1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 REPORTER'S TRANSCRIPT 7 SEPTEMBER 25, 2018 8 9 10 11 12 13 ITEM G1 14 PETITION TO AMEND PROPERTY TAX RULES 302, 15 THE BOARD'S FUNCTION AND JURISDICTION; 16 305, APPLICATION; 17 305.1, EXCHANGE OF INFORMATION; 18 305.2, PREHEARING CONFERENCE; 19 AND, 323, POSTPONEMENT AND CONTINUANCES; 20 AND, PROPOSED PROPERTY TAX RULE 305.4, REQUEST FOR 21 INFORMATION 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 For the Board Equalization: 3 Honorable George Runner 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 Richard Moon Legal Department 17 Public Comments: Marc Aprea 18 Principal Aprea & Micheli 19 Leslie Davis 20 President-Elect California Assessors' 21 Association 22 John McKibben California Association of 23 Clerks and Election Officials 24 Cris K. ONeall Attorney 25 Greenberg, Traurig, LLP 26 27 28 2 1 P R E S E N T 2 Public Comments Cont'd: 3 Edward Yen 4 General Counsel Office of the Assessor 5 Los Angeles County 6 Michael Middleton President 7 ProTax LLC 8 Dawn Duran Administrator 9 San Francisco County Assessment Appeals Board 10 Thomas Parker 11 Deputy County Counsel Los Angeles County 12 Sean Keegan 13 Board Chair California Alliance of 14 Taxpayer Advocates 15 ---oOo--- 16 17 18 19 20 21 22 23 24 25 26 27 28 3 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 SEPTEMBER 25, 2018 4 ---oOo--- 5 MS. RICHMOND: Our next Item is Item G, 6 Rulemaking; G1, we have Petition to amend Property 7 Tax Rules 302, The Boards Function and Jurisdiction; 8 305, Application; 305.1, Exchange of Information; 9 305.2, Prehearing Conference; and, 323, Postponement 10 and Continuances; and, Proposed Property Tax Rule 11 305.4, Request for Information. 12 And we do have several speakers. 13 MR. RUNNER: Okay. We're going to start 14 with the Chief Counsel. 15 MR. NANJO: Good morning, Chairman Runner, 16 Members of the Board. 17 Henry Nanjo, Chief Counsel. I have with me 18 Richard Moon from my Legal Office. 19 As the Board remembers on July 10th, 2018, 20 via e-mail, the California Alliance of Taxpayer 21 Advocates, CATA, petitioned the State Board of 22 Equalization to amend Code of Regulations, Title 18, 23 Sections 302, 305, 305.1, 305.2, and 323, consistent 24 with Government Code Section 11340.7. 25 The rule petition was discussed at the July 26 24th, 2018 Board Meeting. At that meeting the Board 27 directed the Executive Director to instruct the Chief 28 Counsel on the proposed rule changes as presented by 4 1 CATA, with the exception of changing the date, in 2 proposed Rule 323 from 10 days to 90 days. 3 Subsequently, there has -- this was also 4 through a Member request. Member Ma also brought 5 this up as an L Item at the July meeting. And we 6 discussed this at the August meeting. And also now 7 we're here at the September meeting with the legal 8 analysis. Which, as per the Board's direction, has 9 been distributed to both the Board and the members of 10 interested parties or members of the public through 11 the PAN. 12 We had a request to kind of set the stage 13 for this. So what I understand has happened is there 14 has been a number of meetings between CATA and the 15 assessors' organization and the clerks' organization 16 to try to come up with some language. There has been 17 some meetings to facilitate some agreements. 18 I understand that there were some changes 19 that may not be included in the legal analysis that 20 were discussed or decided -- agreed to this past 21 weekend or past week. So we would be ready to 22 address those, both Mr. Moon and myself. 23 I also wanted to remind the Board that 24 there's a little bit of confusion that could occur 25 when we are discussing these rules, because there's 26 two different entities that we're discussing. One is 27 the assessors, which have -- or are charged in the 28 state of California with assessing all properties 5 1 subject to general property taxation. 2 After an assessment is made, as the Board 3 knows, a taxpayer may challenge the assessment by 4 filing an application for a reduction in an 5 assessment, or application with the county board of 6 equalization. 7 That is the second entity that is discussed 8 in these rules. The county board of equalization, or 9 the assessment appeals board at the local level have 10 a separate -- are a separate body and separate 11 interest aside from the assessors. And they are 12 essentially, pursuant to the constitution, directed 13 or empowered, authorized to equalize assessments 14 within the county. 15 So they have their own jurisdiction and 16 their own authority apart from this board and apart 17 from the assessors. 18 So in discussing these rules, I would like 19 to remind the Board to keep in mind the separate 20 bodies and interests. 21 So at this point the matter is scheduled for 22 Board's consideration. The Board may deny the 23 petition; they may grant the petition, in part or in 24 whole, and commence the rulemaking process by 25 ordering publication of a notice of proposed 26 regulatory action pursuant to Government Code 27 11346.5. 28 They can redirect this matter or any parts 6 1 of this matter back to the interested parties process 2 to consider the requested amendments, in part or in 3 whole, or take any other action as the Board deems 4 appropriate. 5 So with that, we stand ready to address any 6 questions or issues that may arise. 7 MR. RUNNER: Okay. Thank you. 8 MS. HARKEY: Member Runner. 9 MR. RUNNER: Yes. Member Harkey. 10 MS. HARKEY: My Chief Deputy, Lisa Renati, 11 was kind enough to put everything together so that 12 it's pretty ducky/bunny. You know I like that. 13 And I do have copies for everyone that goes 14 through each rulemaking and what the changes were, or 15 what the reg. changes are -- the changes -- the -- or 16 in some of them she writes down as to whether they're 17 approved by everybody or they're not. 18 And we go through each -- each role. 19 Because it was really, really hard to break this 20 down. And so -- 21 MR. RUNNER: Is it -- is this the copy? Is 22 it like that? 23 MS. HARKEY: It's like that, right. 24 MR. RUNNER: Yeah, I think -- I think 25 everybody has something similar. 26 MS. HARKEY: There was something done last 27 night that she went through. So I'll just pass these 28 out. 7 1 MR. RUNNER: Yeah. 2 MS. HARKEY: If you want to use your own, 3 that's fine. 4 MR. RUNNER: I actually -- part of the 5 discussion I want to have is process here in terms of 6 how do we -- how do we -- how do we beat this? 7 MS. HARKEY: Yeah. 8 MR. RUNNER: I was going to say "skin the 9 cat," but then my friends told me that PETA would get 10 mad at me if I said that. 11 So I don't -- let me -- let me just suggest 12 a couple of things and have a discussion about how 13 we're going to process this. 14 I -- I think, Member Harkey, you're right. 15 I think having them in front of us in order by the 16 sections is a -- is a good way to do it. Otherwise, 17 I think we'll be leaping all over. And that way we 18 can address the items as they come up. 19 You're right, many of the items -- I 20 shouldn't say many. There are items of agreement. 21 And then those ought to be able to be dispensed of 22 pretty quickly. 23 And then there are items that are not in 24 agreement. And then at that point, we can have the 25 discussion and determine either to move on or 26 continue to -- or to -- or to not accept this. So I 27 think that would be a fair way to do that. 28 I think what I'd like to do, too, is to 8 1 have -- again, I have lots of speaker cards. But I 2 don't -- I think I know who is kind of 3 quarter-backing this for each of the groups. 4 So I think it would be -- and I think 5 probably some of these speakers are speaking to 6 specific items that are within some of these changes, 7 too. 8 So I think maybe the best way to do this 9 would be having whoever is quarter-backing for 10 assessors and clerks and CATA, to come on up and take 11 the chairs. And then I'll let you go ahead and -- 12 yeah. 13 And maybe -- maybe our attorneys can move 14 over to the right there. 15 You're good. You can sit anywhere you'd 16 like. I mean, I think we're all gonna be -- we're 17 not really -- we just need everybody who is close. 18 And I don't really care what side you're on. 19 And then if you folks who are here think 20 that you've got the right people in front of us for 21 the majority of the issues, then, like I said, you 22 may have people who you're gonna call up under 23 certain items here that you may want to have speak to 24 them, too. I think that would be a fine way to do 25 that. 26 Let me just check with Members. 27 Do you all have a piece of paper in front of 28 you that lets you go through that in that order? 9 1 MS. STOWERS: I think I have everything. 2 But I know that I have this document, and I have 3 something that Mr. Aprea provided to us this morning. 4 I'm still a little -- who is going first? 5 MR. RUNNER: Well, if we -- 6 MS. STOWERS: Because I have to make sure 7 that I'm reading -- 8 MR. RUNNER: Well, I guess the -- I guess 9 the issue so much isn't the notes on it, as much as 10 we are going through the right rule order. 11 MS. STOWERS: Okay. 12 MR. RUNNER: And then you can -- then you 13 can refer back and forth and see what you have. But 14 I think if we go in the same rule order, I think 15 then -- then I think we're in good shape. 16 MS. STOWERS: I'm good -- I'm ready to go in 17 rule order. 18 MR. RUNNER: Because I'm not sure I want to 19 favor one document over another that everybody is 20 looking at that way, too. 21 MS. HARKEY: No. Right. 22 MR. RUNNER: Okay. Yes. 23 MR. HORTON: Mr. Chair. 24 MR. RUNNER: Yes. 25 MR. HORTON: Might I recommend the cause of 26 the evolution of this. Chief Counsel has indicated 27 their information that he is yet to be able to opine 28 on. 10 1 MR. RUNNER: Mm-hm. 2 MR. HORTON: So I'd like to hear his off the 3 cuff, to the extent that he's able, as we go through 4 the process. 5 MR. RUNNER: Yeah. 6 MR. HORTON: And to the extent that parties 7 submit that they concur. Because I'm seeing some 8 nonconcurrence within concurrence. 9 MR. RUNNER: Mm-hm. 10 MR. HORTON: And so that they articulate 11 that and the reason why. 12 MR. RUNNER: Yep. 13 MR. HORTON: And then for the benefit of the 14 public, that we -- to the extent possible, that we're 15 going to use sections and codes and so forth. Be as 16 descriptive as you can. 17 Because I've had conversations where they 18 said, "302.5, 303.8, we did this, we did that." And 19 I'm like, "Okay." That would be helpful, I think, to 20 the public. 21 MR. RUNNER: Okay. And I -- and I do -- I 22 would expect in this discussion as we come to these 23 items, the Chief Counsel to include himself in his 24 thoughts in terms of those issues, too. Yes. 25 Okay. So that being said, I think, 26 probably, without going through the whole thought, if 27 any of the groups would have some opening thoughts as 28 we -- before we proceed, that certainly would be 11 1 appropriate. 2 MR. APREA: Mr. Chair, Members of the Board. 3 MR. RUNNER: Yes. 4 MR. APREA: Marc Aprea on behalf of the 5 California Alliance of Taxpayer Advocates. 6 I would like to thank, again, the Board 7 Members and staff for all the work that they've 8 engaged in on this. 9 I, in particular, want to thank Board Member 10 Ma and -- for her good offices in bringing us 11 together on two occasions. 12 And I want to thank our colleagues from 13 CACEO and CAA for all the work that they've engaged 14 in over the past two-and-a-half weeks. 15 And I think that we have seen -- while we 16 have not come to an agreement on every issue, I 17 believe that folks have engaged in good faith. And I 18 want to compliment those folks. And I won't say 19 anything more than that. 20 I want to, however, continue to emphasize 21 for the Board, and for those folks who are looking at 22 this issue, that these matters have been brought to 23 you, not because there is a one-off instance, but 24 rather because there are pervasive practices which 25 have been engaged in and that have placed the 26 taxpayers, both small, medium and large, at a -- in a 27 position where their due process rights, not only for 28 a hearing, but the process, we believe, have been 12 1 abridged. 2 We will address those issues as necessary. 3 We will not go over old territory. 4 And I want to thank the Chair for allowing 5 us to go through each section by section, and 6 allowing us to present where we think we have been in 7 agreement. 8 Of course we want to hear confirmation or 9 disagreement if that is the case. But our goal here 10 is to present to you where we have reached agreement, 11 where there are differences, and why. And why we got 12 to certain alternatives either in response to an 13 interested party, or a view of a better way to get -- 14 to get and address the problem. 15 So, again, I want to thank all of you for 16 all the time and effort that you've engaged in. 17 And I also want to take this opportunity to 18 thank all the practitioners who have taken time to 19 come before you, as well as the involvement of many 20 of their taxpayer clients. 21 MR. RUNNER: Okay. 22 MR. APREA: Thank you, Mr. Chair. 23 MR. RUNNER: Thank you. 24 From the assessors. 25 MS. DAVIS: Mr. Chair, thank you for the 26 opportunity to speak this morning. 27 Since your last meeting, we have had several 28 meetings with CATA and the County Clerks Association. 13 1 I really want to echo Mr. Aprea's thanks to 2 Board Member Ma for hosting those meetings, and to 3 Board Member Runner for sending his staff. 4 We were ably facilitated by your staff, 5 Board Member Ma. And I think that the result is that 6 you are seeing some agreement on some of these 7 issues. 8 MS. RICHMOND: Excuse me. Please introduce 9 yourself for the record. 10 MS. DAVIS: I'm sorry. 11 Leslie Davis, President-Elect of the 12 California Assessors' Association. 13 MR. RUNNER: Thank you, Leslie. 14 MS. DAVIS: By way of background, I want to 15 tell you that I believe some of the disagreements are 16 based on our respective roles. As elected 17 constitutional officers, assessors are the highest 18 ranking taxpayer rights advocates in our respective 19 county. We are like you, elected to administer 20 property tax law and to treat everyone fairly and 21 equitably. 22 When there is a disagreement regarding an 23 assessment, our staff tries to resolve that issue in 24 advance of any appeal. But sometimes we do reach an 25 appeal hearing. And that is what these rules focus 26 on. 27 When a proposal is made that may help one 28 group of taxpayers, we're honor-bound to consider its 14 1 impact on the entire population of taxpayers. We 2 should not be in the business of increasing 3 bureaucracy or slowing response to taxpayer concerns. 4 So at every step in this process, we've 5 considered if the proposal is impacting our 6 taxpayers, or if it has unintended consequences for 7 large counties, medium counties, or small counties. 8 To the extent that a proposal has only 9 affected the county clerks, CAA has deferred to the 10 clerks for their opinion on those particular roles. 11 I really appreciate the legal analysis done 12 by your Board's staff. Again, appreciate each and 13 every one of your staffs for talking to us as we've 14 attempted to work through the process. 15 And thank you again for the opportunity 16 today to express our concerns on those areas where we 17 don't have agreement, but to certainly share with you 18 areas where we do have agreement. 19 And as Mr. Aprea said, I will echo it, thank 20 you to CATA, thank you to the Clerks Association for 21 all of their hard work coming together to reach 22 agreements to bring to you today. 23 MR. RUNNER: Thank you. 24 From the clerks. 25 MR. McKIBBEN: Mr. Chair and Members, 26 John McKibben on behalf of the California Association 27 of Clerks and Election Officials. We are the 28 administrators of the assessment appeals program in 15 1 each of the 58 counties. 2 And I, too, want to thank, Mr. Chairman, you 3 and your staff. 4 And, Ms. Ma, you and your staff for 5 facilitating the discussions we've had over the last 6 couple of weeks. 7 And appreciate the extent that CATA has 8 taken to come to some agreement with us, as well as 9 the assessors. 10 Our interest in being a part of this process 11 is to make sure that the assessment appeals boards 12 are able to run efficiently and effectively, and to 13 provide an even playing field for the two parties 14 that are coming before us; the taxpayer side and the 15 assessor side. 16 And so that has been our interest all the 17 way through on this -- in this process. We have 18 tried to make sure that the rules that might come out 19 of this process facilitate our ability to provide 20 people with a timely, fair hearing. 21 We have also been protective of the county 22 board of supervisors and their delegates, the 23 assessment appeals board members, and preserve their 24 judicial discretion in providing this quasi-judicial 25 program for taxpayers and assessors. 26 I want to appreciate -- express my 27 appreciation to Mr. Nanjo for his report recently, 28 and for also reiterating this morning the role of the 16 1 clerks and the assessment appeals board as being 2 separate from the assessors. 3 MR. RUNNER: Okay. 4 Okay. With that, anybody else -- comments, 5 or does that summarize it? 6 Okay. We'll start moving through it. I 7 think what I'd like to do, since this is a petition 8 that was brought by CATA, I think it would be 9 appropriate, then, as we go through these to have 10 them summarize what is before -- as we address these. 11 And then those who are -- if there's 12 agreement, that's fine. If there's not, then we'll 13 have that discussion. 14 But I think since this is their petition, 15 we'll have them lead off on these items. So that 16 brings us to the first item, which is Rule 302 17 Section (a). 18 Everybody there? Okay. 19 MR. O'NEALL: Good morning, Chair Runner, 20 Members of the Board. 21 Chris O'Neall, practicing California 22 attorney, and appearing on behalf of CATA. 23 I have -- I am a member of the standards 24 committee within CATA, and have been closely involved 25 in the drafting of the rules, the process that's gone 26 on over the past several weeks. And I'm very 27 familiar with the product of recent negotiations 28 that's before you this morning. 17 1 Looking at Rule 302, I think there's two 2 pieces here that are in play. The first is what was 3 initially proposed, 302(c). Which, in essence, says 4 the Board -- 5 MR. RUNNER: I think I want to stay away 6 from 302(c) right now. I think we can do (a) first, 7 can't we? 8 MS. HARKEY: Just 302. 9 MR. O'NEALL: Let -- let -- let -- let me 10 explain. Well, 302 has two parts to it; (a)(1) -- 11 MR. RUNNER: Right. 12 MR. O'NEALL: -- which was language proposed 13 by California Assessors' Association recently. 14 MR. RUNNER: Right. 15 MR. O'NEALL: Which talked about affording 16 applicants a fair hearing. 17 Let me say, Mr. Runner, this is somewhat -- 18 this particular issue, that is whether the board has 19 the power to deny, whether the board has the power to 20 postpone the fairness of a hearing, and then the 21 ability in a prehearing for the board to have only 22 one hearing on noncompliance issue are in some ways a 23 package. 24 MR. RUNNER: So you want us -- let me ask 25 and see if I can get this clear. 26 CATA would like us to handle 302(a)(1) and 27 (c) at the same time? You're not able to go ahead 28 and just do the one that I understand there's an 18 1 agreement on which is 302(a)(1)? 2 MR. O'NEALL: Yeah. Let me -- let me step 3 back a little bit, Mr. Chair. 4 Because I think that -- I think that what 5 you said is probably the case. 302(a)(1) is a very 6 general statement. 7 MR. RUNNER: Right. 8 MS. HARKEY: Right. 9 MR. RUNNER: I get it. I know it is. 10 MR. O'NEALL: And the very specific concern 11 that's really underlaying this petition from the 12 beginning is the noncompliance hearing for failure to 13 comply with 441(d). 14 It's very good to have the generic statement 15 in (a)(1). But the generic statement in (a)(1), 16 which is sort of a statement of policy, doesn't 17 specifically address the problem, which is the 18 noncompliance hearing. 19 MR. RUNNER: Which is -- which will be the 20 next item we come to discuss. 21 MR. O'NEALL: Which is -- yes. And has the 22 multiple parts there. 23 MS. MA: Could we just go back to timely and 24 meaningful? What does that mean? And is it 25 enforceable? 26 MR. MOON: Well, timely and meaningful, I 27 suppose, are terms that could be up for debate. But 28 generally speaking, in terms of what's required in an 19 1 assessment appeals board hearing, is that there's an 2 opportunity to be heard, and that there's an 3 opportunity to hear all the evidence and 4 cross-examine that evidence. So that the hearing in 5 its entirety is -- is -- that they have an 6 opportunity to be heard. That it's full and fair. 7 MS. MA: Okay. So does that mean something 8 to you, timely and meaningful? 9 MR. NANJO: Member Ma, it's going to be up 10 to a Court to decide if there's a challenge whether 11 or not the proceedings were held timely and in a 12 meaningful manner. 13 As Mr. O'neall correctly stated, this is 14 kind of a general policy statement. It doesn't 15 really have effect unless it's violated at the 16 hearing level. So -- 17 MS. MA: Okay. 18 MR. RUNNER: Okay. So, again, we can -- we 19 can either go ahead and move forward with -- since 20 there's agreement on this one -- or if you feel like 21 you would not rather do that, and you'd rather for us 22 to wrap it up into the next section, we can do it 23 that way. 24 MR. O'NEALL: I believe, Chairman Runner, it 25 should be wrapped into the next section. 26 MR. RUNNER: Okay. So why don't we go into 27 302 -- 28 MR. YEN: Chairman Runner. 20 1 MR. RUNNER: Yes. 2 MR. YEN: Is it okay if I speak real quickly 3 on the 302 before we move forward? 4 MR. RUNNER: Well, we're going to be on 302. 5 Are you speaking on 302(a)(1)? 6 MR. YEN: (a)(1), yes. 7 MR. RUNNER: Okay. Go ahead. 8 MS. MA: Could you introduce yourself? 9 MR. YEN: Yes. 10 Edward Yen, General Counsel for Los Angeles 11 County Assessors Office. 12 So I was apart of the group that met with 13 the CATA and CACEO last week with Vice Chair Ma's 14 staff, and, Chairman Runner, your staff as well. 15 And myself and George Renkei, assistant 16 assessor for the Los Angeles County, we actually 17 crafted the language that you see in 302(a)(1). 18 And we just want to make a clarification 19 that timely and meaningful was language that was 20 pulled from, not only the BOE Legal Analysis, but it 21 was also cited from the California jurisprudence. 22 So it is legally -- it's in legal treatise, 23 California legal treatise. So that's where we would 24 find support for a definition and to find some type 25 of explanation and examples. 26 MR. RUNNER: Okay. 27 MS. HARKEY: Thank you. 28 MR. RUNNER: Thank you. Okay. 21 1 So let's move on to the next item, which is 2 more the specifics, then, in regards to the issue. 3 And that takes us then to 302(a) -- no, 302(c) -- 4 (c), right? 5 MS. MA: (c). 6 MR. RUNNER: Okay. Go ahead. 7 MR. O'NEALL: So 302(c) is the provision 8 relating to the jurisdiction of the local assessment 9 appeals board that states that the board does not 10 have jurisdiction to deny an application on the 11 grounds that an applicant has not complied with 12 Section 441(d) of the Revenue and Taxation Code. 13 This is related to -- this is the provision 14 saying, you cannot deny the application, it is 15 related to Rule 323(c). Which is that you cannot 16 postpone an application for the same type of alleged 17 infraction. 18 And it's also related to Rule 305.2(b), the 19 first sentence of which says you cannot deny an 20 application -- you cannot deny an application at a 21 prehearing or status hearing or noncompliance 22 hearing. 23 And the second sentence of which says, which 24 relates to the single postponement for -- for 25 properties that are above a million dollars -- I'm 26 sorry -- $10 million -- and no such hearing for 27 properties below $10 million. 