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 L1 11 DISCUSSION OF AND PROPOSED CHANGES TO: 12 REGULATIONS 302, 13 THE BOARD'S FUNCTION AND JURISDICTION; 14 305, 15 APPLICATION; 16 305.1, 17 EXCHANGE OF INFORMATION; 18 305.2, 19 PREHEARING CONFERENCE; 20 AND, 323, 21 POSTPONEMENT AND CONTINUANCES 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: Henry Nanjo 15 Chief Counsel 16 Dean Kinnee Executive Director 17 David Yeung 18 Chief County-Assessed Properties 19 Division 20 Public Comments: Daniel C. Cederborg Fresno County Counsel 21 Roy Ulrich 22 Executive Director California Tax Reform 23 Association 24 Samantha Corbin Legislative Advocate 25 California Tax Reform Association 26 27 28 2 1 ---oOo--- 2 Public Comments Chuck Leonhardt 3 Cont'd: Plumas County Assessor President 4 California Assessors' Association 5 Larry Stone 6 Santa Clara County Assessor 7 Marcy Berkman Santa Clara County Counsel 8 Paul Dictos 9 Fresno County Assessor 10 Christina Wynn Sacramento County Assessor 11 Rich Benson 12 Marin County Assessor 13 Diane Brown Butte County Assessor 14 Don Gaekle 15 Stanislaus County Assessor 16 Jessie Salinas Yolo County Assessor 17 George Renkei 18 Los Angeles County Assistant Assessor 19 Leslie Davis 20 Calaveras County Assessor 21 Dawn Duran Administrator 22 San Francisco Assessment Appeals Board 23 Tom Parker 24 Los Angeles County Counsel Assessment Appeals Board 25 Dorothy Johnson 26 Legislative Representative California State 27 Association of Counties 28 3 1 ---oOo--- 2 Public Comments Samantha Corbin 3 Cont'd: California Tax Reform Association 4 Marc Aprea 5 Principal Aprea & Micheli 6 Mark Ong 7 Managing Director Independent Tax 8 Representatives 9 Cris K. ONeall Attorney 10 Greenberg, Traurig, LLP 11 Troy Van Dongen Chair 12 Marin County Assessment Appeals Board 13 14 ---oOo--- 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 JULY 24, 2018 4 ---oOo--- 5 MS. RICHMOND: Our next item is L1, 6 Discussion of proposed changes to Regulations 302, 7 The Board's Function and Jurisdiction; 305, 8 Application; 305.1, Exchange of Information; 305.2, 9 Rehearing Conference; and 323, Postponement and 10 Continuances. 11 And we do have several speakers on this 12 item. 13 MR. RUNNER: Okay. Bring those up. I'll 14 let Member Ma introduce this. 15 I was just thinking, though, we probably 16 should have put this together with our Annual 17 Assessors' Meeting. Because we've got a pretty good 18 representation out there. 19 MS. HARKEY: We get to see them more than 20 once. 21 MR. RUNNER: Okay. So I'll do these, and 22 you want to introduce the -- 23 MS. MA: Yeah. So thank you, Chairman 24 Runner, Members of the Board. 25 I sit on the Assessment Appeals Board as an 26 Alternate Member in San Francisco from 1995, probably 27 to about 2000. So I understand a little bit about 28 the Assessment Appeal Board role. And I also served 5 1 on the San Francisco County Board of Supervisors from 2 2002 to 2006. 3 So this has been an issue that I have been 4 interested in. And understanding that there are some 5 inequities in terms of what taxpayers see from one 6 county to the other kind of prompted us to be here 7 today and try to equalize. 8 That's our job, right? Since we are going 9 back to our constitutional function. 10 So, you know, I think I could go through the 11 chronology of events, if that is helpful. But on 12 September 28th, 2016, the California Alliance of 13 Taxpayer Advocates sent a letter to our Board with a 14 copy to the California Assessors' Association 15 bringing to our attention their concerns regarding 16 three categories: information exchanges; 2) improper 17 rejection of appeal applications, and, 3) continuous 18 hearing dates. 19 I think the California Assessors' 20 Association responded by asking CATA to work with 21 them first to resolve these issues before seeking 22 redress before this Board. 23 It is my understanding that CATA sought to 24 do so, unfortunately those discussions never really 25 materialized and none of the issues have since been 26 resolved. 27 CATA again wrote to the BOE in July 7th, 28 2017 stating that their property tax practitioners 6 1 have observed assessor and assessment appeal board 2 practices that are both unfair and inconsistent 3 between counties. 4 Under Government Code Section 15606 5 subdivision C states that the State Board of 6 Equalization shall do the following: 7 "Prescribe rules and regulations to govern 8 local boards of equalization when equalizing, and 9 assessors when assessing, including uniform 10 procedures for the consideration and adoption of 11 written findings of fact by local boards of 12 equalization as required by Section 1611.5 of the 13 Revenue and Taxation Code. 14 CATA on behalf of taxpayer members, again, 15 identified issues that fell into the same categories. 16 Information exchanges to improper rejection of appeal 17 applications and continuous hearing deadlines. 18 CATA testified before the Board of 19 Equalization on August 29, 2017 asking the Board of 20 Equalization to convene an interested parties 21 process. And that at the end of that process, that 22 we promulgate regulations to address these matters. 23 At that meeting, the Members of the Board of 24 Equalization directed staff to move forward with an 25 interested parties process, and do so in an expedited 26 fashion. 27 Further, Board Member Horton stated at that 28 meeting that there has not been thorough review of 7 1 the regulations governing the Assessment Appeals 2 Board process since the 1990s. 3 In the meantime, I don't believe that there 4 has been meaningful progress. There is an immediate 5 need to create uniformity between county assessors 6 and Assessment Appeals Board throughout the state of 7 California. Therefore, these regulations are 8 intended to clarify and support existing law, which 9 does not authorize Assessment Appeals Board or 10 assessors to deny taxpayers the rights to due 11 process. 12 And I understand that we have received 13 letters of support and also letters of opposition 14 from the assessors on certain aspects of the proposed 15 regulations. Since we have a Bagley-Keene issue, 16 we're not really able to meet and talk together as a 17 group and hear both sides. 18 I asked to have this public meeting so that 19 we, as a full Board -- or part of a full Board, can 20 kind of get to the bottom of this issue why we have 21 not really made any progress in two years. 22 So this is the purpose here today. And I 23 look forward to listening to all the input that you 24 all have. 25 MR. RUNNER: Okay. So I think the way we're 26 going to try to do this is we've got -- I've got 27 15 -- 16 folks, mostly assessors, who have -- have an 28 opposition view. And then I've got three others that 8 1 are more, I think, on the other side of the issue. 2 And so I just wanted to -- I'm not sure in 3 term -- and I've got a list from the assessors in 4 regards to the order. My question is, we're wanting 5 testimony not to be redundant. And so I would -- my 6 tendency is to limit time. But at the same time, I 7 want to be helpful to those of you who may be taking 8 the lead on this to give you more time. 9 So let me have -- Chuck, why don't you come 10 up first. And why don't you guys take this side. 11 And -- and you can take this side. 12 Chuck, I assume you're going to be kind of 13 quarter-backing this issue. So I'm -- you know, 14 we'll give you more time at that point and have 15 others add on. Does that work to your benefit? 16 MR. LEONHARDT: I think the Honorable Larry 17 Stone -- if he would join me as well. 18 MR RUNNER: Okay. That's fine. 19 MR. LEONHARDT: I think what -- what we're 20 gonna do is, we've tried to understand that you're 21 going to have time constraints. I think we've tried 22 to limit our comments -- 23 MR. RUNNER: Yeah. 24 That is a low chair, isn't it, Larry? 25 MR. LEONHARDT: -- to two to three minutes. 26 MS. STOWERS: Chairman. 27 MR. RUNNER: Yes. 28 MS. STOWERS: I'm sorry, assessors. But 9 1 before you guys speak on your position, I think it 2 might be helpful -- I mean, Member Ma talked about 3 the timeline of events -- 4 MR. RUNNER: Mm-hm. 5 MS STOWERS: -- and when this issue was 6 first brought to our attention in 2016. But as she 7 indicated, that no meaningful progress has taken 8 place since 2016. 9 I think it might be helpful if the 10 Department speak -- put on the record right now what 11 they have done since we -- 12 MR. RUNNER: Okay. 13 MS. MA: Yeah, that'd be helpful. 14 MR. RUNNER: Okay. That'd be great. That'd 15 be great. 16 Let me just work out how we're going to do 17 this, and then we'll have them come up before the 18 assessors speak. 19 MS. STOWERS: Okay. 20 MR. RUNNER: So we'll go ahead and let you 21 two gentlemen kind of take your time, go through the 22 issue. And then the others -- and hopefully you know 23 your order. 24 Do the members know their order? 25 MR. LEONHARDT: We know our order. And 26 I've -- 27 MR. RUNNER: Okay. If you guys could just 28 fill in. 10 1 And, ladies, could just fill in behind them 2 as they finish. 3 That way we don't have a lot of time -- 4 people coming and going. 5 And before we start, let's go ahead and hear 6 from the appropriate staff -- BOE staff who have been 7 dealing with this issue. 8 And I'll put you over on this side for this 9 time. 10 MR. YEUNG: Good morning, Chairman Runner 11 and Honorable Members of the Board. My name is David 12 Yeung. I'm the Chief of the County Assessed Property 13 Division and the Property Tax Department. 14 I'll give you a quick overview of staff's 15 actions since August 29th at the Board -- at the 16 August 29th Board Meeting, Ms. -- CATA brought up 17 these issues and the Board asked that we start an 18 interested parties process. 19 If you -- our first meeting was held in 20 December 18th, 2017. In that meeting, there was CATA 21 in attendance, CAA, the CACEO, which is the clerks of 22 the boards. 23 And the issues covered in that initial 24 meeting was the information exchange, the improper 25 rejection of assessment appeals applications, and the 26 continuous hearing dates. 27 In that meeting, we asked for parties to 28 submit comments. And we gave them till the January 11 1 19th. And we gave them one month to submit comments. 2 On the 19th, we received comments from 3 CalTax, CAA, CATA, Marine County, and the Law Offices 4 of Peter Michaels. At that time, staff took all the 5 comments and put them into a discussion document. 6 That document included 28 items of issue -- at issue. 7 It was -- it was sent to -- it was put on our Web 8 site and sent to interested parties. And we held our 9 first interested parties meeting in April 2015. 10 MS. HARKEY: 2018? 11 MS. MA: April -- what was the date? 12 MR. YEUNG: April 25th, 2018. 13 MS. MA: Okay. 14 MR. YEUNG: Staff held an interested parties 15 meeting to discuss issues related to local assessment 16 appeals. As anticipated by staff, the number of 17 issues and/or complexity meant that a second 18 interested parties meeting was needed. 19 So on June 28th of this year we sent out 20 another notice advising interested parties that we 21 would have a second interested parties to continue 22 the discussion on the 28th item discussion paper. 23 And that meeting is scheduled for August 24 16th of this year too. So we will have a second 25 meeting. There are still many issues -- substantive 26 issues to be -- to be discussed. 27 MS. STOWERS: So at that -- 28 MR. YEUNG: Yes, ma'am. 12 1 MR. RUNNER: Go ahead. 2 MS. STOWERS: Thank you. 3 At that April 25th first IP meeting, can you 4 kind of give us an idea of how long that meeting 5 took? How long was it? Was it our typical two-hour 6 meeting, or was it closer to five hours? 7 MR. YEUNG: No, it was -- 8 MS. STOWERS: Do you feel that all parties 9 had an opportunity to express their concerns? 10 Did -- did -- were you able to check off any 11 of the items that were identified in your discussion 12 paper? 13 And then finally -- or second -- almost 14 finally, clarify that -- did you provide a summary of 15 that meeting? And at the conclusion of that meeting, 16 did -- when you announced that there was going to be 17 another meeting to continue working through the 18 issues, did anyone have any objection to deferring 19 that meeting to late summer due to the workload 20 constraints of the assessors? 21 MR. YEUNG: Okay. I'll try to -- 22 MS. STOWERS: That's a lot. 23 MR. YEUNG: -- remember all the points. 24 No, the meeting was not a typical two-hour 25 meeting. It was actually quite long. It became very 26 evident that the issues at hand were complex. And 27 agreement was probably -- it's going to be something 28 that we need to work really hard in order to get to 13 1 agreement. 2 Our goal in those -- in that meeting was to 3 basically figure out which items we could address by 4 guidance, either LTA or handbook, which ones needed 5 rule amendments and which ones needed legislative 6 changes. And we were trying to put stuff into each 7 category. 8 We got through -- we got through probably a 9 little more than half, but not -- by no means, we 10 got -- we didn't get through all of it. 11 There were -- there were a couple items 12 there that we knew were going to be much bigger 13 issues than we could handle with the rest of the 28. 14 We've actually identified one that we probably needed 15 to bifurcate. 16 We announced a -- the need for a second 17 meeting, because we just didn't get through all of 18 it. The assessors asked that in order to accommodate 19 their duties in the turnover role, that we actually 20 have it after July when they need to turn in their 21 assessment roles. 22 And we were able to accommodate that. We 23 didn't have anybody there at that time that voiced 24 objection to that. 25 Our next meeting for August 16th, we've 26 actually scheduled it for most of the day. We start 27 at 9:30, and we have the room until 4:00. 28 MS. STOWERS: Which one? 14 1 MR. YEUNG: It's the -- it is -- 2 MS. STOWERS: It's still the same small 3 room? 4 MR. YEUNG: Yes, it is. It's -- but it's 5 the biggest we have. 6 MS. STOWERS: We giggle. I attended that 7 first IP meeting, and it was definitely a full house. 8 MR. YEUNG: Yes. 9 MS. STOWERS: Almost standing-room only. 10 And unfortunately, you know, that is where we 11 generally hold our IP meetings. 12 MR. YEUNG: Yes. 13 MS. STOWERS: But considering the issues 14 being raised, it really would be helpful if you had a 15 bigger meeting space. I know we can't knock down any 16 walls. That's not an option right now. 17 MR. RUNNER: Okay. 18 MS. MA: So what was the June 28th meeting? 19 MR. RUNNER: Member Ma. 20 MR. YEUNG: The June 28th wasn't a meeting. 21 The June 28th was when we -- when we issued our LTA 22 announcing the second interested parties meeting that 23 we're going to have scheduled for August 16th. 24 MR. RUNNER: Member Harkey. 25 MS. HARKEY: You know, it seems like I'm 26 looking at basically four or five changes, you know, 27 on this agenda, and not 28. So is it possible to 28 move forward with some of them, like ASAP and get 15 1 around to the rest that might be a little thornier at 2 a litter date? 3 There's just, you know, it seems like the 4 California Association of Clerks and Elected 5 Officials actually agrees with the CATA 6 recommendations with minor exceptions and some, you 7 know -- some leeway on some issues. They just 8 disagree that, you know, they're taking it out of the 9 IP process. 10 And so -- and I know the CATA folks are 11 attorneys and tax people. And so I've got two 12 recommendations here for at least getting some of 13 this done. 14 How do you respond to that? 15 MR. YEUNG: There are -- some of the items 16 we may be able to find some common ground in. But 17 many of the items are actually related. They have to 18 do with the whole -- the appeal's process as a whole. 19 So I don't -- I'm not necessarily opposed to it, but 20 it's just part of a much bigger issue that we're 21 looking at. 22 MS. HARKEY: Okay. I guess I'm just a bit 23 confused. Because these seem to lead to, you know, a 24 process for requests for information. And another 25 one is the applications can't just similarly be 26 denied. I think -- I think we've got a lot of issues 27 here that just may be some simple clarification. 28 Now, I know the assessors have a lot of 16 1 other -- maybe other issues that they'd like to 2 address. But I think if we could get some progress 3 on these, you know -- I just think trying to take so 4 much, an interested party -- and I know that we -- 5 last year was a time when we were going through a 6 whole re-org, staffing, trying to find an ED, trying 7 to find people to staff up the Board. So it was kind 8 of a hurdle to get anything going. 9 And I'm not sure we still have a full-on 10 ability to conduct IP -- or interested parties. 11 Which is why we had suggested initially to bring them 12 before the Board and have open hearings on these 13 issues. 14 But I do think it might be good. And maybe 15 the Executive Director could opine to break these 16 into manageable pieces and just get some of the stuff 17 through that pertains to the taxpayers and some of 18 the issues that they might be having. So that we can 19 equalize at least a process somewhat here at the 20 Board. 21 MS. STOWERS: Mr. Chair. 22 MR. RUNNER: Member Stowers. 23 MS. STOWERS: I just kind of want to talk 24 about, you know, the categories. The four categories 25 or three categories that were identified by CATA. 26 And their -- we can talk about later some of the 27 proposed changes to the rules kind of fall in those 28 four broad categories. 17 1 But when you look at the categories in the 2 discussion document that staff did prepare, it's 3 difficult and would be ill-advised to separate the 28 4 items from the categories. Because they all 5 interrelate. 6 I mean, the first category, request for 7 taxpayer information, there was about 14 items within 8 that category alone. And it would be difficult to 9 just adopt a rule that says how an assessor can 10 request information under 441(d) without analyzing 11 all of the other code sections that interrelate. 12 And so I believe that's why staff is saying 13 there are 28 items. And that's what they were trying 14 to reach. Some kind of consensus amongst the parties 15 on how business should be conducted. 16 It's extremely complicated. When you look 17 back when the last time that the Assessment Appeals 18 process was evaluated and rules was put in place. 19 That goes back to 1998, 1999. 20 MS. HARKEY: Which is why we have an issue. 21 MS. STOWERS: Yes. Which is why we have an 22 issue. But to -- to -- to just cherry pick certain 23 items without looking at the entire big picture, in 24 my opinion, would create a problem overall. 25 I know we want some resolution. And, you 26 know, we want it as fast as possible. Because we 27 want taxpayers' rights to be protected. But to -- to 28 push ahead without analyzing everything would create 18 1 a problem. 