1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 REPORTER'S TRANSCRIPT 7 DECEMBER 12, 2018 8 9 10 11 12 13 ITEM C1 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 21 22 23 24 25 26 27 REPORTED BY: Jillian M. Sumner 28 CSR NO. 13619 1 1 P R E S E N T 2 3 For the Board Equalization: 4 Honorable George Runner Chair 5 Honorable Jerome Horton 6 Third District 7 Honorable Diane L. Harkey Fourth District 8 Yvette Stowers 9 Appearing for Betty T. Yee, State Controller 10 (per Government Code Section 7.9) 11 Joann Richmond 12 Chief Board Proceedings 13 Division For Board of 14 Equalization Staff: Henry Nanjo Chief Counsel 15 Richard Moon 16 Tax Counsel IV 17 Public Comments: John McKibben California Association of 18 Clerks and Election Officials 19 Chuck Leonhardt Plumas County Assessor 20 President California Assessors' 21 Association 22 Sean Kelley President of California 23 Alliance of Taxpayer Advocates 24 Marc Aprea Principal 25 Aprea & Micheli 26 27 ---oOo--- 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 DECEMBER 12, 2018 4 ---oOo--- 5 MS. RICHMOND: Next on our agenda is Item C, 6 Public Hearing; Item C1, we have Petition to amend 7 Property Tax Rules; 302, The Board's Function and 8 Jurisdiction; 305, Application; 305.1, Exchange of 9 Information; 305.2, Prehearing Conference; and 323, 10 Postponement and Continuances. 11 And we do have public speakers for this 12 item. 13 MR. RUNNER: Okay. 14 I think -- Mr. Nanjo, are you up on front on 15 this one? 16 Let's see -- and I have no cards up 17 here -- oh, here we are. Okay. 18 Okay. Mr. Nanjo, go ahead and give a quick 19 report as to where we are and what's -- or not. Or 20 someone else can. 21 MR. NANJO: So at this -- at this point, 22 Members, we have approved the regulations. They were 23 sent into OAL. 24 This is the time that's been designated for 25 public comments. If memory serves me correctly, I 26 believe we've received five letters, generally 27 supportive. 28 There was one from Ms. Marcy Berkman of 3 1 Santa Clara which had some concerns that she 2 addressed. We've taken a look at that. Your 3 staff -- Legal staff has -- I'd like to introduce 4 Richard Moon, Tax Counsel IV, who's been working on 5 this. 6 And, generally speaking, we believe 7 Ms. Berkman's comments can be addressed through 8 probably notes in the Assessment Appeals Manual and 9 other sources. We don't think that any changes to 10 the regulations are necessary. 11 Richard, do you have anything to add? 12 MR. MOON: Yeah, that's correct. 13 She -- she had requested two different 14 changes. And as Mr. Nanjo has indicated, we believe 15 we can address those sufficiently in the IP process 16 that's going on right now. 17 MR. RUNNER: Okay. I'm going to actually 18 start with Mr. McKibben. 19 And why don't you guys -- we'll just go 20 right down the line, reintroduce yourself and 21 comments. 22 MR. McKIBBEN: Thank you, Mr. Chairman and 23 Members. John McKibben on behalf of the California 24 Association of Clerks and Election Officials. 25 We appreciate this opportunity. And we 26 greatly appreciate the work that your Board has done, 27 and your staff, and particularly Mr. Nanjo and his 28 staff, and the folks from CATA, California Alliance 4 1 of Taxpayer Advocates and Assessors, all working 2 together to reach some resolution on these issues as 3 we urge your Board to adopt the proposed rules as 4 written. 5 MR. RUNNER: Okay. Thank you. 6 MR. LEONHARDT: I would echo Mr. McKibben's 7 comments. I believe that the working group can have 8 animated conversations, put a lot of work into this 9 issue, and I think it came to an accord. 10 I agree that Marcy Berkman's comments should 11 be given heed. I believe, however, these rules have 12 gone through the process. I think we've all come to 13 agreement. And I think that staff can resolve her 14 concerns in the -- in the appeals manual. 15 MR. RUNNER: Thank you, Chuck. 16 MR. KELLEY: Good morning, Chairman Runner, 17 Members of the Board. In order to be brief, which is 18 not usually one of my strong points, I have some 19 prepared remarks that I'd like to go through very 20 quickly. 21 MS. RICHMOND: Please introduce yourself for 22 the record. 23 MR. KELLEY: Oh, I'm sorry. 24 Sean Kelley. I'm the President of the 25 California Alliance of Taxpayer Advocates or CATA. 26 I'm also the President and co-founder of DePasquale, 27 Kelley & Company, a property tax consultant, 28 practitioner for more than 25 years in the state of 5 1 California. 2 We want to take this opportunity to thank 3 you for all your hard work on the regulatory changes 4 that are before you today. 