28 So this is -- this is a part of that 22 1 package, Mr. Chairman, that -- and let me tell you 2 where CATA stands on this. CATA's position is that 3 if the provisions of Rule 305.2(b) -- which are in 4 dispute, which have not been agreed to. That is the 5 postponement of a hearing. And the one-time 6 postponement with a $10 million threshold is accepted 7 by the Board, this Board. 8 And CATA doesn't -- is not concerned about 9 302(c) being included. CATA is not concerned about 10 323(c) being included. One is the denial, the other 11 is the postponement. And CATA would say, of course, 12 let's include 302(a)(1). It's good policy. 13 MR. RUNNER: Okay. 14 MR. O'NEALL: I'm sure the -- 15 MR. RUNNER: Any question, Members, or 16 should we proceed on to the assessors? 17 MS. HARKEY: This one, then, is in dispute, 18 and it is dependent, then, on another section? 19 MR. RUNNER: Mm-hm. 20 MS. HARKEY: But we agree on that. So I've 21 got it here showing in red. So we know it's in 22 dispute. 23 MR. RUNNER: Mm-hm. 24 MS. HARKEY: And at least we can maybe 25 discuss it that way. 26 MR. RUNNER: Right. 27 MR. O'NEALL: And I'm prepared to address 28 the -- the critical language -- the thing that makes 23 1 this go or not is 305.2(b), the second sentence, 2 which reads, for properties with an annual assessment 3 greater than $10 million, and so forth. 4 MR. RUNNER: Mm-hm. 5 MR. O'NEALL: That's 305.2(b). It's in 6 the -- the one that was handed out that I have is in 7 a darker red, a maroon color. Let me speak to that. 8 CATA was aware of Chief Counsel Nanjo's 9 letter. We read it very carefully. CATA understands 10 that Chief Counsel has concerns about promulgating 11 rules that would deny assessment appeals boards 12 jurisdiction to control their dockets. 13 305.2 -- 302(c) is a denial of the right to 14 the board's authority to -- or it would withdraw the 15 board's authority to deny an application for failure 16 to comply with 441(d). 17 323(c) contains language that says the board 18 would not have the power to postpone an application 19 for failure to comply with 441(d). 20 Aware of that, and being aware of that, the 21 language that's here in 305.2(b), second sentence, 22 was proposed. We think this language deals with the 23 concerns that were raised by Chief Counsel. 24 Chief Counsel's concerns were with, are we 25 impinging upon the jurisdiction of the assessment 26 appeals board to control its own docket, to control 27 how it hears cases? 28 The reason why I -- we believe, CATA 24 1 believes, this is not an impingement upon that power 2 in 305.2(b) is the language is permissive. It says 3 the board may only hold -- it says the board may not 4 hold a prehearing. And in those cases, it allows the 5 parties to stipulate and agree that we will have a 6 prehearing. 7 And so although the rule is written that 8 there would be only one prehearing conference on the 9 issue of 441(d) compliance, the parties could have 10 multiple hearings for -- for cases over $10 million. 11 For cases under $10 million, there wouldn't be a 12 hearing unless the parties agreed. 13 And let me go back to where we started from 14 when we first talked about this in July and August. 15 Remember, there is nothing that -- the way the 16 statutory framework is established, assessors may not 17 come and ask an assessment appeals board to deny or 18 postpone a hearing indefinitely because 441(d) was 19 not complied with. 20 The remedies are: put the value to the roll, 21 even though the taxpayer didn't comply; make the 22 taxpayer file an application. 23 If he doesn't come forward with information, 24 he loses. Or if he does come forward with the 25 information, Section 441(h) says, Mr. Assessor, you 26 have the absolute right -- absolute right to a 27 continuance at that point in time. Or, Mr. Assessor, 28 you may issue a subpoena under 462, I believe, of the 25 1 Rev. and Tax Code. 2 So what we're doing here is still consistent 3 with the framework that exists. We believe that it's 4 a softer way of saying assessment appeals boards 5 don't deny appeals because someone didn't comply with 6 441(d), and don't postpone appeals ad infinitum if 7 someone didn't comply with 441(d). 8 Now, understand most cases are homeowner 9 cases. They're small apartment houses; they're strip 10 malls; small office buildings. And in those cases, 11 the issue of a prehearing doesn't really ever come up 12 unless there's a failure to provide information. 13 And that's what we often see on these 14 calendars in some of the counties is they're smaller 15 property owners who have been called up on a 16 noncompliance violation by an assessor who puts them 17 on the agenda for that -- for that -- for that 18 calendar. 19 I'm going to let my colleague here, 20 Mr. Middleton talk about that. Because this has 21 continued to happen. He's -- he's explained to me it 22 happened recently in San Francisco County where over 23 100 taxpayers were put on a noncompliance calendar. 24 And they're large and small. And of course that 25 calendar was put forth by -- or requested by the 26 assessor's office. 27 So those are my comments on this key 28 provision. And let me simplify it for you. If 26 1 305.2(b), second sentence, is adopted by the Board, 2 then the Board need not adopt 302(c) -- 3 MR. RUNNER: Mm-hm. 4 MR. O'NEALL: -- 323(c). And we think it 5 would be good policy to adopt 302(a)(1), the policy 6 statement. It wouldn't be essential, but it would be 7 good policy. 8 MR. RUNNER: Okay. 9 Comment, Mr. Middleton. 10 MR. MIDDLETON: Chairman Runner and Members 11 of the Board, thank you for addressing the concerns 12 raised by CATA on behalf of California property 13 owners and taxpayers. 14 My name is Michael Middleton, and I am 15 President of ProTax LLC. We have been representing 16 small to medium size property owners with an average 17 assessment of about two to three million dollars 18 since 1990. 19 During these three decades we have literally 20 filed thousands of formal appeals with the AABs, and 21 submitted just as many informal requests for the 22 assessor to review the property before the posting of 23 the roll. We have done so in every county in the 24 state of California during this time frame. 25 Many of our clients might only own one 26 property such as a small corner retail center, an 27 office building, a local nursery, a car wash, or a 28 home. 27 1 Historically, during this time frame, 2 challenging an assessment on a small-size property 3 was an easy process, whereby a property owner would 4 file an appeal with the AAB, and the clerk would 5 schedule a hearing date for their hearing to be 6 heard. 7 In most instances the assessor would contact 8 the property owner prior to the hearing date in an 9 attempt to secure information and potentially resolve 10 the appeal. 11 Regardless of the interaction between the 12 taxpayer and the assessor, however, nearly every 13 taxpayer would receive a hearing on the merits of 14 their case on the scheduled hearing date that they 15 had received. 16 In the past several years a small but 17 growing number of county assessors and AABs have 18 added a barrier to the taxpayer by postponing a 19 hearing on the merits of the application until after 20 the taxpayer has provided all the information the 21 assessor has requested. 22 The taxpayer still has to attend this 23 noncompliant -- or prehearing conference, or they 24 will be denied. 25 As noncompliant applications in some 26 counties are trailed to the end of the hearing 27 agenda, some taxpayers may spend an entire day at the 28 AAB simply waiting to answer questions as to why they 28 1 have been deemed noncompliant. 2 The taxpayer is required, then, to return on 3 another day for their actual hearing to take place 4 and be heard. And that would only be scheduled once 5 the taxpayer has become compliant. 6 So I would like to give a few examples so I 7 can explain how this works. 8 In one of the counties they have a compliant 9 and noncompliant agenda. So the taxpayer receives a 10 request for information, and maybe there's seven 11 items listed. The taxpayer maybe finds five, sends 12 them back. They receive a letter that they are 13 noncompliant. May or may not know. They may call 14 the assessor. The assessor may tell them, or they 15 may just show up. 16 They show up at the hearing, right? And 17 since they're on a noncompliant agenda, they're 18 trailed to the end of the day. So they get to spend 19 the entire day there. 20 And then at the end, they're brought up 21 before the board to answer questions as to why they 22 have failed to comply with the assessor's request. 23 And, therefore, they won't be receiving a hearing 24 that day. 25 If they're able to answer -- well, maybe 26 they didn't have the information or -- or maybe the 27 information didn't exist, then they get to come back. 28 Our experience has been, with many of the 29 1 smaller clients, this is a very burdensome thing 2 where they have to come back one or two or three 3 times. And they simply give up. 4 The other thing we found is that the request 5 for information from the assessors are becoming so 6 detailed and so much information. And I'll go to 7 San Francisco where the assessor sends out an initial 8 request letter and asks for numerous things. The 9 case, copy of appraisal, rent roll and spreadsheet 10 format. All sorts of things. 11 And they have a hearing date. So the 12 hearing date has already been scheduled. The 13 assessor sends the letter and says, This is what we 14 want. But at the end it says, If the information is 15 not received by such and such a date, the 16 assessor/recorder will request a postponement of the 17 hearing, and the administrator of the assessment 18 appeals board may schedule a prehearing conference to 19 discuss your noncompliance to our request for 20 information as provided by the California code. 21 So then two weeks later the applicant 22 receives a letter -- or three weeks, whatever it is. 23 And it says, Intent to postpone -- to request a 24 postponement and/or a prehearing conference. 25 And in this letter it says, The real 26 property assessment appeal case referenced above is 27 scheduled for a hearing on such and such a date. 28 As of this date, the assessor has either 30 1 received an insufficient response, or received no 2 response to R&T Code 441(d) request for information. 3 Please note that Revenue and Taxation Code 4 permits the assessor/recorder to fully exhaust all of 5 its rights and remedies against you, including but 6 not limited to, requesting a subpoena be issued for 7 your personal appearance at an examination; 8 requesting your personal appearance before the 9 superior court; and pursuing criminal civil 10 penalties, R&T code. 11 Please submit the information in care of 12 whoever by such and such a date. 13 So then what happens is the applicant now is 14 not going to get his hearing, and there's going to be 15 a prehearing conference to determine. 16 And in this most recent case in San 17 Francisco, the assessor simply sent an e-mail over, 18 and it said, "Good day, AAB. I would like to request 19 the following appeals be sent to PHC due to 20 noncompliance." PHC, prehearing conference. 21 And there were 150 that were all sent at one 22 time where they either didn't respond or didn't 23 sufficiently respond. So what's happening is the 24 assessor is now becoming the gatekeeper as to when 25 you have a hearing. 26 And I've done this for 30 years. And this 27 has just started in the last few years. We always 28 got a hearing no matter what information we brought. 31 1 And if we brought information the assessor requested, 2 then they would get a continuance to review the 3 information. 4 Now what's happening is a lot of our clients 5 simply aren't getting up to bat. They have to come 6 and sit all day and wait. They have to produce 7 information as determined by the assessor what should 8 be produced. Then that's where the problem comes in. 9 And that's where we're seeing the issue. 10 And we don't believe there's anything in the 11 code that allows the assessor to tell the board, or 12 the board to continue a hearing before it even -- or 13 to postpone a hearing before it even starts simply 14 because the assessor hasn't got everything they've 15 asked for. 16 They're the ones that are making a 17 determination whether or not the applicant gets a 18 hearing, and when they're getting a hearing. And 19 that's the issue that we have. 20 MR. RUNNER: Okay. 21 Okay. Members, do we have questions? 22 We're going to go to the assessors. But 23 just in case, Members may have some questions 24 regarding this discussion. 25 MS. MA: I do. 26 So I sat on the assessment appeals board in 27 San Francisco on both the alternate -- as an 28 alternate member on both residential and commercial 32 1 cases. And this was probably back in 1995 to, 2 probably, 2000. 3 And I agree with you. We heard cases even 4 if the taxpayer did not bring information. They 5 would sit there, and we'd say, "Okay. Do you have 6 any information?" They'd be like, "No." And then 7 the assessor would bring whatever comps they had. 8 But at least people had a case, and they 9 got, you know, a hearing date. And we would either 10 continue if one side didn't understand. And they 11 said, "Okay. I can go back and get comps." We would 12 continue. 13 But this type of practice is new to me where 14 you need all the information or you don't get a 15 hearing. Because that's what frankly has been 16 bothering me, is that taxpayers aren't getting their 17 day in court. 18 And sometimes they just don't know, as we 19 have heard cases. They don't know what type of 20 documents you are looking for. And, you know, these 21 complicated letters. They can't afford attorneys or 22 CPAs to help them. And they just come, and they just 23 say, "Well, I'm here." And, you know, they don't 24 have information, they usually lose. 25 As you know, right? 26 MR. MIDDLETON: Right. 27 MS. MA: For the commercial cases, it was a 28 little bit different. Because the commercial, the 33 1 big property owners were able to hire usually fancy, 2 you know, attorneys and accountants. And the 3 assessors were kind of at a disadvantage because they 4 didn't have the same type of experts who would bring 5 reams and reams of documents, right? 6 And so I think there was a little bit of, 7 you know, an unequal playing field in the commercial 8 property cases. 9 But for the residential -- which I am 10 concerned about just normal homeowners being able to 11 have their day in court and not having to, you know, 12 provide more documents, get postponed, not 13 understand, get threatening letters, because they 14 just want to have their day. I mean, you just rule 15 on it or not, right? 16 So I hear what you're saying. And I'm kind 17 of disappointed that, you know, the process has 18 changed, especially for the small homeowners. 19 MR. MIDDLETON: Yeah. And even the small, 20 you know, property owners, like, if, you know, they 21 have a nursery, or they have a small retail thing, 22 they'll bring their income and expense in a rent 23 roll. 24 But when you start saying, "Bring all your 25 lease abstracts," right? And then you don't get a 26 hearing because you're not complying with all that 27 stuff, they just get washed out. 28 MS. MA: And so has something changed in the 34 1 code where they are allowed to do that now? 2 MR. MIDDLETON: To my knowledge, nothing has 3 changed in the code. 4 And to be clear, this is just a small 5 problem in a few counties. Most counties don't do 6 this at all. 7 And -- and -- and even in the counties where 8 they do this, a lot of times the assessors are great. 9 They'll work with us and take us off noncompliance if 10 we give them -- or we try to give them the 11 information they're looking for. 12 So it's not a -- the problem is that it's 13 becoming institutionalized in several counties. And 14 once that happens, and the applicants now have to 15 come and sit there all day and not even know why 16 they're there, and then come back, then -- I've had 17 numerous clients that said, "The process is too much. 18 I can't get all this information. And if we're not 19 going to get a hearing, I ain't got the time." 20 MR. RUNNER: Okay. Member -- 21 MS. MA: I have one more question. 22 And then when was this compliant and 23 noncompliant calendar? We did not have that back in 24 1995. 25 MR. MIDDLETON: Yeah. In Santa Clara, I 26 think it's been going on for a little while. Years 27 ago we wanted to challenge it, but we're a small 28 firm. 35 1 And so, you know, once CATA became organized 2 and, you know, other people started seeing these 3 things happen too, then it was -- there was a 4 platform where we could talk about it. 5 To be clear, in 27 years, every time we've 6 raised the issue in front of boards and went with the 7 law, we were always afforded a hearing. We were 8 never denied once we talked to the board and told 9 them what went on. 10 The problem is, is now if you have to go to 11 noncompliant hearings, and you wait until the end of 12 the day, you just -- there's just too much -- too 13 much time to even get to your hearing. 14 MR. RUNNER: Okay. 15 Okay. Member Harkey, did you have a 16 question? 17 MS. HARKEY: No, I just -- I -- I think 18 that, you know, maybe something is just transforming 19 in a few counties and moving along. And maybe if we 20 could arrive at something that was really simple that 21 just allowed taxpayers their right in court, their 22 day in court. 23 I think we do have a lot of elected 24 officials that would gladly -- assessors that would 25 gladly have, you know -- but taxpayers need to know 26 to go there. And that's -- that's one of the other 27 problems. There may be language barriers and other 28 things. 36 1 A lot of times small property owners are -- 2 are immigrant status. And they just don't -- they 3 don't understand the law. They're just trying to 4 make a living. 5 And so I do think, you know, as much leeway 6 as we can grant in that area. And I know that the 7 gentleman from the assessor's office in Los Angeles 8 has some comments. And I'll wait to hear from him. 9 MR. RUNNER: Okay. 10 Member Stowers. 11 MS. STOWERS: I think I can probably wait, 12 too. 13 MR. RUNNER: Okay. 14 MS. STOWERS: Because I think you said it 15 was San Francisco and Santa Clara County -- 16 MR. MIDDLETON: Were the main ones. 17 MS. STOWERS: -- are the main ones. 18 MR. MIDDLETON: There are a few other ones. 19 But they're the ones that kind of have 20 institutionalized. 21 MS. STOWERS: And I would like for someone 22 to address whether or not -- I think Sac -- Santa 23 Clara County has a local ordinance for this. Maybe 24 LA County or CA can respond or someone. I thought 25 they had a local ordinance. 26 MR. MOON: Santa Clara does have a local 27 ordinance. 28 MS. STOWERS: Okay. Great. Thank you. 37 1 And does that ordinance, does it follow the 2 RTC? 3 MR. MOON: I believe -- I believe the 4 language does, although I can't say for certain. I'm 5 not an expert on that. And so -- 6 MR. MIDDLETON: I'm -- I'm sorry to 7 interrupt. I'd also like to correct myself. They're 8 the two main ones. There's three or four or five, at 9 least, other counties that have been doing it. And 10 it's kind of growing. And they're adopting each 11 languages and stuff. So -- 12 MR. RUNNER: Okay. 13 MR. MIDDLETON: I -- I don't want to mislead 14 the Board that it isn't getting -- becoming more 15 pervasive. 16 MR. O'NEALL: Deputy Controller Stowers, 17 relating to Santa Clara County, there is an 18 ordinance, which actually is a property tax. It's a 19 rule of the assessment appeals board. It 20 specifically says noncompliance hearings. 21 And even if, you know, that was within the 22 authority, at least generically of the county to 23 adopt such an ordinance which became a property tax 24 rule, you can't adopt an ordinance that's contrary to 25 law. And there's nothing in the law that says there 26 should be noncompliance hearings. 27 MR. RUNNER: Okay. 28 Member Horton. 38 1 MR. HORTON: Thank you, Mr. Chair. 2 For me, I think at some point I need some 3 clarification as to whether or not it is within the 4 law. 5 We certainly appreciate CATA's perspective, 6 but I would like general counsel to review that 7 provision to assure that it is within the Revenue and 8 Taxation Code. 9 And the concern is not as much with what 10 they call it, but how it's utilized. If it's 11 utilized solely for the purpose of simply determining 12 compliance, or the AAB for the board is not the -- 13 the trier of fact that's determining whether or not 14 compliance -- first of all, the request for 15 compliance is reasonable and fair and equitable. And 16 whether or not the taxpayer has met that compliance. 17 And also, whether or not there's been a level of 18 discovery in participation prior to the hearing. 19 Because I think it's incumbent upon all the 20 parties to have some level of discussion about this 21 notion of compliance with a request, whether or not 22 it's reasonable, fair, equitable, and whether or not 23 you met that burden prior to continuing disallowing 24 anyone's due process. 25 MR. RUNNER: Okay. I'd like to go to the 26 assessors now. And then I think -- I don't know if 27 the clerks have something in this hunt or not, but 28 they can respond to that. 39 1 And then we also, then, want to hear from 2 Chief Counsel in regards to some of the discussion of 3 the language. 4 MS. DAVIS: Mr. Chair, thank you. 5 And if I bounce around, it's because I got a 6 little confused listening to CATA's comments. They 7 seemed to bounce around a couple of rules. So I'm 8 going back to 302, if I might, first. 9 MR. RUNNER: Sure. 10 MS. DAVIS: Specifically 302(a)(1). It's 11 dealing with the board's function. 12 302 is a rule that deals with the board's 13 function and jurisdiction. 14 302(a) deals with function. 15 And I want to say very clearly that we share 16 the concern that all taxpayers are afforded due 17 process. And, in fact, when I made the suggestion 18 that we create (a)(1), I said, "We need to find words 19 that say taxpayers have a right to their day in 20 court, even though it's not court." 21 So I believe that the statement was crafted 22 to provide that opportunity to ensure all applicants 23 are afforded due process. And that they're given the 24 opportunity for a timely and meaningful hearing. 25 Meaning it's on time; it's within the time lines that 26 are established by law. 27 And meaningful, to me at least -- and I 28 appreciate counsel. I appreciate that if it's 40 1 litigated, the Courts will tell us what it really 2 means. But to me it means they present evidence, we 3 present evidence, and the board renders a decision. 4 And the purpose of putting that front and 5 center, 302(a)(1) is to put all appeals boards on 6 notice that that is their primary function to provide 7 for taxpayers to have due process, to have a timely 8 hearing, and to have a meaningful hearing. 9 I want to say, because as I was listening to 10 Mr. Middleton and Mr. O'Neall -- assessors do not 11 control the appeal's calendar. The appeal's calendar 12 is controlled by the clerk's of the board. 13 And to the extent that an appeals board 14 decides to postpone or continue, they are controlling 15 their own calendar. We do not make that -- we do not 16 have that control. 17 We do have the right to one postponement, 18 just as the taxpayer has a right to one postponement. 19 And if the assessor chooses to -- I'm just going to 20 use this word -- burn their postponement right 21 because they don't have all the information, that is 22 certainly within their authority to do that. 23 So I really think it's important to say 24 assessors have the authority to postpone at least 25 once. But they do not control the assessment appeals 26 calendar. 