2 MR. RUNNER: Member Ma. 3 MS. MA: Well, I would just advise since I 4 was not in -- privy to the hearing and listening to 5 these 28 issues, I kind of would like to hear what 6 everyone has to say here. 7 MR. RUNNER: Right. 8 MS. MA: And, you know, maybe there's gonna 9 be areas where folks do agree. 10 I mean, my concern was seeing different 11 letters from assessors with different dates, 12 different requirements, different responses, differed 13 timelines. That didn't sit well with me, you know, 14 two years ago. 15 And I still don't think that's right that 16 each county has a different rule in terms of 17 timelines. That was kind of one of my main concerns 18 that I thought would be easier to address. I'm not 19 sure why each county has different, you know -- I 20 mean, we saw six or seven letters, and they were all 21 different. I thought that would probably be one of 22 the easiest things. But I'm open to listening -- 23 MS. HARKEY: Should be. 24 MS. MA: -- listening to, you know, what -- 25 you know, where the common -- where people agree 26 with, and perhaps what the larger issues are. 27 MR. RUNNER: Yeah. I think we need -- I 28 think at this point we can hear from -- hear 19 1 testimony. 2 I think the timeline is obviously -- I mean, 3 the timeline getting to this point here before us and 4 the interested parties issues has created some of the 5 issue whether the, you know -- a bill introduction 6 has created some of the issues too. Which then has, 7 you know -- I think all those kind of fit together to 8 obviously be before us. 9 So thank you for the update. And I think 10 we'll just go ahead and start with the -- with the 11 assessors and the opposition of the issue. And 12 then -- and then we'll flip on over to the -- to the 13 support side. 14 MR. LEONHARDT: Good morning. Chuck 15 Leonhardt, Plumas County Assessor and President of 16 the California Assessors' Association. 17 Honorable Chair Runner and Honorable Board 18 Members, I thank you this morning for your time. And 19 I thank you for taking the approach that you're 20 taking on this issue. 21 I think one of the issues I gathered from 22 talking to some staff is that communication problems 23 may be part of this issue. And, as you know, I've 24 been to a number of your meetings this year. 25 When you talked about bringing items before 26 the Board in February, you may recall that my friend 27 Mr. Aprea was supportive of that idea. And if you 28 recall my comments, I indicated that I wasn't opposed 20 1 to the idea. But, you know, as long as the Board was 2 committed to making sure that the issues that came 3 before them were properly vetted by their staff and 4 their Legal Department. And I don't believe this 5 issue has been properly vetted at this point in time. 6 I believe that we all need to be invested in 7 the process to go through it. I remind the Board 8 that this last year has been a pretty rough one for 9 you, but it's been pretty rough for your staff too. 10 And AB 102 basically took all the Legal staff -- 11 virtually all of the Legal staff out of the Board as 12 far as the Property Taxes Department go. 13 And so it's made it difficult not only for 14 this process, but for other processes. And I think 15 that on behalf of the California Assessors' 16 Association, I would say that we are committed to 17 being part of the process in moving the process 18 forward and trying to find solutions where we can. 19 The fact is that some of the things that 20 CATA's asking for are things that they're asking to 21 take away rights that we've had for 100 years. And 22 there's gonna be things we're not going to agree 23 on. 24 MR. RUNNER: And are we gonna get -- I -- 25 part of the issue I'd like to make sure is we get 26 specific. Because, again, I think sometimes we have 27 these general discussion about, you know, what we'd 28 like in terms of, "We oppose," "We don't like the 21 1 change," "We've had this right for 100 years." 2 MR. LEONHARDT: Right. 3 MR. RUNNER: What are we -- I think at some 4 point -- 5 MR. LEONHARDT: And we have -- we have those 6 subject matters. 7 MR. RUNNER: Good. At some point we need to 8 get to that -- 9 MR. LEONHARDT: So I'll finish my preamble, 10 and then we'll turn it over to Mr. Stone. 11 MR. RUNNER: Good. 12 MR. LEONHARDT: And we'll kind of recount 13 the past, and then we'll deal with -- 14 MR. RUNNER: Good. Thank you. 15 MR. LEONHARDT: You know, as these issues 16 are -- I mean, they do need to be vetted by the 17 county clerks. They need to be vetted by, you know, 18 County Counsels, all the people that are affected by 19 these regulations and boards of equalization. And so 20 we need to have them all at the table. We can't just 21 make the decisions in this room. 22 I understand that it's been suggested that 23 CAA somehow violated the interested parties process 24 by initiating AB 2425. And the basis of that 25 legislation actually was part of the conversation we 26 had in the interested parties process. But AB 2425 27 is intended to modernize the message that assessors 28 and taxpayers can exchange information with one 22 1 another. 2 And let's be reminded the interested parties 3 process is adopted to vet Board promulgated rules and 4 guidelines. AB 245 does not pertain to BOE 5 guidelines or rules. It's the updating of the 6 Revenue and Taxation Code, and bringing it into the 7 20th century as to how we trade information. 8 Let it be further noted that CATA has had 9 the opportunity to meet with the Members and provide 10 input. 11 MS. MA: Who is that? Which Member? 12 MR. LEONHARDT: Berman, I believe. 13 And CATA has also tendered many of the 14 suggestions that they've provided to you for 15 discussion today to the Member. And at least at this 16 point they've chosen not to put it in the bill. But 17 that's -- you know, that's up to the Member to make 18 those decisions. And that's probably why we're here 19 today. 20 You know, I think as we look at this issue, 21 my main request -- the bottom line is that we need to 22 put this back in the interested parties process. 23 Maybe we need to provide more resources to the Board 24 staff to work on it. But it would be completely 25 inappropriate for this Board to adopt some 26 regulations without them being properly vetted. 27 In the interest of trying to provide you 28 with relevant information today, we've assembled a 23 1 group of assessors, County Counsels, clerks of the 2 Board, CSAC, and the California Tax Reform 3 Association to provide testimony. 4 And then Mr. Stone and I will be up here in 5 the front if you've got questions. 6 And with that, I'd like to turn it over to 7 the Honorable Larry Stone, Assessor of Santa Clara 8 County. 9 MR. RUNNER: And if I could have the others 10 that -- since you know your order -- step right up to 11 these chairs over here. So that you're prepared to 12 go after Assessor Stone. 13 There's room for three. 14 Okay. 15 MS. HARKEY: Nobody else wants to talk. 16 MR. RUNNER: No. 17 MS. HARKEY: There we go. Okay. 18 MR. RUNNER: We'll see. Okay. 19 MR. STONE: Yes. 20 I'm Larry Stone, County Assessor, Santa 21 Clara County. 22 The California Assessors' Association has 23 worked collaboratively with CATA prior to the 24 interested parties process. 25 Two years ago assessors formed an ad hoc 26 committee to work with CATA to address real concerns 27 regarding assessment appeals and requests for 28 information from taxpayers. 24 1 Assessors created specific guidelines for 2 all assessors, and many changed their practices. 3 CATA continues to complain about many practices that 4 no longer exist. 5 It was CATA who asked the BOE to create the 6 interested parties process. The first formal meeting 7 was held in April of this year. Significant progress 8 had been made on some very complicated issues. The 9 second meeting is scheduled for next month. 10 Suddenly without -- without consulting with 11 assessors, Member Ma proposed a rule circumventing 12 the interested parties process. A process that was 13 created by the BOE over 20 years ago. 14 What's the rush after only one IPP meeting? 15 Member Ma is abandoning the interested parties 16 process, not on merit, but because of politics. Her 17 term expires at the end of the year. 18 MR. RUNNER: I -- I -- I would prefer to 19 start hearing discussion on the regulation rather 20 than some opinion as to why a Member put it on the 21 agenda. 22 MR. STONE: Well, I think the process is 23 important. That's what I'm talking about. 24 MS. HARKEY: But these are personal, though. 25 These are personal. 26 MR. RUNNER: Yeah, I -- I -- I'd recommend 27 that you stay focused on the issues that are before 28 us. 25 1 MR. STONE: The -- the issue is, and it's 2 said by Member Ma, that recent information has shown 3 that several counties are postponing, delaying, and 4 denying appeal applications. That claim is blatantly 5 false. 6 CATA has repeatedly presented fabricated and 7 misleading information to support their invalid 8 claims. It is a blatant effort to deceive BOE staff 9 in the interested parties process. 10 You will hear from County Counsels and 11 others that the overwhelming content -- and this is 12 the most important part of this issue -- the 13 overwhelming content of this proposed rule is 14 contrary to existing law. State statutes always 15 trump BOE rules. Always. 16 So let's be clear, CATA has no general 17 interest in assessors accessing required information 18 necessary for accurate assessments of real and 19 business personal property. CATA's proposal is 20 intended to restrict assessors and their legal 21 authority to request information and data from 22 taxpayers. 23 If the BOE proceeds with adopting the rule 24 as proposed, California Assessors' Association will 25 file a Section 538 legal action against the BOE. And 26 I am very confident on this issue, we will prevail. 27 This conduct and behavior is precisely the 28 reason that the State Legislature and the Governor 26 1 stripped the BOE of most of its authority. 2 Thank you. 3 MR. RUNNER: Okay. 4 So we have right now County Counsel for 5 Santa Clara. 6 MS. BERKMAN: Good morning. Thank you. 7 My name is Marcy Berkman. I'm the County 8 Counsel for the Assessment Appeals Board in Santa 9 Clara County. We have three Assessment Appeals 10 Boards and five Legal Hearing Officers. And I've 11 been Board Counsel for seven years now. 12 And what that effectively means is that I 13 sit with them between one and three days a week, 14 every week. And more days than that we have special 15 set hearings which are for cases that will run more 16 than a few hours. And those could go anywhere from 17 one day to -- our longest one in the last year ran 22 18 days. 19 So of everyone in Santa Clara County and in 20 many places, I think I'm probably the person who most 21 sits with the Board and sees and understands the 22 reality of how procedures happen on a day-to-day 23 basis. 24 I participated in the first phone call -- 25 one phone call last fall. I understand a lot of 26 people were in the room in person. I was on the 27 phone. 28 And in the first interested parties meeting 27 1 that happened in April, I also attended by telephone. 2 My recollection is I think that went all the way 3 through the morning to 4:00 o'clock. 4 One of the things that concerned me, and 5 very, very much concerns my Appeals Board members, is 6 they take very seriously their constitutional 7 obligation to reach the correct value. Not the value 8 the applicant wants, not the value the assessor 9 wants, but the correct value. And the only way they 10 can do that is if the assessor has been able to get 11 the information they need responsive to the 441(d) 12 exchange -- the 441(d) process. 13 And applicants are frequently -- and their 14 agents -- especially those with agents -- frequently 15 reluctant to turn that over. 16 And one of the things that I personally 17 found very concerning, as did my Board Members 18 especially, were the opinions expressed by the agents 19 during the phone call that the assessors have already 20 taken their crack when they put the value on the 21 role, regardless of the quality of the information 22 they had to work with at the time. 23 And really the only thing the agents and the 24 applicant should have to deal with is providing 25 information to support the case that they want to put 26 on to lower their value. And that they should only 27 have to provide to the assessors information that 28 would support their case to lower the value. 28 1 And if they don't turn anything over, 2 there's always the 441(h) process to continue the 3 hearing if the applicant's agents then submit 4 something. 5 But the real issue is in that procedure, as 6 the agents would have it, they're not providing the 7 assessor -- information to the assessor that the 8 assessor can then use to present the other side to 9 the Board so the Board can get to the correct value. 10 And that's something that really is at the heart of a 11 lot of this proposed rulemaking. A lot of the 12 indicated issues is that viewpoint on they and their 13 applicant should not have to go through the work of 14 finding and providing to the assessor a lot of 15 information of coming to the Appeals Board. 16 We are very lucky in Santa Clara County. We 17 have procedures that work wonderfully, and things 18 work smoothly. We have a prehearing conference 19 process as the law provides for and allows. And 20 applicants, the assessor, the Appeals Board and the 21 clerks all have the power to request that something 22 be put on the prehearing conference agenda. 23 One of the items that you see most often on 24 those agenda even has its own category. And that's 25 for 441(d) compliance. And what happens in those 26 situations -- and you see it very frequently with 27 large applicants, and sometimes small applicants, 28 they'll come forward, the assessor will provide the 29 1 Appeals Board a copy of the 441(d) letter. And the 2 Appeals Board will ask the applicant, "Have you seen 3 this?" 4 Approximately 50 percent of the time the 5 answer from the agent or the attorney representing 6 the applicant is, "I haven't seen it." "I only 7 recently took over the case." "I have every faith my 8 client has this." "It looks standard to me." "Looks 9 very familiar." "I'm sure I can get the information 10 from my client and bring it to you in 60 days." 11 Now, these only come to the Board because 12 the assessor has brought -- been the one to put it to 13 the Board's attention that applicant never responded 14 to their 441(d) request. And this gets the 15 applicant's agent in gear and let's them know that 16 the applicant never let them know about it. 17 Approximately another 40- to- 50 percent of 18 the time, what we hear from the agent, "Yes, I've 19 seen this letter." "We're working cooperatively with 20 the assessor." "We've gotten them part of the 21 information or none of it. And we expect it will 22 take us whatever period of time to get the 23 information to the clients and get it to the 24 assessor." 25 Our Board then turns to the assessor and 26 says, "If they get you the information when they say 27 they will, how long until you're ready to go for 28 hearing?" 30 1 The assessor usually says 60 days or 2 something like that. And then everyone pulls out 3 their calendars, and they set a mutually agreeable 4 hearing date in which the applicant can be there with 5 any witnesses and experts they need. In which the 6 board room is available. 7 And our county finds this works really well 8 to provide due process to everyone, to keep things 9 moving along, and is very cooperative. 10 In the seven years I've been Board Counsel 11 there have been maybe two instances in which somebody 12 didn't want to turn something over, and there was an 13 actual dispute about what the assessor requested. 14 I believe in both cases those were agents in 15 Texas who just wanted to hold everything confidential 16 and not provide it to the assessor at all. And once 17 they were advised what California law was, there was 18 no problem. 19 And I think that there were two instances in 20 which an agent was saying, "My client doesn't have 21 that." And the assessor was saying, "That is just 22 not possible. They, of course, have this." 23 And to resolve it, the Board Chair asked, 24 "Would it be useful for the parties if applicant's 25 person most knowledgeable in their tax department 26 provided a declaration under penalty of perjury about 27 whether or not they have this?" 28 At which point in both cases the agent 31 1 either said, "It's just too much work to provide it, 2 we don't want to," or, "It's in a warehouse, and my 3 client would have to dig through the warehouse." 4 So it turned out that in both instances that 5 I can recall that this ever happened, the applicant 6 themselves actually probably had the document. 7 Either the applicant or the agent didn't want to go 8 through the trouble of looking with it. And all it 9 took was the question of, "Would a declaration under 10 penalty of perjury be helpful for that information to 11 suddenly come out?" 12 The one or two other times that I've seen 13 there has been an issue are with applicants who were 14 not represented by agents. Because sometimes you get 15 a small business owner or a small homeowner handling 16 their own case. And frequently the assessors 441(d) 17 letters and the best efforts to the assessors staff 18 are just Greek to them. 19 And in those cases the Board Chair very 20 patiently walks them through, "Well, what they're 21 asking for is," "A rent role is this kind of thing," 22 "And this is what it really means," "And maybe your 23 documents are this. Do you have anything that looks 24 like that?" 25 And then the applicant can say, "Yeah, I 26 have that. Now I know what you're talking about," 27 or, "No, we don't have those." 28 And when they are able to figure out with 32 1 the Board what is really being asked for, they're 2 able to say, "Oh, yeah, I have that. I can shoot a 3 PDF file to the assessor tonight," or, "It will take 4 me about two weeks to round that up and turn it in." 5 And so the applicants have been very 6 grateful about going through that process. But this 7 whole process is something that my understanding is 8 CATA wants to do away with and they're unhappy about. 9 One of my concerns also is this proposed 10 rule about not being able to dismiss cases. In Santa 11 Clara County, we don't dismiss for 441(d) 12 non-compliance. But if your applicant or your agent 13 just decides not to come to the hearing about the 14 441(d) status, they're dismissed for lack of 15 appearance. Just like anybody else would be for a go 16 case, a hearing on the merits. 17 And just like anyone else, they have the 18 ability to submit a request for reinstatement to the 19 clerk saying, "Hi. I just got the hearing date 20 wrong," or, "I missed my flight and please reinstate 21 us." And our Board tends to be extraordinarily 22 generous with the reinstatements. 23 MS. RICHMOND: Time's expired. 