1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 REPORTER'S TRANSCRIPT 7 AUGUST 21, 2018 8 9 10 11 12 13 ITEM K1 14 EXECUTIVE DIRECTOR'S REPORT; 15 K1.1; 16 ORGANIZATIONAL UPDATE 17 18 19 20 21 22 23 24 25 26 27 REPORTED BY: Jillian M. Sumner 28 CSR NO. 13619 1 1 P R E S E N T 2 3 For the Board Equalization: 4 Honorable George Runner Chair 5 Honorable Fiona Ma 6 CPA, Vice Chair 7 Honorable Jerome Horton Third District 8 Honorable Diane L. Harkey 9 Fourth District 10 Yvette Stowers Appearing for Betty T. 11 Yee, State Controller (per Government Code 12 Section 7.9) 13 Joann Richmond Chief 14 Board Proceedings Division 15 For Board of Equalization Staff: Dean Kinnee 16 Executive Director 17 18 ---oOo--- 19 20 21 22 23 24 25 26 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 AUGUST 21, 2018 4 ---oOo--- 5 MS. RICHMOND: Our next item is Item K, 6 Other Administrative Matters; K1 is the Executive 7 Director's Report; Item K1.1, Organizational Update 8 MR. KINNEE: Good afternoon, Chairman 9 Runner, Honorable Members. I'm Dean Kinnee, 10 Executive Director of the Board of Equalization. 11 This month's report provides updates on the 12 following topics: 13 BOE Sacramento office consolidation plans; 14 Proposition 5 implementation planning; and BOE Web 15 site. The planning activities to consolidate our 16 headquarters and all of -- all other Sacramento 17 offices into one facility in Natomas continues. 18 As part of the process, we continue to have 19 discussions with the Department of General Services 20 about determining office and work space needs for 21 BOE. 22 Concurrent with our discussion with DGS on 23 construction relocation activities, we are working 24 with the California Department of Tax and Fee 25 Administrations Budget Office and the Department of 26 Finance regarding our budget and funding to cover the 27 cost. Initial cost estimates are pending. 28 At past meetings, the Board has asked if DGS 3 1 would be willing to make a presentation to the Board 2 on the office of consolidation plan. I've spoken 3 with DGS's Chief Deputy Director, Mr. Jeff McGuire, 4 and he's indicated that DGS is prepared to come to 5 the September 25th, 2018 Board Meeting to discuss 6 this matter, if that's the wish of the Board. 7 Proposition 5 implementation planning. As 8 you're aware, Proposition 5, which is on the 9 November 6 ballot, would make changes to the 10 requirements for certain property owners to transfer 11 their property tax base to replacement property. 12 At the recent Northern California Assessors 13 Association Conference, the assessors created a 14 Proposition 5 Implementation Ad Hoc Committee to 15 provide support and experience to the BOE as we 16 prepare procedures and form changes for the potential 17 implementation of Prop 5. 18 Staff has also reached out to the California 19 Association of Realtors, authors of the proposition, 20 about possible implementation legislation needed 21 should the proposition pass. 22 At this time, staff is planning a 23 presentation on base year value transfers for the 24 November 8th Board Meeting right after the election. 25 And we'll have more to report to the Board on this 26 matter at that time. 27 I'd like to thank the Assessors' Association 28 for establishing the Ad Hoc Committee and willing to 4 1 work with Board staff on this matter. 2 BOE Web site. As discussed at previous 3 meetings, BOE staff is currently working on updating 4 the BOE Web site to reflect our current tax programs. 5 This is a two-step project. 6 The first step was removing links to pages 7 that include information that is no longer part of 8 our agency. This step was completed July 31st, 2018. 9 And all links from our current pages reflects our 10 current tax programs. 11 So if you go out there, you might notice it 12 no longer has CDTFA information on our web site. 13 The second step is refreshing our site, 14 which includes multiple efforts. For example, we're 15 in the process of creating tax topic pages. 16 As you're probably aware, we have a lot of 17 information on our Web site. But some is in 18 handbooks, some is in annotated legal opinions, some 19 is in FAQ, some is in letters to assessors. So our 20 tax topic pages, we'll be consolidating them under 21 one topic where taxpayers can easily find the 22 information. 