27 With regard to 302(c), we strongly disagree 28 with the inclusion of that language in Rule 302 as it 41 1 speaks to the board's jurisdiction. We believe the 2 authority for the board's jurisdiction is vested in 3 the constitution and should not be limited by this 4 rule. 5 However, we do realize that legal counsel to 6 the board believes that there may be some wiggle room 7 here. And this would be a perfect instance where we 8 think the interested parties process needs to 9 continue so that we can consider another way to craft 10 a solution that would work better for what everyone's 11 intent is. 12 Again, as I listen to Mr. Middleton and 13 Mr. O'Neall, I'm struck by the fact that we're 14 talking about a limited number of counties in which 15 this is happening. I'm hearing the concern, if you 16 will, that it may be expounding to other counties. 17 And I'm looking to Mr. Kinnee to let him 18 know that this is a place where I think education is 19 needed. 20 When CATA first came to the board -- and, 21 actually, I think they first came to Board Member 22 Horton, and shared concerns, if you will, about 23 441(d) requests. Assessors took it upon themselves 24 as a group to talk about 441(d) requests, to talk 25 about where they might actually be considered 26 threatening, and to try and craft a way to avoid that 27 appearance for all taxpayers. We're very sensitive 28 to that. 42 1 And I would say to you that as it relates to 2 302(c), I believe the interested parties process 3 would be an appropriate way for us to attempt to work 4 through where some language might work in that 5 regard. 6 As for the group who was meeting for the 7 last month, we believe that putting a statement in 8 Rule 305.2, prehearing conference, that reads: "At a 9 prehearing conference, the board shall not deny an 10 application solely on the ground an applicant has not 11 responded to a request for information made under 12 section 441(d) -- 441 of the Revenue and Taxation 13 Code," is appropriate. 14 We believe 305.2, as it was proposed to you, 15 but without the words "status hearing," 16 "noncompliance," and the sentences that follow, that 17 is an appropriate place to talk about denying at a 18 prehearing conference for noncompliance. 19 But putting it in 302 or putting it in 323, 20 we believe, is inappropriate. We strongly disagree. 21 Now, I think I see Board Member Ma has a 22 question. I'm wondering if you want me to keep going 23 on the other rules. 24 MS. MA: I do have a question. 25 So do you agree that -- I hear what you're 26 saying that the assessors do not control the calendar 27 for the appeals. 28 So I guess -- I want to ask the clerk; who 43 1 is making the decision on this compliant and 2 noncompliant calendar? 3 MR. McKIBBEN: I would have to defer to 4 Santa Clara, San Francisco counties on specifically 5 how the procedure works out. 6 But, generally speaking, the clerk does 7 control the calendar. It's the clerk's 8 responsibility to set a hearing. 9 As to an evidentiary hearing, the clerk does 10 refer, to some extent, to the assessor as to the 11 assessor's readiness. Because the assessor has to be 12 at each and every hearing we hold, whereas the 13 taxpayer does not. 14 But beyond that, it's typical for the clerk 15 to completely control that calendar and determine 16 when those applications are going to be heard. 17 I meant in my opening remarks earlier -- 18 Mr. Chairman, I meant to point out that I know we're 19 short of seats and microphones here. But I do have 20 other folks with me today, including board legal 21 counsel, as well as two clerks who are over at 22 operations. So if it would be helpful for us to move 23 in and out -- 24 MR. RUNNER: Well, when it's appropriate. 25 I'll let you make the decision in regards to when 26 it's appropriate. And if you think we need to have 27 somebody give up a seat for them to make comment, 28 we'd be glad. But you can control that. 44 1 MR. McKIBBEN: Okay. Thank you. 2 MR. RUNNER: Okay. 3 MR. McKIBBEN: With regard to the board's -- 4 we want to make a point and -- and reinforce what 5 Assessor Davis has just said about putting that 6 prohibition in Rule 305.2. 7 We support that. That's the appropriate 8 place for this. Because the prehearing conference, I 9 was around when the rule on prehearing conferences 10 was written. 11 And I remember that the types of situations 12 that we're talking, where we've got people with 13 noncompliance, or there's a whole bunch of issues 14 involved, it's a complex case. The parties need to 15 meet with the boards and agree on what the process is 16 going to be like and what information is needed. 17 That's what my recollection is to why the prehearing 18 conference was put into the property tax rules. 19 Dean Kinnee was here at the time, and he may 20 be able to corroborate that. I don't know. 21 But the prehearing conference is a very 22 important tool that can be used and should be used by 23 all parties, including the clerk and the board, to 24 make sure that things are running smoothly, that 25 disputes that are kind of peripheral to the actual 26 details of the case are dealt with, that everybody 27 has the information they need, and the parties 28 understand what the process is going to be going 45 1 forward. 2 We don't want to see -- we're just not 3 willing to sit still to let the board's discretion be 4 impinged upon in this case. The board has to control 5 its own calendar. It's appropriate for the board to 6 make these kinds of decisions as to whether or not 7 there's going to be a prehearing conference, or 8 whether or not there's going to be more than one 9 prehearing conference. It depends on the 10 circumstances pertaining for that particular 11 application on that particular time in that 12 particular county. 13 MR. RUNNER: Let me just ask real quick to 14 clarify the question. Because you spoke to the issue 15 of the compliant/noncompliant part of the calendar. 16 Who determines whether or not, in those 17 counties, somebody is compliant or noncompliant? 18 MR. McKIBBEN: Well, ultimately it really is 19 up to the board to make that determination. 20 MR. RUNNER: Well, no. Who put them on as 21 compliant or noncompliant? 22 MR. McKIBBEN: In those counties? 23 MR. RUNNER: Yeah. 24 MR. McKIBBEN: I believe it's the clerk. 25 Now, based on the information -- 26 MR. RUNNER: The clerk determines that -- 27 MR. McKIBBEN: -- coming from the assessor, 28 of course. Because they're the ones that are 46 1 involved in the -- 2 MR. RUNNER: Well, yeah -- yeah. Help me 3 understand. The clerk, I would assume, doesn't 4 necessarily know whether they're compliant or 5 noncompliant. They're just receiving information. 6 MR. McKIBBEN: That's correct. 7 MR. RUNNER: So somebody instructed them 8 that the taxpayer was compliant or not compliant. 9 MR. McKIBBEN: That's information that's 10 typically coming from the assessor. 11 MR. RUNNER: So the assessor determined, in 12 those counties, as far as you know, that somebody was 13 compliant or noncompliant? 14 MR. McKIBBEN: Let me say this, if you would 15 like, I can bring up the clerk from San Francisco 16 County to address that specific question. 17 MS. MA: That'd be great. Is Dawn here? 18 MR. RUNNER: That's -- I think that's a 19 pretty critical issue. Because that appears to me to 20 have some control in regards to calendars. 21 MS. DAVIS: While he's doing that, I think 22 it's important to -- I know it's going to sound like 23 I'm splitting hairs -- 24 MR. RUNNER: Right. 25 MS. DAVIS: It's partly what we've done for 26 the last month. 27 We don't instruct the clerk of the board as 28 to anything. We tell the clerk of the board what we 47 1 believe the issue is coming before the board. 2 So, for example, if someone did not file 3 their appeal within 60 days of a notice of 4 supplemental assessment -- 5 MR. RUNNER: Right. 6 MS. DAVIS: -- the clerk of the board can't 7 know that, because they don't control the mailing or 8 the dates of the notices. So we will inform the 9 clerk that this will be a timeliness hearing. 10 And, at least in our county, even an entire 11 section of the appeals board agenda is devoted to 12 timeliness hearings. So we will -- 13 MR. RUNNER: Yeah. Right now I'm just 14 focused on this compliant and noncompliant issue. 15 MS. DAVIS: But that's my point. We don't 16 instruct the clerk. We simply inform them what we 17 believe the issue is going to -- the main issue 18 that's coming before the appeals board at their 19 schedule. 20 MR. RUNNER: So it's the -- in your opinion, 21 it's the clerk who looks at all the information and 22 determines that this person is compliant or 23 noncompliant? 24 MS. DAVIS: Determines where to put it on 25 their agenda. 26 MR. RUNNER: And labels them compliant or 27 noncompliant? 28 MS. DAVIS: Well, I don't know that they 48 1 label them on the agenda. I think it's a hearing as 2 to -- 3 MS. HARKEY: It's included on the agenda -- 4 MR. RUNNER: I would assume they are -- 5 they're either -- well, let me ask the clerk from 6 Sacramento -- or San Francisco. Excuse me. 7 MS. DURAN: Thank you. 8 Dawn Duran, I'm the administrator for the 9 San Francisco County Assessment Appeals Board. 10 MR. RUNNER: Okay. 11 MS. DURAN: We -- 12 MR. RUNNER: I guess the question is -- the 13 question is, and that is -- because, again, it goes 14 to the issue of being able to have a hearing, which 15 is the core of this issue. 16 And apparently in some of these counties 17 there's this idea of being compliant or noncompliant. 18 If you are labeled noncompliant, you're on the 19 agenda. But your -- your appeal is not going to be 20 heard that day; is that correct? 21 MS. DURAN: That is not the process for San 22 Francisco County. 23 MR. RUNNER: Okay. Tell me. 24 MS. DURAN: San Francisco County has devised 25 and implemented its own local rules in dealing with 26 441(d) requests and prehearing conferences. 27 The -- and it works two ways. The clerk 28 will schedule a hearing -- a -- a hearing on the 49 1 merits of the case. 2 MR. RUNNER: Mm-hm. 3 MS. DURAN: If the assessor's office has not 4 received sufficient information they believe to be 5 able to go forward with the hearing, they will 6 request a postponement. 7 MR. RUNNER: Mm-hm. 8 MS. DURAN: And ask or request that that 9 application be put on a prehearing conference. 10 MR. RUNNER: Mm-hm. 11 MS. DURAN: That's the first way. 12 The second way is, as indicated by 13 Mr. Middleton, that we do receive information from 14 the assessor's office immediately asking for a 15 prehearing conference. 16 So the second way would be that the 17 applicant for that case would be initially scheduled 18 for a prehearing conference. At the prehearing 19 conference is when the parties get together before 20 the board and discuss the issues of the documents 21 that have been requested. 22 The board is very thorough about going 23 through the list, asking the assessor's office if you 24 need the information, "Have you gotten the 25 information?" They will ask the taxpayer, "Does the 26 taxpayer have that information? Is it available?" 27 So that's where the communication comes into 28 play before the board between the two parties. 50 1 After the prehearing conference, the board 2 will instruct the parties to either please provide 3 the information, you have 30 days, or they will ask 4 the taxpayer how long will it take for you to provide 5 this information. 6 Given that information from the taxpayer to 7 the board, the board will then instruct the clerk to 8 reschedule the hearing within a certain amount of 9 time to allow: A, the taxpayer to provide the 10 information; and, B, to allow the assessor's office 11 sufficient time to review the information before the 12 case is scheduled for a hearing on the merits of the 13 case. 14 So the prehearing conference is really -- in 15 San Francisco County is where that dialogue comes 16 into play. We -- San Francisco County does not have 17 an agenda where something is scheduled, and it's 18 either heard on the merits or it's dropped down to 19 noncompliance. All of the 441(d) issues are 20 addressed at a prehearing conference. 21 MR. RUNNER: Do -- do you have a 22 noncompliance item on the agenda? 23 MS. DURAN: No, it's -- 24 MR. RUNNER: Okay. 25 MS. DURAN: Everything is under a prehearing 26 conference. 27 MR. RUNNER: Okay. Okay. 28 MS. DURAN: So, no, San Francisco County 51 1 does not have that section on their agendas. 2 I believe Santa Clara County doesn't, but I 3 can't speak to Santa Clara's -- Santa Clara County's 4 process. 5 MS. MA: So what happens after the 6 prehearing conference? You all -- they all meet, you 7 get X number of days saying come back in 60 days. 8 And the taxpayer does not have any information, or 9 the assessors say, "We didn't get information," or, 10 "We don't have time to review it." 11 MS. DURAN: The clerk -- the clerk -- given 12 what the board instructed at the prehearing 13 conference, the clerk schedules the case 14 accordingly. 15 MS. MA: Regardless. 16 MS. DURAN: Regardless. 17 MS. MA: So no one gets -- 18 MS. DURAN: At that hearing. At the next 19 hearing which is on the merits of the case at that 20 point. 21 MS. MA: Okay. 22 MS. DURAN: The taxpayer, if they have the 23 burden of proof, will present their case first. At 24 which point, if the assessor did not receive 25 sufficient information, they will request a 26 continuance under 441(h). 27 And so then it is continued to line -- to 28 your deadline as told at that point. 52 1 MS. MA: Okay. So in San Francisco no one 2 is denied a hearing under 441(d) for not providing 3 documents? 4 MS. DURAN: No, not in San Francisco County. 5 Again, I can't speak for other counties. 6 MR. RUNNER: Right. 7 MS. MA: Right. And people do show up 8 without documents, right? 9 I mean, I served before you were clerk, so 10 has -- 11 MS. DURAN: People do. We find that for the 12 prehearing conference a lot of the times it helps the 13 taxpayer understand what the assessor is asking for 14 or why they are asking for it. It opens up the 15 dialogue between the two parties. 16 And so -- and, again, it happens one of two 17 ways. Either it's scheduled for a hearing, and it 18 gets postponed and reset for a valuation hearing. 19 Which means the taxpayer, at that point, is only 20 coming in once for a prehearing conference, twice for 21 a hearing on the merits. That's usually the 22 circumstances. 23 MS. MA: Even for small residential homes? 24 MS. DURAN: It all -- 25 MS. MA: They all go to two hearings? 26 MS. DURAN: It all works the same. Well, if 27 they provide the information prior to the prehearing 28 conference, the assessors office will let us know. 53 1 They will advise the clerk accordingly. It's taken 2 off the prehearing conference, and they just come for 3 the hearing on the merits of the case. 4 MS. MA: And what if they don't provide the 5 documents? 6 MS. DURAN: It's addressed at the hearing on 7 the merits. 8 MS. MA: Okay. So then -- so then at what 9 point, 30 days, 60 days, a year, two years, where, 10 you know, you say, "Oh, the assessor said, 'Well, 11 they're not giving us the information,' so just 12 schedule it"? 13 MS. DURAN: As the clerk, we usually will 14 get to within a year of the two-year deadline. And 15 whether the documents -- the assessor's office will 16 let us know if they have received documents. They 17 don't normally let us know if they haven't received 18 documents, and they're not ready to go forward. 19 Again, when it gets to the prehearing 20 conference level, when the board instructs the clerk 21 to schedule it within, say, 90 days, it's on calendar 22 within 90 days or as close thereto as possible. 23 So at the hearing on the merits, if 24 documents have not been provided, it would be brought 25 up at that point. But our board normally will -- the 26 case will go forward at that point unless there is 27 substantially good cause that the assessor is not 28 ready or cannot go forward without those documents. 54 1 But that -- again, that is usually flushed 2 out during the prehearing conference. It's not -- 3 it's not during the hearing on the merits of the 4 case. 5 MS. MA: And so for the prehearing 6 conference, are the members involved, or is it just a 7 hearing officer? 8 MS. DURAN: No, it's -- prehearing 9 conferences are always before a full board. 10 MR. RUNNER: It's before the board. 11 MS. DURAN: It's before the Board. 12 MR. RUNNER: Okay. 13 MS. DAVIS: In San Francisco. 14 MR. RUNNER: Oh, okay. You're right. Thank 15 you. 16 MS. DURAN: And, again, I'm just speaking 17 about our process in San Francisco. Thank you. I 18 can't -- 19 MS. DAVIS: So -- so it's important to say 20 this -- 21 MS. DURAN: -- speak to that process for 22 other counties. 23 MR. RUNNER: Go ahead. 24 MS. DAVIS: Local board rules establish how 25 a prehearing conference is held. And a prehearing 26 conference is not a hearing. Which is why we're 27 objecting to the words "hearing" in the proposal of 28 305.2(b). 55 1 It is not a status hearing; it is not a 2 noncompliance hearing. It's a conference. And the 3 conference is intended to resolve those issues. 4 In Calaveras County our local board rule 5 provides that county counsel to the appeals board 6 conducts the prehearing conference -- 7 MR. RUNNER: Mm-hm. 8 MS. DAVIS: -- for purposes of deciding if 9 the hearing should be bifurcated to hear legal issues 10 first, followed by valuation issues, or to deal with 11 any other complicated matters that may be coming up. 12 So it's important to know that local board 13 rules establish what is happening at a prehearing 14 conference and how that prehearing conference is 15 conducted. 16 MR. RUNNER: Okay. 17 Mr. O'Neall, comment on -- 18 MR. O'NEALL: Mr. Chair, I don't want to 19 take too much of the CAA's time here, but I'm just 20 going to interject a couple of things. 21 First of all, the one hearing example of 22 San Francisco was actually part of how -- or the 23 reason we patterned that second sentence in 305.2(b) 24 the way we did with one hearing -- one -- one-time 25 hearing -- 26 MR. RUNNER: Mm-hm. 27 MR. O'NEALL: Which apparently in San 28 Francisco is sufficient for what they need to do. 56 1 The second thing is, let's remember that 2 most counties have adopted 305.2 verbatim into their 3 assessment appeals board rules. We only have a 4 handful of counties where they have their own special 5 rule. 6 The one that's, you know, of most concern 7 here is Santa Clara County, where they have defined 8 noncompliance hearing in the rule. And that's the 9 place where we have the problem with -- and -- and I 10 will say the assessor decides who goes on that 11 calendar. And then it will go on, and on, and on, 12 until you finally get off that calendar. 13 And that's one of our biggest concerns. I 14 mean, the prehearing conferences that are 15 441(d)-directed happened in multiple counties. So I 16 think that's the -- 17 MR. RUNNER: I need to go back to this. I 18 think we were -- we did not finish from -- I think 19 we're going to end up discussing this some more. But 20 I think I want to let the assessors continue to 21 finish up their thoughts in regards to this section. 22 MS. DAVIS: Thank you, Mr. Chair. 23 And with regard to Santa Clara County and 24 how they may do it, if your Board believes that Santa 25 Clara County is doing it incorrectly, if your Board's 26 legal counsel concurs with that belief, I think 27 that's a simple matter of contacting that county and 28 telling them to fix it. 57 1 It does not rise to the level of adding a 2 regulation that effects statewide county offices at 3 the assessor level and at the clerk's level. 4 MR. RUNNER: Can I -- can I actually go to 5 the Chief Counsel on that issue. 6 MR. NANJO: Sure. 7 MR. RUNNER: And that is, I think part of 8 this discussion that we're having is that we have -- 9 we have -- you know, we have 58 clerks out there in 10 counties who may be doing it different. 11 We may have -- then a couple of them are 12 doing something different. And maybe this is an 13 interesting discussion to have on this item, and that 14 is this issue of compliance and noncompliance. 15 If indeed we don't have a rule that speaks 16 to the issue of compliance and noncompliance, what is 17 our ability to actually go and have discussions with 18 a particular assessor at any county? 19 MR. MOON: Well, even though there might not 20 be specific rules as far as regulations, there are 21 rules in terms of statutes. And if those statutes 22 are being violated by a particular local rule, then 23 we would have -- 24 MR. RUNNER: We -- we would assume there's 25 no statute that talks about a 26 noncompliance/compliance calendar. 27 MR. MOON: No, there's not. 28 MR. RUNNER: Okay. So that goes back to my 58 1 main point, and that is if indeed there is no statute 2 and there is no rule, what gives us the ability to 3 have a discussion with an assessor in regards to 4 speaking the issue? 5 MR. MOON: Well, the general statutes that 6 exist could say that the rule is or is not compliant 7 with that general statute that governs -- 8 MR. RUNNER: The rule that we would do? 9 MR. MOON: No. No, I mean the general 10 statute. 11 MR. RUNNER: Okay. 12 MR. MOON: So, for example -- 13 MR. RUNNER: But then you're just dealing 14 with an opinion. You're dealing with our opinion 15 versus the assessor's opinion. 16 MR. MOON: Yes. 17 MR. HORTON: Well, ours -- 18 MS. HARKEY: Well, there's a little bit 19 more. 20 MR. NANJO: One of the things the Board -- 21 this Board can do is, if we believe that something is 22 not a good practice -- 23 MR. RUNNER: Mm-hm. 24 MR. NANJO: -- or best practices, typically 25 those are the type of things that we, as BOE, will 26 send out through letters to assessors, or things of 27 that nature. 28 So we can provide guidance to the assessors 59 1 and/or the assessment appeals board in these kinds of 2 matters. 3 And one of the things -- 4 MR. RUNNER: Let me ask you again. 5 MR. NANJO: Sure. 6 MR. RUNNER: If we sent out a letter of 7 guidance, a letter to the assessors, saying that we 8 believe that this is an incorrect -- or we believe 9 this is a questionable practice -- 10 MR. NANJO: Correct. 11 MR. RUNNER: -- what authority does that 12 have in them creating a change in their practice? 13 MR. NANJO: It's a guidance from this Board. 14 MR. RUNNER: Right. 15 MR. NANJO: It doesn't require them to make 16 the change. 17 MR. RUNNER: Thank you. 18 MR. NANJO: It's harder for them to preserve 19 it. 20 MR. RUNNER: Okay. Thank you. 21 Member Horton, I think had a comment. 22 MR. HORTON: Thank you, Mr. Runner. 23 You know, I'm going back to the -- we've got 24 different counties doing different things. And I 25 have no quantitative empirical data before me that 26 indicates what counties are doing what, and whether 27 or not those counties are -- that are presumed to not 28 be doing the right thing, whether or not they're in 60 1 compliance with the law. 2 I mean, I don't disagree with our legal 3 counsel. But I do want to sort of clarify from my 4 perspective, if the statute states that something is 5 to be done, and it's not being done, the statute does 6 not have to be permissive. It often is not. 7 And because it doesn't permit a party to do 8 something, then the party is not allowed to do it. 9 And so to -- we can clarify statute in a 10 letter to the assessor that clarifies statute. Or we 11 can clarify statute in a rule. Even though one might 12 say it's relatively redundant if the rule itself is 13 clear. 14 But if the rule is not clear to one county, 15 the first phase may be to clarify the rule. If it's 16 clear to the -- if you've got 50 counties, and they 17 all seem to understand the rule and comply with the 18 rule; you've got 8 who don't, then that would signal 19 to me that there isn't understanding what the rule 20 says. And there's a level of compliance. 21 The other thing the statute seems to 22 provide -- at least from my read of it -- is it 23 provides that the clerks have the authority to sort 24 of manage this process. And to the extent that that 25 management of the process is not consistent, the 26 Board of Equalization around the issues of equity, 27 fairness, and reasonableness, should do what we need 28 in order to assure that that management process is 61 1 consistent, given consideration to the practical 2 applications. 