24 MR. RUNNER: Thank you. 25 Okay. Now we have the assessor -- 26 MR. DICTOS: Good morning, Board Members. 27 MR. RUNNER: -- from Fresno. 28 MR. DICTOS: Good morning, Chairman. 33 1 Good morning, Board Members. 2 My name is Paul Dictos. I am the first 3 immigrant to be elected to the Assessor's Office in 4 California, and I'm very proud of it. 5 I took over as the assessor eight years ago. 6 And at that time, the 441(d) was practically never 7 used. 8 Since I thought they use it, because I'm an 9 accountant, I know what I'm asking. We have a lot of 10 success. But we all had -- also had a lot of 11 surprises. 12 In my last 441(d) request of Fortune 500 13 company, I asked for the tax. And they said, "You 14 are crazy to get it." I said, "Why?" 15 "It's too big. 16 "Well, I have it." 17 So they said to me it was about two feet 18 thick. I was able to go through the tax with them 19 and found out, unbeknown to me, there was information 20 there that they would not disclosure to me. 21 This company had a Fresno County Inc. 22 Corporation filing tax. And that tax was very, very 23 important to me. And I came up, and I saved you guys 24 a lot of money. That was good for the taxpayers. 25 Now, CATA, they are lawyers and like to 26 twist the truth. I have to say that. They like to 27 maximize their -- their -- their bottom line. They 28 like to work less time to make more money. 34 1 So one of the major companies again hired 2 this CATA rep. And when I sent him my 441(d) letter, 3 he said, "Mr. Dictos, I didn't expect to work so 4 hard. I'm not going to do this." 5 So he withdrew. He did not do any good to 6 his -- to his client. 7 Another one, and a bigger company, Fortune 8 500 again. I was dealing with a rep for -- for six 9 months, and he was not communicating to -- to his 10 client what was being discussed. When -- when the 11 client find out what -- what he was not 12 communicating, they fired him, and they withdrew the 13 appeal. 14 I'm saying this, you want to limit the 15 441(d) request to within 20 days, it is impossible. 16 It took me six months to get the tax return, and then 17 another three months to go through it. So that's not 18 practical. 19 I would close by saying -- I will close by 20 saying one of my letters here. 21 Finally the change is presented to you for 22 due process (inaudible) will undermine our ability to 23 collect information essential to their properties 24 charged of our constitutional duties. And we 25 facilitate the falsification and under-reporting of 26 taxable property. 27 This is happening, Board. This is bad news 28 for our children and our families. 35 1 Attached, you will not approve any changes 2 to the property tax system that conflict with the 3 Revenue and Taxation Code and limit our ability to 4 work for the common good. 5 Thank you very much. 6 MR. RUNNER: Thank you. 7 Thank you. 8 Would the assessor from Sacramento -- 9 MS. WYNN: Good morning, Chairman Runner and 10 Honorable Board Members. 11 Can you hear me okay? 12 MR. RUNNER: Mm-hm. 13 MS. WYNN: Am I talking -- is this working? 14 MS. HARKEY: Yes. 15 MS. WYNN: Thank you. 16 In the interest of time and to avoid 17 repetitive comments, I'll keep my comments as brief 18 as possible. 19 Adoption of the proposed revisions as 20 currently drafted would create an untenable conflict 21 between the controlling Revenue and Taxation Code 22 Assessment Appeal statutes and the regulations the 23 Board rules while potentially undermining the 24 existing information discovery process to the public 25 detriment. 26 For example, the proposed amendment to 27 Property Tax Rule 305.2(b) would prohibit an 28 Assessment Appeals Board from continuing a prehearing 36 1 conference to compel an applicant to respond to 2 Revenue and Taxation Code 441(d) information request. 3 This proposal is in direct conflict with the 4 Revenue and Taxation Code which expressly provides 5 the general two-year limit for hearing an appeal does 6 not apply where an applicant has failed to provide 7 full and complete information as required by law. 8 Similarly, the proposed amendment to Rule 9 323(c) would prohibit a Board from postponing a 10 hearing solely on the ground that the applicant did 11 not respond to Revenue and Taxation Code. 12 Such amendment is also clearly contrary to 13 the Legislature's intent as expressed in Section 14 1604(c)(2). 15 So given the circumstances, I urge you to 16 oppose the revisions as currently drafted and allow 17 for continuation of the existing interested parties 18 process in order to ensure the regulations properly 19 correspond to the Revenue and Taxation Code and allow 20 for fully informed and timely appeal hearings. 21 Thank you. 22 MR. RUNNER: Thank you. 23 We have Mr. Benson from Marin County. 24 MR. BENSON: Good morning, Chairman Runner 25 and Honorable Board Members. 26 My name is Rich Benson, I'm the 27 Assessor/Recorder Clerk from Marin County. 28 Thank you for taking the time for us. I'll 37 1 try to be brief. I don't have too many new things to 2 add. Just a couple. 3 If you had a chance to see my letter to the 4 Board on this issue, one of the things I pointed out 5 in the first is the sovereign right of the State to 6 collect confidential information from taxpayers. 7 And I have copies that I will leave for you 8 here today with the clerk and with Mr. Aprea of the 9 Attorney General Opinion 84-1104, which I've 10 mentioned in previous testimony. And I've 11 highlighted those pertinent sections, which state 12 that the provisions to collect confidential 13 information from taxpayers and use them for the 14 purposes of taxation constitute an integral aspect of 15 the State sovereign power to collect taxes. 16 This has been here for centuries, so to 17 speak, and is not to be compromised. And in that 18 context, what we've been asked to do by CATA in the 19 proposed rules -- which I urge you not to 20 accept -- is to do just that, and compromise that. 21 And something that, for the assessors, it's 22 not a compromisable issue to deny us the right to get 23 confidential information and rely on that for 24 purposes of taxation either in determining our 25 original value or in the course of appeals, or for 26 third-party information. 27 The big issue that seems to be the conflict 28 is this question between due process and the right to 38 1 privacy. Both United States Constitutional issues. 2 They both have remedies in the context of 3 the Revenue and Taxation Code for either party. 4 Either party, if they're unsuccessful either gutting 5 information from the taxpayer, can subpoena the 6 information from the taxpayer. 7 You will see that happening more frequently. 8 It is going to cost taxpayers more. It's a very 9 inefficient mechanism. 10 And, likewise, if the assessor uses 11 confidential information of one taxpayer, the 12 applicant or the appellant has the opportunity to 13 seek that information in court where the Court 14 performs the balancing test for the right to privacy, 15 for the right -- versus the right to due process. 16 That's a well-established process. It's 17 imbedded in the law. Something that if we're gonna 18 pursue this is the appropriate remedy. 19 Lastly, I will mention what Ma asked for, 20 which was about training. It seems off topic, but 21 I'd say it's pretty on point. There's an opportunity 22 here vis-a-vis the interested parties process, as 23 well as the process that we use to train appraisers 24 and certification analysts for one. 25 These are people that we trust that you have 26 certified, that you've trained. They've taken an 27 oath of honesty to the state. And I would encourage 28 that we also establish a new ethics course, which 39 1 I've taught before in the state. 2 You should be able to trust that these 3 people that you have granted the power to do these 4 appraisals for and to do the taxation are honorable 5 people that follow through with what you've asked 6 them to do. Which is assess property according to 7 the Revenue and Taxation Code. And not compromise 8 their rights and their ability to do their job with 9 the proposed rules. 10 So I thank you for your time. 11 MS. STOWERS: One quick -- Assessor 12 Benson -- 13 MR. BENSON: Yes. I'm sorry. 14 MS. STOWERS: Assessor Benson, you -- you 15 commented about the ability to collect and use 16 confidential information. And how, in your opinion, 17 it conflicts with the rules. 18 Can you, for clarification, just confirm my 19 understanding that you are saying that that is -- the 20 proposed rule change you're talking about is 305.1? 21 And in that paragraph it states midway 22 through, "Information supplied by one taxpayer should 23 not be used by the assessor in the Assessment Appeals 24 Board Hearing of another taxpayer, including the 25 taxpayer of another county, without written 26 authorization from the first taxpayer"? 27 MR. BENSON: That's -- 28 MS. STOWERS: Is that the section that 40 1 you're referring to? 2 MR. BENSON: That's absolutely true. But 3 also the ability under 441(d) for us having the 4 authority and the right to collect confidential 5 information from the taxpayer. And the prospect that 6 being denied that right, then the applicant is 7 entitled to a hearing. 8 Now that's fine. We can go to hearing. But 9 that's also imbedded in these rules that have been 10 proposed. That should that prevail, we'll just go to 11 court. And we'll just subpoena the assessor. 12 If you look at your Board of Equalization 13 letter -- excuse me for one second and I'll find it 14 for you. Sorry for the time delay here. 15 I guess it's annotation two -- no, that's 16 not it. 17 There's a Board letter that says what the 18 assessor's right to obtain this information and to 19 subpoena it. 20 It's not far away from my hand. 21 Yeah, there it is. 22 It's 8120, January 30, 1980, the assessors 23 subpoena power, according to Section 441 and 454, is 24 very clear about how it articulates that the assessor 25 can subpoena the information directly from the 26 taxpayer. And if the taxpayer fails to provide the 27 information, then the assessor may go to the Court 28 for an order. 41 1 So that's still the existing law and still 2 the opportunity. But it's a very inefficient 3 process. Especially to the taxpayer, who is seeking 4 to find market value and may now have to hire an 5 attorney to go to court. It's going to delay the 6 process in court. It's going to cause expense. 7 I am confident that it won't take long if we 8 go down this road, that the Courts are going to start 9 providing feedback saying, "This is crazy. You have 10 laws in place, 441(d), to get the information. 11 There's noncompliance. So now you're clogging the 12 Court's calendar to seek compliance, which we're 13 gonna have to do." 14 That's just a very inefficient process, and 15 I would expect it to come back to the Board in short 16 order. 17 MR. RUNNER: Okay. Thank you. 18 MR. BENSON: Thank you. 19 MS. BROWN: Good morning. 20 My name is Diane Brown. I'm the Butte 21 County Assessor. 22 Most of the changes that are being proposed 23 don't affect us. We don't have pretrial conferences. 24 We don't have that kind of stuff in my county. We're 25 too small. 26 But we do have a Board that only meets once 27 a month. So to put the hearing for 20 days after a 28 continuance is not workable in my county. It's 42 1 creating an unfunded liability, and unfunded state 2 mandate that we -- just one more that we have to 3 fight. 4 It's unreasonable to expect the hearing to 5 be taken place within 20 days of the original 6 hearing. It's just not gonna work for us. 7 THE COURT: Thank you. 8 MS. BROWN: So -- 9 MR. GAEKLE: Morning, Chair Runner, Members 10 of the Board. 11 Don Gaekle, Stanislaus County Assessor. 12 I just wanted to take an opportunity to kind 13 of put things in perspective from our view point. 14 I'll say up front that we use the 441(d) letter on a 15 regular basis as an investigative tool. We send it 16 out regularly when appeals are scheduled for hearing. 17 I can say with confidence that no taxpayer 18 in Stanislaus County has been denied a hearing based 19 on their compliance with that. 20 I will say, however, that their compliance 21 is very important in the process. Put it in 22 perspective, looking at commercial and industrial 23 appraisals, that's what we're talking about here. 24 Those are most of the properties where an agent is 25 involved. 26 Over the past 20 years, almost 3,800 27 appeals, 55 percent of those appeals were withdrawn, 28 36 percent were resolved by stipulation with the 43 1 assessor. Three point five percent were decided by 2 the Assessment Appeals Board at hearing, and the 3 remainder were denied for nonappearance. 4 Those numbers don't speak of a system that's 5 broken, as CATA would have you believe. That speaks 6 to a system that's working efficiently as the 7 Legislature intended it to work. 8 In terms of one of the -- one of the 9 proposals about continuous hearing dates, I can 10 assure you that we don't have those in Stanislaus 11 County. 12 For the past -- the period from 2011 to 13 2015, we had over 1,300 commercial industrial appeals 14 scheduled. During that time, the assessor requested 15 a postponement or continuance 20 times. Agents 16 representing taxpayers requested postponements/ 17 continuances 460 times during the same period. 18 Most of our appeals are scheduled out of 19 necessity because of workloads. They're scheduled by 20 our Clerk of the Board, not by the assessor, up to a 21 year out. 22 And it's frustrating to assessors that that 23 far after an assessment appeal is filed, the 24 information to resolve the issue -- and that's our 25 viewpoint is to resolve the issue. We don't enjoy 26 the process going to hearing any more than the 27 taxpayers do. 28 But that long after filing an appeal, the 44 1 information is not available from the agent in most 2 cases. And I don't think that's very helpful to the 3 appeal -- to the appeal process. 4 The changes that are being envisioned are 5 also not going to help the efficient administrative 6 resolution to these -- to assessment appeals issues. 7 My closing comment is that I would urge the 8 Board not to take action at this time, and to allow 9 the interested parties process to complete its 10 course, and allow your staff and attorneys for the 11 Board to vet the process and make sure that we have 12 proper rules. 13 Thank you. 14 MR. RUNNER: I'm not sure which one of you 15 two are -- 16 MR. SALINAS: It's myself. Hi. 17 MR. RUNNER: Okay. Go for it then. 18 MR. SALINAS: Good morning, Chairman Runner 19 and Honorable Board Members. 20 Jesse Salinas, the Yolo County Assessor, 21 Clerk Recorder, and Registrar of Voters. 22 Thank you for the opportunity to come today 23 and share with you our comments on these 24 regulation -- proposed regulations. 25 I agree with everything that the 26 representing assessors have shared with you thus far. 27 There are three points I'd like to be able to 28 emphasize. 45 1 First, I want to emphasize that the local 2 Board of Equalization, whether it's the Board of 3 Supervisors or the Assessment Appeals Boards, are 4 constitutionally quasi-judicial bodies. 5 For assessment issues, they are the Court. 6 And they take their responsibility seriously. What 7 is implicit in the proposed rules is that the ABs 8 cannot fairly administer the judicial process they 9 oversee. That viewpoint is wholly inconsistent in 10 what my experience has been in dealing with the ABs. 11 Second, not only are many of the proposed 12 rules inconsistent with provisions of the Revenue and 13 Tax Codes as we've discussed already, they're 14 unnecessary, as has been noted. 15 The Constitution affords each county the 16 power to adopt procedural rules. That is found in 17 Article 13 and Section 16. 18 In addition, taxpayers are protected by 19 constitutional due process to ensure that they are 20 afforded a fair hearing. If a party was not given 21 due process, the ruling will be overturned. 22 Third, these regulations will undermine the 23 core function of every assessor and every Assessment 24 Appeals Board to determine the taxable value of 25 property. 26 These rules would force assessors and AABs 27 to make evaluation decisions on incomplete 28 information. Meaning that other taxpayers will carry 46 1 disproportionate burden, and local agencies will not 2 receive the funding they need. 3 In sum, I strongly encourage you not to take 4 action today, and to review as discussed previously 5 some of the items that we can further vet and discuss 6 at late. 7 Thank you very much for your time. 8 MR. RUNNER: Thank you. 9 MR. RENKEI: Mr. Chairman, Members of the 10 Board -- 11 MR. RUNNER: Why don't you scoot up closer 12 to the mic there. 13 MR. RENKEI: I'm George Renkei. I'm the 14 Assistant Assessor from Los Angeles in charge of 15 operations here on behalf of Assessor Prang. I've 16 been with the office about 30 years now. Seven of 17 those years were dedicated to solely assessment 18 appeals. So I did that on a daily basis for seven 19 years. 20 One of the greatest challenges for our 21 office or appraisers is collecting the information 22 that we need to do our jobs. The proposed rule 23 changes from CATA would only make that job more 24 difficult. And it would also cause postponements, 25 which is one of the greatest concerns that we hear 26 from taxpayers as to the time it takes to get those 27 hearings. 28 So it would -- it would be counterproductive 47 1 in -- in our process. Not only making our jobs more 2 difficult, but also causing delays for the taxpayers 3 that are waiting for their hearings. 4 We have been engaged in the IP process, and 5 we are dedicated to seeing that process through. I 6 will be here personally on August 16th to continue 7 the process. 8 We are also hopeful that we could express 9 our concerns to Member Horton before you are asked 10 to -- to make a decision on this issue. 11 So we are asking to continue with the IP 12 process, and then hopefully address that issue after 13 we've had that opportunity. 14 Thank you. 15 MR. YEN: Good morning, Honorable Chair 16 Runner and Honorable Board Members. 17 My name is Edward Yen. I am the Senior 18 Deputy County Counsel representing Los Angeles County 19 Office of the Assessor. 20 The focus of my remarks today is to apprise 21 the Board that the proposed changes to the Property 22 Tax Rules identified in Agenda Item L1 are misguided 23 and contradict already settled law. 24 This past fiscal year approximately 18,000 25 assessment appeals were filed in Los Angeles County 26 alone. Due to the immense amount of appeals, 27 approximately 29,000 applications are waiting to be 28 scheduled for hearing before an Assessment Appeals 48 1 Board or Hearing Officer. 2 Our Assessment Appeals Board operates four 3 full board hearings five days a week. And Hearing 4 Officer agendas are heard three days a week, 5 year-round. 