1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 REPORTER'S TRANSCRIPT 7 JULY 24, 2018 8 9 10 ITEM K1 11 EXECUTIVE DIRECTOR'S REPORT; 12 ITEM K1.1 13 ORGANIZATIONAL UPDATE 14 15 16 17 18 19 20 21 22 23 24 25 26 27 REPORTED BY: Jillian M. Sumner 28 CSR NO. 13619 1 1 P R E S E N T 2 3 For the Board Honorable George Runner Equalization: Chair 4 Honorable Fiona Ma 5 CPA, Vice Chair 6 Honorable Jerome Horton Third District 7 Honorable Diane L. Harkey 8 Fourth District 9 Yvette Stowers Appearing for Betty T. 10 Yee, State Controller (per Government Code 11 Section 7.9) 12 Joann Richmond Chief 13 Board Proceedings Division 14 For Board of Equalization Staff: Dean Kinnee 15 Executive Director 16 17 ---oOo--- 18 19 20 21 22 23 24 25 26 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 JULY 24, 2018 4 ---oOo--- 5 MS. RICHMOND: Our next item is Item K, 6 Other Administrative Matters; K1 is the Executive 7 Director's Report; K1.1, we have the Organizational 8 Update. 9 MR. RUNNER: Mr. Kinnee. 10 MR. KINNEE: Good morning, Chairman Runner, 11 Honorable Members. I'm Dean Kinnee, the Executive 12 Director of the Board of Equalization. 13 This month's report updates on the following 14 organizational topics: 15 BOE's Sacramento offices' consolidation 16 plans; July 9th stakeholders meeting with the State 17 Controller; and Board Member staffing. 18 The planning activities to consolidate our 19 headquarters in all of the Sacramento offices into 20 one facility in Natomas continue. 21 For the sake of providing context about 22 process, the Department of General Services has a 23 broad range of responsibilities; one of which is its 24 Real Estate Service Division that offers real estate 25 and property management service to state agencies. 26 The Real Estate Service Division assists 27 state agencies with space planning, lease 28 construction, and interior design services. The 3 1 current planning phase involves documenting all of 2 BOE Sacramento employees and their classifications to 3 determine employee office and work space needs, 4 documenting all the operational activities to 5 determine space needs for conference and training 6 rooms, office supplies, and equipment storage, and 7 other such matters. 8 The planning also covers space needs for 9 Board Member Sacramento offices, including addressing 10 needs to avoid any Bagley-Keene issues. Initial cost 11 estimates are expected to be available once the 12 analysis of all the above items is completed. 13 Along with the space-planning activities, 14 DGS handles construction phase, including working 15 with property owners to get bids for reconstructions 16 needed to accommodate our relocation and 17 consolidation. 18 DGS is estimating a four- to six-month 19 construction period following securing permits and 20 everything. So after we work through everything, 21 then they pull permits. It'd be four to six months 22 for a build out. This timeframe lines up with the 23 expiration of leases for BOE's downtown offices. 24 Concurrent to these construction and 25 relocation activities, we are working with the 26 Department of Finance regarding our budget and 27 funding to cover the cost. 28 This update is a high-level summary of the 4 1 activities. We'll provide updates as the process and 2 activities continue. 3 Leases for current district offices' space 4 will remain in place for now. The newly elected 5 Board Members will occupy the existing district 6 office initially until the new locations are selected 7 and leases established. 8 Regarding the July 9th stakeholders meeting 9 with the State Controller, on July 9th a group of 10 private and public sector stakeholders were invited 11 to meet with State Controller Yee. The meeting 12 provided a form for stakeholders to share their 13 concerns about the results of AB 102, the Taxpayer 14 Transparency and Fairness Act of 2017, and to offer 15 their suggestions to tax agency services. 16 The state agencies in attendance were the 17 BOE, FTB, CDTFA and the OTA. The stakeholders found 18 the discussion helpful and look forward to subsequent 19 meetings and opportunities to provide ongoing input. 20 In regards to the BOE, there was, you know, 21 discussion. "Let's not forget the BOE in all this 22 and focus on CDTFA and OTA. And let's make sure the 23 BOE is kept whole." And we addressed our shortfalls 24 in areas. So that was raised by interested parties 25 at that meeting. 26 And then finally, Members, regarding the 27 Board Member staffing matter as you'll find in 28 Provision 4 of SB 840, the Budget Act of 2018 will 5 1 meet with you individually next week to discuss the 2 specific staffing and personnel matters for your 3 office. 4 Due to the confidentiality of personnel 5 matters, I won't make any further comments at this 6 time on this matter. But we will be meeting with 7 your offices next week. 8 And that concludes my remarks. I'm happy to 9 answer any questions. 10 MS. STOWERS: Madam Vice Chair. 11 MS. MA: Ms. Stowers. 12 MS. STOWERS: Thank you. 13 Okay. Let's start with item one, 14 consolidation of the BOE office. 