3 In some counties they may have a million of 4 these things. And their end is harder where the 5 concern -- the other concern that I have is the one I 6 stated earlier. Is that one county can call it a 7 prehearing conference, but, in fact, their action is 8 not a hearing where the evidence is being presented 9 and evaluated by the trier of fact in being defended 10 by both parties. 11 Which takes us back to 302 -- 302(a)(1), 12 which seems to have some basis for providing a level 13 of guidance from my perspective. Although it's 14 generic. Which is -- which is where the inefficiency 15 comes in. 16 The term "meaningful hearing" and "timely 17 hearing," when, in fact, we should probably have 18 language that speaks more to -- that there shall be 19 evidence presented, cross-examined, evaluated, and 20 the trier of fact should make a decision so that it's 21 clear that the assessment appeals board is making the 22 decision as to the fairness, equitableness of the 23 evidence that's being presented. 24 So to some extent we need a definition of a 25 term. Because they're different interpretations of 26 what those terms are from one county to another. 27 And I think the statute is also clear that 28 the parties have to -- a right to a level of 62 1 discovery, and how that discovery process should take 2 place. That they have a right to a discovery hearing 3 where they're entitled to discover whether the 4 evidence is there, whether there's sufficient 5 evidence. 6 And the other thing, which kind of puzzles 7 me, is that -- and then I'm going to close with this, 8 Mr. Chair, is that the assessor, under the law, is 9 presumed to be correct from the onset. 10 And so the taxpayer has a burden here of 11 proving -- and it would seem to me that it's in 12 everyone's best interest to -- at least to a point of 13 reasonableness -- provide reasonable data to support 14 your position. 15 And if you choose not to do that, and you 16 choose to argue your case, be caught with no evidence 17 but a verbal submission of your view of how you -- 18 this evidence should be evaluated, you're entitled to 19 do that, too, under the constitution. 20 So you need to sort of separate these things 21 up so that everyone is on the same page from the 22 onset as to what we're actually talking about and how 23 relevant it is to this body. 24 Are we being asked to make a rule for the 25 exception, or for noncompliance with existing law? 26 Or are we asking to clarify existing law, or are we 27 being asked to actually redraft existing law? 28 MR. RUNNER: Member Stowers. 63 1 MS. STOWERS: Mine is really simple. 2 To CATA, the document I have regarding 3 302(c), your notes say that you're willing to delete 4 that section if the parties agree to 302 -- 5 305.2(b). 6 MR. RUNNER: Mm-hm. 7 MR. O'NEALL: That's correct. 8 MS. STOWERS: That's correct. Now, can you 9 guys come to an agreement if they disagree to the 10 first sentence and not this threshold? Because I 11 believe there's some issues with that. 12 MR. O'NEALL: The first sentence we've 13 already heard. Everyone is in agreement with the 14 first sentence. 15 MS. STOWERS: So you said first -- go ahead. 16 MR. O'NEALL: Except with regard to should 17 it be a prehearing conference, status hearing, or 18 noncompliance hearing. We think it should be all 19 three. 20 But the idea that they may not deny solely 21 on that ground of noncompliance with 441(d), I heard 22 Assessor Davis and I heard Mr. McKibben say both 23 organizations are in agreements with that concept. 24 It's the second sentence, which is the 25 protection in the case of the hearing being postponed 26 or continued. And we have to have that. Because 27 denial is one thing. 28 And I did testify at a prior hearing. I was 64 1 at a hearing in San Mateo County where I saw a denial 2 occur. I have the details of that, but we haven't 3 been able to identify which taxpayer it was. 4 County Counsel for San Mateo brought that to 5 my attention, and we have tried to find that 6 information. 7 But the bigger issue is the ongoing 8 noncompliance hearings. The calendar of them -- 9 MR. RUNNER: Can -- can you real quickly -- 10 I just want to see if I'm on the right -- when you 11 say the second sentence and the first sentence -- 12 MS. STOWERS: Yeah, I was lost there, too. 13 MR. RUNNER: -- can you clarify? I think 14 I -- I think I have a line through some sentences. 15 So I just want to make sure we're dealing with the 16 right sentences. 17 MR. O'NEALL: Yes, Mr. Chairman. 18 So it's the sentence that reads, "For 19 properties with an annual assessment greater than $10 20 million." 21 MR. RUNNER: Okay. That's your second 22 sentence? 23 MR. O'NEALL: That's the second sentence. 24 Because the second -- the original second sentence 25 was -- per the agreement of the parties, was deleted. 26 MR. RUNNER: Okay. 27 MS. STOWERS: Okay. 28 MR. RUNNER: Thank you. 65 1 MS. STOWERS: So you're saying that you 2 still need to have that second sentence? 3 MR. O'NEALL: We have to have -- 4 MS. STOWERS: You have to have that second 5 sentence. 6 But as far as the first sentence, if we 7 strike "status hearing" and "noncompliance," could 8 CATA be in agreement? 9 MR. MIDDLETON: You couldn't strike the 10 noncompliance, because that's exactly what they call 11 it in Santa Clara. So if you strike it, they can 12 just keep holding their noncompliance hearings. The 13 whole idea is that the taxpayer should have a 14 hearing, whether or not they've complied with an 15 assessor's request for information. 16 MS. DAVIS: Let's look at the name of the 17 rule. 18 MR. RUNNER: I -- let's go back -- I really 19 need to get back to letting the assessors continue to 20 close this discussion with their issues, and then we 21 can continue with the specifics. 22 MS. DAVIS: Okay. Before I move, though, I 23 really want to go to 305.2. The name of the rule is 24 prehearing conference. By definition, that is not a 25 hearing. By law, the appeals board may not render a 26 decision unless they've held a hearing at which 27 evidence has been presented. 28 A prehearing conference is a meeting. It is 66 1 not a hearing. Evidence is not presented. Decisions 2 may not be rendered except as it relates to how 3 something might be scheduled for hearing. 4 So putting "noncompliance hearing" and 5 putting "status hearing" under that rule elevates a 6 prehearing conference to something it is not. 7 And if you're doing it because one county 8 does it that way, invoke your authority for 9 uniformity. Send that one county, or three, or five, 10 a letter, and tell them to cut it out. But don't 11 bring it to the level of a regulation that is 12 unnecessary based on anecdotal evidence that one or 13 two or three counties are doing it that way. 14 So I'm sorry, Mr. Chairman -- 15 MR. RUNNER: Okay. 16 MS. DAVIS: -- for kind of losing it 17 there. 18 MR. RUNNER: That's fine. 19 MS. DAVIS: I'll go back to -- I think I've 20 beat 302 about as far as it needs to be beaten. 21 MR. RUNNER: Mm-hm. 22 MS. DAVIS: Rule 305 relates to the 23 application. And I would say that CAA is in 24 concurrence with these suggestions because the clerks 25 are. 26 This is a rule that deals with the processes 27 that the county clerks employ. We defer to them to 28 work through that verbiage with CATA. And we are -- 67 1 we are in concurrence with that. 2 MR. McKIBBEN: That's correct. 3 MS. DAVIS: So moving to Rule 305.2, which I 4 just did spend a little time yelling about -- again, 5 my apologies. I'm a little passionate about some of 6 this. 7 Rule 305.2 deals with prehearing 8 conferences. We strongly oppose any attempt to bring 9 in the concept of status hearing or noncompliance 10 hearing. 11 And I apologize if I might -- Mr. Yen 12 noticed that I wasn't quite clear in my letter late 13 last night to you. And -- and so I want to be very 14 clear this morning that noncompliance hearing and 15 status hearing, in our mind, has to be stricken from 16 305.2(b). 17 And then the end should be stricken as well. 18 And I want to explain to you why the second sentence 19 that Mr. O'Neall refers to as being so very important 20 to CATA is so very important to me as a small county 21 assessor, and to CAA representing all 58 counties, 22 why it should not be there. 23 I sent them an e-mail yesterday, and I said, 24 As I sit here writing this e-mail I can think of two 25 properties in my county that have a value of $10 26 million. One is a couple hundred yards to my right. 27 It's our justice center. 28 Our $80 million jail is tax exempt, so it 68 1 would not rise to that level. Because even though it 2 has the value, it's not assessed. 3 The other few hundred yards to my left is 4 our hospital. Again, 25, $30 million facility, but 5 exempt under the welfare exemption because it's a 6 hospital. 7 I cannot think of another building or 8 another piece of property in Calaveras County that 9 hits the $10 million level. And essentially, then, 10 you would be considering a regulation that would 11 eliminate prehearing conferences in my county. 12 But it goes beyond that. Complicated change in 13 ownership issues are not restricted by property 14 value. 15 A few years ago I had a complicated change 16 of ownership following the death of an owner. Which, 17 by the way, an estate that was probated almost all 18 the way to the California Supreme Court. 19 And we had multiple meetings with the heirs, 20 and multiple requests for information before it could 21 be resolved. 22 Now, it happens to be my policy not to move 23 things to prehearing conference if we can avoid it, 24 but to continue to try to work through these issues 25 with taxpayers. 26 It happened to effect a small strip mall 27 worth less than $1 million. 28 So had we not been successful with this 69 1 property owner, we also would not have been able to 2 go to prehearing conference to sort of pull those 3 issues apart and decide if the hearing should be 4 bifurcated, or how it would proceed. 5 The same issue could have easily affected a 6 single-family residence. When you deal with these 7 complicated estate issues, these complicated change 8 of ownership issues, they know no value limit. 9 Last week we actually held a prehearing 10 conference on a property with multiple issues. There 11 were two possible exclusions from reassessments. 12 There were concerns about what is or is not defined 13 as new construction. And there's a concern about 14 value. And it was on a single-family residence worth 15 less than $500,000. 16 This language was presented to us by CATA. 17 And it's understandable to me that CATA would 18 generally represent larger taxpayers. After all, 19 those are the taxpayers who can afford 20 representation. 21 But all taxpayers, regardless of their 22 ability to pay for someone else to help them, should 23 be afforded an opportunity to represent themselves in 24 this process. And we should not be creating 25 obstacles or unreasonable hardships for those 26 taxpayers. 27 I implore you to move this issue to an 28 interested parties process where it can be adequately 70 1 discussed and adequately vetted by all county 2 assessors and CATA's members. 3 Would you like me to move onto -- because I 4 think they moved onto 323 as well. 5 MR. RUNNER: 323 is connected to this one, 6 correct? 7 MS. DAVIS: 323 is connected to this one in 8 that, again, the proposal that the board shall not 9 postpone a hearing on the application solely on the 10 ground they haven't responded -- 11 MR. RUNNER: Right. 12 MS. DAVIS: -- to the request for -- 13 MR. RUNNER: It's part of the issue that 14 they would remove it if the one was accepted. 15 MS. DAVIS: Exactly. 16 MR. RENKEI: Mr. Chair -- 17 MR. RUNNER: Hang on. I think that she's -- 18 I'm sorry. 19 MR. RENKEI: Will we have an opportunity to 20 respond? 21 MR. RUNNER: You'll have an opportunity, but 22 this is -- 23 MR. RENKEI: Thank you very much. 24 MR. RUNNER: This is now their time. 25 MS. DAVIS: Again, we disagree in general 26 with that proposed change. Although most of Rule 23 27 was negotiated with county clerks. And we are in 28 support of those changes. 71 1 As it relates to 323(c), we do not agree. 2 And if I might borrow Mr. Horton's word, we do 3 believe it's redundant to put another clause in the 4 rules about postponing or deciding on applications 5 where 441(d) requests have not been complied with. 6 MR. RUNNER: Okay. 7 I'm sorry. 8 MS. DAVIS: Mr. Renkei, did -- 9 MR. RENKEI: Yeah. 10 I did want to clarify earlier, we were 11 talking about prehearing conferences. And I wanted 12 to clarify that the assessor has the ability to 13 request a prehearing conference. We don't dictate 14 the calendar. 15 We do have the ability to make that request 16 based on 441(d). It is -- if you look through the 17 rules, it's one of the issues -- one of the issues 18 that's included in prehearing conferences. 19 So we do have the ability to ask for that 20 prehearing conference. And we will let the board 21 know that the issue before them will be 441. And in 22 that hearing we have the ability to make our case as 23 to why the information is necessary. 24 The applicant has the ability to argue why 25 they don't believe it's relevant, or they are unable 26 to provide it. And the board ultimately will make 27 the decision as to whether or not the assessor is 28 entitled to the information, or that the information 72 1 is necessary to go forward with the hearing. They 2 will make that decision. And then we will move onto 3 a scheduled hearing. 4 So that's how the process works. And it 5 sounds like it's being -- 6 MR. RUNNER: Let me ask -- you just said 7 something. 8 MR. RENKEI: Yes. 9 MR. RUNNER: The board will determine 10 whether or not what the assessor has asked for is 11 relevant, right? 12 MR. RENKEI: That may be one of the 13 arguments. So the -- 14 MR. RUNNER: And if -- and if the board 15 decides that it is, and the taxpayer doesn't provide 16 it, does the taxpayer end up with a hearing? 17 MR. RENKEI: Yes. 18 MR. RUNNER: Okay. Thank you. I just 19 wanted to clarify that. 20 MS. RICHMOND: Sir, can you please provide 21 your name? 22 MR. RUNNER: Okay. 23 MR. RENKEI: Okay. 24 MS. RICHMOND: Sir. 25 MR. RENKEI: So -- yeah. It's been stated, 26 and I keep hearing that the assessor is putting the 27 applicant on a compliance agenda. And we don't have 28 the ability to do that. 73 1 If the board decides to call that when the 2 assessor tells the board that we're asking for a 3 prehearing conference on the issue of our request for 4 information, and the board decides to put that on 5 what they call a noncompliance agenda, that's 6 completely up to the Board. The assessor does not 7 have the ability to do that. 8 So I just wanted that to be clear. 9 MS. RICHMOND: Sir, please provide your 10 name. 11 MR. RUNNER: Oh, I'm sorry. You need to 12 introduce yourself. 13 MR. RENKEI: George Renkei. I'm the 14 Assistant Assessor from Los Angeles County. 15 MR. RUNNER: Okay. Thank you. 16 MS. RICHMOND: Thank you. 17 MR. RUNNER: Okay. I'm going to let 18 Mr. O'Neall quickly respond, and then I'm gonna -- 19 there's some questions I'm sure Members have. 20 MR. O'NEALL: Okay. Very quickly, 21 Mr. Chairman. Thank you. 22 I think going back to the most recent 23 comments by Assessor Davis -- and I appreciate her 24 perspective. Because many counties in the state of 25 California are not as populaced as, say, Los Angeles 26 County or Santa Clara County. 27 We need to bear in mind that prehearing 28 conferences are held for numerous reasons. And a 74 1 number of them are listed in the paragraph (a) above. 2 In fact, the parties have agreed that 3 requests for information is now specifically referred 4 to in that. And you'll see that's marked up there. 5 The only pro -- the only thing that the 6 second sentence -- the new second sentence to 7 paragraph (b) in 305.2 addresses is those cases where 8 it's the sole issue on the -- at the prehearing 9 conference is a request for information. 10 The second thing is this whole thing about, 11 is it a prehearing conference, a status hearing, or 12 noncompliance hearing, you know, locally in 13 Los Angeles County, we sometimes refer to them as 14 status hearings. Specifically, though, in Santa 15 Clara, they're noncompliance hearings. 16 So I think -- I think it's important that 17 the Board write a rule that's going to encompass all 18 of the possibilities that might be out there. 19 MR. RUNNER: Mm-hm. 20 MR. O'NEALL: And, honestly, I am concerned 21 about -- about a county defining it as something 22 else. Not even listed here. And saying it's in our 23 ordinance, and it's not there. So guess what, we get 24 to hold that kind of conference. And we'll do what 25 we want to. So -- 26 MR. RUNNER: Okay. 27 MR. MIDDLETON: Just one quick comment -- 28 one quick comment. 75 1 MR. RUNNER: Very quickly. 2 MR. MIDDLETON: Very quickly. 3 I agree with most of everything Assessor 4 Davis said. However, the prehearing conference, if 5 you do not show, you will be denied. So although 6 it's just a conference and a meeting to discuss 7 things -- 8 MR. RUNNER: You will be denied what? 9 MR. MIDDLETON: Your appeal will be denied. 10 MR. O'NEALL: On the information. 11 MR. RUNNER: You won't go to hearing? 12 MR. MIDDLETON: No. If you don't show up to 13 a prehearing conference, you can be denied. 14 MS. DAVIS: Then -- then you may -- 15 MR. RUNNER: Okay. Hold on. 16 Under -- under -- and where is that? 17 MS. HARKEY: Santa Clara? 18 MR. RUNNER: Which county is that? 19 MR. MIDDLETON: That happens in Santa Clara. 20 MR. RUNNER: Okay. Okay. 21 MR. MIDDLETON: And I don't know if it 22 happens -- 23 MR. RUNNER: Okay. That -- I just want 24 to -- I think part of our problems sometimes we talk 25 about what is gonna happen -- what's happening. And 26 it's happening over here, but it's not happening over 27 there. 28 MR. O'NEALL: Correct. 76 1 MR. RUNNER: So I think that's part of the 2 issue. We have to get down to where this is 3 happening, and where it isn't happening. 4 MR. HORTON: Mr. Chair. 5 MR. RUNNER: Yes. 6 MR. HORTON: It's not even clear if it's -- 7 when it's happening. If it's happening at the 8 prehearing conference, or when you say it will be 9 denied, it goes forward on a noncompliance hearing, 10 and it's denied at a hearing. 11 MR. MIDDLETON: Well, I mean, maybe you can 12 ask the clerk of San Francisco if someone doesn't 13 show to the prehearing conference, if they're denied 14 or not. 15 MR. HORTON: They said they were not. 16 MR. MIDDLETON: They're not denied? 17 MS. DURAN: They are denied for lack of 18 appearance. For lack of appearance. 19 MR. MIDDLETON: So if they don't show to the 20 prehearing conference, they're denied for lack of 21 appearance. 22 MS. DURAN: They're denied for lack of 23 appearance. And under the local -- 24 MR. RUNNER: Okay. Hang on. Maybe if you 25 could step up to the Mike. 26 Because, again, I need to clarify, I think, 27 for us. When you say they're denied, does that mean 28 they're denied a hearing? 77 1 MS. DURAN: If they do not show up -- if the 2 taxpayer does not attend for a scheduled prehearing 3 conference -- 4 MR. RUNNER: Right. 5 MS. DURAN: -- they are denied for lack of 6 appearance. The notice clearly says lack of 7 appearance. 8 MR. RUNNER: Okay. But -- 9 MS. DURAN: Under local rules, they have 10 30 days to request for the board to reopen or 11 reinstate that application. 12 MR. RUNNER: Okay. Okay. Hold on. 13 So this is a prehearing conference now? 14 MS. DURAN: Mm-hm. 15 MR. HORTON: Well -- 16 MR. RUNNER: But -- hang on. 17 Prehearing conference. So they're denied at 18 the prehearing conference. Does that mean they're 19 denied -- their appeal, they don't have a chance to 20 go to their hearing for appeal? 21 MS. DURAN: Unless they asked to have it 22 reinstated. 23 MR. RUNNER: Reinstated. Would reinstated 24 mean they need to go back to the -- back to the -- 25 MS. DURAN: The prehearing conference. 26 MR. RUNNER: -- prehearing conference? 27 MS. DURAN: Yes. 28 MR. RUNNER: Okay. So in essence -- 78 1 MR. HORTON: I need clarification, 2 Mr. Chair. 3 MR. RUNNER: Yes. 4 MR. HORTON: Are you defining a prehearing 5 conference as an informal, managerial discovery 6 process? Or are you defining the prehearing 7 conference as an actual hearing where the board 8 evaluates the data presented and makes -- draws some 9 conclusion as to whether or not the data presented is 10 sufficient enough for them to make a decision, and 11 then makes a decision? Or are they just arbitrarily 12 saying, "You didn't show up, so you don't get due 13 process"? 14 MS. DURAN: We schedule prehearing 15 conferences for complex case -- we schedule 16 prehearing conferences for several items. It's not 17 solely on 441(d) requests. 18 MR. HORTON: What happens at the prehearing? 19 MS. DURAN: For -- for any -- for any of the 20 prehearing conferences that are scheduled, it's a 21 scheduled prehearing conference. The parties are 22 expected to appear unless they request for a 23 postponement of the prehearing conference. 24 For -- they are denied for lack of 25 appearance if they do not attend the prehearing 26 conference. 27 MR. HORTON: Yeah. But I'm still not clear. 28 And maybe it's my fault. 79 1 They're scheduled for a prehearing 2 conference. At that prehearing conference, the 3 discussion could be on various different issues, not 4 just compliance? 5 MS. DURAN: Yes. 6 MR. HORTON: It could be on various 7 different issues. 8 MS. DURAN: Yes. 9 MR. HORTON: At that prehearing conference, 10 the board is there, and the board is making a 11 decision? Or the board is not there? 12 MS. DURAN: No, the board is there. The 13 case is called before the board. 14 MR. HORTON: And both parties have an 15 opportunity to present evidence, evaluate evidence? 16 MS. DURAN: No, not necessarily evidence, 17 no. What they are there to do is to discuss, have 18 communications about either the status of the 19 hearing, the status of the request for information. 20 It could be for various reasons. 21 For prehearing conferences, locally in 22 San Francisco, our Board will not look at evidence -- 23 specific evidence regarding that case. It is 24 scheduled as a prehearing conference. 25 MR. HORTON: And is it -- to the 26 representative of the assessors; is that a common 27 practice? 28 MS. DAVIS: Well, it's certainly not common 80 1 in my experience. And I will tell you that early in 2 my career I spent two years as the assessors 3 representative before the appeals board in Contra 4 Costa County. So I have not only large county 5 experience, I have small county experience. 6 It alarms me to hear that at a prehearing 7 conference an application is being denied. But 8 moreover, an applicant who is denied for lack of 9 appearance has the right under the code, under the 10 Revenue and Taxation Code -- 11 MR. HORTON: Under the law, yeah. 12 MS. DAVIS: -- to request reconsideration of 13 that denial for good reasons. 14 MR. RUNNER: Mm-hm. 15 MS. DAVIS: And so I would assume that if an 16 applicant then said, "Wait a minute. I wasn't there. 17 I didn't understand how important this was," that's a 18 relatively good reason that it should be reinstated 19 and go back through the process. 20 I can't imagine why else they would not show 21 up. I mean, it snowed, the -- the freeways were 22 jammed. Those are obviously also good reasons. 23 MR. HORTON: Yes. Personally, I think they 24 can not show up because they didn't want to show up. 25 They still should be entitled to due process. I 26 don't think we can deny due process in an 27 administrative environment. 28 MS. DAVIS: I agree. 81 1 MR. HORTON: An informal, administrative 2 environment. 