6 Because Los Angeles County experiences these 7 massive case loads, cooperation between applicants 8 and their representatives has been crucial for the 9 assessor to collect and review documentation to 10 properly identify and assess all taxable property in 11 this county. 12 However, the proposed changes in 13 Rule 305.1(e) will jeopardize a collaborative spirit 14 between assessor and taxpayer by frustrating an 15 assessor's ability to gather information using 16 essential discovery tools granted to assessors by the 17 Revenue and Taxation Code and the Constitution. 18 I highlight the proposed amendment to Rule 19 305.1(e), which directly conflicts with several 20 provisions of the Revenue and Taxation Code and 21 misleads the Board in judging the assessor difficult. 22 For example, proposed 305.1(e) has language 23 that requires the assessor to issue requests for 24 information no less than 20 days prior to a hearing. 25 This change directly conflicts with Revenue and 26 Taxation Code Section 441(d), which allows the 27 assessor to request information at any time. 28 In Los Angeles County, with an active 49 1 caseload of 29,000 cases, it is common that many 2 cases are resolved at the time of hearing because 3 taxpayers are known to ignore requests for 4 information by assessor staff until the hearing date 5 is scheduled. And even then there are many occasions 6 when some taxpayers only agree to give up such 7 information on a date of the hearing. Therefore, an 8 arbitrary 20-day deadline for the assessor to request 9 information is not only unreasonable, but it is 10 unworkable in Los Angeles County. 11 I also want to point to Revenue and Taxation 12 Code 1604, where an applicant value can be enrolled 13 after no hearing is set within two years with four 14 exceptions. One of which is where an applicant has 15 not provided all information required by law. 16 In creating that law in 1981, the 17 Legislature recognized and enshrined in the 18 scheduling of case setting the importance of 19 applicants providing all information under 441(d). 20 Applicants, assessors, and Assessment Appeals Boards 21 all want to have hearings scheduled as promptly as 22 possible. 23 Important -- it is important to recognize 24 that part of the due process the Legislature codified 25 is ensuring that applicants provide all information 26 before the hearing on the merits to go forward. Only 27 then can Assessment Appeals Boards properly discharge 28 its constitutional mandate to determine the correct 50 1 value. 2 I also want to point to two letters that 3 have been drafted by attorneys from -- County Counsel 4 from Riverside, Kristine Bell-Valdez, as well as 5 former Santa Barbara County Counsel, Marie LaSala. 6 Both those letters outline in more detail the 7 specific Revenue and Taxation Code sections that are 8 affected by just the change in Property Tax Rule 9 305.1(e). 10 There is also a memo attached to Assessor 11 Stone's letter from County Counsel from Santa Clara, 12 Robert Nakamae, who also outlines some issues 13 highlighting some conflicts in law related to 14 Rule 305.1(e), and as well as some other Revenue and 15 Taxation Code sections. 16 Thank you for your consideration in this 17 matter to withdraw the proposed changes identified in 18 Agenda Item L1. And we ask that you continue with 19 the interested parties meeting in August. 20 Thank you very much. 21 MR. RUNNER: Okay. 22 MS. DAVIS: Mr. Chair -- 23 MR. RUNNER: Ms. Davis. 24 MS. DAVIS: -- Honorable Members of the 25 Board, Ms. Stowers. I'm Leslie Davis, Calaveras 26 County Assessor and President-Elect of the California 27 Assessors' Association. 28 I'm here today to express my opposition to 51 1 the proposed rule changes and to support my fellow 2 assessors and legal counsel who have testified here 3 today. 4 And many of whom have sent you letters that 5 have given you the specificity, Mr. Chair, that you 6 asked for earlier during this hearing. 7 Through those letters and testimony, you 8 have been told how important it is to obtain accurate 9 and complete information. And you've heard how this 10 proposal violates existing law. 11 On a daily basis, assessors work to ensure 12 the proper, fair and equitable assessment and 13 administration of Property Tax Law. One section that 14 Revenue and Taxation Code requires that we sue your 15 Board if we believe you've promulgated a rule that is 16 contrary to existing law or the State Constitution. 17 From your proposal to violate the rights of 18 the taxpayer and assessor for proper notice, to 19 limiting the assessor's ability to perform mandating 20 tasks, these rule proposals are a case study for the 21 rational of Section 538. 22 It's important to note that not all 23 assessment appeals are initiated by large taxpayers 24 capable of hiring tax reps. In fact, most appeals 25 are filed by taxpayers who represent themselves. 26 For most of our constituents, the world of 27 property taxation is pretty darn confusing. This 28 proposal does nothing to clarify matters for them. 52 1 CATA would have you believe the proposal 2 benefits everyone. It does not. It benefits the 3 very limited world of their clients. 4 Most taxpayers in my experience comply with 5 our request for information as soon as we are able to 6 explain to them what we need and why we need it. 7 The California Assessors' Association has a 8 long history of working collaboratively with the BOE 9 to resolve issues such as this. Our focus is and 10 always has been in working in the best interest of 11 the public we all serve. 12 I urge you to consider all California owners 13 and taxpayers and vote against this proposal, 14 continue the interested parties process, and let us 15 work together for a better outcome. 16 Thank you for the opportunity to testify 17 before you today and express these opinions. I hope 18 you've had the time to read all of our letters 19 detailing those very issues we have with this. 20 MR. RUNNER: Thank you. Thank you. 21 We are -- we are a little more than halfway 22 through those -- the assessors' side of the issue. 23 So I'm going to especially ask that we not be 24 redundant. 25 MS. DURAN: I'll do my best. 26 Good morning, Chairman Runner and Members of 27 the Board. My name is Dawn Duran, and I'm the 28 Administrator for the San Francisco County Assessment 53 1 Appeals Board. I'm here today on behalf of CACEO, 2 the Clerks Association. 3 Should the Board decide to interrupt the 4 existing IPP, we would like our proposed changes that 5 were submitted to be considered, as well as those 6 that were submitted with -- by CATA. 7 And we also believe that the Assessor's 8 Office should also be given the opportunity to submit 9 their own set of proposals regarding what is at issue 10 before the Board. 11 We believe our proposals address some of the 12 concerns raised by CATA while preserving the local 13 County Board's proper authority under the law. 14 Regarding Rule 305, we agree that appeal 15 applications cannot be denied because an agent's 16 authorization is not signed by a taxpayer in the same 17 calendar year. 18 Our proposal attempts to clarify what the 19 law and rule permit regarding agent authorizations. 20 We also understand the confusion about filing agent 21 authorizations when an application is filed 22 electronically. However, some counties are simply 23 unable to provide a means to file an agent 24 authorization electronically due largely to lack of 25 funding, as well as for technological reasons. 26 Our proposal attempts to clarify what the 27 parties need to do to file their authorization forms 28 when filing an application electronically. 54 1 The amendment is also worded in such a way 2 as to recognize different methods of electronic 3 filing an appeal, depending on the type of system 4 used by the respective clerks. 5 Regarding Rule 305, we agree that 441(d) 6 requests should be made in writing whenever possible. 7 The same should also hold true for taxpayer requests 8 for information under Section 408. However, we 9 strongly object to setting a date certain in advance 10 of the hearing for such requests. A firm date 11 inevitably would cause additional, sometimes 12 unnecessary, postponements and delays, which many 13 counties cannot afford. 14 Further, it preserves the Board's discretion 15 to grant a postponement to a party where appropriate. 16 Regarding Rule 323, we strongly object to 17 CATA's proposed language limiting a continuance to no 18 more than 10 days. 19 Please keep in mind, clerks schedule 40 -- 20 schedule hearings 45 days out. Some counties only 21 hold hearings once a month, twice a month, as was 22 previously indicated by other counties. We find that 23 this is just simply not feasible to enforce straight 24 up and down all the counties in California. 25 Our proposal makes clear to a Board or 26 Hearing Officer that every reasonable effort must be 27 made to avoid delay. However, it also appropriately 28 preserves the Assessment Appeals Board of the local 55 1 county authority to use its discretion in considering 2 a request for continuance. 3 I'd like to thank you for your time and 4 consideration regarding these matters. 5 MR. RUNNER: Thank you. 6 MR. PARKER: Mr. Chair Runner and Honorable 7 Members of the Board, my name is Thomas Parker. I'm 8 with Los Angeles County. 9 I have been practicing Property Tax Law 10 since 1994 as both assessors' counsel or as AAB 11 counsel. Most recently as AAB counsel in Los 12 Angeles. 13 I will not say more regarding the interested 14 parties process, except to say that Los Angeles 15 County, the Mono County AAB both want and think the 16 interested parties process should occur. 17 You've also been given numbers regarding the 18 cases filed with the AAB in the pending cases. What 19 I will do is simply note that the proposed rule 20 323(d) is as a practical matter impossible for 21 Los Angeles County to work with the proposed rule of 22 CATA. One size does not fit all to meet the cliche 23 there. 24 Lastly, I would say, I was an assessor's 25 counsel involved in the last revision to these 26 equalization rules in the 1999- to- 2001 period. I 27 attended every single interested parties meeting, 28 every meeting before the State Board, as it was 56 1 constituted at the time. And it took over 2 one-and-a-half years to adequately cover and properly 3 vet and review proposed rule changes for the Board. 4 What I want you to know is, this process is 5 not one that can be short-circuited with the idea 6 that your Board can be fully informed on the various 7 practical and legal issues that will go into your 8 decision-making. Whatever your decisions turn out to 9 be and what the rules should or should not be, I'm 10 not even going there. Just to be fully informed so 11 you understand what you are deciding and what is 12 going to drive your determination on those issues. 13 You can cannot do it in short order. 14 LA County AAB would suggest, recommend that 15 rather than short circuit the IPP process, that your 16 Board ask the interested party groups and your staff 17 to come up before -- before September 1st with a 18 proposed schedule for all remaining IPPs, preparation 19 of an issue paper, so that you know what it is you're 20 going to have to decide, what all the parties want 21 and don't want, and why they feel as they do. And 22 that way you can get a property tax committee's 23 hearing scheduled, And then the hearing before the 24 full Board. 25 So that by December 31st you could have 26 properly vetted determinations with issue papers and 27 a completed interested parties process. 28 That doesn't mean you're going to have it 57 1 all done into the OAL necessarily by the time the new 2 year rolls around. But at least you can have your 3 say on whatever you think the rules should be. 4 Thank you. 5 MR. RUNNER: Okay. 6 We have others on the list, and they're not 7 coming forth. So I'm not sure if -- there they -- 8 yeah, here we go. 9 Anybody else? Come on down, please. We 10 don't want to waste time. 11 Okay. 12 MS. HARKEY: That's it. 13 MR. RUNNER: Okay. We're going to consider 14 this the end then, right? Nobody else? 15 Okay. Good. Thank you. 16 MS. JOHNSON: Good morning, Honorable Chair 17 Members. Dorothy Johnson with the California State 18 Association of Counties representing all of 19 California's 58 counties. 20 And for the sake of time, I'll align my 21 concerns with those already stated by the assessors, 22 the county counsels, and the county clerks. And 23 these are concerns of course related both to the 24 process and of course the substantive changes 25 proposed. 26 We believe they stand in direct conflict 27 with the existing statute, and also the duty of the 28 Boards. 58 1 And, furthermore, we are very concerned 2 about the new unfunded mandate that would be imposed 3 on some of our counties based on their current 4 meeting schedules. 5 So we do respectfully request the 6 continuation of the IP process to find resolution to 7 the remaining items left unresolved. 8 Thank you. 9 MR. RUNNER: Thank you. 10 MS. CORBIN: Mr. Chair, Members. 11 Samantha Corbin on behalf of the California Tax 12 Reform Association. 13 As the closer I also will keep it brief and 14 align my comments with the experts in the field 15 before me, and would ask that you continue with the 16 interested parties process, as we're in strong 17 opposition of moving forward with these new 18 regulations. 19 Thank you. 20 MR. RUNNER: Okay. Thank you. 21 I have three speaker cards on the side that 22 is interested in some change. I'm going to ask them 23 to come up. I assume they probably have determined 24 the order to which they will speak. And we'll let 25 them go ahead and lead off how they would like to. 26 MR. APREA: Good morning, Mr. Chair, Members 27 of the Board. For the record, I'm Mark Aprea with 28 the lobbying firm of Aprea and Micheli, here on 59 1 behalf of our client, the California Alliance of 2 Taxpayers. 3 And I want to also point out that the 4 California Alliance of Taxpayers are a -- Taxpayer 5 Advocates are a group of tax agents that represent 6 taxpayers before the assessor, the Assessment Appeals 7 Board and the Board of Equalization. 8 I also want to thank Board Member Ma for 9 proposing this regulation package, for the Chair for 10 agendizing the item, and for the Board for engaging 11 in this issue for nearly two years. 12 But let me -- let me give a little bit of 13 history. Because I think that there has been some 14 misinformation as to what has gone on and what has 15 not. And I'll go through the calendar, not in 16 excruciating detail, but to really address the 17 process that we've gone through. 18 And before I do that, I think I want to make 19 sure that we know what it is we're dealing with here. 20 And this is not to adopt the reg package up or down 21 today, but rather whether or not to go forward with a 22 regulatory process where all interested parties, 23 including those who are present here today, and 24 others, have an opportunity to comment, to propose 25 alternatives, to support the proposed regulations, or 26 to oppose them. 27 But I think that there's some misconception 28 here or misstatements as to whether or not this is a 60 1 matter that is before you up or down. 2 California Alliance of Taxpayer Advocates 3 initiated a County Assessor Outreach Program in 2015 4 and met with many of the county assessors throughout 5 the state, some of which are here today. And to 6 address the very issues that are before you today, 7 and that have been discussed before this Board either 8 in letters, in meetings, or in other testimony before 9 this Board. 10 These are not new issues, and no one should 11 be surprised as to the content of this regulatory 12 process. 13 In September, as Board Member Ma indicated, 14 of 2016, CATA sent a letter to the BOE because there 15 had been absolutely no progress being made with any 16 of the assessor meetings that had been instituted and 17 engaged in over a two-year process. Again, the same 18 issues were being raised. 19 The CAA responded to that letter requesting 20 that we not engage with the Board of Equalization, 21 but that we first engage with them. 22 So there was a conference call in December 23 of that year that we were later informed was an 24 unofficial or unauthorized call, and that we were 25 required to send a letter to CAA requesting a 26 meeting. 27 We did so. And despite our best efforts of 28 following up to ask for when a meeting would be held, 61 1 no meeting was forthcoming through the end of June. 2 And so we understood at that point, after 3 nine months, that there wasn't gonna be any 4 engagement with CAA in that capacity. And so we, 5 again, wrote a letter, much like the first letter 6 nine months prior, to the Board of Equalization 7 asking that you all address these issues. 8 We then again testified in August, and we 9 did ask for an interested parties process in the 10 hopes that it would lead to some changes. 11 As Mr. Yeung pointed out, there was a 12 meeting in December. But we were told that there 13 would be no interested parties process. And that 14 this would be the way it would go forward. 15 And, in fact, Mr. Yeung and others indicated 16 that there would likely be no regulatory changes. 17 Which I found -- which we found kind of interesting 18 since that was stated at the beginning of that 19 meeting. And so it was interesting that staff could 20 conclude that there was going to be no need for 21 regulatory change even before the issues have been 22 vetted. 23 So there was that December meeting. And 24 the -- Mr. Yeung did point out that the letters were 25 due in January for comments. 26 We then appeared in February before this 27 body and asked for an IP process, not for an informal 28 process. And this Board directed the staff to move 62 1 forward with a interested parties process. And we 2 did have that meeting in April. 3 I would point out that contrary to 4 statements made, there was no timeline put forward. 5 And, in fact, I specifically asked at the end of that 6 meeting when would be the next meeting. And we were 7 told that they didn't know, and that they would get 8 back to us. And, in fact, until we got the notice, 9 we did not know when there would be another 10 interested parties process. 11 And so I -- the CATA Board looked at this, 12 and looked at the 22 months that have elapsed since 13 our first letter to the Board of Equalization. And 14 had we known then what we know now, we would not have 15 engaged in these informal discussions or the IP 16 process. Because clearly nothing has come of it. 17 In fact, not even as a simple proposal made 18 by Ms. Stowers that there be a model or template or a 19 form for an initial 441(d) letter -- even that hasn't 20 been adopted. 21 And so it is our view that looking at this 22 IP process, that it's unclear as to whether or not 23 there will ever be a conclusion or any changes made 24 as a result. 25 And I would point out, by the way -- and the 26 Board Members know this as well -- that there have 27 been IP processes on other issues like the airlines. 