15 MR. KINNEE: Mm-hm. 16 MS. STOWERS: So this consolidation, I 17 believe you spoke about it last month, and that was 18 moving the Executive Office and that team, Board 19 Proceedings, which is currently at the -- 20 MR. KINNEE: 621. 21 MS. STOWERS: Thank you. 22 Building on Capitol, moving all that over to 23 Natomas where the Property Tax Division is and some 24 other CDTF staff. 25 Has there been a study -- in addition to 26 moving the Board Members' offices, their Sacramento 27 offices over there, has there been a study by DGS to 28 validate this movement, and that that's the best 6 1 place for them to be? And is it normal or normal 2 practices to have such a study? 3 MR. KINNEE: We've asked if there's a study 4 at a meeting awhile back, and asked to see those if 5 they've done any. We have not seen any such 6 studies. 7 MS. STOWERS: That's -- that's concerning. 8 With respect to the Board Members' 9 Sacramento offices, you said they're addressing the 10 Bagley-Keene Act as well. How are they addressing 11 that? Are they taking into consideration that 12 these -- the Members are elected officials, and they 13 do conduct business? And some of that is 14 confidential. And what one Member is doing should 15 not and cannot be disclosed to another. 16 Basically, I have some concerns that the way 17 the offices for the Members may be designed, they may 18 be sharing a common office space, a reception area. 19 They may be sharing a common law, and, you know, 20 walls are thin. And there could be some issues there 21 where not wanting to hear what another Member's 22 talking about. But just in that whole general 23 vicinity -- facility, I just have some issues 24 there. 25 MR. KINNEE: Correct. We've pointed that 26 out numerous times in the initial plans we saw. We 27 said we think it was problematic and -- and poses 28 problems with Bagley-Keene. 7 1 So we've pointed it out, and we continue to 2 point that out -- that concern out of ours. 3 MS. STOWERS: Has DGS considered having the 4 Board Members' Sacramento offices located here some 5 place downtown Sacramento on the Capitol corridor? 6 I mean, this is, you know, where Members, 7 when they're in Sacramento, will be conducting 8 business. Whether they're meeting with other elected 9 officials or meeting with other representatives, that 10 generally takes place here. 11 I'm just having a hard time understanding 12 why they would want the Members to be away from where 13 they need to conduct business at. 14 MR. KINNEE: We've raised that possibility 15 to them. I think it might be the initial ones that 16 had everyone in one Sacramento office. And I think 17 when you look at this most recent Budget Act, maybe 18 it loosens things up a little. It had everyone in 19 one BOE -- at the BOE headquarters -- 20 MS. STOWERS: But the 2017 -- 21 MR. KINNEE: -- as it were. 22 MS. STOWERS: -- Budget Act basically 23 said -- 24 MR. KINNEE: And I think that was viewed as 25 notwithstanding all our letterhead and everything is 26 450 N Street. I think people viewed the Natomas as 27 our headquarters, and, therefore, everyone would be 28 there. 8 1 But I think there's -- the language is such 2 that there might be some flexibility to allow Board 3 Members to stay downtown. And we're in discussions 4 about that. 5 MS. STOWERS: Yeah. Because I thought the 6 2017 Budget Act required for the Board Members, as 7 their Sacramento leases expire, to move into a 8 state-owned facility as opposed to in Natomas, if 9 not -- 10 MR. KINNEE: I think there was some language 11 in that, but now I don't think that's in the 12 current -- 13 MS. STOWERS: That's not in the current -- 14 so the prior Budget Act is not controlling to the 15 current Budget Act? It just -- it's year by year? 16 MR. KINNEE: I'm not certain on that. 17 MS. STOWERS: Has the Department of Finance 18 weighed in yet on the cost to move? Is it -- 19 MR. KINNEE: No, we have a meeting 20 scheduled. Ms. Fleming and I have a meeting with 21 Finance to discuss the move. 22 MS. STOWERS: And as far as your day-to-day 23 operation, is DGS looking into the BOE's operational 24 needs in order to have a mail room and printers and 25 all other -- 26 MR. KINNEE: We've identified all those 27 adequate conference rooms and a training room for 28 staff. So we've identified that. 9 1 We've raised the issue of what will we do 2 for a Board Hearing room. So we've raised all those, 3 and information we've pushed over to DGS. 4 MS. STOWERS: Okay. I'll stay with that 5 topic first. I have other comments. 6 MR. RUNNER: Yeah, I have some questions on 7 the topic also. 8 MS. HARKEY: I do, too. 9 MR. RUNNER: Yes. Ms. Harkey. 10 MS. HARKEY: Well, I was just thinking, you 11 know, we have boards of supervisors, we have city 12 councils. They, you know, have a way to deal with 13 all of this without either Brown Act or Bagley-Keene 14 violations. And I think that might be the model for 15 us. 16 But I do believe that -- I know that the 17 Orange County Board of Sups, and also in San Diego, 18 you go up to one floor, and the reception area for 19 each supervisor is different. You know, so you don't 20 go into another supervisor's area. 21 And I don't know how much space is available 22 out in Natomas. I do tend to agree that being 23 downtown is probably better for Board Members. 