across the 20 United States. And I have been heavily involved in 21 the working wind group, and -- and we support the -- 22 support the approval of the guidelines. 23 MR. HORTON: Thank you. 24 Mr. Michaels, I see you moving the mic. 25 ---oOo--- 26 PETER MICHAELS 27 ---oOo--- 28 MR. MICHAELS: Just very, very briefly, 8 1 yes. 2 Ms. Broyer is here from Portland, Oregon. 3 She has a colleague with her, Aryn Hansen. 4 Ms. Manelski is from Juno Beach, Florida. So we've 5 got folks here from Iowa, Florida and Portland, 6 Oregon, probably most of the footprint of renewable 7 productivity here in the State of California. 8 I just want to specially also to 9 acknowledge and thank Isaac Cruz who has worked on 10 this project with us collaboratively for the last 11 probably three years. It has been a collaborative 12 effort and these are three of the most prominent 13 renewable, particularly wind energy, producers in 14 the state. But there are a number of other 15 companies that collaborate with us who likewise 16 support approval of these guidelines. 17 MR. HORTON: Okay. Mr. Cruz, would you 18 like to share anything with the Board? 19 MR. CRUZ: I think it'd be fair to -- to 20 thank the core working group, the folks that 21 participated from industry and also the assessors. 22 It's been a long effort, and I think we've come up 23 with a really good product and it will go a long 24 ways to equalizing the values for wind farms in 25 California. 26 MR. HORTON: Thank you very much. 27 Let me also thank Saba in my office who was 28 been intimately involved in this, throughout this 9 1 entire process, and extremely pleased that we have 2 been able to provide this industry some direction 3 after years of collaborating. 4 Discussion, Members? 5 Hearing none, is there a motion? 6 MS. MA: Move to approve Alternative 1, 7 staff recommendation. 8 MR. HORTON: Member Ma moves to approve 9 staff recommendation. 10 Is there a second, Members? 11 MS. STOWERS: Second. 12 MR. HORTON: Second by Member Stowers. 13 Objection, Members? 14 Without objection, such will be the order. 15 Thank you very much for appearing before 16 us. We made it. 17 MR. MICHAELS: Thank you for your 18 leadership. 19 MR. HORTON: Our second issue, Members, 20 Rule seven -- 370 and 370.5 changes, which is a 21 little bit shorter, and it just comports with the 22 statute. 23 Staff, would you please introduce the 24 issues? 25 MR. YEUNG: Hello, Chairman Horton, again. 26 With me here is Mr. Bradley Heller from our Legal 27 Department. 28 I bring before you today the proposed 10 1 amendment to Property Tax Rule 370, Random Selection 2 of Counties for Representative Sampling, and 3 language for proposed Property Tax Rule 370.5, 4 Random Selection of Counties for Survey or 5 Representative Sampling for Calendar Years 2016 6 through 2020. 7 Effective January 2016, Assembly Bill 681 8 changed the method in which the Board selects 9 counties to be surveyed and sampled. Rule 370 10 establishes a five-year cycle in which all counties 11 are to be surveyed, and prescribes a method in 12 selecting at least three counties per year in which 13 to perform representative sampling for their -- of 14 their assessments. 15 The amendment to Rule 370 provides that the 16 selection methodology does not apply for 2016 17 through 2020. Proposed Rule 370.5 prescribes the 18 new selection methodology to be used for those years 19 2016 through 2020. 20 Under the new methodology, the largest 10 21 counties will be surveyed and sampled as before. 22 However, counties 11 through 20, one county will be 23 randomly chosen to be sampled and one to be 24 surveyed. And for the remaining counties, three 25 counties will be randomly chosen to be surveyed and 26 two will be sampled, and two will be neither, will 27 get to basically (inaudible). 28 Staff -- staff with the Property Tax 11 1 Department initiated a project to amend Rule 370 and 2 to add new Rule 370.5 to implement, interpret and 3 make specific the amendments made by AB 681. 4 Board staff worked with the county 5 assessors, California Assessors' Association Ad Hoc 6 Committee on the survey program in drafting the 7 amendments to Rule 370 and the language for Rule 8 370.5. Interested parties were provided with 9 staff's proposed amendments and draft language for 10 the new rule on December 22nd, 2016 and invited to 11 participate in the rulemaking effort. 12 The only comment received was from Los 13 Angeles County in support of the new proposed rule 14 as written. As a consequence, we believe there are 15 no unresolved issues remaining. Therefore, staff 16 recommends the Board adopt Alternative 1. 17 I'm available for any -- I am available to 18 answer any questions you may have and ask for the 19 Board to initiate the rulemaking process for 20 Property Tax Rule 370 and 370.5. 21 MR. HORTON: Discussion, Members? 22 Hearing none, is there a motion, Members, 23 to adopt Alternative 1 to initiate the rulemaking 24 process? 25 MS. STOWERS: So move. 26 MR. HORTON: Moved by Member Stowers, 27 seconded by Member Harkey. 28 Without objections, Members, such will be 12 1 the order. 2 Thank you very much. Appreciate your 3 position. As well, thank the county assessors. The 4 ad hoc committee they established is working. 5 MR. YEUNG: Yes. 6 MR. HORTON: It's a -- it's a good process. 7 We're engaging through the process. I believe that 8 was established by Board Member Runner. And so it's 9 good to see that it is being effective and good work 10 is coming out of it. Thank you very much. 11 MR. YEUNG: Thank you. 12 ---oOo--- 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13 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 certify 9 that on June 20, 2017 I recorded verbatim, in 10 shorthand, to the best of my ability, the 11 proceedings in the above-entitled hearing; that I 12 transcribed the shorthand writing into typewriting; 13 and that the preceding pages 1 through 13 constitute 14 a complete and accurate transcription of the 15 shorthand writing. 16 17 Dated: July 25, 2017 18 19 20 ____________________________ 21 KATHLEEN SKIDGEL, CSR #9039 22 Hearing Reporter 23 24 25 26 27 28 14