28 And we've seen no progress in that capacity either. 63 1 So from our prospective, we have -- our view 2 is that we have frankly no choice but to ask that you 3 move forward with this regulatory process, allow all 4 the parties to battle it out, to provide comments, to 5 provide their arguments, and to go forward. 6 I will also note that at the interested -- 7 at the time that I testified in August, Mr. Horton 8 suggested that this would be done in an expedited 9 fashion. And he estimated that it would be concluded 10 at the beginning of 2018. He also directed the 11 interested parties, that we meet informally to move 12 the process along. 13 Now, I'll indicate to you as I've done 14 before, that we have asked repeatedly for meetings to 15 engage in off site. And if the Board wishes, I'm 16 happy to provide those e-mail requests that went 17 unanswered. 18 There has been no offer to have a meeting. 19 And I find it ironic that it's this proposed 20 regulatory package that has brought, you know, so 21 many assessors to the table, when, in fact, we 22 couldn't get a meeting before. 23 And so I am urging you to move forward with 24 publishing these regulations, so that progress can be 25 made whether there are deadlines, if there's an 26 initial subsequent comment period, any subsequent 27 15-day comment period, and that we're able to move 28 forward and address these issues and not leave them 64 1 in the interest of taxpayers and the interest of the 2 assessment and the Assessment Appeals process in 3 abeyance. 4 With me today I have Mark Ong. He is a 5 Board Member of the California Alliance of Taxpayer 6 Advocates. He is a founding member of that 7 organization. And has served throughout, in one 8 capacity or another, on CATA's Board or as an officer 9 of CATA over the past seven years. 10 Also with me is Chris O'Neall. I'll let 11 Mr. O'Neall give you his bonafides. But I'll 12 introduce him as a member and a participating member 13 of CATA Standards Committee who's been actively 14 engaged in developing the issues that are before you. 15 Thank you, Mr. Chair and Members of the 16 Board. 17 MR. RUNNER: Okay. Thank you. 18 And, again, I would hope that what we're 19 going to hear from the other two are some discussions 20 in regards to the specifics in regards to what's 21 being proposed. 22 I think we're well aware and have heard lots 23 of renditions of the schedule. But I think what's 24 before us now is the actual material and the rational 25 as to why it would be necessary. 26 MR. ONG: Chairman Runner -- is this thing 27 on? 28 Okay. Chairman Runner, Members of the 65 1 Board, my name is Mark Ong. I'm here as Board of 2 Director of California Alliance of Taxpayer Advocates 3 or CATA. 4 CATA is a -- dedicated to professional 5 practice of state and local consulting through 6 education, advocacy, and ethical standards. 7 CATA members represent California business, 8 large or small, individual homeowners, and now 9 profits. 10 The ultimate beneficiaries of proposed rule 11 changes today will be these taxpayers, the same 12 taxpayers that are your constituents as well. 13 CATA supports the Property Tax Rule changes 14 as proposed by Member Ma. Our association's been 15 working on this issue for more than two years. The 16 rule-change option seems to be the most efficient way 17 to move the process forward. 18 We agree with the goals of these rule 19 changes, which are to ensure data requests law is 20 applied fairly and uniformly, and to ensure the 21 taxpayers are afforded due process. 22 The lack of uniformity regarding data 23 requests within -- there is lack of uniformity 24 regarding data requests within our state. Bear in 25 mind that property taxation relates only to tangible, 26 real and personal property. 27 Reports from our members indicate data 28 request is not a uniform in terms of the extent of 66 1 information requested; they are not uniform in terms 2 of consequences of noncompliance; they're not uniform 3 in terms of compliance deadlines. 4 We would appreciate the Board's taking the 5 leadership role in making the data request process 6 more uniform throughout this state. 7 There's also disagreement in the 8 consequences of noncompliance of data requests, which 9 effect due process. We disagree whether the taxpayer 10 is noncompliant; we disagree who is the party to 11 enforce noncompliance; we disagree whether 12 noncompliance were resolved in appeal process being 13 stopped. 14 We seek the Board's interpretation of the 15 current law and provide taxpayers in this state clear 16 guidance of the consequences of noncompliance of data 17 requests. 18 In summary, CATA supports the rule change as 19 proposed by Member Ma. These changes will make the 20 data request process uniform and fair. They will 21 provide taxpayers of our state with clear guidance in 22 terms of the consequences of data requests 23 noncompliance. 24 Thank you. 25 MR. RUNNER: Thank you. 26 Mr. O'Neall. 27 MR. O'NEALL: Thank you, Chair Member Runner 28 and Members of the Board. 67 1 Having been very deeply involved in putting 2 these together, I do intend to provide some substance 3 to the discussion, which is now this afternoon. And 4 I hope that it will be of some guidance and some help 5 to you, as I realize you are only deciding whether to 6 put these regulations into rule-making process. 7 I am a member of the Standards Committee of 8 CATA. And I am one of its legal advisors. I am also 9 a licensed California attorney. I am with the law 10 firm of Greenberg, Traurig, and practice out of their 11 office in Irvine. 12 I've been practicing in the property tax 13 field for almost 30 years, all of it in California, 14 and most of it at the local level before Assessment 15 Appeals Boards. 16 In fact, I appear and have appeared before 17 most of the Assessment Appeals Boards in the 18 metropolitan counties in the state, and a number of 19 Appeals Boards in the smaller counties. 20 I am familiar with the practices of many of 21 the Boards in the state. As I said, I appear in 22 front of them regularly. And as a matter of fact, I 23 try anywhere from 6- to- 12 cases a year in front of 24 Assessment Appeals Boards. 25 We're frequently appealing those, then, to 26 Superior Court and to the Court of Appeal. And I 27 have appeared on brief even as high as the California 28 Supreme Court on property tax matters. 68 1 I am familiar with the issues raised in the 2 proposed regulations, because I participated in the 3 process of drafting them. 4 And I will say also that I participated in 5 the rulemaking process that occurred in 1998 and 6 1999, which was much more broad-based rewriting of 7 the Assessment Appeals Board rules. In comparison, 8 this is -- this is -- this is 20 percent of that work 9 or less. 10 First, 441(d) requests. There are two 11 ways -- let me back up first and say, most taxpayers 12 comply with 441(d) requests whether small or large. 13 The problem we have to deal with is what happens when 14 someone doesn't comply with a 441(d) request. And 15 there are really two remedies that an assessor has if 16 there is no compliance. 17 First, the assessor can proceed to the 18 Assessment Appeals Board hearing. If the taxpayer 19 comes forward with the information that had been 20 requested at that time, the assessor has an absolute 21 right to a continuance under Rev and Tax Code 441(h). 22 "H" as in Harry. And I've seen that granted many 23 times. I've used it also as well on my side. 24 So that's the first remedy. And it's a good 25 remedy. Because if the assessor's been surprised, he 26 now has the information. And the Board says, "Go 27 away for two weeks. Go away for two months. Look at 28 it, come back. We don't want you to be surprised, 69 1 Mr. Assessor." It's a good remedy. 2 But there's another remedy. And Assessor 3 Benson talked about that today. It's been talked 4 about by a few others who testified from the 5 assessor's side. The assessor has the power to issue 6 a subpoena. It's not under 441(d). It's under 454. 7 An "Assessor Subpoena," it's called. 8 I've actually dealt with one of those last 9 year in San Diego County. We had a dispute going on. 10 Assessor Subpoena was issued by the assessor of 11 San Diego County. Issue resolved. Information came 12 forward, because we had a dispute against the tenant 13 and the landlord as to who was supposed to give the 14 information. 15 I have also been involved in such a 16 proceeding in Santa Barbara County. It's ongoing 17 right now. We have a genuine dispute with the 18 Assessor's Office of Santa Barbara County as to 19 whether they're entitled to certain information. 20 Assessor issued a subpoena; we've gone to Superior 21 Court; Superior Court judge is going to explain to us 22 what we need to do. 23 That's the process. That's how it works. 24 The statute and the framework are in -- are in -- 25 it's in place. This is how it's done. 26 But what has happened? Well, assessors got 27 together with Assessment Appeals Boards and they 28 said, "You know what, if we have someone who doesn't 70 1 comply with a 441(d) request, let's have 441(d) 2 compliance hearings." 3 There is no place in the law that provides 4 for 441(d) compliance hearings. Notice I didn't say 5 "status hearings," I said "compliance hearings." 6 The prehearing -- the Prehearing Regulation 7 305.2 permits the Assessment Appeals Board to call at 8 a prehearing to ask what's the status of your 9 information request. 10 It doesn't permit the Board to say, "Oh, you 11 haven't complied? Well, we're not having a hearing 12 today. And until you comply, we're not going to have 13 a hearing." That's not found anywhere in the law. 14 Now the assessors today have raised that 15 1604(c)(2) -- Rev and Tax Code 1604(c)(2) requires 16 that. Because in order for the Board to decide -- in 17 order for there to be a determination -- and this is 18 the statute where the hearing doesn't occur within 19 two years. 20 So in order for there to be a determination 21 of whether there's been compliance by the taxpayer, 22 and that two-year standard should be enforced or not, 23 there has to be a determination whether or not the 24 taxpayer complied. 25 Well, that's two other places in the code. 26 But it doesn't say there that you have to have a 27 compliance hearing. It does not say "compliance 28 hearing." That's because it's not in the law. 71 1 That's because there's the other remedies, 441(h), 2 and a 454 subpoena, followed by going to court under 3 462 of the Rev and Tax Code. 4 The reason why we've put it in three 5 places -- it's in 302(c), Jurisdiction, 305.2(b), 6 Prehearing Conference, and 323(c), Postponements, is 7 to make it clear to Assessment Appeals Boards you 8 don't have the power to -- to dismiss an appeal where 9 there hasn't been compliance. And you don't have the 10 power to postpone a hearing where there hasn't been 11 compliance, if that's -- if that's what you deemed to 12 have occurred. 13 Now, lest you think and you hear, "Well, 14 that never happens." Well, let me tell you, last 15 year during a prehearing conference before the 16 San Mateo County Assessment Appeals Board -- not my 17 matter, but I was sitting there. They have a portion 18 of the hearing where they go through what are 19 basically 441(d) compliance complaints. And everyone 20 comes up. The assessor's appraiser is then asked by 21 the Board, "Have they supplied the information?" A 22 dialogue goes on. 23 Particular item came up on the agenda; the 24 assessor's appraiser stood up and said, "Mr. Member 25 of the Board, we now have a -- I think it was 26 Mr. Chairman -- we now have the information. We got 27 it yesterday afternoon." 28 The Chairman of the Board said, "The day 72 1 before a prehearing conference is too late; the 2 appeal is dismissed." And the gavel came down. 3 And that appeal got dismissed even though 4 the applicant had provided the information, and the 5 assessor's appraiser had agreed it was there. 6 Now, let's talk a little bit about how is it 7 done elsewhere in the state. You heard today that 8 Santa Clara County actually has formal 441(d) 9 compliance hearings. 10 In San Mateo County, they come up as part of 11 other prehearings, and they can be denied. 12 In Los Angeles County, we don't have 13 compliance hearings. But the issue comes up. And 14 you are admonished by the Board to get the 15 information in. And then we'll come back for the 16 next -- next setting. 17 In Orange County I've never heard this 18 happen -- of this happening before. And in San Diego 19 County I've never seen it happen before. The 20 practice around the state is very desperate. There 21 is no uniformity in how 441(d) compliance is 22 administered. 23 Actually, I think to its credit, Santa 24 Barbara County understands that if there's a dispute, 25 if there's a need to -- to -- to -- to bring in, say, 26 confidential information, then they allow you to go 27 to court. So there's an acknowledgment in that 28 county of "this is how it works." 73 1 The point being, Mr. Chairman and Members of 2 the Board, the practice is all over the place in this 3 state on how this is handled. And it is the duty of 4 the State Board of Equalization to provide uniformity 5 in the assessment practices throughout the state. 6 And that includes Assessment Appeals Boards. 7 You have the power to establish rules. It's 8 in Property Tax Rule 1. You have the power to 9 establish rules that will provide uniform practices, 10 not only by assessors, but by Assessment Appeals 11 Board. 12 Let me address the next, um -- the next 13 point, which is important in the package. And it's 14 come up. And that is this use of confidential 15 information. 16 Confidential information comes to assessors 17 through 441(d) requests. In some counties, the 18 confidential information collected from other 19 taxpayers is then used in third-party hearings. The 20 information is used in a cloaked or de-identified 21 form. 22 By de-identifying the information, the 23 assessors are able to maintain its confidentiality. 24 However, by doing so, they prevent the taxpayer in 25 that particular hearing from being able to 26 cross-examine the information. 27 Regulation 313(g) -- your Property Tax Rule 28 313(g) says, "Taxpayers have the right to 74 1 cross-examine all information." But you don't have 2 that right when you can't identify the information at 3 all. I would -- that's a due process violation. 4 I would go so far also to say -- and I 5 argued this to the LA County Assessment Appeals 6 Board -- how can you, as an Assessment Appeals Board, 7 evaluate evidence presented to you by an assessor 8 when you don't know what hotel it relates to, or what 9 shopping center, or what apartment house. 10 I've been to -- I was recently in a hearing 11 in Los Angeles County where we were determine -- we 12 were looking at the basis for selection of 13 capitalization rates for a hotel. Seven hotel 14 comparables were presented. None of them had the 15 hotel name. And I'm used to that. 16 Okay. We have hotels "A, B, C, D, E, F, G." 17 And then here's the cap rates for the sales of those 18 seven hotels, you know, "seven percent, nine percent, 19 four percent, five percent." 20 So I said to the assessor's witness, "The 21 first one up here, number -- Hotel A. I don't know 22 what it is, a Marriott or Hilton. But that cap rate 23 for that sale was nine percent, right?" 24 "Oh, no. It's one of those seven on that 25 list. But we mixed them up, so you can't figure out 26 which one it is." 27 I turned and looked to the Assessment 28 Appeals Board Chairwoman, and I said, "How can you, 75 1 in good faith, Madam Chair, evaluate this 2 information? We don't know whether it was a Marriott 3 or a Hampton Inn. That was No. A. And we don't have 4 any idea." 5 And you know what? The Board didn't know 6 what to do, so they allowed the information in. I -- 7 I'm incredulous. How could this happen? 8 The problem is, and we're now pursuing it, 9 that the only way to get at this confidential 10 information is for taxpayers to bring a lawsuit under 11 Rev and Tax Code 408(c) -- sorry -- (e)(3) -- I think 12 I've got that right -- let me make sure -- (e)(3). 13 You go to court, you bring in all the 14 information, you have all those hotel owners come in, 15 and you've got to find out who they are. And you 16 have a Superior Court judge issue a confidentiality 17 order. And then you can use that information. 18 But that's only if you're a large taxpayer. 19 Who can afford that? 20 I'm in that process right now on another 21 hotel case. We're gonna spend $30- to- $50,000 to 22 get a confidentiality order from a judge. A hotel 23 could afford it; could a strip mall owner? Could a 24 small apartment house owner? No. 25 And so what are they going to do? They're 26 going to have to live with, "The assessor put on a 27 bunch of confidential information. I couldn't 28 cross-examine it. Did the best I could. I lost at 76 1 hearing." 2 The -- the -- what we proposed -- what's 3 proposed in this regulation, it reads, "Information 4 supplied by one taxpayer shall not be used by the 5 assessor in an Assessment Appeals Board Hearing of 6 another taxpayer, including a taxpayer in another 7 county without written authorization from the first 8 taxpayer." 9 That's a very reasonable requirement. 10 Assessors can do that. They have the information 11 there. We don't have the information. They talk 12 about they can't get the information from us. They 13 already have it. But they won't let us see it in an 14 Assessment Appeals Board proceeding. And they commit 15 due process violations by allowing us to have any 16 access to it other than going to court and spending 17 $50,000 to get a confidentiality order. 18 MS. RICHMOND: Time is expired. 19 MS. HARKEY: I would like this to go -- 20 MR. RUNNER: Yeah, he can -- again, we have 21 a lot of time on the one side. And we'll go ahead 22 and extend some more time. 23 MR. O'NEALL: Thank you, Mr. Chairman. 24 The third issue in the regulation packet 25 that I'd like to address is this prohibiting 26 assessors from asking for continuance, continuances 27 and ongoing continuances. 28 And the problem is this, that an application 77 1 comes on for hearing before a Board. The applicant 2 presents his or her case. The assessor, then -- and 3 maybe that takes a couple of hours. You've got five 4 hours of hearing that day. It's lunchtime. The 5 assessor says, "Mr. Chairman, we'd like to just ask 6 for a continuance, and we will then put on the 7 assessor's case." 8 Now, you know, I would say if the assessor 9 hadn't seen the case, maybe -- maybe he's entitled to 10 some time. I do exchanges of information in most of 11 cases under Rev and Tax Code 1606. And those cases 12 the assessor has seen my appraisal for at least two 13 weeks and maybe longer. 14 I was involved in a case in Los Angeles 15 County involving a call center for a major, 16 international bank. We had exchanged appraisals. 