23 A few pages that are complete include 24 disaster relief, veterans, transfer to base year 25 value, and new construction. Additional pages that 26 will be live within the next few weeks include 27 supplemental assessments, decline in values, 28 manufactured homes and personal property. 5 1 We have also refreshed the Taxpayer Rights 2 Advocates page, Legislative Research and Statistics 3 page, and the Board Meeting page. 4 Our major effort currently in process 5 identifying the ways to present information based on 6 the audience. For example, based on inquiries to our 7 agency, we have three major groups that use our Web 8 site; assessors, tax practitioners, and the general 9 public. 10 Our taxpayers. We are identifying topics of 11 interest based on the pages viewed most, and will 12 refresh our site to make the information easy to 13 locate. Our goal is to complete the refresh by the 14 end of this calendar year. 15 I'd like to thank the BOE staff who are 16 working on that and picking up this workload in 17 addition to the current workload. 18 And I'd like to thank the CDTFA staff that 19 are working with us on this matter. 20 That concludes my report for this month. 21 MR. RUNNER: Okay. 22 MR. HORTON: Question, Mr. Chair. 23 MR. RUNNER: Question? 24 Yes, Member Horton. 25 MR. HORTON: Thank you, Mr. Kinnee, for your 26 presentation. We certainly appreciate that. 27 On the consolidation of the offices, it's my 28 understanding that the agency has done a cost 6 1 analysis of what it would cost. 2 MR. KINNEE: We're working with DGS and 3 CDTFA people on that right now. We haven't finalized 4 that at this time. But we are working on it, looking 5 at various options. 6 MR. HORTON: Does the -- does the agency 7 have its own separate analysis as to what the cost 8 would be to accomplish the various different 9 objectives and what the benefit would be to the 10 agency? 11 MR. KINNEE: We don't have it. We're 12 working on it. 13 MR. HORTON: Okay. When do you anticipate 14 that being completed? 15 MR. KINNEE: Well, we'll -- on the next item 16 we'll bring up the budget-change concepts, and we can 17 talk about that. But we would need to have it by 18 September 4th when BCPs are submitted to DOF. 19 MR. HORTON: Okay. What is the estimated 20 time line for the transition to take place? 21 MR. KINNEE: I think they're estimating four 22 to six months build out. I think they're hoping by 23 March or April of next year, sir. 24 MR. HORTON: Okay. My office received some 25 information that -- to maintain the offices -- manage 26 the Members' office on the 23rd and 24th floor, the 27 cost would be $250,000. Any -- do you know anything 28 about that? 7 1 MR. KINNEE: That's ballpark of where we 2 would be. We haven't refined that. But, yes, we 3 would be ballpark there. 4 MR. HORTON: We've also received information 5 that to move management and staff to Opus (phonetic) 6 and the Members, it would be $1.8 million. 7 MR. KINNEE: I think that's low, sir. 8 MR. HORTON: Okay. Well, there's another 9 number here. The number is to move management and 10 staff and Members to Opus, but offices and board room 11 would be -- to establish a board room would be $2.1 12 million. 13 MR. KINNEE: That's more in the ballpark, 14 sir. 15 MR. HORTON: And so what other decisions 16 other than finances drives this ultimate decision? I 17 know I'm not -- I'm asking in your opinion. 18 MR. KINNEE: We continue to work with DGS 19 and individuals. But if you look in the, you know, 20 budget bill, Senate Bill 840, revision 3: 21 All acquisitions and procurements made by or 22 on behalf of Board Members or Board Member staff, 23 including renting or leasing of office space, shall 24 be processed by the Executive Director through the 25 Department of General Services. 26 The Department of General Services shall 27 have the final decision-making authority for all 28 acquisitions or procurements made by or on behalf of 8 1 the Board Members and Board Member staff. 2 MR. HORTON: Okay. So we need to make that 3 clear. No matter what happens, some -- for some 4 reason there's an anticipation or a belief that Board 5 Members actually can make these kinds of decisions. 6 This is not -- that regulation is not anything new. 7 That's been the practice for the last 150 years. 