24 Because if they transact business, that's surely 25 where it is. 26 And I do -- I do recall that the original 27 Legislation said we had to move to 450 N regardless. 28 And I think that now, you know, things are calming 10 1 down and realizing that that's probably not the best 2 idea. 3 But I do think there's a way to do this. 4 And, you know -- but I, you know -- I have no 5 objection, surely, to Members having a separate 6 office. But, you know, just a reception area, a 7 couple areas, and then, you know, directly to the -- 8 to the Board Member would be, I think, the way it 9 needs to be set up. 10 So if Natomas has that availability when you 11 look at it. And whatever is cost-savings, of 12 course. 13 MR. RUNNER: I -- just in regards to the 14 issue of -- so Board Members coming will have two 15 offices; one in Sacramento, and one in their 16 district. Their staff will then be distributed 17 between those two offices. 18 So I guess my question is, how do we know 19 how to -- much space to work in those offices, if we 20 don't know the staff distribution? 21 Because I think the size of offices is a -- 22 is a formula driven by DGS. So, I mean, in theory, 23 you could have, you know, Members that have one or 24 two up here in Sacramento, and four down in a 25 district. And so, therefore, their district office 26 has a different need than their Sacramento office. 27 So I guess in the design, I don't know how 28 that's playing out. Or just play -- you just decided 11 1 you're going to go with the maximum space, and then 2 it goes -- it falls down from there? 3 MR. KINNEE: Correct. We know there will be 4 six staff. But the distribution between district and 5 headquarters, we don't know. 6 MR. RUNNER: So you just prepared for -- 7 MR. KINNEE: Yeah. 8 MR. RUNNER: -- the number at one place, and 9 then whatever falls off goes in another -- 10 MR. KINNEE: Right. Correct. 11 MS. HARKEY: You could always add a cubicle. 12 You know, cubes work. 13 MR. RUNNER: Okay. Yes. 14 MS. STOWERS: I actually -- on this topic, I 15 think it would be really helpful if we could invite 16 Department of General Services to come and do a 17 presentation on this plan move. 18 Because I -- there's -- I -- there's a lot 19 of questions here. And I realize that you're just 20 receiving what they're saying to you. And -- but -- 21 MR. KINNEE: We'll talk to them. 22 MS. STOWERS: If you could talk to them and 23 see if they could come -- 24 MR. KINNEE: I've got to believe Mr. McGuire 25 would love to come back here. 26 MS. STOWERS: -- down to the August meeting. 27 MR. RUNNER: We'll -- we'll work -- we'll 28 work with the Executive Director in regards to some 12 1 future agendas to see how that -- 2 MS. STOWERS: See how that works. 3 MR. RUNNER: -- maybe could work out. 4 MS. STOWERS: The other topic you mentioned, 5 the Controller state tax holder meeting we had on 6 July 9th. 7 And I do want to thank you, Mr. Kinnee and 8 Ms. Fleming, for participating. We asked you. We 9 didn't summons you down. You provided some very 10 useful information. I must admit it that you guys 11 were the shining star. Because you had handouts for 12 the people to follow along, and it was very helpful. 13 For -- I think -- it was a closed meeting. 14 It wasn't a public meeting. But the topic was very 15 helpful. And just seeing, like, a check-in, where 16 are we a year later since AB 102. 17 And the public had some really useful 18 information that the department had BOE, CDTFA and 19 FTB took in and are following through to see how we 20 can further enhance the organizations. 21 We purposely did not include OTA as an 22 agenda topic, but they asked to come to the meeting 23 just to hear how things are going. We didn't include 24 OTA because they were in the middle of their own IP 25 process and updating their regulations and how 26 they're going to conduct business. 27 But there was some issues identified just 28 from that transition between November and December 13 1 2017 to January 2018 where the different departments 2 have agreed to take additional steps to close those 3 gaps. 4 So I just want to thank you, Mr. Kinnee, for 5 coming and providing your incite. 6 I want to thank you, the public, Mr. Aprea, 7 for coming to the meeting and standing up for BOE. 8 That was really important, too, to recognize that BOE 9 is a very important organization and really needs the 10 resources in order to function. And let's not lose 11 sight of that. 12 MR. RUNNER: Okay. 13 Any comment? 14 Okay. Mr. Kinnee, are you -- 15 MR. KINNEE: That concludes my remarks for 16 that portion. 17 MR. RUNNER: Okay. 18 ---o0o--- 19 20 21 22 23 24 25 26 27 28 14 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, Jillian Sumner, Hearing Reporter for 8 the California State Board of Equalization, certify 9 that on July 24th, 2018 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 14 14 constitute a complete and accurate transcription of 15 the shorthand writing. 16 17 Dated: April 8th, 2019 18 19 20 ____________________________ 21 JILLIAN SUMNER, CSR #13619 22 Hearing Reporter 23 24 25 26 27 28 15