17 The -- it took almost -- more than a year for the 18 case to come on for hearing first -- first setting. 19 Which is typical in Los Angeles County. 20 Applicant presented its case. We got to, I 21 recall, 1:00 o'clock in the afternoon. The assessor 22 said, "Mr. Chairman, we're gonna need a continuance." 23 One of the Board Members who was a former 24 Superior Court Judge says, "That's not how we do it. 25 You should just go ahead and put on your case." But 26 the other two Board Members voted in favor of the 27 continuance. We did not come back for 12 months. 28 When we came back, the assessors started to put on 78 1 their case. 2 And another one of those examples -- this is 3 Los Angeles County -- the assessor had used a bunch 4 of leases from a property on -- within certain block 5 range, is what they told me. But they would not 6 reveal which buildings they were in. 7 I objected, because I couldn't see the 8 information. One of the Board Members said maybe I 9 had a good objection, and immediately another request 10 for continuance from the Assessor's Office. We did 11 not come back then for 16 months. 12 Finally, the assessor put their case on that 13 time. And then we had asked for findings, which we 14 did not get until eight months later. The total case 15 took three years and nine months. And it was 16 basically a concrete tilt-up warehouse in the Pamona 17 area in Los Angeles County. 18 All of the starting and stopping and 19 starting and stopping increased the cost of handling 20 that appeal. The resulting value reduction was 21 worth -- $50,000-worth of property tax. And almost 22 all of that was eaten by appraisal fees and 23 attorney's frees. There was no point in having gone 24 forward with the appeal. 25 Now, that was a major international bank. 26 Suppose it were a small business owner with a strip 27 mall, or maybe a small office building, or maybe an 28 apartment house. It's upside down. You can't afford 79 1 this kind of thing going on and on. 2 That's why these ongoing continuances, this 3 assessor-request for continuance immediately after 4 the applicants put their case on is patently unfair. 5 Especially if the assessors had the information, and 6 we've had this going back and forth of exchanging 7 information. 8 I'm gonna raise one other issue, and then 9 I'm going to address something that was talked about 10 by one of the former County Counsel, Marie LaSala. 11 And that is that there are a lot of elements in the 12 proposed regulation packet that deal with specific 13 issues on 441(d). 14 Should they be in writing, for example. All 15 of these topics have been vetted, were discussed, 16 have been discussed in the IP process. But as I said 17 in the IP process, because the assessors came back 18 and said, "We solved the problem." We did have -- we 19 did have letters where they threatened -- we had 20 assessors who did know the law. And they would write 21 letters that say, "If you don't send us the 22 information, you're going to go to jail." 23 And there were a few bad assessors who put 24 that out. And the assessor -- the CAA did police 25 themselves, and they pulled those letters back. And 26 they -- they cleaned up that process. 27 But as I said to my colleague Larry Stone 28 over here, and Assessor Benson, a few of us have gray 80 1 hair around here. And what happens five years or ten 2 years from now when we're gone, and those young bucks 3 coming up from the Assessor's Offices don't remember 4 that, "Oh, well, you can't threaten somebody with a 5 misdemeanor in a 441(d) letter." 6 Well, that's back in the policies way back 7 when in the CAA. Remember 16 years ago when we 8 approved that, or 8 years ago? 9 And I said to my colleagues as we sat around 10 that table in the IP process, "Let's put this in 11 writing so that we don't have this come up anymore." 12 441(d) requests, I'll tell you, I was seven 13 days before a hearing in San Mateo County, on the 14 phone, attempting to settle a matter. County Counsel 15 for the assessor says, "We would like you to give us 16 this information." And she says it verbally. And 17 I'm like, "That's not in writing." 18 We came to hearing seven -- five days later 19 from the Assessment Appeals Board in San Mateo 20 County, "You did not respond to that verbal 441(d) 21 request made to you during a settlement discussion; 22 assessor gets a continuance." 23 We need them in writing. Then we won't have 24 this. I have brought witnesses out from the East 25 Coast and the Midwest. 26 So, again, it -- good rules make for good 27 neighbors, make for good process. Even if they're 28 little things like "put it in writing." 81 1 Now let me address some of Marie's -- 2 Counsel Marie LaSala's statements. She says that the 3 rule package is gonna interfere with the essential 4 discovery tools, and undermines the assessor's 5 ability to collect information. It facilitates 6 falsification and under-reporting. 7 And then it lists all of these statutes that 8 are gonna be interfered with. And I -- I have first 9 one very quick and easy response. Because all of 10 Ms. LaSala's concerns are primarily focused on 11 proposed Rule 305.1(e). 12 If you read Rule 305.1(e), the first 13 sentence says it's all about Section 441. It's not 14 about Section 442. It's not about Section 454, 470, 15 461, 462, 468. It's not about those. Those are -- 16 those are still going to be there. 17 The scope of what's being proposed there is 18 Section 441. And the assessor still has all the 19 subpoena powers, and all the other powers that they 20 need. And I agree they need them sometimes. And 21 they can use them. 22 The second thing, though, is that Rule 23 305.1(e) -- which has the most substance in the rule 24 packet when you look at it -- puts reasonable and 25 fair limits on information requests. 26 The first sentence tells us how. It says it 27 should be in writing. It says what. It should 28 relate to the subject property. It should be 82 1 relevant. It says when. At least 20 days before an 2 Assessment Appeals Board Hearing. 3 Look, I don't know any county that issues 4 441(d) requests 20 days or less before an Assessment 5 Appeals Board Hearing. It's too late by then. Just 6 as if I -- I couldn't send out the discovery 10 or 20 7 days before a hearing. 8 305.1(e), the second or third sentence says 9 you have to give the authority. The authority you're 10 gonna use. And you can't threaten criminal 11 sanctions. 12 That's fair. That makes sense. It's good 13 for -- it's good for small business owners who are 14 scared of these kinds of letters. 15 The fourth sentence says how Section 441(d) 16 requests and information provided is to be used. 17 It's supposed to be held secret. We know that. 18 That's in the law. It cites the law there that says 19 that. 20 And it says, "Don't use the information you 21 receive from a 441(d) request in hearings for another 22 taxpayer unless you got the permission to do so." 23 And that's in the fifth sentence. 24 And the sixth and seventh sentence, they 25 limit 441(d) requests only to obtaining documents. I 26 have a problem -- I'm having a concern with -- I'll 27 be frank -- with Santa Barbara County. 28 Santa Barbara County issues a 441(d) 83 1 request, and then they want to come and take a 2 deposition of the person who is supposed to be 3 providing the documents. They don't call it a 4 deposition. They call it a sworn statement with a 5 court reporter present. 6 I don't think that's permitted. That's what 7 we're actually litigating, what we've litigated in 8 the Superior Court of Santa Barbara County. 9 441(d) was intended to be an informal way of 10 obtaining information, just like Assessment Appeals 11 Board proceedings were intended to be informal. 12 If the assessor needs formal, go get that 13 bad player who's not giving information, issue an 14 Assessor Subpoena under 454, go to court and get a 15 Superior Court judge under 462 to issue an order. 16 And the reason why -- and I want to go back 17 to compliance hearings. Why not have a compliance 18 hearing? Why not let Assessment Appeals Boards issue 19 compliance -- put on -- do compliance hearings? 20 Because they have no contempt. They have no 21 ability to enforce any kind of order. And also, 22 they're not schooled on how to resolve discovery 23 disputes. Superior Court judges are. 24 If the parties can get together and do it, 25 an assessor and taxpayer, great. But if they 26 can't -- if they can't, shall we ask an Assessment 27 Appeals Board Member -- And, Member Ma, you know 28 this -- who's a CPA, who maybe is a realtor, to 84 1 determine what is the legal relevance of this 2 document. Does this particular statute require it to 3 be turned over? Is this pertinent to a cap-rate 4 determination? Or is this truly rental information 5 that has to be provided? 6 Board Members are not -- not prepared to do 7 that, and really they don't want to do that. 8 MS. MA: And are there lawyers that sit 9 at -- I don't remember lawyers sitting at our 10 meetings. It was just the clerk and just the Board. 11 MR. O'NEALL: And this also varies from 12 county to county. In Santa Barbara -- in San Diego 13 County, one of the Board Chairs, Mr. Schwartz, always 14 wants a Board Member -- an attorney with him. The 15 other Board Members don't ask an attorney to be 16 there. 17 In Kern County, the Board -- the Board 18 always sits with their attorney. In Santa Barbara 19 County, the Board always sits with their attorney. 20 In LA County, they don't sit with their attorney. In 21 Orange County, they only sit with their attorney if 22 asked to be present. 23 So they -- and that varies all over the 24 state as well. In Placer County, they sit with their 25 attorney. And for big cases, they hire outside 26 counsel to sit as the Board's attorney. 27 So, you know, many times, though, the Board 28 doesn't have counsel present to help them with this. 85 1 Particularly big counties like Los Angeles County, 2 it's a big job. More than just probably one county 3 counsel assigned to the Board can handle. 4 Let -- let me just finish with this part, 5 and then I'll close. 6 I believe every sentence in Rule 305.1(e) is 7 consistent with California Statutory Law and 8 California Case Law. It complies with the relevance 9 statutes; it -- it complies with the CRTC [phonetic] 10 statutes. And I think it sets good procedures and 11 good policy and good guidance. 12 Remember, the -- we're not asking -- this -- 13 this package doesn't -- the Board is not changing the 14 substance of the law. The State Board of 15 Equalization would be changing the procedures. And 16 in this area, giving guidance as to procedure is 17 something that you're empowered to do. I think you 18 need to do it. I think -- I think that's one 19 strength that the Board -- this Board has always had 20 is telling everybody, "Here's how we ought to do it." 21 I'll close with this, California Revenue and 22 Taxation Code Section 169 -- that's 169 -- says -- 23 and it's only one sentence -- "The Board" -- meaning 24 the State Board of Equalization -- "shall encourage 25 uniform statewide appraisal and assessment 26 practices." 27 I'll read it again. "The Board shall" -- 28 it's mandatory -- "encourage uniform statewide 86 1 appraisal and assessment practices." 2 I would encourage this body to act upon that 3 requirement in this -- in the -- in Section 169, and 4 help us to get some uniformity in these areas. 5 Thank you very much for your time. 6 MR. RUNNER: Okay. Thank you. 7 MS. HARKEY: May we take a five-minute 8 break? 9 MR. RUNNER: Yes, let's take a five-minute 10 break. 11 MS. HARKEY: Thank you. 12 (Whereupon a break was taken.) 13 MR. RUNNER: I have Troy Van Dongen. 14 MR. VAN DONGEN: Good afternoon, Chairman 15 Runner and Honorable Members. My name is Troy Van 16 Dongen. I am a tax lawyer. I've been -- I've been 17 practicing property tax for roughly 20 years up and 18 down the state. 19 Like Mr. O'Neall, I can confirm that there 20 are -- there's a wide variety of practices at the 21 Assessment Appeals Board. I've handled hundreds of 22 cases myself. 23 I'm also the incoming Chair for the Taxation 24 Section of the California State Bar, now known as the 25 California Lawyers Association. And I serve as the 26 Chair of the Assessment Appeals Board in Marin 27 County. So, in as such, I'm tasked with implementing 28 these rules that you're talking about. 87 1 We have -- just last week our Board had an 2 opportunity to review the proposal. And we've gone 3 through those. And with one exception, we don't have 4 any problems with them personally. 5 We -- we noticed that -- that Section (d) of 6 Proposal Rule 323, which provides for just ten days 7 if the assessor requests a continuance, that just 8 presents scheduling problems for our particular 9 Board. 10 And we did discuss what would be an 11 appropriate timeframe, bearing in mind that there 12 should be some sort of -- in our view some sort of 13 limitation. But we don't want to push it out too 14 far. We thought 90 days would be sufficient for us. 15 MR. RUNNER: Okay. 16 MR. VAN DONGEN: That's really all that I 17 have for you. I appreciate the opportunity to -- 18 MR. RUNNER: Thank you. 19 MR. VAN DONGEN: -- address you, and happy 20 to take any questions if you should have any. 21 MR. RUNNER: Thank you. 22 MS. HARKEY: This is -- this is -- 23 MR. RUNNER: That's helpful. 24 MS. HARKEY: This is Marin County? 25 MR. RUNNER: Marin County. 26 MR. VAN DONGEN: Marin County, yes. 27 MR. RUNNER: Okay. Thank you. 28 I think the way we're going to proceed here, 88 1 and I think you may need to give -- unless you want 2 to join them up there with another chair. But right 3 now you guys work that out over there. 4 I think the way we want to proceed here is 5 to let Members drill down on some of the questions 6 they may have for -- for -- for a bit. And we'll -- 7 we'll start from there. 8 So I'm sure -- who's -- who's ready? 9 MS. HARKEY: Ms. Ma. 10 MS. MA: Go ahead. 11 MR. RUNNER: You ready? 12 MS. MA: Diane usually goes first. 13 MS. HARKEY: No, I'm not -- this is not -- 14 MR. RUNNER: Well, I'll go first while they 15 decide. 16 MS. HARKEY: I've got -- I've got some -- 17 I've -- 18 MR. RUNNER: I'll let them organize their 19 notes here, and I'll just have a couple quick 20 questions. 21 You know, I guess -- I guess part -- part of 22 the issue is conceptual for me. And this is where I 23 kind of -- and in regards to the role of the, you 24 know, the Appeals Board of these issues, and then the 25 role of requirements of materials to get to an 26 appeal. 27 And I guess, generally speaking, I would -- 28 my -- I think I would step back and say, "I don't 89 1 believe a requirement for certain materials should 2 prohibit a person from having their hearing." 3 I just -- I don't -- I won't believe that 4 should happen. And I think I'm getting conflicting 5 information as to whether that does happen or not. 6 Because I think I'm hearing that, indeed, there 7 become requirements that if you don't provide this, 8 then you're -- you're not going to end up in front of 9 the Appeals Board. And I have an issue with that. I 10 just don't believe that that is a -- 11 And, again, I guess I put more faith in the 12 Appeals Boards to say, Hey, look; if somebody comes 13 unprepared, if somebody isn't turning over 14 information correctly to the assessor, then it seems 15 to me the role of the Appeals Board, then, is to find 16 for the, you know -- find for the -- for the county 17 at that point. Because the person didn't provide 18 relevant information. 19 Now, maybe what they'll find is that the 20 information wasn't relevant, and they will make a 21 decision the other direction. And I -- and I guess I 22 have a -- and I guess that's where I start from in 23 regards to some of the issues. That people ought to 24 be able to get to the Appeals Board and have their 25 issue heard regardless as to whether or not they 26 provided all the information that the assessor has 27 determined that they need. 28 Now, let me -- I'll start with the 90 1 assessors. Help -- help me understand why that 2 concept is -- am I missing something there, or -- 3 MR. LEONHARDT: George, what I'd like to do 4 is yield that to people that are actually on the 5 Assessment Appeal Boards or work with the Assessment 6 Appeals. I've got Marcy with me right here. 7 MR. RUNNER: Okay. 8 MR. LEONHARDT: And I'll let her start with 9 that. And I think we've got Tom Parker from LA 10 County. And he can probably address that issue -- 11 MR. RUNNER: Okay. 12 MR. LEONHARDT: -- as well. 13 MR. RUNNER: Okay. 14 MS. BERKMAN: Thank you, Mr. Runner. 15 16 -- 1604(c)(2) of the Revenue and Taxation 16 Code specifically provides in setting for the time 17 period during which hearings should take place, that 18 they don't take place until all the information has 19 been provided. 20 And the reason that the Legislature did that 21 when it set the general two-year statute -- except 22 for that and a few other -- 23 MR. RUNNER: So you believe the statute says 24 that a person -- that -- 25 MS. BERKMAN: It expressly says that. If 26 you look at 1604(c)(2), and under (2) there's a 27 unnumbered paragraphed just under that. 28 MR. RUNNER: Right. 91 1 MS. BERKMAN: And that expressly says that 2 that does not apply when all information has not been 3 provided. 4 And I don't know if the State Board of 5 Equalization has done this yet, but if it has not, I 6 encourage you to do so. I've gone back and read all 7 the legislative history from when that was adopted. 8 And the Legislature, in adopting 1604, was very 9 specific -- 10 MR. RUNNER: So who monitors whether or not 11 the request is relevant? 12 MS. BERKMAN: Ninety percent of the time 13 it's self-monitoring. The applicant -- 14 MR. RUNNER: That's not -- that doesn't 15 sound very protective. 16 MS. BERKMAN: The applicants and the 17 assessors generally -- as the CATA agent said, most 18 of the time, work this out among themselves. 19 MR. RUNNER: Right. Right. Right. 20 MS. BERKMAN: I don't know about other 21 counties. Santa Clara County hears thousands upon 22 thousands of appeals a year. Most of the time the 23 applicants and the agents work this out amicably. 24 When they can't, under -- the Constitution 25 has reserved to -- the County Board of Supervisors, 26 the ability to have local rules of notice and 27 procedure. And this Board has authorized also 28 counties to have prehearing conferences. 92 1 Our local rules specifically provide that 2 applicants, agents, the assessor, the clerk, the 3 Appeals Board, all of them can set something for 4 prehearing conference. 5 So in the rare instance when there's a, 6 quote/unquote, "dispute" -- 7 MR. RUNNER: Mm-hm. 8 MS. BERKMAN: -- about 441(d) compliance, 9 any of them can put that on our prehearing conference 10 agenda. 11 MR. RUNNER: But that's not a hearing. 12 MS. BERKMAN: Right. 13 MR. RUNNER: I mean, I -- I get the idea 14 that you guys have set up these different kinds of 15 steps and whatnot. 