3 MS. DAVIS: And in that case -- 4 MR. HORTON: And I think that's -- that's 5 consistent with existing law, you know, that you 6 can't do that. 7 And so if that needs clarification, then -- 8 and that's happening, maybe the intent of San 9 Francisco is to comply with the law that allows them 10 to manage their calendar. And in managing their 11 calendar, they're actually setting in motion another 12 process of deferral. Or that's what the intent is. 13 But sometimes intention has a tendency to become 14 formal as opposed to an informal process. 15 Question of our general counsel; does a 16 county have the authority to -- under the statute, 17 under the Revenue and Taxation Code, have the 18 authority to deny a taxpayer due process, their right 19 to a hearing, in an administrative process? 20 MR. MOON: I believe there's -- I'm trying 21 to recall it. But I believe there is a statute that 22 talks about denials for nonappearance. Whereas 23 here -- 24 MR. HORTON: The question is where are they 25 appearing? If they -- if it's nonappearance before a 26 board, it is a hearing. It is a -- it is -- it is a 27 process where both parties are allowed to present 28 evidence, examine evidence. And the trier of fact is 82 1 making a decision even with the absence of the 2 evidence, or the absence of the party there to defend 3 themselves. 4 I mean, at the Board of Equalization that 5 happens quite often. We actually have a 6 nonappearance calendar where the taxpayer chooses not 7 to appear. And the Board will make a decision. And 8 oftentimes the Board has made decisions to actually 9 examine the information, and may go against the 10 agency. 11 And so it's not guaranteed that because they 12 don't appear, that they're going to lose a case 13 because that's the trier of fact. 14 MR. MOON: I do believe there's a statute, 15 however, that requires the appearance. 16 MR. HORTON: At a pre -- 17 MR. MOON: At a hearing. 18 MR. RUNNER: Could you refine that -- 19 MR. HORTON: No, no. I'm not saying 20 hearing. I understand -- I -- I agree with that. 21 MR. RUNNER: A hearing, not a 22 pre-conference. 23 MR. MOON: Correct. 24 MR. HORTON: An administrative conference 25 that they're calling a pre-nonhearing. I'm going to 26 use -- I'm going to add that nonhearing to the pre, 27 because I think that's what they mean. 28 MR. MOON: Yeah. I think it -- I think it 83 1 may depend on whether the ability to have that 2 reinstated upon -- simply upon a request within a 3 certain amount of time saves that from -- from a due 4 process issue or not. 5 MR. RUNNER: I think the core -- I think the 6 discussion, though, is -- I think -- I don't know. 7 I'm hearing different things. 8 One is the issue of denial at a hearing. 9 The other issue is putting in that same application, 10 in an informal -- what seems to be an informal 11 prehearing. So they really got denied at the 12 prehearing, not at the hearing. 13 MR. NANJO: Right. But I think that's kind 14 of where we're going is due process is still 15 maintained as long as there's an easy way for the 16 applicant to reinstate that process. I think that's 17 probably -- 18 MR. RUNNER: Yeah, but the due process isn't 19 to hear their stuff being heard. The due process is 20 another shot at responding to what it is that they 21 needed to bring, right? See what I'm saying? 22 I agree with the issue of you've got due 23 process if you actually get to go to your hearing, 24 and you get to hear -- people get -- actually get to 25 hear your argument. 26 MR. NANJO: Right. 27 MR. RUNNER: But if your -- but if your 28 right is only back to a prehearing -- informal 84 1 prehearing, and -- where they're still going to tell 2 you, "You need to bring these things," then you're -- 3 then you never get to the hearing. 4 MR. APREA: Chairman Runner. 5 MR. RUNNER: Hang on just a minute, 6 please. 7 MR. NANJO: Yeah. That -- it -- the 8 challenge here is the local assessment appeals board 9 have their own constitutional authority to manage and 10 operate their hearings in a manner that they see fit. 11 The Board of Equalization, where our 12 authority is, is to the extent that there's something 13 that is either not efficient, not working well, or 14 causing some issues. We can either provide guidance 15 through LTAs or other means. Or if we are doing 16 regulations, we have to be consistent with the law 17 MR. RUNNER: Right. 18 MR. NANJO: In the process that's being 19 described by both the assessors, and I think with San 20 Francisco's clerk, I'm not hearing anything that's 21 necessarily in violation of the law. Otherwise, it 22 would have been -- one, it would have been challenged 23 before now. 24 MR. RUNNER: Right. 25 MR. NANJO: And, two, I'm just not aware of 26 the law that's violated in doing that. 27 MR. RUNNER: Do you believe that -- do you 28 believe that -- let me ask a broad question. 85 1 MR. NANJO: Sure. 2 MR. RUNNER: And I might be sorry for asking 3 it. 4 Do you believe that some of the 5 recommendations that you've heard, though, in terms 6 of -- that CATA has brought up, are in -- in conflict 7 with the statute? 8 MR. NANJO: I have some concerns that they 9 may go -- yes. Yes. The answer to your question is, 10 yes, I have some concerns that some of what they are 11 proposing may go beyond -- 12 MR. RUNNER: Which -- which portions of it? 13 MR. NANJO: The -- again, there's a delicate 14 balance between the authority of this Board, the 15 Board of Equalization, and the local assessment 16 appeals board. We need to be careful that we are not 17 inadvertently managing their calendar and taking that 18 authority away from them. 19 MR. RUNNER: So you still haven't told me 20 what the answer to my question was. 21 MR. NANJO: Well, one of the things I'm 22 concerned about is this $10 million threshold. 23 MR. RUNNER: Okay. So the $10 million 24 threshold is a concern for you? 25 MR. NANJO: Very much so, yes. 26 MR. RUNNER: Okay. Okay. I got that. 27 Okay. 28 Let me go back and ask a real quick 86 1 question. Because, again, I mean, I think generally 2 speaking, I'm hearing from members that say where 3 we're concerned is that people ultimately get to 4 hear -- get before the board. 5 I'm hearing the assessors say, "Yes, people 6 should ultimately get to the Board." 7 But what I'm hearing is anecdotal 8 information that says there are some places that have 9 in places barriers or rules that keep them from 10 getting to the board. And so I think that's -- 11 MR. HORTON: Mr. Chair, if I may also -- I'm 12 not quite clear that -- well, possibly we need to 13 kind of determine who is on first, second and third 14 base before we throw anybody out. 15 So which counties are actually not allow -- 16 denying a taxpayer a hearing at a -- during an 17 administrative process. And then whether or not the 18 law that provides them an opportunity to manage their 19 calendar actually provides a board the opportunity 20 to -- allows a board to deny a taxpayer their right 21 to a hearing at an administrative process simply 22 because they can or cannot make a simple request to 23 have it reinstated for a hearing. Kind of need to 24 know that information. 25 Does anyone before us have any quantitative 26 data that sort of says what's going on and where, and 27 whether or not this is a one-off or this is not? 28 MR. APREA: Mr. Horton, through the Chair, 87 1 if I may. 2 MR. RUNNER: Mm-hm. Yes. 3 MR. APREA: And as Mr. Horton and I had this 4 conversation on the phone yesterday, we don't -- you 5 know, we cannot, nor are we in a position of, 6 providing you absolute data that lays out for you, 7 you know, how many people are kicked out of the 8 system. 9 The data that you have is that more than 40 10 percent of cases that are initially filed are 11 ultimately withdrawn. And those can be withdrawn for 12 a variety of reasons. There is a -- there is a -- an 13 appeal filed just to save their place; there is an 14 appeal that's filed and people make a decision that, 15 you know what, maybe I don't have as much of a case 16 as I thought I had. 17 But there are other cases. And I think over 18 the course of the last two years, we've shown you, 19 and it's been discussed here today, that these are 20 not aberrations of a single county or a single 21 individual. 22 We are hearing, as an example -- and this 23 is -- I don't believe has been brought to your 24 attention before -- that people are denied for 25 failure to show up at a prehearing conference. 26 Now, the question that I want to know is, 27 well, are they -- how are they informed that they've 28 got a right to come back? How are they informed that 88 1 they're kicked out? What's the burden on them to get 2 back in? 3 Is it, again, just to get to a prehearing 4 conference, or is it to get to a hearing? I would -- 5 I would point to the very different tone and 6 direction that the Board of Equalization has 7 historically taken, that everybody gets their day in 8 court, and you allow that process to bubble up and 9 get you. You're not looking to kick people out along 10 the way. 11 And as we've discussed, if somebody doesn't 12 show up to a prehearing conference, there is no rule 13 that kicks you out. 14 You failed to show, fine. The -- the 15 hearing is set, you come before it, you do your best. 16 And, you know, again, the -- the taxpayer has the 17 burden of proof, so it's against the taxpayer. 18 But there's an important right here. And 19 we're hearing that there are practices all over the 20 map. And what we're asking is to ensure that the 21 taxpayer, at the end of the day, comes before the 22 assessment appeals board, throws themselves on the 23 mercy of that assessment appeals board, puts forward 24 their best facts, puts forward their best arguments, 25 whether it is an individual residence or a large 26 company, and lets that assessment appeals board make 27 a decision. 28 As opposed to a patchwork quilt of varying 89 1 practices that have taxpayers being treated very 2 differently from one jurisdiction to another. And in 3 many cases in an unfair fashion. 4 And so what we have proposed to you 5 initially on August the 8th, and it worked towards -- 6 through this, is to try to get to that point where 7 there is uniformity across the state of California, 8 and where the taxpayer has a right to come before the 9 assessment appeals board and present their case to 10 the best of their ability. 11 It may not be the hearing that you want, or 12 that you want, or that you want. But this is 13 designed to protect the taxpayer and their ability 14 not to preserve the convenience of a particular 15 calendar. 16 And so it is -- I think we need to -- and we 17 are petitioning you, the Board. Do we want to have 18 taxpayers have their due process? And if so, how do 19 we best get -- 20 MR. RUNNER: And I do believe -- I do 21 believe that we have, within our authority and 22 responsibility as the Board of Equalization, to 23 create uniformity that is consistent under statute. 24 So I think that that's what we're striving 25 to do. And I think what we're hearing, again, is 26 this discussion about -- 27 MR. HORTON: But, Mr. Chair, therein is an 28 80 lb gorilla. Whether or not it is within the law 90 1 to do this. All parties seem to agree with 305.2(b). 2 Which seems to make sense, with the exception of the 3 last sentence that no party should be denied -- 4 MR. RUNNER: I don't think they agree with 5 the first part. No, they don't agree. 6 MR. HORTON: Well, let me just ask. 7 Do you agree with 440(b) [phonetic], 8 specifically at a prehearing conference, the Board 9 shall not deny the application solely on the grounds 10 that the applicant has not responded to the request 11 for information made under 44 -- Section 441. 12 Everyone agree? 13 MS. DAVIS: As you read that, yes. 14 MR. RUNNER: I'm sorry, so what was the 15 language difference? 16 MR. HORTON: Does CATA agree? 17 MR. O'NEALL: CATA would like the 18 language -- 19 MR. HORTON: That's not my question. Does 20 CATA agree with that? 21 MR. O'NEALL: CATA does not agree with that. 22 MR. HORTON: Okay. Then there's 23 disagreement. 24 MR. O'NEALL: CATA wants it as written. 25 MR. RUNNER: I'm sorry. I missed -- I don't 26 have written down what you just read then. 27 MS. STOWERS: He's read the status hearing 28 and noncompliance hearing. 91 1 MR. HORTON: Well, no -- well, yes. I think 2 the notion of a hearing -- call it what you may -- 3 that first, if I can go to section -- to section -- 4 the second section. I have some concern with 5 bifurcating at any -- any -- establishing a threshold 6 where you're treating one sector of taxpayers 7 different than the other, irrespective of what that 8 threshold is. I don't think that that's fair. I 9 think each party ought to have the same rules, the 10 same opportunities. 11 Because I don't necessarily believe that 12 value expresses the complexity of the item. In fact, 13 I know that not to be the case. And I don't think 14 it's fair and equitable. 15 MR. RUNNER: Can I get clarity, though, 16 again on that 305.2(b)? 17 My understanding is that the assessors had 18 difficulty with using the phrase "prehearing 19 conference," "status hearing" and "noncompliance 20 hearing" wrapped up together. 21 MR. HORTON: Two different sentences. 22 MR. RUNNER: Correct? 23 MS. DAVIS: That's correct. And he did 24 not -- and what he read -- 25 MR. RUNNER: That's all one sentence. 26 MS. DAVIS: And what he read, which was the 27 earlier version we had, in fact, agreed to as a 28 group. 92 1 MR. RUNNER: Right. 2 MS. DAVIS: He eliminated "status hearing" 3 or "noncompliance hearing." 4 MR. RUNNER: Okay. Right. 5 MR. HORTON: Well, what I'm really doing is 6 separating the administrative process from the 7 hearing process. And I'm saying that no 8 administrative process should deny the taxpayer due 9 process. 10 And I believe that that's consistent with 11 existing law. And I'm prepared to test that to see 12 if it is consistent with existing law. 13 The hearing process is a different process 14 by virtue -- where the taxpayers actually having 15 their day in court, if you will, lack of alternative 16 term. And that's a different process, and we should 17 look at that differently. 18 And so at what point do you go to the 19 hearing conference? The clerks have to manage that 20 process. And I don't know that we have the authority 21 to micromanage it. 22 What happens in that process, the board has 23 jurisdiction to determine whether or not to deny or 24 accept. And I think that's statute. And I don't 25 think we have the authority to deny that jurisdiction 26 or to question their judicial discretion, or to 27 direct their judicial discretion. 28 Where I do believe we have some authority is 93 1 in the area of defining reasonableness as it relates 2 to the process, and whether or not this is 3 reasonable. 4 And we may even be able to stretch it to 5 some point of equity in the assessment of the data 6 itself. Although that is sort of embarking on an 7 area that I would pause. 8 MR. RUNNER: Can I -- can I -- following up 9 on that, can I -- taking that sentence and just 10 starting with, "The Board shall not deny an 11 application solely on the ground that the applicant 12 has not responded to their request for information 13 made under Section 441 of the Revenue and Taxation 14 Code." 15 Why doesn't that work? 16 MR. MIDDLETON: It actually does, except for 17 the fact that in one county they call it 18 noncompliance. And so if we don't -- 19 MR. HORTON: No, what they call it -- from 20 what you've testified before, they call it a hearing. 21 They put this term of the hearing, as we do at the 22 Board of Equalization, nonappearance hearing, legal 23 hearing. 24 So they have these definitions that they're 25 using that is kind of distorting the actual purpose 26 and intent. 27 So if we don't use those terms, and we just 28 use the purpose and intent and say, "At a hearing 94 1 where both parties have an opportunity to present the 2 evidence, evaluate the evidence, and the trier of 3 fact makes a decision about the evidence, you can 4 deny it." 5 I mean, the trier of fact has the right to 6 deny it. And I don't think we can take that away 7 from them at that point. 8 But at an administrative process, no 9 administrative body should be supplanting the -- the 10 trier of fact -- 11 MR. APREA: Mr. Chair -- 12 MR. HORTON: -- in that process. 13 MR. RUNNER: Okay. Go ahead. Real quick. 14 MR. APREA: -- if I may address Mr. Horton's 15 question. 16 If you look at paragraph (a), the new 17 language that was agreed to by all the parties, and 18 request for information, as well as status of 19 exchange of information -- 20 MR. RUNNER: Paragraph (a) where? 21 MR. APREA: Okay. If you look at the red 22 "and requests for information." 23 MR. RUNNER: Okay. There we go. Thank 24 you. 25 MR. APREA: Okay. The status of exchange of 26 information requests. 27 So that's what that -- this -- this 28 prehearing conference is supposed to be about, right? 95 1 And so it's been said, Well, we don't have the 2 authority to allow for a -- to use the word a 3 "noncompliance hearing." 4 MR. HORTON: No. If you're saying I said 5 that, I didn't say that. You can call it whatever 6 you want, but -- 7 MR. APREA: My point is that folks are 8 saying that they're objecting to this language 9 because the authority -- I'm not ascribing this to 10 you. But it was said by others that there's not the 11 authority to do this. 12 Well, what is a noncompliance hearing? It 13 is "did you provide the information or not," right? 14 We're talking about -- that's what we're talking 15 about is, was the information requested, was the 16 information produced, was it -- was it sufficient, 17 and are we going to let you go forward or not? 18 And so what we're trying -- 19 MR. HORTON: Well, that's not -- that's not 20 what I'm hearing. 21 MR. APREA: What we're trying to do is 22 address that situation. So that a -- the -- the new 23 rule as proposed would cover any circumstance whereby 24 the taxpayer would be denied solely on the ground 25 that they did not respond to the request for 26 information. 27 MR. HORTON: Okay. So, I mean, what you've 28 just done is kind of mix these words up again. So 96 1 what I'm not necessarily -- what I'm discussing or 2 trying to clarify is the process adjudication, and 3 that's it. Which is -- which can be defined any way 4 the parties want to define it. 5 They can place it on their agenda any way 6 they want to place it on their agenda. But I would 7 certainly encourage you place it first, so that the 8 folks can show up or not show up. And you can make a 9 decision and move on. So they don't have to stay 10 around and pay all these fees. 11 But the process of adjudication -- let's use 12 the generic term "hearing." And at a hearing, if 13 there's a decision to separate your calendar at a 14 hearing and have where a nonappearance, as we do at 15 the Board of Equalization, which in effect means 16 noncompliance. You could call it that. But it's a 17 hearing. 18 And we have a section where parties are 19 ready, the evidence is there, and everyone is ready 20 to discuss it. At this noncompliance hearing, or 21 whatever you call it, process of adjudication, if 22 both parties have an opportunity to present their 23 evidence at that point and evaluate that evidence, 24 the trier of fact has a responsibility and the 25 discretion to make a decision. 26 That decision could be continued; that 27 decision could be denied. Whatever they make that 28 decision is based on their professional judgment, and 97 1 based on all the evidence presented. 2 And the taxpayer has an opportunity to 3 appear at that hearing and argue their case. And 4 that's the process that I think we should be trying 5 to make sure -- 6 MR. RUNNER: Preserve. 7 MR. HORTON: -- is fair. And that's the way 8 it works. 9 MR. RUNNER: Let me just ask, again, and 10 help me understand again. Again, looking at what 11 Section 305.2(a) say in regards to clarifying the 12 prehearing conferences and requests for information 13 that was agreed on, I'm still at a loss as to why it 14 is that making a very -- more declarative simple 15 statement there without them mixing up the words 16 between, you know, "noncompliance hearing" and 17 whatnot. Just leaving all that and saying, "The 18 Board shall not deny an application solely on the 19 ground," and continue on with that sentence. 20 How does that -- how does that not 21 accomplish the fact that what we're concerned about, 22 and that is that ultimately a taxpayer needs to be 23 able to get before a board, regardless of whether or 24 not they provided the stuff. 25 MR. HORTON: Mr. Chair Runner, if I may. 26 I appreciate CATA's concern about semantics. 27 But you would -- you would end up right back here 28 again, because they just changed the name. 98 1 So I think what we -- what we do is stick 2 with the law and call it what it is, and define what 3 it is. And, therefore, anything that is not this, 4 you can't deny the hearing. 5 MR. RUNNER: Well, and that's why I think 6 that second sentence, they shall not be denied -- 7 MR. O'NEALL: Chairman Runner -- 8 MR. HORTON: Yeah, I'm in concurrence -- 9 MR. RUNNER: Yeah. 10 MR. O'NEALL: Going to your point, the 11 language starting with -- if you were to put, "The 12 Board shall not deny an application," to the end of 13 that sentence, I think that's verbatim what's in 14 302(c). 15 The reason that we ended up with, "at a 16 prehearing conference," at the beginning is to make 17 it particular to 305.2. 18 Now, I would grant you that if you deleted, 19 "at a prehearing conference, status hearing, or 20 noncompliance hearing" -- 21 MR. RUNNER: Uh-huh. 22 MR. O'NEALL: -- and started with, "The 23 board," in the context of this rule, and given that 24 (a) precedes it, it has the same effect. 25 MR. RUNNER: Same effect as? 26 MR. O'NEALL: Same effect as if -- if you 27 were not to have that preliminary language. 28 MR. RUNNER: Okay. 99 1 MR. O'NEALL: Because the context is 2 prehearing conference -- 3 MR. RUNNER: Right. Right. 4 MR. O'NEALL: And everything that happens in 5 a prehearing conference, which is in (a). 6 MR. HORTON: Well, Mr. Chair, with -- 7 without that preliminary language, we would -- again, 8 would be embarking on denying the Board their right 9 to make a decision -- 10 MS. HARKEY: Yeah. 11 MR. HORTON: -- in a process, in a hearing. 12 And, quite frankly, if that's the request, and let's 13 say it goes forward, the Office of Administrative Law 14 is going to say, "Listen, you can't do that. You 15 can't -- you can't impede their judicial discretion 16 to deny a hearing." 17 You can say the evidence is not reasonable, 18 process was not reasonable, it was not fair, it was 19 not equitable, you didn't have due process. But to 20 have a constructive term that limits judicial 21 discretion, you could ask for it, and we could even 22 grant it, you know. It's going to take you a year to 23 get it done. 24 So let me encourage this. I mean, let's 25 consider all the other variables that are involved in 26 this process if your objective is to kind of get 27 something done. 28 Today or within -- within my tenure on this 100 1 Board, which that would be my objective -- 2 MR. RUNNER: Mm-hm. 3 MR. HORTON: -- you know, to try to get it 4 done. Or at least to establish a process by which 5 this will get done. Then let's give all of that some 6 consideration before, you know, we make our request. 7 I mean, I would be prepared, Members, to 8 move this (b)(4), that language as I -- as I read it. 9 And even -- even the second half. If you strike this 10 "prehearing status conference," "noncompliance 11 conference," and speak to a hearing. 12 Eliminate the threshold, which I think it's 13 not fair in the first place. Small taxpayers, 14 medium-size taxpayers should all have the same 15 equitable right. And -- and not impede the judicial 16 discretion -- 17 MR. RUNNER: I'm actually fine -- I think -- 18 I think -- I sense that the board would probably be 19 comfortable with the idea of striking the front part 20 of that language with those -- with those descriptors 21 in them. Make it clear, then, that the board shall 22 not deny an application, and go on with that 23 language. 