8 And so if there is a decision to spend 9 $2.1 million when $250,000 can accomplish the same 10 objective, be equally effective and so forth, I want 11 to make it clear that's not my decision. 12 My decision, you know -- I'm not -- although 13 I don't have any authority here, as I've never had 14 any authority to make decisions on these 15 acquisitions. But let me just make it clear here if 16 DGS or anyone else decides to spend $2.1 million, I 17 would -- I would ask you as our representative if you 18 could find it to pose the question, simple question, 19 one-word question: why? 20 MS. HARKEY: We would -- 21 MR. RUNNER: Okay. 22 MS. HARKEY: I think we'd all kind of agree 23 with that. It's -- you know, I think that much of 24 what happened to this Board was done without a lot of 25 forethought. And -- and so spending more money at 26 this time would not be a goal. 27 I know my lease expires on my facility. So 28 we're just kind of running the clock out. But my 9 1 budget has constantly run under budget, because my 2 staff is minimal. 3 And I'd like to actually get rid of my car, 4 too. I would like to buy it. But I don't know if 5 that's an easy process. Since I'm used to it. I 6 certainly don't need it. I drive my own car; not the 7 state car. And nobody else seems to -- it's a lot of 8 work to keep the record-keeping. 9 So that is actually ready to go back. If 10 somebody can't figure out a price for me that I could 11 buy it, because I don't use the vehicle. So my 12 expenses are going to be really minimal. 13 I'm way under budget and quite proud of 14 that. We've been able to manage. My staff is very 15 lean. But they are -- they are doing what they need 16 to do to get us through this period. 17 And I think we're probably one short of the 18 right sizing that we're supposed to have. But, you 19 know, I will say that, you know, I think for the next 20 year the size of the staff is probably accurate. 21 MR. RUNNER: Member Stowers. 22 MS. STOWERS: Yes. 23 To Mr. Kinnee, am I correct, didn't you guys 24 ask about moving and consolidating BOE operation to 25 the 23rd or the 24th floor for the Executive Office 26 and Legal and Board Proceedings? 27 MR. KINNEE: We did. That's correct. 28 MS. STOWERS: And that was rejected. 10 1 MR. KINNEE: Yes. 2 MR. HORTON: Well, the -- the -- the 3 concern -- my concern is that similarly a question or 4 inquiry to do something can -- can be easily rejected 5 based on someone's opinion and so forth. And I 6 personally prefer cost benefit analysis where we're 7 making decisions based on -- not on personal 8 objectives or convenience for the Board Members or 9 for anyone else. That the decision is based on 10 quantitative empirical evidence. 11 And then at the end of the day, there's -- 12 there's a decision to spend $1.8 million more than 13 what it would cost. One would presume there's a lot 14 of logic and reasoning behind that. Not just -- 15 MS. HARKEY: Not just emotion. 16 MR. HORTON: Yeah. Well, whatever, you 17 know -- whatever the reasoning is, you know. Twenty 18 square feet is twenty square feet. 19 So the next question I have is relative to 20 Proposition 5. 21 MR. RUNNER: Actually, can I follow up just 22 real quick on the issue of the move real quick before 23 we leave that one? 24 Yeah. I guess part of the discussion we 25 would have, are we -- we -- an interesting one would 26 be if we can't use those floors in this building, I 27 assume that then, again, there's costs for us to -- 28 to -- or the state will incur the cost for those 11 1 facilities to be moved over to another place. But I 2 assume that creates vacancy in this building then. 3 MR. KINNEE: Correct. 4 MR. RUNNER: That, then, is back-filled, I 5 assume. 6 MR. KINNEE: Correct. 7 MR. RUNNER: Then by -- I assume it would be 8 by -- 9 MR. KINNEE: Staff that -- they've already 10 moved staff out of Opas -- or the Natomas. So 11 they're moving into this facility. 12 MR. HORTON: Prior to a decision being made? 13 The answer is yes? 14 MR. KINNEE: Yes, sir. 15 MR. HORTON: So no one has made a 16 decision -- 17 MR. RUNNER: Well, DGS has apparently. DGS 18 has made a decision. 19 MR. KINNEE: Correct. 20 MR. HORTON: So irrespective of this process 21 you mentioned earlier, the decision's already been 22 made to spend the $2.1 million instead of the $250. 