16 I guess I'm going back to the -- the core of 17 my question then is, you would believe that the law 18 is very clear that if a -- that the assessor has the 19 ability -- excuse me -- the Board -- the Appeals -- 20 the Appeals has the ability to not hear something if, 21 indeed, the taxpayer has not provided all the 22 requested information? 23 MS. BERKMAN: Yeah. The Revenue and 24 Taxation Code specifically provides that that 25 two-year time period doesn't apply unless all 26 information required by law has -- 27 MR. RUNNER: Okay. Let me -- let me go back 28 to the other side then. Because, again, that -- to 93 1 me, this is a pretty good -- 2 MS. BERKMAN: That being said, before you do 3 that, Mr. Runner -- 4 MR. RUNNER: Yeah. 5 MS. BERKMAN: -- I just want to explain my 6 experience. Sitting with every single appeal that's 7 heard over seven years has been -- at least in our 8 county. Which we're not as large as LA, but we're 9 pretty darn large. It is generally not an issue as, 10 you know, I indicated in my -- 11 MR. RUNNER: Well -- and that's the problem 12 we're having at times when we have this discussion is 13 because we hear it's anecdotal. Because we do 14 hear -- and then everybody's, you know -- and then we 15 have people saying, "Well, that doesn't happen in my 16 county." 17 MS. BERKMAN: It -- it -- the -- the 18 other -- 19 MR. RUNNER: But -- but somebody says, "But 20 it happens over in this county." 21 MS. BERKMAN: Right. 22 The other part of your question, and I think 23 where you started, is in the instances where there's 24 a dispute, and don't you just find for the taxpayer, 25 I know one of the biggest concerns for my Boards, for 26 the assessors -- 27 MR. RUNNER: No, I didn't say if there's a 28 dispute, you find for the taxpayer. 94 1 MS. BERKMAN: Well, if -- if they haven't 2 turned it over. If -- if they haven't -- if they 3 haven't turned it over, and you go ahead -- I'm 4 sorry -- and that you find for the county -- 5 MR. RUNNER: Right. 6 MS. BERKMAN: -- one of the biggest 7 issues -- and I know that that's CATA's position. 8 You know, they've often said, "If we don't 9 provide it to them -- if we think it's not relevant, 10 and we don't provide it to them, and we suddenly show 11 up at hearing, 441(h) let's them continue. And 12 that's correct. 13 But the big issue for the Appeals Boards is 14 there can be information that assessors requested -- 15 MR. RUNNER: Uh-huh. 16 MS. BERKMAN: -- and applicants don't want 17 to provide it. 18 MR. RUNNER: Right. 19 MS. BERKMAN: Because it might result in an 20 increase in value for their applicants, who really 21 wouldn't be very happy if the agents come back with 22 an increase in value. 23 MR. RUNNER: Right. 24 MS. BERKMAN: Or they just have a difference 25 in opinion. And we find this, for example, 26 frequently with data centers. Of which there are a 27 lot. 28 MR. RUNNER: Okay. But wouldn't that just 95 1 be argued at the hearing? 2 MS. BERKMAN: Well, no. Because -- 3 MR. RUNNER: Wouldn't that be -- wouldn't 4 that be the content of the hearing, "Hey, look, we -- 5 we -- we didn't provide -- the reason we think they 6 didn't provide it is because they think it may be 7 increasing their -- their -- their -- their -- 8 their -- their -- their property tax exposure. 9 And so that becomes part of the discussion 10 that the -- that the Appeals Board hears. 11 MS. BERKMAN: Well, there are times when our 12 assessor -- it -- first -- first of all, it's the 13 Appeals Board and their clerks who set the hearing 14 dates and cooperates -- 15 MR. RUNNER: Right. Right. 16 MS. BERKMAN: -- with the assessor -- 17 MR. RUNNER: Right. 18 MS. BERKMAN: -- for when it's convenient. 19 But sec -- so sometimes you do, in fact, see 20 assessors say, "They haven't provided all the 21 information in response to our 441(d)." 22 And then our Appeals Board says, "You have a 23 right not to go forward yet if they haven't provided. 24 Do you want to wait?" 25 And they'll say, "No, we don't think it's 26 coming. And we're willing to work with what we 27 have." And the law allows us to -- 28 MR. RUNNER: Right. 96 1 MS. BERKMAN: -- make our best estimate. 2 And that does, in fact, happen. The danger 3 that happens with that is -- 4 MR. RUNNER: But -- but you're saying that 5 does happen, but you're saying that the law, then, 6 would allow them not even to schedule that hearing. 7 MS BERKMAN: Yes, that's correct. 8 MR. RUNNER: Okay. 9 MS. BERKMAN: And that does -- that does 10 happen very frequently. 11 MR. RUNNER: Well, I think -- right now I 12 want to discuss what the law says. 13 MS. BERKMAN: Yes. 14 MR. RUNNER: So I -- is that correct? 15 MR. O'NEALL: Mr. Chairman, it is incorrect. 16 4 -- 1604(c)(2) -- we have to remember the 17 context of 1604(c)(2). It is for those situations in 18 which an Assessment Appeals Board failed to hear the 19 application within the required two years. 20 And one of the elements for that to be 21 enforced is whether or not a taxpayer had supplied 22 the information. 23 The result is, look, if the -- if the 24 taxpayer supplied the information, then the 25 taxpayer's opinion of value goes on the role, because 26 the Assessment Appeals Board made a stake -- made a 27 mistake and didn't hear it within two years. 28 Now, if the taxpayer didn't, then we go 97 1 forward with a hearing on -- and the taxpayer's value 2 is not enrolled. 3 There is nothing in 1604(c)(2) second 4 paragraph that says there will be a noncompliance 5 hearing if that taxpayer doesn't do that. 6 What it does say, and it says this two other 7 places in the Revenue and Taxation Code, is someone's 8 gonna have to figure out whether or not the taxpayer 9 complied with 441(d) or not. 10 But how that happens is not an Assessment 11 Appeals Boards. They're not set up to do that. We 12 have an Assessment Appeals Board member here. We 13 have Member Ma with us today. 14 The way the thing was set up is if you 15 didn't get the information, Mr. Assessor, go to 16 hearing. Because maybe the taxpayer won't even 17 provide that information, and we'll just go forward 18 based on the evidence that we've got. 19 If the taxpayer shows up with that 20 information and you go, "Ah-ha. I asked for that in 21 that letter. It was item three in paragraph two. 22 How come you didn't give it before?" 23 The Board will go, "441(h). You're entitled 24 to a continuance, Mr. -- Mr. -- Mr. Assessor. And, 25 you know what, we're gonna give it to you unless you 26 say you don't want it." 27 Or the assessor, if he wants the information 28 before the hearing, and he didn't get it, and he 98 1 doesn't use the 1606 exchange, he can issue a 454 2 Assessor Subpoena. 3 If the applicant doesn't comply then, he can 4 go to a Superior Court judge and say, "Your Honor, 5 use your contempt -- first, use your contempt powers 6 and order this guy, or this -- this taxpayer to turn 7 the information over." 8 That's the way the system works. And it's 9 that way because AABs don't have the power of 10 contempt. They can't send the sheriff out to get the 11 information. And they're not schooled in how to 12 handle these things. 13 I have yet to see -- rarely I see a 14 case -- and I guess this is an attorney who sits as a 15 Chairman -- I have yet to see an Assessment Appeals 16 Board who says, "Oh, great. Let's spend the next 17 hour talking about whether that document you want is 18 relevant or not." 19 In my opinion, let's push it down the road. 20 And there's two ways to do that. One is no hearing. 21 "You guys go out in the hallway, or go away and talk 22 about it for 90 days." Or no hearing at all. We're 23 done. 24 But that's not permitted under the law. 25 That's not the way it's set up. 26 MR. RUNNER: Okay. Okay. Again, I've -- 27 we've got two -- two different opinions here on that 28 particular issue. And I guess we will -- as we talk 99 1 about this some more, I'm sure we'll be -- we'll be 2 dealing with it again. 3 So Member Harkey. 4 MS. HARKEY: I -- I just have a question. 5 I mean, San Diego, Orange County are not 6 here. They're not apparently having problems. Marin 7 says they're okay. Do we just perhaps maybe have 8 some bad actors, you know, in -- in certain counties? 9 I mean, what -- is -- is there -- are 10 there -- are there particular counties -- and maybe 11 you won't want to point the finger, but is there -- 12 is there some particular county driving a lot of the 13 processes that, you know, quite honestly seemed to be 14 different in each county? Because there are some 15 counties that seem to have a process and it works 16 MR. APREA: Mr. Chair, Madam -- 17 MR. RUNNER: Yes. 18 MR. APREA: Ms. Harkey, let me respond to 19 that. 20 And I'm -- I am not going to name a 21 particular county. Because I don't think it is a 22 single county. 23 I think the testimony both by the assessors 24 and the testimony offered today by Mr. O'Neall 25 address something fundamental here. And that is, is 26 that there is a lack of uniformity from county to 27 county. 28 And as Mr. O'Neall concluded in terms of the 100 1 Board's duties, there is, I think -- I think it is 2 demonstrated to you by both the opponents to this reg 3 package, and as well as the supporters of this reg 4 package, that, you know -- that it is -- there is not 5 consistent practices throughout, and that they're not 6 observing the existing statute and existing rules and 7 applying them in a comparable fashion across the 8 state. 9 And I think to your question -- and I don't 10 want to point fingers -- but the fact of the matter 11 is that that lack of consistency is what is violating 12 taxpayer's due process. Because I can -- I can do 13 okay here; but in this case, I'm -- I'm not. And I'm 14 not gonna get my hearing. 15 And this whole issue of the two years, it's 16 been stated, "Well, everybody gets their case 17 resolved in two years." No, they don't. Because -- 18 MS. HARKEY: I know this. 19 MR. APREA: -- many taxpayers and many tax 20 agents don't want to poke the bear. 21 And I think that, you know, the fact is, is 22 that the assessors are going to get their continuance 23 if it is asked for simply because the taxpayer 24 doesn't want to, and the tax agent doesn't want to 25 offend the assessor. 26 The assessor has significant power that is 27 not, if you would state it in the law, but is -- is 28 able to exercise that through the process. 101 1 So I think that this issue is not a benign 2 one. It is one in which you have very significant 3 differences in how assessors practice, in how 4 Assessment Appeals Boards practice. And, in fact, we 5 see from county to -- from even within the county 6 that those larger counties, that the Assessment 7 Appeals Boards also behave differently within. 8 We've also heard Mr. O'Neall talk about, 9 "Well, in some counties, couns -- you know, there's a 10 lawyer present. In others, there is not." 11 And so it is our petition to you that not 12 only that you make a change to the rules, but that 13 these rules be uniformly enforced across -- across 14 the Board. And that's in large part why we're here. 15 MS. HARKEY: Are there -- my next question 16 then goes -- is there maybe something wrong in the 17 assessor process that there are so many appeals? Is 18 there something that maybe needs to change in 19 different offices? 20 Now, I know these are elected assessors. 21 But taking the politics out of it, is there something 22 that maybe the County Assessors Group should do, 23 should take part in in ensuring that, you know, maybe 24 the practices of a county that's got thousands of 25 appeals, you know, are they -- are they because -- 26 are -- are they -- are they being assessed properly 27 to begin with? 28 And why don't you answer that? You look 102 1 like you're waiting. 2 MS. BERKMAN: I -- I think probably that's 3 more proper for the assessors. 4 But as AAB Board Counsel, what I can tell 5 you is that the applicants and the assessors resolve 6 a huge proportion. I think most -- something like 7 90/95 percent informally. 8 And many of those are simply by the 9 applicant withdrawing once they've had a chance to 10 have an informal discussion with the assessor staff, 11 and understand why their value on the roll is as it 12 is. 13 Of those that come before the Appeals Board 14 and are heard, I think there is a number -- I don't 15 know the exact percentage offhand. I would estimate 16 off the top of my head maybe 10 percent where the 17 applicant changes the value. 18 There's another percentage where having 19 prepared for the hearing, the assessor realizes that 20 the roll value is too high, and actually recommends a 21 lower value to the Board based on information that 22 they did not have at the time of the original roll 23 that they've since discovered through talking with 24 the applicant and further working up the case. And 25 they come forward to the Board with better values 26 saying, "Our recommendation is this value." 27 And in many of those cases, stipulations are 28 reached for the applicant well before the Board. And 103 1 every one of those stipulations goes through my 2 hands. And so the vast majority of cases are 3 informally resolved or are are resolved through 4 stipulations. 5 And another large chunk is resolved through 6 the assessor coming in with a lower recommended value 7 based on information they obtained from the applicant 8 during the course of preparing for the appeal. 9 MR. STONE: I think Assessor Gaekle, the 10 statistics that he gave to you are pretty 11 consistent,at least with my county. Less than five 12 percent of all assessment appeals filed actually end 13 up in a hearing. About half of them go away, because 14 -- usually because the taxpayer, often residential, 15 doesn't understand the system. So they withdraw 16 them. 17 There's reductions given or changes of some 18 kind given of about 45 percent of the time. But less 19 than five percent actually end up with the things 20 we've been talking about here. 21 MS. BERKMAN: Yeah. One thing we see a lot 22 of, for an example -- and I'm sure the Board Members, 23 both as Board Members and probably individual 24 homeowners -- understands there's a lot of 25 individuals. Generally, not those represented by 26 agents, but those, especially homeowners and small 27 business people who represent themselves. And many 28 of them did not live in California when Prop. 13 104 1 passed, and when and when Prop. 8 passed. And so all 2 they know is -- referring they hear -- that you can't 3 raise the value more than two percent a year. 4 So when you're coming off of -- for example, 5 when we had the last economic decline, and values 6 fell through the floor. And then they come back at 7 faster than two percent a year on their way back up 8 to the factored base of your value. The applicants 9 are horrified by this. Because the only thing that 10 they know about California Tax Law is Prop. 13 says 11 you can't raise my value more than two percent a 12 year. 13 And when they speak with the assessors 14 informally about it, they think, "You're the 15 assessor. You're trying to do me in. You're against 16 me." And then they come to the Board, and the Board 17 explains to them that they're the impartial 18 quasi-judicial body. They explain or ask the 19 assessor to explain "this is how it works and what's 20 happening here is you're being restored from your 21 property." 22 So we do see a large number of those cases. 23 I'm not sure how many of those CATA ends up handling. 24 I assume that mostly they stipulate to those when 25 their applicants have filed them. 26 But especially with individuals handling 27 their own cases. We see a lot of types of those 28 things where they just simply don't understand 105 1 California law. 2 Or we see a lot of cases, for example, where 3 the applicant signed her cousin onto the house, or 4 her sister, or her brother. Or it came out of trust 5 and -- to the sister, and the sister gave it to the 6 brother. And to them it's all in the family. And 7 they don't understand. "It's not a change of 8 ownership, it's still my family." 9 And so a lot of the things that come before 10 the Board are those kinds of cases where applicants 11 simply don't understand the law. 12 And we also get a significant portion where 13 they do understand the law, but perhaps they've come 14 from some place where the system is different. And 15 they hope that if they come in, that the Board will 16 negotiate with them and give them something. Because 17 they're nice people, or they're taking care of their 18 parents, or whatever it is. And that if they just 19 come in and plea for the mercy of the Court -- 20 MS. HARKEY: Okay. 21 MS. BERKMAN: -- that they'll get a reduced 22 value based on that. And based on the fact that it's 23 hard for them to pay their taxes, rather than based 24 on the actual values. 25 MS. HARKEY: Okay. Thanks. I think that's 26 the -- that may be a little unusual -- 27 MR. O'NEALL: Member Harkey, if -- 28 MS. HARKEY: Yes, please, if you would. 106 1 MR. O'NEALL: If you study the statistics, 2 which the Board -- this Board puts forth on appeal 3 applications filed every year and processed every 4 year. Generally speaking, it just follows the 5 economic trend. When -- when in the 1990s, as I 6 recall, LA County was getting -- had at one point 7 over 100,000 assessment appeal applications filed. 8 But it's where we were on the economic cycle. 9 I don't think there's probably anything that 10 can be done upfront by assessors, you know, to 11 sort -- to sort of keep the number of applications 12 down. Because it -- it really -- a large part -- 13 people look at what's going on economically, and they 14 say, "Gee, the market's down; my value should go 15 down." And -- or, "The market's up, but it didn't go 16 up that much. Why -- why am I being over-assessed?" 17 And I think it's very hard -- it would be 18 very hard for assessors to be able to say, "Well, we 19 can flag -- 25 percent of ours somehow are gonna 20 just -- we should just be able to remove them right 21 away by doing something else." I think that would be 22 difficult to do. 23 MS. HARKEY: Okay. What were -- what we are 24 being asked, though, here is to begin with the 25 regulatory process. 26 Which would have -- and this is just for our 27 counsel -- which would have what other steps? It 28 wouldn't end an IP process, would it? I mean, there 107 1 would still be input? 2 MR. NANJO: That is correct, Member Harkey. 3 There's -- there -- the challenge is, this 4 coming up as an L Item kind of bypasses the Board -- 5 as I understand it -- the Board's standard of 6 regulatory process when there's an interest. 7 For example, one of the ways this could have 8 been handled is Mr. Aprea's request could have been 9 viewed as a petition to amend tax rules. 10 If that was -- if that were to occur, then 11 we would have had a -- under the Board's process, we 12 would have responded to them within 30 days, 13 acknowledging that request. 