24 MR. HORTON: Well, at a prehearing 25 conference. 26 MR. RUNNER: Uh-huh. Although I think 27 broader than that. 28 MR. HORTON: Or -- or -- 101 1 MR. APREA: Mr. Chair. 2 MS. HARKEY: During an administrative 3 process, if I may, Mr. -- 4 MS. HARKEY: That's -- that's what I was 5 going to say. At a prehearing conference or any 6 other administrative process -- or any other 7 administrative process or conference, the board shall 8 not deny an application. 9 So that kind of covers it. Any other 10 administrative hearing or -- 11 MR. RUNNER: All administrative hearing, I 12 guess. 13 MS. HARKEY: Yeah. Prehearing conference, 14 or any other administrative -- 15 MR. APREA: Any other administrative 16 proceeding, we think would satisfy that. 17 And I also want to point out that it is 18 important to note where this language is located. It 19 is located in Rule 305.2, which deals with 20 preconferences -- 21 MR. RUNNER: Pre-conference hearing. 22 MR. APREA: -- as it's defined there. So I 23 think -- 24 MR. RUNNER: I'm going to ask the Chief 25 Counsel to be the reporter of language. 26 MR. HORTON: This is a prehearing. When you 27 flip those words, the whole context change. 28 Prehearing is before hearing, pre-conference hearing 102 1 is a hearing. 2 MR. APREA: It is -- it is the title of this 3 section is prehearing conference. 4 MR. HORTON: No, I -- 5 MR. APREA: And we just discussed a 6 prehearing conference or other administrative 7 proceeding, the board shall not -- and go forward -- 8 MR. HORTON: We're moving in the right 9 direction. 10 MR. APREA: We would be fine -- we would be 11 fine with that. 12 MR. RUNNER: I guess I want to make sure 13 that the language is understood and heard, so we all 14 understand the language. 15 I'm going to ask Chief Counsel if he can 16 repeat that language. 17 MR. HORTON: I'd also like -- Mr. Chair, if 18 I may, I'd also like to hear from the assessors on 19 their -- 20 MR. RUNNER: Okay. 21 MR. NANJO: So what I heard was we are 22 making a change to 305.2(b) that will read in the 23 first sentence, "At a prehearing conference or other 24 administrative proceeding, the board shall not deny 25 an application solely on the ground that the 26 applicant has not responded to a request for 27 information made under Section 441 of the Revenue and 28 Taxation Code," period. 103 1 MR. O'NEALL: Chairman Runner, if I could -- 2 MR. RUNNER: Hang on just a minute. I 3 think -- let me go -- 4 MS. HARKEY: I think that -- 5 MR. O'NEALL: Chris O'Neall for CATA. Could 6 I interject here? 7 MR. RUNNER: Okay. We'll get your 8 perspective. This is -- 9 MR. O'NEALL: In light of Mr. Horton's 10 comments, that we make it very clear that this is 11 prior to evaluation hearing, prior to the full 12 hearing. Could we change -- add to what Mr. Nanjo 13 has said to say, "any other prehearing administrative 14 proceeding"? 15 MR. HORTON: Well, that's just the same 16 thing. 17 MS. HARKEY: Yeah. 18 MS. STOWERS: That's just the same thing. 19 MR. O'NEALL: Well, I -- 20 MR. HORTON: Again -- 21 MS. HARKEY: Maybe it's not. 22 MR O'NEALL: One might say that an valuation 23 hearing is an administrative proceeding, because the 24 superior court and the Courts of Appeal view AABs, 25 assessment appeals boards, as administrative panels. 26 MR. HORTON: Yeah. 27 MS. HARKEY: Yeah. 28 MR. O'NEALL: So we need to be clear that 104 1 we're not saying valuation hearing -- 2 MR. RUNNER: I -- I would have to defer to 3 those of you who practice that. 4 MR. HORTON: Yeah, the legal and -- 5 MR. RENKEI: That was also my concern 6 when -- when -- because it's -- a hearing is an 7 administrative hearing. So that could be considered 8 an administrative proceeding. 9 MR. RUNNER: Okay. 10 MS. HARKEY: Okay. 11 MR. RENKEI: So it -- the way it's written, 12 it could reference -- 13 MR. RUNNER: Okay. 14 MS. HARKEY: We have pre's of 15 administrative, which we don't want to -- let's just 16 do administrative. 17 MR. RUNNER: Okay. Okay. 18 MS. HARKEY: At a prehearing conference or 19 any other prehearing proceeding. 20 MR. RUNNER: Let me ask our counsel, are you 21 receiving this? 22 MR. HORTON: Yeah. 23 MR. NANJO: Yes. We're -- we're -- we would 24 be -- we would be comfortable with, "at a prehearing 25 conference or other" -- is it prehearing proceeding? 26 MS. HARKEY: Yes. 27 MR. NANJO: I think that was your 28 suggestion, Member Harkey. 105 1 MS. HARKEY: Yes. 2 MR. NANJO: That would be fine with us. 3 MR. RUNNER: And that satisfies the concern 4 CATA has? 5 MR. O'NEALL: CATA is satisfied, yes. 6 MR. RUNNER: Okay. 7 Assessors? 8 MS. DAVIS: We're satisfied with the 9 clarification at the last sentences regarding the 10 threshold are removed. 11 MR. RUNNER: Yeah, we're not -- we haven't 12 even gotten to that part yet. 13 MS. DAVIS: Okay. 14 MR. RUNNER: That's part (b) here. 15 MS. HARKEY: We've got this one done. 16 MS. DAVIS: We are satisfied with the 17 wording -- 18 MR. RUNNER: Okay. 19 MS. DAVIS: -- that Mr. Nanjo read. 20 MR. RUNNER: Okay. And then we've got that 21 one -- the language -- 22 MR. McKIBBEN: Clerks are okay with it. 23 MR. RUNNER: Clerks are okay. 24 Okay. Let's go to the second sentence, 25 which has to do with the issue of thresholds. 26 I, for one, kind of -- I think I'm hearing 27 from the Board Members is that it seems arbitrary to 28 try to split up that issue. 106 1 I understand that the goal here is to try to 2 limit the number. Is that what I'm understanding? 3 The goal here is to really limit the number or not 4 have a prehearing? 5 MR. O'NEALL: Yeah. I think, 6 Mr. Chairman -- Chris O'Neall on behalf of CATA -- 7 that the model that we heard Clerk Dawn Duran from 8 San Francisco talk about where, okay, there's one 9 hearing. We're going to kind of get together and see 10 if we can figure this out. But no more than that 11 unless the parties agree. So that's the purpose of 12 the second sentence. 13 We were looking at this and understanding 14 Mr. Nanjo's concern about the $10 million threshold. 15 And perhaps to avoid concerns about -- I think Member 16 Horton mentioned singling out or separating groups of 17 taxpayers. Maybe it would be better to just remove 18 the threshold, and just have -- 19 MR. RUNNER: So the -- remove the threshold, 20 fashion language that would then indicate that there 21 is one hearing, subsequent hearings would require 22 agreement from both parties. 23 MR. HORTON: Well, Mr. Chair. 24 MR. RUNNER: Go ahead. 25 MR. HORTON: I'd have some concerns about 26 establishing one hearing rule. 27 Again, as we've seen here at the Board 28 during these hearings, all kinds of information can 107 1 come up. I think the parties -- there should be a 2 level of concurrence as to whether that date's set 3 forth. 4 MR. RUNNER: But this is the prehearing 5 conference, it's not the hearing. 6 MR. HORTON: Oh, this is a prehearing? 7 MR. RUNNER: This is all prehearing. This 8 is all pre-conference. 9 MS. STOWERS: Well, I -- I -- 10 MR. HORTON: Well, I still would be -- 11 MR. RUNNER: Okay. 12 MR. HORTON: -- concerned about that because 13 the challenge, Mr. Chair and -- and Members, is that 14 the sword sort of cuts both ways. 15 MR. APREA: Mr. -- Mr. -- Mr. Horton, and 16 through the Chair -- 17 MR. RUNNER: Yes. 18 MR. HORTON: Mr. Chair, I believe I still 19 have the floor. 20 MR. RUNNER: Go ahead. 21 MR. APREA: My apologies. 22 MR. HORTON: I appreciate that. 23 The sword sort of cuts both ways when we 24 begin to -- to -- to take away the discretion of 25 the -- of the trier of fact. 26 It -- in fact, if there's a need for another 27 hearing, and the taxpayer says, "Well, I want to come 28 back and have another discussion for X, Y, and Z." 108 1 And the assessor says, "No, make a decision now." 2 Well, you know, that don't seem quite fair. 3 And vice versa, if the assessor believes 4 that -- with the assessor knowing that they -- the 5 preponderance is on the taxpayer, knowing that the 6 assessor is presumed to be right if he says, "Well, I 7 think I may have made a mistake. I want to rehear 8 this." 9 I mean, at the Board, we have -- we -- we 10 allow for that. You know, if the parties -- we allow 11 them to get together and have a discussion. And if 12 the agency wants to take another look at it because 13 they think they've made a mistake, or they're not 14 going to be thinking, "Well, I think it should be 15 higher now that I've got this information." You 16 know, that generally doesn't happen. That generally 17 goes downward. 18 But -- so I would just encourage the party 19 to look at both sides. 20 MR. RUNNER: Here -- here -- yeah, here's 21 would be my concern I guess in doing that, though, 22 without making it like endless amounts of prehearing 23 conferences. And that is, it could be a way, then, 24 to continue to deny access to the hearing. 25 And that's -- that would be -- I guess that 26 would be the concern. So -- I mean, from my 27 perspective. 28 So I guess I think let's hear from the 109 1 clerks -- let the clerks -- 2 MR. McKIBBEN: Mr. Chairman, John McKibben 3 for the Clerk's Association. 4 Trying to place an artificial limit on the 5 number -- I mean, we recognize that you don't want to 6 stretch things out forever and have -- 7 MR. RUNNER: Right. 8 MR. McKIBBEN: -- people coming back over 9 and over and over again. 10 MR. RUNNER: Yeah. 11 MR. McKIBBEN: But, nevertheless, the Board 12 has to be able to make that decision to allow the 13 parties to come back free at another hearing. 14 Instances -- 15 MR. RUNNER: And not the hearing, this is 16 all prehearing, right? These are all -- 17 MR. McKIBBEN: Prehearing. 18 MR. RUNNER: -- these are all informal 19 administrative -- 20 MR. McKIBBEN: I'm sorry. I'm sorry. 21 Prehearing. 22 MR. RUNNER: Right. 23 MR. McKIBBEN: There may be needs, and there 24 are needs for the parties to come back again at a 25 prehearing and finish working out the issues that 26 are -- 27 MR. RUNNER: And if both parties would 28 agree -- 110 1 MR. McKIBBEN: But what if you have one 2 party, whether it's an assessor or a taxpayer, who is 3 not wishing to cooperate? 4 MR. RUNNER: Then you go to the board with 5 incomplete information. And it probably doesn't sit 6 well with -- with the -- with the taxpayer. 7 MR. McKIBBEN: But you've limited the 8 board's discretion. And we believe strongly -- 9 MR. RUNNER: Okay. 10 MR. McKIBBEN: -- that the board has that 11 discretion to make more -- to call for more than one 12 hearing to resolve -- 13 MR. RUNNER: How do you -- how do you 14 address the issue -- how do you address the issue, 15 though, that it becomes then -- again, not that 16 everybody would do it. But maybe you've got some, 17 you know -- some assessor out there who is on their 18 own agenda who then uses that as a tool to deny 19 access to the hearing? How do you control that? 20 MR. McKIBBEN: As Assessor Davis just was 21 going to point out, you have 302(1)(a) that's been 22 agreed to. You also have -- 23 MR. RUNNER: 302(1)(a), which is really 24 just -- 25 MR. McKIBBEN: -- LTAs. 26 MR. RUNNER: -- language that says -- 27 MR. McKIBBEN: Yes, it is. But it's a 28 listing of the -- 111 1 MS. STOWERS: But don't we have the two-year 2 rule -- 3 MR. McKIBBEN: -- functions for the Board, 4 and -- 5 MS. HARKEY: Yeah, isn't there a statute 6 here about the rule? 7 MR. McKIBBEN: -- we're not going to ignore 8 that. 9 MS. STOWERS: Yeah, we have the -- 10 MR. RUNNER: Two years. 11 MS. STOWERS: We have the two-year rule. 12 MR. RUNNER: Two-year rule. 13 MS. STOWERS: So if they don't get to the 14 hearing within two years -- 15 MR. McKIBBEN: Exactly. 16 MS. STOWERS: -- the applicant's value will 17 stay. 18 MR. RUNNER: So the applicant wins. 19 MS. STOWERS: The applicant wins. 20 MR. McKIBBEN: That's the -- that's the 21 other point -- 22 MR. RUNNER: So that's the hammer, you 23 think? 24 MR. McKIBBEN: That's the hammer. 25 MS. HARKEY: Okay. So we probably don't 26 need -- 27 MR. RUNNER: Okay. Let me hear from CATA 28 real quick. 112 1 MR. RENKEI: I just have one other concern 2 of the -- of the language. Should there be something 3 in there that says, Even if -- they can't even be 4 denied for lack of appearance. 5 Because it's not quite -- says that they 6 can't deny, but if they now deny for lack of 7 appearance -- 8 MR. RUNNER: It's still a denial. 9 MR. HORTON: That's still a denial. 10 MS. HARKEY: Still, they have to have a 11 hearing. 12 MR. RENKEI: So they -- so it doesn't need 13 to be in there then? 14 MR. HORTON: I don't -- 15 MS. HARKEY: I don't think so. 16 MR. HORTON: I don't think -- but I -- I do 17 think, Mr. Chair, if I may, that -- 18 MR. RENKEI: Because in San Francisco, 19 that's what they said they do. They don't deny for 20 you not providing information, they deny because you 21 didn't show to the prehearing conference. 22 MS. HARKEY: No. This -- this -- 23 MR. HORTON: It's a denial. 24 MS. HARKEY: This is real clear in the 25 wording that you can't -- the board shall not deny 26 application based solely on the grounds -- 27 MR. RENKEI: Okay. 28 MS. HARKEY: End of subject. 113 1 MR. HORTON: I do think, Mr. Chair, that at 2 some point the taxpayer should have the same rights 3 that they have in court. And this notion of timely 4 hearings and so forth, that the taxpayer should be 5 able to compel a hearing if they're ready. 6 And the assessor is not ready after they 7 presented evidence, they've heard the evidence, and 8 now there's no additional evidence, there's no 9 additional facts to be considered, and there's no new 10 evidence. And we just want to continue. Something's 11 kind of -- 12 MR. RUNNER: How do you -- how do you -- I 13 think that's the attempt that they were trying to do. 14 So how do you -- 15 MS. HARKEY: -- the two-year plan. 16 MR. APREA: Mr. Chair -- 17 MR. HORTON: I mean, the two-year limit -- I 18 don't even want to go two years if I don't have to. 19 I mean, that's better than the Board of Equalization. 20 You can go 50 years. 21 MR. RUNNER: Well, the good news is they 22 win. 23 MR. HORTON: You're not even hearing your 24 case here. As -- as fine as the Board of 25 Equalization is and all the good work that we do, 26 oftentimes, as the taxpayer's delay on purpose, 27 because they somehow think it will go away -- 28 osmosis. So with that qualification there -- 114 1 Now, Mr. Chair, thank you, I just -- 2 MR. RUNNER: Okay. 3 Mr. Aprea. 4 MR. HORTON: -- would like to hear from the 5 parties. 6 MR. APREA: Thank you. 7 Mr. Chair, Members of the Board, I think 8 from CATA's point of view on behalf of their members 9 and the taxpayers that they represent, there are -- 10 you know, I want to remind everybody that, you know, 11 let's put this within the framework. It is the 12 taxpayer that has the burden of proof. 13 MR. RUNNER: Mm-hm. 14 MR. APREA: And so the taxpayer, if they 15 want to present information, has to present it to the 16 assessment appeals board in a compelling fashion. 17 It is in their interest to be ready, and it 18 is in their interest to present a cogent case. If 19 they fail to do that, the assessment appeals board 20 will do what it needs to do. 21 The concern that we have expressed is the 22 continuances that have been imposed, either at the 23 direction or recommendation of the assessor, or the 24 acquiescence of an assessment appeals board. And it 25 is that issue that we're trying to address in 26 providing some limitation on the number of hearings. 27 Now, if a taxpayer wants to go forward with 28 another prehearing conference, don't you think they 115 1 would agree to that? Of course they would. 2 And so why -- why the concern about limiting 3 it to one? The taxpayer either is ready to go, or 4 will request another prehearing conference. And, 5 presumably, the assessor will acquiesce to that. 6 But at the end of the day, it is the 7 assessor -- excuse me, the assessee that has the 8 burden of proof to present to the assessment appeals 9 board. 10 So when we're presenting this to you, we're 11 not presenting this to you in a fashion that is, what 12 we perceive, is contrary to the interest of the 13 taxpayer. And so from a -- a taxpayer perspective, 14 which I believe all of you are, in fact, looking at 15 limiting it to one prehearing conference, unless 16 agreed to by both parties, we think protects the 17 taxpayer and their interest. 18 And we would, therefore, ask that we look at 19 it from that standpoint and not invite, if you would, 20 a rinse and repeat of prehearing conferences that 21 cause delay, cost to the taxpayer, and ultimately is 22 the cause for many taxpayers to simply bow out. 23 MR. RUNNER: Yeah. I -- 24 MR. HORTON: So, Mr. Chair, if I may. 25 MR. RUNNER: Yeah. 26 MR. HORTON: Is a concern an unreasonable 27 delay? 28 MR. APREA: I'm sorry. 116 1 MR. HORTON: Is a concern that there's an 2 unreasonable delay, is it -- is the concern with the 3 number, or is the concern with the fact that it's 4 unreasonable to delay this any further on the part of 5 the taxpayer -- 6 MR. MIDDLETON: Both. 7 MR. HORTON: -- and they want to go to 8 hearing? 9 MR. MIDDLETON: Both. Because if you have 10 to appear multiple times, again, the small taxpayer 11 just -- my client, they're just not going to do it. 12 If they have to keep coming back again, and again, 13 and again, before they even have a hearing -- 14 MR. HORTON: Even if it's reasonable, they 15 shouldn't have to come back -- 16 MR. MIDDLETON: Well -- 17 MR. HORTON: If it's reasonable, if it's a 18 fair assessment, adequate data hasn't been 19 presented -- this is the trier of fact is saying 20 this. 21 I don't believe -- well, first, this is what 22 the trier of fact is actually saying. I am going to 23 agree with the taxpayer, if I -- with the assessor, 24 because the presumption is, is that the assessor is 25 right without any evidence. 26 But I believe that you should have another 27 opportunity, you know. So -- well, let me just stick 28 with the law. 117 1 Again, I think we have the jurisdiction to 2 determine reasonableness. If it's reasonable. If 3 it's fair. If it's equitable. If it's consistently 4 applied. 5 MR. MOON: If I could -- if I may, 6 Mr. Chair -- 7 MR. RUNNER: Mm-hm. Yes. 8 MR. MOON: -- just interject quickly. 9 I do believe there is a concern about 10 infringement of the AAB's authority. But I just 11 wanted to point out that the two-year limitation, it 12 would not apply when there's a failure to provide 13 full information according to law. 14 So if the prehearing conference -- 15 MS. HARKEY: See, that's the problem. 16 MR. MOON: -- at the prehearing conference 17 there was a delay or a need for another prehearing 18 conference because of a failure to provide 19 information, for example, if the taxpayer needed more 20 time to get the information together, the two-year 21 limitation would not apply. 22 MR. O'NEALL: Mr. -- Mr. Chairman, may I 23 respond to Mr. Horton? 24 MR. RUNNER: Well, let me -- let me -- 25 Mr. Horton had a comment first. 26 MR. O'NEALL: Oh, he had asked a question 27 about unreasonable delay. It is unreasonable delay. 28 Because in many counties, if -- if -- if you have to 118 1 have a continuance or a postponement or whatever 2 happens, it may be several months. As a matter of 3 fact, in Los Angeles County it's six to eight months 4 before you can expect to have the next reset. 5 So let's say that you had a situation where 6 there was a noncompliance hearing. And, for example, 7 the taxpayer didn't show. So then he asked for a 8 reinstatement. Well, that's another hearing. So now 9 we've got to go -- 10 MR. HORTON: Who is he? 11 MR. O'NEALL: -- to a second -- 12 MR. HORTON: You say he. 13 MR. O'NEALL: The taxpayer -- 14 MR. HORTON: Asked for a continuance? 15 MR. O'NEALL: -- asked for a reinstatement. 16 MR. HORTON: Reinstatement. 17 MR. O'NEALL: Because his application -- he 18 did not appear at the prehearing conference. And the 19 issue at the prehearing conference was whether he 20 complied with 441(d). 21 He then requests a reinstatement under 22 Property Tax Rule 326. Well, that's another hearing. 23 Now he goes to another hearing. At that hearing he 24 perhaps -- probably will be reinstated. 25 Then it's time to schedule another hearing. 26 And we can be a year out, a year-and-a-half out. 27 MR. HORTON: Well, we can't deny the 28 hearing. I mean, we're saying you can't deny the 119 1 hearing pursuant to the activities at a 2 pre-conference hearing. So if that's the case, he 3 still will eventually get his hearing. 4 It seems to me the debate and the question 5 here before us is how many prehearings can you have? 6 You know, because small tax -- all taxpayers don't 7 want to, you know -- there's a risk valuation that's 8 just -- just evaluate -- just a cost benefit analysis 9 where at some point the fees sort of exceed the 10 actual assessment. And we just don't want to do 11 that. 12 So I -- I -- I'm on your side here. So -- 13 MR. O'NEALL: Okay. Mr. Horton, maybe I can 14 add to that. 15 This two-year rule -- I think the two-year 16 rule is a good guide. And in smaller counties and in 17 a number of counties -- 18 MR. HORTON: We don't have any -- 19 MR. O'NEALL: -- you can get to -- you can 20 get to a hearing within a year. 21 But in larger counties where they have full 22 dockets of the assessment appeals boards, it can take 23 a long time. And what happens when a taxpayer runs 24 up against the two-year standard is; do I waive my 25 right to a speedy hearing? And if I do, what 26 happens? 27 And what typically happens is then you go 28 into the other group, which you will eventually get a 120 1 hearing. And I relayed at a meeting of the working 2 group, I had such a client. And it took the 3 application from the date of filing to the date the 4 board issued its signings was six years. 5 And the time required in hearing, once the 6 hearing commenced, to get the hearing, to get to a 7 decision, was three-and-a-half years. 8 MR. HORTON: And who requested the delay in 9 that case? 10 MR. O'NEALL: The assessor requested every 11 delay that occurred in that case. 12 MR. HORTON: And, of the assessors, why 13 would the assessors request a delay when the 14 presumption is, is that your evaluation is correct 15 going into the hearing? 16 MS. DAVIS: I can -- I can answer you that 17 in 18 years, we have not gone past the two years. 18 MR. RUNNER: Right. Okay. 19 MS. DAVIS: I can tell you that in the 20 majority of appeals that we actually go to hearing, 21 the presumption is with the taxpayer, not with the 22 assessor. The presumption of correctness. Because 23 there are exceptions to that presumption. 24 But I think we're kind of getting off the 25 point. The point is, should there be multiple 26 prehearing conferences? 27 And I would just like to say that in the 28 month since your last meeting, we met three times on 121 1 these rules. Three times. Twice in person and once 2 by telephone. And that should tell you that when 3 things are complicated, which is the purpose of a 4 prehearing conference, we don't have prehearing 5 conferences for fun. 6 We have prehearing conferences because one 7 or both parties need information, they need to share 8 something, and they don't need to share it as part of 9 the hearing. 10 When they get complicated, limiting to one 11 prehearing conference is really not reasonable. And 12 so the assessors disagree with that limitation. We 13 do not think that putting this at the level of a 14 regulation or a property tax rule is reasonable. 15 We do believe that if your Board thinks -- 16 and there were several instances that we discussed 17 during our conversations. 18 If your Board thinks that there are good 19 business practices for assessors to follow, let's put 20 that in the assessment appeals manual. Let's raise 21 it to that level of assessor handbook where the 22 courts give that weight, and where assessment appeals 23 boards, assessors, and taxpayers rely on your 24 guidance. But I do not believe that it should be a 25 hard and fast rule in the regulation. 