23 Build out a whole new Board room instead of using 24 this empty one that will be virtually empty or 25 whatever -- 26 MS. STOWERS: Won't we -- excuse me. Won't 27 we continue to use this Board room for a while? At 28 least 2019? 12 1 MR. KINNEE: We would need to for a while. 2 MR. HORTON: We would have to. Because 3 they've got to spend two -- 4 MR. RUNNER: I can't imagine -- 5 MR. HORTON: -- point one million dollars to 6 build one. 7 MR. RUNNER: Yeah. It would be just 8 horrendous to taxpayers if -- to me, in my opinion, 9 if all of the sudden we ended up having to build -- 10 or the state had to -- decided to build a new hearing 11 room for the shrunk BOE, knowing that this building, 12 this hearing room basically is empty. Because they 13 do no hearings here now, right? 14 MR. KINNEE: Not to my knowledge. They do 15 present -- you know, staff meetings. 16 MR. RUNNER: Staff meetings, right. But 17 there's no hearings in this meeting -- in this room. 18 So you have an empty hearing room, and then somebody 19 at DGS is making a decision to build a new one? 20 MR. KINNEE: Mr. McGuire said he would be 21 more than happy to be here next week. 22 MR. RUNNER: Okay. 23 MR. HORTON: Well, that would be -- 24 MR. RUNNER: That would be like old times. 25 MR. HORTON: Well, I'm not part of that 26 decision, so I don't really need to hear -- 27 MR. RUNNER: I was going to say, I don't 28 know if -- well, I guess, let's -- do -- do we have a 13 1 desire to have DGS come over? 2 MR. HORTON: I don't have a -- I mean -- 3 MR. RUNNER: I personally don't. 4 MS. STOWERS: I -- I -- well, can -- 5 MR. HORTON: I would defer to the Executive 6 Director. And if he wants to report back to us as to 7 the logic, the quantitative, the numerical reason; 8 not the personal -- 9 MR. RUNNER: Right. 10 MR. HORTON: -- or what's convenient for one 11 or the other, that would be helpful. 12 I mean, the Board of Equalization bought 13 furniture here and furniture there, and now they're 14 buying a whole new Board room. Now all the write-up 15 about all that. Ain't no telling, you know -- I just 16 want to make it clear here. 17 MS. HARKEY: Well, we won't be here. 18 MR. HORTON: Yeah. 19 MR. RUNNER: Okay. I just want -- so right 20 now what I'm hearing is there's not really a 21 consensus from the Board Members that we need DGS to 22 come to us. 23 MR. HORTON: No. I -- 24 MS. HARKEY: Well, I -- 25 MR. HORTON: I would. But, Mr. Chair, with 26 your permission, I would like to hear from the 27 Executive Director as to the reasoning they've 28 already made this decision. 14 1 So theoretically, without a process, without 2 concurrence, a public process, public concurrence, a 3 decision has been made, people are moving people, and 4 in this unilateral world that we live in these days. 5 But I'd just like to know why, you know. I'm going 6 to presume that there's a reason. 7 MS. HARKEY: That it's going to save money 8 in the long term, right? 9 MR. HORTON: No. 10 MS. HARKEY: And wasn't it -- wasn't it -- 11 MR. RUNNER: Okay. Okay. 12 MR. HORTON: Proposition 5. 13 MS. HARKEY: In -- in the long run, we're 14 all dead. Isn't that what they -- 15 MR. RUNNER: Okay. Any other thoughts or 16 questions? I think we've kind of hit that issue. 17 MR. HORTON: Proposition 5, Mr. Chair. 18 Was there a cost analysis submitted to the 19 Legislature by the BOE? 20 MR. KINNEE: I think analysis on 21 propositions are done by the LAO's offices, I 22 believe. 23 MR. HORTON: They -- I mean, generally 24 speaking, they -- they -- I agree, generally speaking 25 they ask for our input. Did we provide any? 26 MR. KINNEE: I don't believe -- 27 MR. HORTON: That we did? 28 MR. KINNEE: They were asked -- our input 15 1 was asked. 2 MR. HORTON: We didn't ask? Okay. 3 The BCP process, I know it's forthcoming -- 4 MR. RUNNER: You're moving onto his next 5 item? 6 MR. HORTON: Oh, okay. I'll wait. 7 Thank you, Mr. Chair. I appreciate your 8 leadership. 9 MR. RUNNER: Okay. Anything else? 10 Then we're ready for the next item. 11 ---o0o--- 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 16 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 September 21, 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 17 14 constitute a complete and accurate transcription of 15 the shorthand writing. 16 17 Dated: April 9, 2019 18 19 20 ____________________________ 21 JILLIAN SUMNER, CSR #13619 22 Hearing Reporter 23 24 25 26 27 28 17