14 And then at that point, Legal would have 15 prepared a memo. And that memo would have been 16 presented under Chief Counsel Rulemaking. And that 17 would be presented to the Board for the Board's 18 discussion as to whether or not this is something 19 that they wanted to move forward on. 20 The Legal memo under the Chief Counsel's 21 Rulemaking section would have had pros and cons. 22 Kind of -- tried to be as neutral of an analysis of 23 the proposal as possible. And at that point, the 24 Board makes their decision. 25 Once the Board makes their decision to go 26 forward, at that point, then, Legal would be 27 preparing the package, the notice, and all other 28 documents necessary to go to OAL to make those 108 1 regulatory changes. And that, in and of itself -- 2 MS. HARKEY: Is there -- is there still an 3 open process through a regulatory process? 4 MR. NANJO: Yes, there is. 5 There is the Board process. And the 6 Board -- through the OAL process, typically there is 7 a public comment period, and there is a period by 8 which you take comments from various interested 9 parties. 10 The Board, historically, as I look through 11 the Board's history, has used the IP process to take 12 public comment and get input. 13 So that's the methodology which the Board 14 has used in the past. 15 MS. HARKEY: Okay. That's -- that's kind of 16 the point of this, though, is the IP process seems to 17 have fallen down. And it seems to be getting 18 delayed, delayed, delayed. 19 What I recall, we got a whole package from 20 CATA a couple years ago asking us to begin this. It 21 kind of dropped for a while, because we were going 22 through our re-org. 23 And, quite honestly, I think property tax 24 hasn't had quite the attention it should have had on 25 the Board because of all the other issues that we 26 were dealing with. 27 So I'm just wondering, putting it on the L 28 agenda, could we -- I don't know who wants to do -- 109 1 or who -- who wants to do what. But I think we've 2 seen that -- I mean, there are -- there is legal 3 justification for what's being requested. I'm just 4 wondering about a process for it. 5 Could it come through on the -- 6 MR. RUNNER: Well, I think -- I think -- 7 MS. HARKEY: -- on the -- 8 MR. RUNNER: Let's just clarify what our 9 process could be. We know what it isn't. 10 MR. NANJO: Right. 11 MR. RUNNER: So -- so our options moving 12 forward -- 13 MR. NANJO: At this point, your option 14 moving forward is if the majority of the Board 15 decides that they want to go forward, my 16 recommendation to you as your Chief Counsel would be 17 for you to direct Legal to do their analysis and 18 prepare the legal memo. 19 Then, at next month, if we could do it that 20 quickly -- although this is a complicated matter. So 21 I don't know if I could turn it around in 30 days. 22 But I will do my best. 23 Legal would prepare a memo that would come 24 up under the Chief Counsel's Rulemaking session. 25 Which I think is a "C" or somewhere earlier in the 26 calendar, I believe. And that at that point we would 27 preparing -- we would be presenting the Board Members 28 our legal analysis. Which is kind of pros and cons 110 1 of what our recommendations are, vis-a-vis if you 2 want us to move forward with the CATA suggestion, 3 that's what we'd be analyzing. 4 MS. HARKEY: I think that -- I don't know. 5 Member Runner. 6 MR. RUNNER: Well, let me get some more 7 discussion. 8 MS. STOWERS: When you -- when you talk 9 about the legal analysis and the pros and cons, I 10 need a little bit more clarification. Because we 11 have all these letters from the county that's 12 basically saying that the proposed rules are 13 violating different existing statutes. 14 And then we have CATA saying, "No, that's 15 not true. They're not violating." 16 So would you be providing an analysis on 17 whether or not there's a violation in another 18 statute? 19 MR. NANJO: Right. We would -- we would 20 provide our point of view as to what we think -- 21 whether it does violate the statute, whether it 22 doesn't violate the statute, you know, any 23 challenges. We would try to point out challenges. 24 Again, our -- our -- our document would be 25 guidance to the Board based on all the information 26 presented. 27 MS. STOWERS: Okay. 28 MS. HARKEY: And that would come on -- 111 1 MS. STOWERS: And that would come back. 2 MS. HARKEY: And then that would come on the 3 agenda. 4 MR. NANJO: Right. 5 MS. HARKEY: And then it would be public -- 6 publicly noticed. 7 MR. NANJO: Right. 8 MS. HARKEY: Everybody could opine and do 9 their research. And we could have another discussion 10 of this. 11 MR. NANJO: Right. And at that time, the 12 Board, based upon both the public comment at that 13 time and Legal's analysis, could either make the 14 decision to direct staff to move forward with the OAL 15 rulemaking process. You could presumably pick and 16 choose. You don't have to listen to everything Legal 17 says. You can decide to take parts of it, or 18 whatever the Board's pleasure is at that point. 19 MS. HARKEY: Yeah. And I think -- I think 20 that's the reason, kind of, this agenda item came 21 forward, is we were trying to drive a process. And I 22 don't know that it was being driven. 23 So, you know, I -- I mean, I would love to 24 make a motion to -- 25 MS. STOWERS: Before you make a motion, I 26 still have comments. 27 MR. RUNNER: Okay. Go ahead. 28 MS. HARKEY: Well, you can have comments 112 1 after a motion and a second. 2 MS. STOWERS: Go ahead, make your motion. 3 MS. HARKEY: Whatever you wanna do. 4 Whatever you wanna do. 5 MR. RUNNER: Let's go ahead and hear the 6 comments. 7 MS. HARKEY: Okay. 8 MR. RUNNER: That way our discussion can 9 stay focused on the -- on the -- on the -- 10 MS. HARKEY: Okay. 11 MR. RUNNER: -- motion once it's made. 12 MS. HARKEY: Fine. 13 MS. STOWERS: Okay. I understand that we -- 14 we -- we could say, "Okay. Let's adopt these 15 proposed rules." Chief Counsel would write an issue 16 paper. 17 Now, I don't have a question, but I do feel 18 that the rules being proposed are very specific on 19 what you guys are looking for. And I will 20 acknowledge that the discussion paper that we've been 21 working on in the IP meeting did not lay them out in 22 that foundation, you know, where amend this rule to 23 do this; amend this rule to do that." 24 And I really think that we should go back to 25 the IP process and just incorporate all these 26 proposed changes into the meeting that's scheduled 27 for August 16th. 28 And at that time, BOE staff, Legal, should 113 1 be preparing a legal analysis on these rules. Finish 2 the IP process, which we're very close to the items. 3 Write the issue paper like we normally do. And bring 4 it back to the Board to decide our normal process. 5 If we want to adopt one, two or three, or all of the 6 proposals. I just think that we still need to keep 7 the IP process moving forward. 8 MS. HARKEY: Member Runner. 9 MR. STONE: There -- there are issues in the 10 IP process that are not yet been -- 11 MS. HARKEY: Okay. This is -- this is the 12 Board. 13 I'd -- I'd like a comment. 14 MR. RUNNER: Okay. 15 MS. HARKEY: I think I am very concerned 16 because I heard that there were 28 issues, and that 17 they couldn't be resolved. And then I'm hearing this 18 boil down to really four maybe statutory issues that 19 can be resolved. 20 There is a dispute whether they're statutory 21 violations or that they're statutorily allowed. And 22 because it's taken two years, I would like to -- I 23 mean, if we end up having to go back to an IP 24 process, that's fine. But I'd kind of like to get 25 this rolling through, you know, to direct 26 Chief Counsel to make a rulemaking process. Which 27 would then get some of these issues faired out. 28 And then we could have another discussion 114 1 here. If the Board still was confused or couldn't 2 decide, then they could, in fact, go back to an IP 3 process. 4 But, I think there's just -- you know, 5 there's 20 -- we've got a few issues here. One of 6 them -- the majority is -- is the Section E. And, 7 you know, I -- I see one, two, three, four, five -- 8 maybe five circumstances here that seems to be the 9 crux of the issue where the assessors are saying they 10 can't do, and the proposers are saying they're 11 totally legal. 12 And I think I'd like, you know, a thorough 13 legal analysis before just sending this back to 14 everybody to go talk again. And then wait another 15 year. 16 So that's kind of where I am. And that 17 doesn't mean it couldn't be pulled back off. But, 18 you know, I think -- I think we need a serious focus 19 and analysis on the suggestions. 20 Especially when we've got some counties 21 saying it works. I know the smaller counties may 22 have other issues that can be worked out. But we've 23 also got the California Association of Clerks and 24 Elected Officials that came up with some very salient 25 points that they were incom -- they -- they felt 26 they -- it could be worked with, with some minor 27 revisions. 28 And so I'm looking at this thinking, "Okay. 115 1 We can set this back for more -- more IP talks that 2 seem to get very confused, you know? And seems to be 3 a matter of how many show up at what time, rather 4 than are there just a couple of spokespersons from 5 each side that can really drive the process forward. 6 And I know that's what an IP process is for. 7 But I'd really -- I'd like to just see -- I'd like to 8 make a motion to direct Chief Counsel to begin the 9 rulemaking process. Hopefully back to this Board 10 within 30 days. If not, we could extend that. But 11 that's -- that's what I would like to see happen. 12 MR. RUNNER: Just for clarification, the 13 intention of the motion to begin the rulemaking 14 process is using this -- what's before us as the 15 base? 16 MS. HARKEY: What's before us as the 17 base -- yeah. To begin the -- to begin the 18 regulatory process, I think, is what I need. 19 MR. NANJO: Member Harkey, if I could make a 20 clarification or suggestion. 21 MS. HARKEY: Please do. 22 MR. NANJO: The motion I would suggest would 23 be to direct Chief Counsel to start the preliminary 24 analysis, so that we can -- the Board can decide 25 whether it wants to formally engage in the regulatory 26 process. Because that's kind of the second step 27 after I give you my analysis. 28 MS. HARKEY: Okay. Then that's my motion. 116 1 So moved. 2 MR. RUNNER: Okay. 3 MS. MA: I -- I do have a couple of -- I 4 heard from -- 5 MR. RUNNER: I'll second that. 6 MS. HARKEY: Okay. We have -- 7 MR. RUNNER: But then we can -- 8 MS. MA: Have discussion. 9 MS. HARKEY: Then we can discuss. 10 MR. RUNNER: Then we can discuss it. Yeah. 11 MS. MA: Okay. So I did hear from 12 Mr. Troy -- I'm not sure your last name. 13 MR. VAN DONGEN: Van Dongen. 14 MS. MA: Yeah. 15 And some of the assessors that the 10-day 16 period was not workable just because of meeting 17 schedules and others. And I would like to make an 18 amendment to 90 days for that section. Which I think 19 would alleviate -- 20 MR. VAN DONGEN: Yes. 21 MS. MA: -- the concerns here. 22 I also agree with Member Runner that -- 23 MR. RUNNER: Is that the only change you 24 have? 25 MS. MA: That's the only change, yes, 26 specifically. 27 MR. RUNNER: Okay. Is the motion-maker okay 28 with that? 117 1 MS. HARKEY: I'm fine with that. 2 MR. RUNNER: And I'm okay with that. 3 MS. HARKEY: And, excuse me, I don't know 4 that we can adopt that here. 5 MR. KINNEE: Dean Kinnee, Executive 6 Director. 7 If you maybe want to correct the motion to 8 direct the Executive Director to -- 9 MR. RUNNER: Thank you. 10 MS. HARKEY: Can -- can we repeat that 11 motion then? Let's repeat the motion. 12 I'll withdraw the motion, and we'll withdraw 13 the second. Let's get one motion on. 14 Thank you. 15 MR. NANJO: So as I understand the motion, 16 the motion is to -- for the Board to direct the 17 Executive Director to ask the Chief Counsel to 18 prepare the preliminary analysis on the proposed CATA 19 regulatory changes, with the exception of changing 20 the date from 10 days to 90 days, as I understand 21 it. 22 MS. HARKEY: Yes, I support that. 23 MS. MA: I -- I do have another question. 24 So when -- when you say direct Legal to do 25 an analysis, prepare a legal memo -- 26 MR. NANJO: Yeah. 27 MS. MA: Is that you, Mr. Nanjo? And then 28 I'm wondering, how are you going to assess, right? I 118 1 mean, we heard here. But, you know, -- are -- are 2 you gonna -- 3 MR. RUNNER: The attorneys disagree with 4 each other. 5 MS. MA: Right. So are you gonna call all 6 of the 58 counties? I mean, like, how are you going 7 to prepare the legal memo that is going to guide us 8 to what we should be -- 9 MR. NANJO: So -- so what -- what the 10 legal -- I'm just repeating what the process, as I 11 understand it, has been in the past with this Board. 12 What your Chief Counsel -- it could either 13 be myself or my staff, or us in teamwork with each 14 other. But what we're providing you is, as our -- as 15 your counsel, the Board's counsel, our independent, 16 legal analysis as to what we think the potential 17 legal challenges are, if any. Any, you know -- we 18 don't make -- we are not making the program decision. 19 We are looking at it strictly from, "Are there any 20 legal issues with the proposal as it stands?" 21 MS. MA: Okay. So I would then also agree 22 with Ms. Harkey that it seems like the contentious 23 issue is really -- 305.1(e) is where I think most of 24 the disagreements are. 25 And so I would ask that you focus on those. 26 Because we've heard constitutionality. We've heard, 27 like, suing. We've heard, you know, other issues, 28 right, about confidentiality. That there is a 119 1 process already there. That they can subpoena. That 2 they can go to court. I mean, I think that all needs 3 to be clarified. 4 But I would agree with Member Runner that, 5 you know, being denied -- a taxpayer being denied a 6 hearing because they did not submit the information 7 that is determined by the assessor's office only for 8 the 4 -- 441(d) letter is not reasonable. 9 I have heard cases where people come before 10 us back then, and they were like, "Well, the taxpayer 11 brought nothing. And the taxpayer brings nothing, 12 then the taxpayer loses the case," right? 13 So, you know, I mean, that's what a 14 quasi-judicial Board does is hears the evidence and 15 listens to the facts and circumstances. 16 But being denied that, I think we as a 17 Board, have been very conscious about making sure 18 that taxpayers that want to be heard, that want to 19 postpone, reschedule, you know, to give the taxpayer 20 that day in court. And if they're not prepared, 21 they're not prepared. 22 But to deny them, you know, one-sided, 23 without that opportunity to present their case, I 24 don't think that that is fair and just. 25 MS. HARKEY: Yeah. I have a motion out, but 26 there's been no second. 27 MR. RUNNER: Well -- 28 MS. HARKEY: No, we're -- 120 1 MR. RUNNER: I'll second the motion that was 2 the rephrased motion, which directed the ED and made 3 the change on the proposed reg. 4 Okay. Any other discussion? 5 MS. STOWERS: I'm going to be objecting to 6 that -- 7 MR. RUNNER: Okay. 8 MS. STOWERS: -- to the motion. I -- I -- 9 MR. RUNNER: Okay. 10 Again, just to clarify what's gonna -- 11 what's gonna come back to us is gonna be obviously 12 before us at the next meeting is not gonna be a set 13 of regs to -- to -- to adopt. It's going to be -- 14 it's going to be the legal analysis of the -- of the 15 material that -- that we were discussing that have 16 been the nature of this discussion. 17 MR. NANJO: And a recommendation from Legal 18 Department. 19 MR. RUNNER: Right. 20 MR. NANJO: And then, at that point, if the 21 Board has consensus, the majority of the Board votes 22 for a regulatory change, at that point, then, you 23 would direct -- 24 MR. RUNNER: And it may be parts and pieces 25 of whatever -- 26 MR. NANJO: Exactly. And at that point, you 27 can direct the Legal counsel to -- 28 MR. RUNNER: Right. 121 1 MR. NANJO: -- prepare the notice of 2 regulatory action. And that's when you actually 3 start the regulatory process. 4 MS. HARKEY: Thank you. 5 MR. RUNNER: Okay. 6 MS. STOWERS: So I'm assuming that the 7 motion is gonna pass. So are we going to continue 8 with the August 16th IP meeting, or should we suspend 9 that meeting since -- 10 MS. HARKEY: No, there -- 11 MS. STOWERS: -- we are -- 12 MR. RUNNER: I'm going to let the staff 13 decide if they feel like that IP -- that IP meeting 14 would be necessary given the new direction that they 15 have. If it's helpful to them in preparing their 16 material, then they would have it. If it's not -- 17 MS. STOWERS: Okay. That's good. 18 MR. NANJO: I would make the suggestion as 19 your counsel that you continue with the IP meeting. 20 Because when this comes back with counsel's 21 recommendations, you're still going to have these 22 discussions. So to the extent you can narrow down 23 any of the issues, I think would -- 24 MR. RUNNER: Yeah. I -- I think that's, 25 again, in their decision process. 26 MS. STOWERS: I just want to say, for the 27 record, I definitely support Chief Counsel doing the 28 legal analysis and looking at the various proposed 122 1 rule changes. 2 I am taking issue with the process because 3 the proposed rule changes, in my opinion, should have 4 really have come to us as a petition to amend the 5 rules from CATA or their agents. And at that time, 6 our Legal counsel could have done this analysis and 7 saved us a lot of time. 8 I mean, it's great to hear from the public. 9 But it's very difficult to hear from the public when 10 you don't have a single -- one single document 11 outlining everything. 12 We had the proposed rule changes, and we had 13 maybe 30 letters from the assessors or the other 14 parties objecting to various areas of it. And I know 15 I personally spent a lot of time looking at each one 16 and going back and forth to the different code 17 sections that were being cited. 18 So I'm objecting on policy. 19 MR. RUNNER: Okay. 20 MS. STOWERS: We should have gone through 21 the regular petition with that legal analysis 22 upfront. And we could have that analysis before us 23 right now. 24 MR. RUNNER: Okay. I think we're going to 25 get to where you want to get to in the end. 26 MS. STOWERS: Mm-hm. 27 MR. RUNNER: Please call the roll. 28 MS. RICHMOND: Chairman Runner. 123 1 MR. RUNNER: Aye. 2 MS. RICHMOND: Ms. Ma. 3 MS. MA: Aye. 4 MS. RICHMOND: Ms. Harkey. 5 MA. HARKEY: Aye. 6 MS. RICHMOND: Ms. Stowers. 7 MS. STOWERS: No. 8 MS. RICHMOND: Motion carries. 9 MR. RUNNER: The motion carries. 10 Okay. That takes us on to the next item, 11 which, I believe, is Item L4. 12 ---oOo--- 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 124 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 24, 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 124 14 constitute a complete and accurate transcription of 15 the shorthand writing. 16 17 Dated: September 28, 2018 18 19 20 ____________________________ 21 JILLIAN SUMNER, CSR 22 23 24 25 26 27 28 125