26 MR. RUNNER: Let me ask a question in 27 regards to the process here. 28 So -- so let's say I'm a taxpayer. You 122 1 know, I've got a dispute. I think I -- the assessor 2 is wrong on the -- on the number. I'm going to 3 make -- I file my appeal, and my -- and now I have a 4 prehearing conference scheduled. Okay. 5 I don't want to go to a prehearing 6 conference, I just want to go to the Board. And I 7 don't show up at this prehearing conference. 8 Does that mean, if it's unlimited, that the 9 assessor can keep having those? 10 MS. DAVIS: Well, that -- 11 MR. RUNNER: And then what happens if after 12 two years -- do I understand what happens after two 13 years? 14 MR. HORTON: They can go on and -- 15 MR. MOON: If the reason why they're not 16 having -- or are holding the hearing and not coming 17 to a final decision is because they failed to provide 18 information, the two-year limitation wouldn't apply. 19 MR. RUNNER: When you -- when you say "they 20 provide," they -- they didn't provide information; 21 they didn't provide the right infor -- who determines 22 what information they needed to provide? 23 MR. MOON: Well, ultimately it would be -- 24 the assessor would -- 25 MR. RUNNER: Okay. So the assessor can keep 26 saying -- 27 MR. MOON: Well, no, no, no. I'm not saying 28 it's the assessor who is actually going to decide. 123 1 It would ultimately be the assessment appeals 2 board -- 3 MR. NANJO: Right. 4 MR. MOON: -- to determine whether that -- 5 MR. RUNNER: I'm sorry. The assessor -- the 6 appeals board -- 7 MS. HARKEY: Is not going to -- 8 MR. RUNNER: They're not going to hear the 9 case. 10 MR. YEN: Let me make a clarification 11 first -- 12 MR. RUNNER: Yeah. I mean, let me -- hold 13 on. Let me go back on that theory. The case never 14 gets to them. 15 MR. MOON: Well, it would -- that's part of 16 the reason for the prehearing conference. 17 MR. RUNNER: But they didn't -- they decided 18 not to come. They don't want to go to the prehearing 19 conference, they just want to go to the board. 20 MS. DAVIS: So, Mr. Moon, can I, at least in 21 practice, talk about that? 22 MR. RUNNER: Sure. 23 MS. DAVIS: So a property owner files -- 24 we'll use your example. So let's make sure we're all 25 on the same page. 26 MR. RUNNER: Right. 27 MS. DAVIS: Property owner files an appeal, 28 someone -- let's presume in this case the assessor 124 1 requests a prehearing conference. 2 MR. RUNNER: Right. 3 MS. DAVIS: The applicant no-shows to the 4 conference. What happens? Do they get -- does the 5 assessor get an unlimited right to keep scheduling 6 prehearing conferences? And what happens after two 7 years? 8 MR. RUNNER: Right. 9 MS. DAVIS: Well, it would be a stupid 10 assessor who scheduled another prehearing conference. 11 Because if the applicant already no-showed, the odds 12 are pretty good we know why. We're in contact with 13 these applicants. They're telling us, "I don't see 14 any reason to come to a prehearing conference." 15 MR. RUNNER: Okay. 16 MS. DAVIS: They're not denied at a 17 prehearing conference, because it's not a hearing. 18 MR. RUNNER: Okay. 19 MS. DAVIS: So now they're going to get 20 scheduled. Now they're going to move to hearing. We 21 will have told them what we thought the issue was. 22 MR. RUNNER: Right. 23 MS. DAVIS: We're going to -- we still have 24 the right. Let's use a legal issue followed by a 25 valuation issue. We would have the right to ask the 26 clerk of the board to bifurcate the hearing and 27 notify the applicant that we're requesting a 28 bifurcation where the legal issue is heard first, 125 1 then the valuation issue. 2 If it's other complications like, "We're not 3 getting information," we're still going to appear at 4 that hearing. 5 MR. RUNNER: Okay. So that's what happens 6 in your county. 7 MS. DAVIS: Mm-hm. And I'd say the majority 8 of the counties. 9 MR. RUNNER: Well, again, the problem -- 10 here's part of our problem in this discussion, that 11 is, when we say "the majority of the counties," we're 12 not -- we're responsible for creating a unified issue 13 in all counties. 14 And so -- and so, you know, even if the 15 majority of the counties do it right, I think we 16 still have a responsibility to address the action in 17 regards to all counties. 18 MS. DAVIS: And that's where I believe your 19 guidance through the assessment appeals manual and 20 the LTA process is appropriate. 21 MR. RUNNER: Well, again, my question with 22 that is that that has no ability to actually be 23 enforced. 24 MS. DAVIS: Actually it does. 25 MR. RUNNER: Well, what -- tell me how. 26 MS. DAVIS: The Courts give it great weight. 27 MR. RUNNER: Yeah, after you go to court. 28 After the taxpayer goes to court, it does, right. 126 1 MS. DAVIS: So assessors know that. Why 2 would they start out -- 3 MR. RUNNER: Because they know a lot of 4 these people won't go to court. 5 MS. HARKEY: That's why we're here. 6 MR. RUNNER: Right? I mean, a lot of -- a 7 lot of these, they won't go to court. 8 MS. DAVIS: Allow me for a moment -- and I 9 know that people behind me now are going to start to 10 get alarmed. Because they told me to be very 11 diplomatic and not be the bulldog I usually am. 12 But allow me for a moment to just be 13 insulted on behalf of the assessors. We don't do 14 that. We are the highest ranking elected taxpayer 15 rights advocate in the county. We are elected to 16 represent those taxpayers. They are our 17 constituents, and we are not deliberately building 18 obstacles or saying, "Ah, this state board didn't 19 know -- 20 MR. RUNNER: Well, I guess where I would 21 probably want to tend to want to be careful where I 22 say I disagree, and that is I think there are a lot 23 of elected officials who are of high quality, really 24 important, understand their job and do it well, but 25 there are some who don't. 26 MS. DAVIS: Okay. 27 MR. RUNNER: And so I would never, probably, 28 throw everybody in the same bucket saying, "Hey, all 127 1 these people will do the right thing." 2 So I guess -- and I think we've already 3 heard anecdotally of people who do things differently 4 than you believe that they should be done -- 5 assessors. 6 So I get the fact that you're representing 7 all assessors. But at some point not all assessors 8 are going to necessarily choose to do the right 9 thing. And I think that's the challenge we have at 10 trying to create some guidance there. And I don't 11 have any problem assuming that almost all of them do, 12 you know, at that point. 13 So let me just ask, to follow up on this one 14 issue in regards to the idea of the -- of the appeal 15 appeal, the ability to put a number -- 16 MR. RENKEI: I'll -- I'll respond. 17 MR. RUNNER: Okay. Go ahead. 18 MR. RENKEI: So we have no interest in going 19 to endless prehearing conferences either. 20 Continuances are a significant issue for us. 21 The question was asked earlier as to why 22 would the assessor ask for a continuance. The most 23 common cause for a continuance is because we haven't 24 received the information that's necessary to value 25 the property. 26 So somehow that is described as the assessor 27 asking for the continuance, but the continuance is 28 caused because the taxpayer has not provided the 128 1 information. 2 And typically in those hearings, the 3 taxpayer will say, "I just need more time." And it's 4 agreed upon that the information will be provided, 5 and the board agrees to allow and give the taxpayer 6 more time so that they can provide the information. 7 So that, you know, we can have a productive hearing. 8 That is the most common reason for a 9 continuance. It is frustrating for us. We'd rather 10 have the information before the hearing, so that the 11 hearing's productive. 12 And we also don't want to see the board 13 force the applicant to go forward and lose the case. 14 Because that's not a good outcome for anyone. 15 Our -- our objective is to put a fair and 16 equitable value on the property. And it's our job to 17 get to that number. The best way to get to that is 18 to have the information necessary to evaluate the 19 property and come up with the right number in a 20 timely manner. 21 So this is -- this is why it's critical for 22 us to have the ability to obtain the information, and 23 so the board can maintain the ability to make sure 24 that the information is present so that they can have 25 a productive hearing. As opposed to forcing the 26 hearing forward when the applicant hasn't provided 27 the information. Which, as you have indicated, will 28 result in a denial. Which is not a good outcome. 129 1 MR. RUNNER: But it's -- but it's at the 2 control of the taxpayer. 3 MR. RENKEI: It is absolutely. And the 4 taxpayer has the ability and makes the decision as to 5 whether or not to provide the information or not. 6 MR. RUNNER: Right. But they would get to 7 control -- the fact that they get the denial, is that 8 kind of like their -- that's kind of like their -- 9 their risk. 10 MR. RENKEI: So the board -- the board also 11 doesn't want to waste their time. So they will hear 12 the reasoning. And if an applicant is -- is just 13 telling them, "I'm not going to provide the 14 information; I want to go forward with the hearing," 15 the board is going to accommodate them -- 16 MR. RUNNER: Okay. 17 MR. RENKEI: -- and is going to hear the 18 case. 19 MR. RUNNER: Member Harkey. 20 MS. HARKEY: I just have one statement here 21 that I think speaks to what the assessors are 22 actually saying, is that the assessors are elected 23 locally by their county. And some of this means you 24 may have a bad assessor. And I think that's up to 25 the local citizens, maybe, to overturn that decision 26 with a new assessor. 27 But I'm a little bit worried about putting 28 constraints on their ability to function, when we may 130 1 only have a couple counties that are not really run 2 as the others are. 3 And so I'm -- I'm -- I'm very much in 4 approval of the first part of this. I do understand 5 the reasoning for the second. If we could arrive at 6 something reasonable, that would be fine. 7 But if we've got bad county assessors, then 8 it's up to the citizens to get rid of them, you know. 9 I mean, it is an elected office. And so I do -- I do 10 believe they have some authority here. 11 But the citizens that live in those counties 12 also need to step up and run a campaign. I mean, I 13 don't understand why -- why this isn't happening. 14 Especially in one particular county that we know 15 well. 16 So I think rather than just trying to get 17 approval of things, there might need to be a 18 change -- 19 MR. RUNNER: Okay. 20 MS. HARKEY: -- in the elected. 21 MR. RUNNER: Let me -- let me -- let me do 22 this. Because I think we need to continue to move 23 forward here. 24 MS. HARKEY: Yeah. 25 MR. RUNNER: Is there a -- I guess I'm going 26 to check with Board Members. 27 Is there a consensus to have the ability to 28 have numerous pre-conference hearings, or should -- 131 1 is there a concern that we should have some limit to 2 them? 3 Because if there's -- if there's -- we can 4 just strike the whole sentence if, indeed, there's 5 not a desire, as Member Harkey just pointed out, to 6 just say, "This is a local issue, let them work it 7 out." 8 MR. HORTON: Well, I -- 9 MR. RUNNER: Member Horton. 10 MR. HORTON: I don't know if that's what I'm 11 hearing from the parties, Mr. Chair. 12 MR. RUNNER: Oh, okay. 13 MR. HORTON: But let me just speak for 14 myself. 15 I very much value judicial discretion, and 16 don't believe that we have the authority to limit, 17 prohibit, that process. And I think that this 18 process, like all judicial process -- any way. 19 That -- so let me just ask a couple of 20 questions here just for points of clarification. 21 When does the assessor, and -- and I 22 somewhat know the answers, but I just want to hear 23 from the parties. Because it comes out differently 24 sometimes. 25 When does the assessor issue the proposed 26 valuation? Prior to the discovery? Is the taxpayer 27 fully aware of what the assessor is proposing as to 28 what the valuation is from the onset? 132 1 MS. DAVIS: Well, I'm not sure I understand 2 your question. But once a year by July 1st we're 3 required to certify the assessment roll. And we're 4 required to notify all taxpayers of their value, 5 unless it's only gone up by the statutory, increasing 6 the consumer price index, or two percent, whichever 7 is less. 8 So those who do not fall in that bucket 9 receive a notice. They also receive notification by 10 receipt of tax bills that, at least in my county, are 11 mailing out this afternoon. 12 MR. HORTON: Okay. So would the 13 assessor -- at the prehearing process, what 14 additional information would the assessor -- I mean, 15 are there situations where the assessor would need 16 additional information to change that original 17 presumption? 18 MS. DAVIS: Yes. Quite often there will be 19 an appeal filed where the applicant knows something 20 about the property the assessor did not at the time 21 the value was determined. 22 That could be either because the property is 23 being inflated annually, and, let's say the property 24 had contamination, just to make something up. It 25 could also be that the assessor attempted to gain 26 information from the taxpayer during the course of 27 producing the assessment roll and was enable to. 28 So we invoke Section -- Revenue and Taxation 133 1 Code Section 501, which basically says in the absence 2 of that information, we assess that property to the 3 best of our ability. 4 So there would be additional information 5 that we could need in the event of an assessment 6 appeal. 7 MR. O'NEALL: Mr. Horton, Chris O'Neall. If 8 I could respond from the taxpayer standpoint. 9 You point out -- you make a very good point. 10 And that is by the time the 441(d) request typically 11 comes out, the assessor has already put out a value 12 to the roll. 13 There would be some times when that's not 14 the case. And maybe then it results in an escape 15 assessment. But generally it's to the roll. 16 So at -- when the 441(d) does come out, 17 oftentimes it's in response to, "You have filed an 18 assessment appeal application, please send us the 19 following information." 20 And whether that's to fine tune the 21 appraisal -- and in some counties they do fine tune. 22 They look at it again, they say, "Did we do it right 23 when we put it together?" 24 Or in some cases -- remember, we're in a 25 litigation mode. And that can be used to -- to -- 26 strategically against the taxpayer. 27 And that's why the concern is that you can't 28 have so many of these. It's like -- it's like being 134 1 in discovery where you can have 12 depositions and 2 12 rounds of interrogatory requests. It should be 3 one time. 4 MR. HORTON: Well -- 5 MR. O'NEALL: Unless there's consent of the 6 parties. 7 MR. HORTON: Let me share that my concern is 8 with equity, fairness, reasonable, and how we get 9 there. And protective of the taxpayer. 10 So how we get there, if it takes us, the 11 Board of Equalization, if it takes us a 30/30/30, it 12 takes us, you know, whatever length of time, another 13 hearing, a prehearing, a reconsideration or whatever, 14 in order to get it right, then that's what we have to 15 do to get it right. 16 So the question is, is that what is the 17 process by which you have to go through in order to 18 get it right? 19 And that's the judicial discretion. Someone 20 has to make that decision. Not us. And that's why 21 they have the assessors appeals board. 22 Now, at some point the taxpayer should be 23 able to say, "You know, I want a hearing. I want a 24 speedy trial. I want to go to hearing whether you 25 have the information or not." 26 And the assessment appeals board should be 27 in a position to make that decision. But I believe 28 that's current law. So -- but I'm being told by CATA 135 1 that that's not. 2 MR. RUNNER: Okay. 3 MR. HORTON: One quick question. 4 MR. O'NEALL: Can CATA quickly respond? 5 MR. HORTON: Let me ask the question. 6 MR. O'NEALL: Sure. 7 MR. HORTON: Does CATA believe that there 8 are times that the assessors will request and be 9 granted a -- an opportunity to have another 10 prehearing when, in fact, they presented -- your 11 clients have presented all the data that they believe 12 they can present to defend themselves, or they've 13 chosen not to present any data, and they're prepared 14 to go to hearing. 15 MR. O'NEALL: There are situations in which 16 the taxpayer, either because he doesn't have the data 17 or for other reasons, or intentionally doesn't want 18 to provide the data, and then it will go to another 19 prehearing, yes. 20 MR. HORTON: And -- and of both parties, at 21 that -- during when that occurs, there are a number 22 of reasons -- I have experience in my 30-some years 23 in auditing and all this other stuff -- where it's 24 intentional that you don't want to provide the data, 25 because the assessor's assessment is a lot lower than 26 what you think it should be. 27 Which, I think the taxpayer would have a 28 right to do. I mean, they're not compelled. You 136 1 know, I think the supreme court has ruled on a number 2 of occasions that the taxpayer is not compelled, you 3 know, to -- to give you information that causes his 4 taxes to go up. 5 So, you know, when that occurs, if the 6 assessor -- these are bad situations when the 7 assessor believes, "Well, there's more information 8 out there." The assessor doesn't have the authority 9 to do what we call at the Board of Equalization, a 10 flush-out audit, better referred to as a FBO, fill 11 billing order. Where we just issue a billing, you 12 know, that we know is probably high, but it's in the 13 ballpark. It's reasonable. It's in the ball park of 14 being reasonable in order to kind of get to what the 15 real data is. 16 And if that's what we're trying to make a 17 rule around, you know, I've got -- I don't know how 18 we stop people from running stop signs. I mean, you 19 know. But I am concerned about the equity of it. 20 And I think that we should deal with that specific 21 issue aggressively and firmly if we know that that's 22 what's happening. 23 MR. PARKER: Mr. Chair. I apologize -- 24 MR. RUNNER: Yes. 25 MR. PARKER: I'm Thomas Parker, Deputy 26 County Counsel with Los Angeles County. 27 MR. RUNNER: Mm-hm. 28 MR. PARKER: I'm also the AAB counsel. 137 1 MR. RUNNER: Mm-hm. 2 MR. PARKER: I've been involved in property 3 tax since 1994, for 16 years as assessor's counsel, 4 and the last 8 as AAB counsel. 5 I want to make a few key points that a lot 6 of this discussion that has been going on recently 7 has focused on the dynamics of the assessor versus 8 the taxpayer. 9 I think it's very important to re-keep in 10 mind what the AAB's job is here. The AAB's job, like 11 a court of law, is going to decide what the right 12 value is in the end. 13 CATA is pursuing uniformity as their stated 14 purpose -- one of their stated purposes. This 15 uniformity and the uniformity purpose for a state 16 board regulation does not mean that the judicial 17 discretion granted to AABs by the constitution 18 through the people of California is overrode. 19 Blind and arbitrary uniformity is not 20 required by law, by due process, or good 21 decision-making. 22 CATA, on this issue, wants such blind and 23 arbitrary uniformity that is not practical or 24 realistic. 25 And speaking for myself, I wholeheartedly 26 agree with Ms. Harkey's comments. If there's a bad 27 assessor out there, they are a local elected 28 official. And let the local voters make the change. 138 1 Which is required by the constitution. 2 MS. MA: Okay. So this is why it's taken so 3 long to get here. Because whether there's a bad 4 assessor or not, I mean, there's lack of uniformity. 5 And this is why we're here. 6 I mean, initially it started with all these 7 different notices that we received from different 8 assessors about the process. And that's where I was 9 concerned is one is 30 days, one is 9 months, one is, 10 you know, a year. One is you can't even schedule if 11 you don't submit your information. 12 So I think what we're trying to do here is 13 since this issue has been bubbling for many years, 14 we're trying to just clarify it so that when we -- 15 we're gonna make some changes so that hopefully all 16 the assessors are going to abide by it. 17 But it's really hard to get rid of an 18 assessor. Somebody has to, you know, write op eds 19 [phonetic], and follow everything, and keep posting 20 in the newspaper. And these folks are not going to 21 do it. 22 MS. HARKEY: It takes money. 23 MS. MA: It takes money, it takes someone 24 just like, you know, watchdogs. 25 So we're just here, we understand we're all 26 elected officials. We're all trying to, you know, 27 meet the highest standards as elected officials to be 28 fair and efficient. We're not arguing about that. 139 1 But clearly there are some assessors that are not 2 operating uniformly. So that's why we're here. 3 We're not questioning you, but we just want 4 to clarify. So that hopefully the assessors that are 5 doing something different are going to listen to it. 6 We may have to issue a letter from our 7 assessment appeals board saying we have issued, you 8 know, revised regulations and rules, and this is what 9 it means. And please follow them so that we don't 10 have to kind of get complaints from CATA and 11 taxpayers that they're not being treated fairly; 12 they're not having their case heard. 13 So that's all. 14 MS. HARKEY: Who investigates? Is the AG -- 15 is the AG involved in anything that's under the board 16 in a county assessment practice? 17 MS. DAVIS: The grand jury investigates. 18 MS. HARKEY: Grand jury. 19 MS. DAVIS: A taxpayer files a complaint 20 with the grand jury, the grand jury will 21 investigate. 22 MS. HARKEY: I'm just -- I'm just trying to 23 get beyond -- I know -- I know there were a lot of -- 24 a lot of issues that go on, a lot of reason for 25 postponement. But I think the main thing here is 26 that, you know, if you have a few rogue counties, 27 then that's an elected problem. 28 But if you -- if you could put a -- a -- and 140 1 I don't know that we have the authority to limit the 2 number of hearings, I guess, is what I'm saying. And 3 I'm -- but I am concerned. Maybe we just write some 4 kind of a rule that if after two years, blah, blah, 5 blah, blah, blah. What will we say after two years? 6 MR. RUNNER: Well, again, I think at this 7 point I -- I don't know if we want to, up here, start 8 creating new language. 9 MS. HARKEY: Yeah. Well, that's why I'm 10 suggesting maybe we approve that first one, and we 11 send this back. 12 MR. RUNNER: I think -- the bottom line is I 13 don't think there's consensus that I -- that I hear 14 in terms of trying to limit the number of hearings. 15 For me, I'm fine with one. And then -- 16 MS. DAVIS: Prehearing conferences. 17 MR. RUNNER: -- after that -- after that, 18 parties can agree to have more. I'm okay with that. 19 But I don't think other Members are. So at this 20 point, I don't think it does us any good to continue 21 to go through this. Because I just don't think we 22 find consensus here. 23 MR. O'NEALL: May I take one more stab at 24 it? 25 MR. RUNNER: Very -- 26 MR. O'NEALL: Okay. Let's -- let's 27 understand when things take time, when it takes a 28 year-and-a-half, two years for you to get a hearing, 141 1 properties sell, parties leave, witnesses disappear, 2 documents no longer exist. 3 One reason that due process or a timely 4 hearing requirement is in the law, is it is typical 5 in standard, is because that occurs. 6 In this case I gave you where it took 7 three-and-a-half years, actually board members went a 8 year between sessions. And I know they didn't take 9 notes. And I don't know how they were called. No 10 superior court judge would hear a case one day for 11 trial and then a year later another day for trial. 12 So that's why we have due process. Because 13 memories fade, documents disappear, properties are 14 sold, plant managers move onto something else, and 15 they're not available. They retire, for example. 16 The second thing is let's remember we're 17 talking about prehearing conferences where the sole 18 issue -- the sole issue is whether or not there's 19 been 441(d) compliance. Not whether we should 20 bifurcate. Not what kind of evidence you're gonna 21 present. None of these other issues are there. It's 22 only that. 23 And as I've heard explained here, one is 24 good enough. Most people are gonna either come 25 forward, there's going to be exchange of information. 26 If it's complex, they'll, together, agree. 27 And, remember, we're talking about the 28 parties could agree to have another one. Which 142 1 happens with the larger properties. 2 MR. RUNNER: Mm-hm. 3 MR. O'NEALL: But in most cases, one is 4 enough. And if a party chooses -- if an applicant 5 chooses not to participate, bad on him. Because it's 6 gonna go to hearing. He's not going to have his 7 information, and he's going to lose. So, to me, this 8 is good management. This is good management of the 9 process. 10 And let me say one other thing. Assessment 11 appeals boards have constitutional powers to control 12 their docket. But they don't have the power to deny, 13 and deny, and deny someone an appeal. 14 MR. RUNNER: That's what this discussion is 15 about. 16 MR. O'NEALL: The constitutional requirement 17 of due process trumps that power to control the 18 docket. 19 MR. RUNNER: Okay. 20 Member Horton. 21 MR. HORTON: Thank you, Mr. Chair. 22 I concur with your thought process as it 23 relates to due process and speedy hearing. And I 24 believe that the constitution of authority would 25 concur. And, therein, is the notion of judicial 26 discretion to kind of make that call. 27 And at some point -- but the board has 28 authority in this area of reasonableness. And so 143 1 maybe as the parties -- I think there needs to be 2 more discussion about this, but as the parties have 3 that discussion, Mr. Chair, as you've indicated, that 4 there is some clarification definition of what is 5 reasonable. 6 Are we saying new evidence or a proposed 7 change in valuation? Quite frankly now, I believe 8 that the assessment appeals board, for the most part, 9 is making fair and equitable decisions. 10 By the way, they're appointed by elected 11 officials who are county supervisors, who are take -- 12 I mean, who are concerned about this whole process. 13 And so their appointment is kind of at risk as well. 14 But that there is -- there is some definition to the 15 reasonableness. 16 And let's just say that's the exception. 17 Let's say that's the one percent. If the one percent 18 is occurring, it is incumbent upon us to address that 19 one percent as well, as it relates to the failure to 20 provide due process in a speedy hearing under the 21 area of reasonableness. 22 We get out from under that, and we start 23 embarking upon judicial discretion, then we are 24 probably running the risk of this never being 25 resolved. Even if it is resolved at this level, the 26 other levels would cause a number of people to pause. 27 MR. RUNNER: Okay. Let me -- let me just do 28 this. Because, again -- 144 1 MR. HORTON: See, I don't want to state 2 something that I think already -- let me ask the 3 assessors. 4 No one is here from the board itself, right? 5 MS. DAVIS: No. We were going to invite 6 someone, but it was too short of notice. 7 MR. HORTON: Oh, okay. 8 What is the reason that they generally allow 9 continuances of these conferences, nonhearing? 10 MS. DAVIS: George? 11 MR. HORTON: Is it arbitrary? 12 MS. DAVIS: I would certainly hope not. 13 MR. RENKEI: No. As I -- as I mentioned 14 before, the most typical case is where there was a 15 request for information. The applicant had not yet 16 provided that information and is asking for more time 17 to give that information to the assessor. 18 MR. HORTON: And asking CATA; what 19 situation -- what's the circumstances when it's 20 continued against the taxpayer's desire to continue, 21 and what would be the reason? 22 MR. O'NEALL: For failure to supply all of 23 the information that the assessor requested. And the 24 assessor says, "I want more information. Please put 25 them back on the next calendar." And we'll see if 26 they give it to us in the next 60 or 90 days. 27 MR. HORTON: And what if the board was to 28 make a determination as to the reasonable -- well, 145 1 no. Let me ask another question. 2 Why would the assessor want to have it 3 continued? Because they believe that their valuation 4 may be wrong, and they want to -- which is the only 5 reason I think you would want a continuance is you 6 think your valuation -- original valuation -- if it 7 was the original that was set back in the time frame, 8 blah, blah, blah -- is wrong, why would you want to 9 continue? 10 MR. KEEGAN: Board Member Horton, maybe I'll 11 take a shot at that. 12 Sean Keegan. I'm with CATA and current 13 Board Chair. My firm is a property tax assistance 14 company, and we represent small to medium-sized and 15 some large manufacturers throughout California. So 16 it's more of the personal property assessment. 17 We also represent some real property owners 18 as well in the evaluation area and change in 19 ownership areas. 20 So to give you a little bit of perspective 21 on -- and to answer your question, oftentimes, like 22 Mr. O'Neall mentioned and several of the other 23 speakers, in response to an appeal application when 24 it's filed, our experience has been we receive a 25 request for information almost immediately after you 26 file the appeal or during the process leading up to a 27 hearing. Okay? 28 So in some cases it can be more than one 146 1 441(d) request letter. Now, by and large, most of 2 the discussions we're having here talk about 3 valuation hearing. What is the value of my 4 manufacturing equipment? What is the valuation of my 5 commercial building, right? 6 So there's certain information that the real 7 property division will ask for, and there's certain 8 information that the business division will ask for. 9 So say, for instance, if it deals with the 10 equipment valuation, maybe it's sales of the 11 equipment, maybe it's when was it installed, you 12 know, invoices. Real property is a little bit 13 different. 14 But not to get too far, you know, down into 15 the details. But what happens is you get the first 16 letter. And hopefully the taxpayer, whether they're 17 represented by an agent or not, they'll respond and 18 submit the information. 19 They may choose not to respond or wait until 20 your application's calendared for hearing. 21 So when it's calendared for hearing, most 22 counties should follow, you get a 45-day notice. 23 Unless it's a reset; the meeting is continued and 24 it's reset. 25 So in that particular case there's a very 26 good chance that the assessor's office, some 27 practices will be they'll reissue another 441(d) 28 letter. Maybe it's the same one, generic. 147 1 So, again, it's on the taxpayer and on the 2 agent to make sure they provide that information to 3 the assessor in a timely manner prior to the hearing. 4 But keep in mind, even if the applicant or 5 the tax agent exchanges information with the 6 assessor's office, they're gonna evaluate the 7 information, and some case appeals get resolved, 8 right? Some cases they don't. Maybe the assessor 9 has more questions. 10 But leading up to that first hearing, they 11 could also issue another 441(d) letter, and say, "Can 12 I have some more information? Because I have these 13 questions." 14 And if that does happen, there's a very, 15 very good chance that the taxpayer or the applicant 16 can't get -- or the agent can't get that information 17 on time. 18 MR. HORTON: When -- when -- 19 MR. KEEGAN: And that would -- 20 MR. HORTON: If I may interrupt. 21 MR. KEEGAN: And that would lead to, like 22 Mr. Renkei had said, the applicant has to come and 23 say, "You know, listen. I need a little more time to 24 get that information." Whatever it is. It could be 25 very pertinent to that assessment. It could be, you 26 know, anything the assessor asked for. You may have 27 to -- you need more time to go gather the data, 28 right? 148 1 And so the belief has been that if the 2 assessor's office makes that request, you know, CATA 3 always, you know, advises, you know -- in most cases, 4 or I should say in the cases that I'm involved in -- 5 we make an effort to get the information and try to 6 satisfy the assessor's request. 7 If we can't get the information or it's not 8 available, you know, we're obligated to communicate, 9 right, with the assessor's office. So maybe by the 10 next hearing some things get resolved. 11 The only problem that we run into is that if 12 we're heading down towards a potential resolution 13 before a hearing, or we'd like to have our hearing 14 and there's another 441(d) request made right before 15 the hearing, guess what happens. It's going to be 16 onset. 17 And this two-year statute that you were 18 talking about that might keep the assessor's office 19 and everyone on a timeline or managing the calendar 20 properly, it's going to push you past the two years. 21 Okay. If you can't satisfy that information request. 22 That's an exception to the two-year rule. Okay. 23 And so what can happen is, you know, there 24 are situations where there -- there are a lot of 25 requests that could go out after the applicant 26 delivers their information to the assessor's office. 27 We have oftentimes the same concerns that 28 you have as it deals with real property that, "Well, 149 1 hey, an assessment was made. Okay. And now you want 2 a lot of information." Is it really a discovery 3 tool, or is it really -- is it being used to 4 genuinely evaluate the information? 5 Now, we can't get inside how the appraiser 6 or the assessor's office operates, but I will tell 7 you that there can be many, many delays until you -- 8 in certain counties, until you satisfy that 9 information request as it's read. 10 Because the assessment appeals board, 11 they're going to read the 441(d) letter and say, "Why 12 haven't you given, you know, the last three items of 13 the ten items you requested?" 14 And they can be very -- there can be reasons 15 why you can't produce the information. But you'll 16 make the effort to do so, because the goal is to 17 resolve the assessment issues. 18 MR. HORTON: So in that scenario the 19 taxpayer doesn't have the right to say, "It was an 20 unreasonable request," and the appeals board will 21 decide the reasonableness of that request? 22 MR. KEEGAN: They might. Oftentimes the 23 taxpayer is very passionate. Or the -- the agent 24 will present that that information we don't believe 25 is relevant to this particular assessment or this 26 evaluation. Or it's information that, you know, 27 cannot be obtained. We'll express that position. 28 The assessor's office, you know, may express 150 1 their position and say, "We really need to evaluate 2 that to ensure that we can change our value or not 3 change our value. 4 MR. HORTON: It's not the assessor, but the 5 appeals board that's making the decision as to the 6 reasonableness of this as it relates to the hearing 7 or not a hearing. 8 MR. KEEGAN: That would be their role, the 9 board's role. 10 MR. HORTON: Not the assessor's role? 11 MR. KEEGAN: The information request that's 12 driven in most counties is driven by the assessor's 13 office who either produces the letter or makes a 14 request, right? 15 And in Santa Clara County, which we've 16 spoken about, that may be driven a little bit 17 differently. Again, because there are situations, 18 because you have noncompliance hearings, or that's 19 how it's labelled, there may still be a valuation of 20 that information as well. 21 MR. RUNNER: Okay. We -- we -- I think this 22 has been fully discussed. 23 Let me just ask -- and it seems to me we 24 have two doors to go through. One is to not limit 25 the number of prehearing conferences, or to come up 26 with a number or some -- limit them without, then, 27 approval from both parties. 28 That's the two issues before us. 151 1 MR. HORTON: Mr. Runner, I don't believe we 2 have the statutory authority to -- to put such a 3 concrete rule in place. Because it would impede the 4 judicial discretion. I do believe -- 5 MR. RUNNER: Let me -- let me ask. Is that 6 a -- can we go to Chief Counsel specifically on that? 7 Because if that's the case, and our Chief Counsel is 8 going to rule that we don't have the authority, then 9 we may as well stop our discussion. 10 MR. NANJO: I think there's some serious 11 concern that that interferes with their judicial 12 authority of the AABs. So I would not -- it would be 13 very challenging to come up with a number unless 14 there's a really good basis behind it. And I don't 15 believe that we've heard sufficient basis to set a 16 number. 17 MS. HARKEY: I -- I -- 18 MR. HORTON: As a follow-up question, if I 19 may, Mr. Chair. 20 MR. RUNNER: Mm-hm. 21 MR. HORTON: Do you believe that the Board 22 has some authority to assess or determine 23 reasonableness in this process? Which, to give you 24 an example, the introduction of new information, 25 introduction of new facts, has caused the parties 26 to -- either party to be concerned about the 27 valuation. 28 MR. NANJO: The way I would answer that, 152 1 Member Horton, is, as your legal counsel, I would 2 seriously caution the Board in trying to come up with 3 criteria that defines reasonableness. 4 MR. HORTON: I'm -- I'm actually -- 5 MR. NANJO: Oh, I'm sorry. 6 MR. HORTON: I'm actually not talking about 7 a rule. Apologies. I probably should have clarified 8 that. A best practice scenario where we're actually 9 giving some guidance to -- 10 MR. NANJO: That -- that is clearly within 11 the Board's authority. But that would not be through 12 a regulation. That would be through either a letter 13 to assessors or guidance in our Assessment Appeals 14 Manual. 15 MS. HARKEY: Right. 16 MR. HORTON: I -- I don't know what that 17 process is. I don't know what the reasonableness is. 18 I mean, I -- I have some pretty good ideas as to 19 what's reasonable. Because we -- we deal with the 20 same concerns at the Board of Equalization where the 21 agency is continuing a case. And because of that 22 continuance, the taxpayer is now at a financial 23 disadvantage. 24 And their risk assessment shifts, cost 25 benefit analysis shifts. And the agency wins simply 26 because of administrative delay. And I think that's 27 inherently wrong. 28 I mean, when, you know, a taxpayer can go a 153 1 whole year intentionally because of an administrative 2 problem or lack of understanding of the law -- and I 3 can go on, but I think Members understand where I'm 4 going with that. 5 MR. O'NEALL: Mr. Chair -- 6 MR. RUNNER: Hang -- hang on. 7 Go ahead. 8 MR. HORTON: So I think -- and so I want 9 to -- I want to operate on the premise that we are 10 dealing with professionals here who can figure this 11 out, and can identify -- and that the agency can 12 specifically identify the bad behavior that is 13 existing. 14 And that the agency can aggressively go 15 after that bad behavior, which I think begins to set 16 some sort of precedence that somebody is going to 17 take you to court. Only because a lot of lawyers 18 understand if they take the agency to court, and they 19 win, they'll probably get legal fees. Especially 20 when an agency has said, "You're wrong. You're doing 21 this wrong," and so forth. 22 So I think there's a high probability that 23 you're going to get a little bit of compliance just 24 because of the nature of the legal process. 25 MR. O'NEALL: Mr. Chairman. 26 MR. RUNNER: Okay. Let -- I think we've 27 gone through this. Unless there's -- 28 MR. HORTON: New information. I'm good. 154 1 MR. RUNNER: I think we've fully discussed 2 this issue. So I think before us right now we have 3 the Rule 305.2(b), which I believe there has been 4 some consensus on language. 5 Can you -- can I have the Chief Counsel read 6 that language? 7 MR. NANJO: Yes. Chairman Runner, what I 8 have is, "At a prehearing conference or other 9 prehearing proceeding, the Board shall not deny an 10 application solely on the ground that the applicant 11 has not responded to a request for information made 12 under Section 441 of the Revenue and Taxation Code," 13 period. 14 MR. RUNNER: Okay. 15 Is there a motion to approve that language? 16 MS. HARKEY: So moved. 17 MR. HORTON: Mr. Chair -- 18 MR. RUNNER: There's a motion to -- there's 19 a motion here to approve it. 20 Is there a second? 21 MS. MA: Second. 22 MR. HORTON: Only in reference to the 23 motion -- 24 MR. RUNNER: There's a second. 25 MR. HORTON: Mr. Chair. 26 MR. RUNNER: Go ahead. 27 MR. HORTON: I would just amend the motion 28 to not necessarily approve the language, but to move 155 1 the language to the process of -- to the next 2 level. 3 MR. RUNNER: We're approving the language to 4 go into the process. 5 MR. HORTON: To go into the next level 6 where -- and I would ask that Cheif Counsel sort of 7 provide some -- a description of what that process 8 is. 9 And then this gentleman here seems to want 10 to address -- 11 MR. RUNNER: Well, hang on. Let's go -- 12 let's go ahead and answer the question in regards 13 to -- 14 MR. NANJO: I'm sorry. Mr. Yen was speaking 15 to me, so I kind of missed the first part of your 16 comment. 17 MR. RUNNER: Okay. The issue is, as we're 18 going to go through this right now, we are probably 19 going to come up with -- 20 MR. HORTON: It's relative to the motion 21 only. Just the motion. 22 MR. RUNNER: Right. We're gonna come up 23 with situations like this where there's some 24 agreements that we have on -- on -- on language to go 25 into this request that's before us. 26 MR. NANJO: Okay. 27 MR. RUNNER: So I think the nature of -- I 28 think what -- what I think is being asked here is to 156 1 make sure what we're doing is we're just agreeing on 2 this language. Later on, we'll act on the whole -- 3 MR. HORTON: No. No, I mean, even -- we can 4 move -- I think we can move this language into the 5 process. I just would like to have -- 6 MS. HARKEY: It's rulemaking process. 7 There's not -- 8 MR. HORTON: -- Mr. Nanjo to say that we -- 9 what the process is. I mean, I don't want to -- 10 MR. NANJO: Sure. 11 MR. HORTON: What the process is -- 12 MR. RUNNER: Why don't you direct us what 13 the process -- 14 MR. HORTON: -- and what the motion would be 15 in order to move it into that process. 16 MR. RUNNER: Right. 17 MR. NANJO: So if I could maybe -- if this 18 could help maybe the Board understand at a greater, 19 kind of higher level, what happened was this 20 originally started through two sources. One was the 21 CATA's petition for property rule amendment. And 22 second is Member Ma's L Item for the Board Member 23 item to make changes to these sections. 24 What you have in front of you is proposed 25 language that has gone back and forth between -- 26 that's been originally produced by CATA. And then 27 also agreed to in some form by the clerks, and then 28 also by the Assessors' Association. 157 1 So what this Board is doing at this 2 juncture, as I understand it, is you're going through 3 everything that's been presented, and you're coming 4 up with language that you, as a Board, are 5 comfortable with going forward with for regulation 6 purposes. 7 MR. RUNNER: Right. 8 MR. NANJO: So what we are doing now is kind 9 of, for lack of a better term, kind of keeping a 10 tally sheet of what language there's consensus of. 11 And you can do it either one of two ways. You can go 12 and approve and say, "Yes, we're definitely putting 13 this through as regulations," as you're going through 14 each piece. Or we can kind of put a place holder in 15 all of these, and at the end of the day we can see, 16 you know -- what I mean by "end of the day" is 17 obviously end of this particular item. 18 MR. RUNNER: Right. 19 MR. NANJO: We can decide whether we want to 20 move all of it, some of it, or what have you. 21 I would actually recommend that you do it at 22 the end. Because you'll probably want to take a look 23 at everything that you've decided to make changes on 24 and make sure they're consistent -- 25 MR. RUNNER: Okay. 26 MR. NANJO: -- and that you're all 27 comfortable with it. 28 MR. RUNNER: And can we do that still by 158 1 having -- by establishing that consensus with a vote 2 that puts it on that list? 3 MR. NANJO: Correct. 4 MR. RUNNER: Okay. 5 MR. HORTON: And, Mr. Chair, if I may. 6 What is that called? What is that phase 7 called? 8 MR. NANJO: You are having discussions to 9 determine -- 10 MR. HORTON: No, no, no. What is the phase 11 that we're moving into? The 45-day -- 12 MS. HARKEY: Writing a regulation? 13 MR. HORTON: -- discussion, the regulatory 14 process -- 15 MR. NANJO: What you're doing is you're 16 getting ready to direct the Chief Counsel to prepare 17 a rulemaking package with the following rule changes. 18 MR. HORTON: So the motion would be to 19 direct Chief Counsel -- 20 MR. NANJO: Yes. 21 MR. HORTON: Okay. 22 MR. RUNNER: Well, ultimately that will be 23 the motion. 24 MR. NANJO: That will be the last motion. 25 MR. RUNNER: That will be the last motion. 26 Okay. 27 MR. HORTON: Okay. 28 MR. RUNNER: So the motion before us is an 159 1 agreement on this item. 2 MR. NANJO: Correct. My understanding is on 3 changes to Rule 305.2, prehearing conference. 4 MR. RUNNER: Point 2(b). So -- 5 MR. NANJO: Correct. 6 MR. RUNNER: (a) and (b), actually. 7 MS. HARKEY: (a) and (b). 8 MR. NANJO: We've been discussing (b), but 9 there are changes to (a) as well. 10 MR. RUNNER: And there's agreement on those 11 changes. So it would be (a) and (b). 12 MR. NANJO: Yes. And I think Mr. -- I can 13 speak for Mr. Yen. He can correct me if I'm wrong. 14 He pointed out that the reference to 441(d) and (b) 15 should be 441(d). So -- 16 MS. HARKEY: Right. 17 MR. NANJO: -- it would be more accurate. 18 MR. RUNNER: Yeah. 19 MS. HARKEY: That's correct. 20 MR. RUNNER: And that's the language that -- 21 MR. NANJO: I read. 22 MR. RUNNER: That you read? 23 MR. NANJO: Yeah. 24 MR. RUNNER: Okay. Very good. 25 MR. NANJO: He's just suggesting the (d) be 26 put in there. And that would be more accurate. 27 MR. RUNNER: And that would -- so -- 28 MR. NANJO: Do the same thing. 160 1 MR. RUNNER: So the motion is -- that is in 2 the current motion? 3 MR. NANJO: If the Board is agreeable to 4 it. 5 MR. RUNNER: Is that a clear motion? 6 MS. HARKEY: Yes. At the prehearing 7 conference -- 8 MR. RUNNER: Okay. Okay. Okay. 9 Without objection? Okay. 10 MS. HARKEY: Yay. 11 MR. RUNNER: I'm going to try one more quick 12 thing before we take a lunch break. Because we're 13 going to take a quick lunch break. And that is going 14 back to 302. 15 302, I -- I think at this point, then, we 16 can -- we might be able to deal with 302.1, which 17 there was an agreement on. 18 And (c) goes away in light of what we just 19 did; is that understood? 20 MR. O'NEALL: Could I understand on -- on 21 what you just did on 305.2(b)? You've accepted the 22 first sentence but not the second sentence? 23 MR. RUNNER: That's correct. There's no 24 consensus. There's not agreement on any kind of 25 limitations. 26 MR. O'NEALL: Now I understand. 27 MR. RUNNER: Yeah. Okay. 28 MS. STOWERS: Chairman. 161 1 MR. RUNNER: Yes. 2 MS. STOWERS: I move to accept the language 3 in 302(a)(1) and strike the language in 302(c). 4 MR. RUNNER: Okay. Is there a second? 5 MS. HARKEY: Second. 6 MR. RUNNER: Without objection? 7 MS. HARKEY: Sounds good. 8 MR. RUNNER: So be it. 9 Okay. We're going to go ahead and take a 10 break until 1:30, and then we will pick up from 11 there. 12 ---o0o--- 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 162 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 25, 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 162 14 constitute a complete and accurate transcription of 15 the shorthand writing. 16 17 Dated: January 9, 2019 18 19 20 ____________________________ 21 JILLIAN SUMNER, CSR #13619 22 Hearing Reporter 23 24 25 26 27 28 163