5 We also wish to thank the representatives of 6 the California Assessors Association, CAA, and 7 California Associations of Clerks and Election 8 Officials for their engagement and participation in 9 the development of these regulatory changes. 10 And we're here today to support these 11 changes and to respectfully request that you vote to 12 adopt the proposed amendments on the regulations. 13 CATA was formed in 2011 as a nonprofit trade 14 organization made up of tax consultants representing 15 taxpayers before county assessors, county assessment 16 appeals boards, and BOE. 17 The journey on these regulatory changes 18 began September 26, 2016 -- excuse me -- with a 19 letter from CATA, Board Member Horton, and the other 20 Members outlining a series of concerns we had 21 regarding assessment and assessment appeals 22 practices. 23 As our December 6, 2018 letter spells out, 24 we agree with the staff report in that the proposed 25 amendments would provide significant clarity 26 regarding the assessment appeals hearings. 27 Among those changes, the more significant 28 are: 6 1 One, that the functions of the Appeals Board 2 include the duty to ensure that all applicants are 3 afforded due process and given the opportunity for 4 timely and meaningful hearings; that an application 5 may not be denied at a prehearing conference or 6 hearing proceeding; and, three, the reasonable cause 7 for both parties agreement is required to postpone or 8 continue hearings for longer than 90 days, and 9 requires the reason for the longer delay to be stated 10 on the record. 11 We also agree with staff that these 12 clarifications are reasonably necessary for the 13 efficient and fair operation of local assessment 14 appeals hearings. 15 After today's meeting I will be flying back 16 to Southern California to perform one of my last 17 duties as the outgoing CATA President by opening our 18 annual CATA conference. I'll be sure to report to 19 our members on today's events and the significant 20 work of all of those that I've referenced this 21 morning. 22 Among others, the thing I'm most pleased to 23 present will be that when reasonable parties come 24 together in good faith, significant progress can be 25 made resolving differences. 26 In light of the above, we, again, 27 respectfully request the Members of the Board vote to 28 adopt the proposed amendments to the regulations. 7 1 Thank you. 2 MR. RUNNER: Thank you, Mr. Kelley. 3 Mr. Aprea. 4 MR. APREA: Mr. Chair and Members of the 5 Board, Marc Aprea. I'm only here to answer questions 6 and to provide any assistance. 7 MR. RUNNER: Okay. Okay. Very good. 8 I just want to say I appreciate -- and I 9 think the whole Board appreciates -- the cooperative 10 spirit. 11 I know that, you know, there were times when 12 there was deep disagreement. But I think everybody 13 moved accordingly, decided what were the most 14 important things to move forward with, and decided 15 that it was important to kind of come to conclusions. 16 So I, as a Board Member, appreciate that and 17 your work with the staff in that process. 18 Any Members? 19 Member Horton. 20 MR. HORTON: Thank you, Mr. Chair. 21 I -- excuse me -- thank every individual in 22 the organization that have come together and worked 23 together. 24 What's most gratifying, I think, about this 25 process is, despite the disagreements throughout the 26 process, you established a system by which hopefully 27 you will continue to operate within a public debate, 28 public discussion process by which the concerns of 8 1 all the parties are addressed not only from a legal 2 perspective, but also from an implementation 3 perspective. The ability to implement it given the 4 variety and the dichotomy that exists within the 5 assessors from county to county. 6 So to the staff, thank you for establishing 7 such a process. And we encourage that we continue in 8 that vein as we deal with the issues of concern for 9 the taxpayers. 10 CATA, thank you for your efforts as well, 11 and the assessors, as well as the county clerk and 12 all of those involved. 13 Thank you so very much. 14 MR. RUNNER: Member Harkey. 15 MS. HARKEY: Well, I would just like to echo 16 those thoughts, and thank you so much for working 17 together. We got through what we could. And it was 18 really nice to have that checklist where "this is 19 done, this is done, now we need to work on this." I 20 thought that was a great method of organizing a lot 21 of issues and being sure that we were able to address 22 them and everybody had the opportunity to opine. 23 And I want to thank the county assessors in 24 particular. It's really hard to herd 58 together. I 25 mean, that's tough. Everybody is publicly elected. 26 It's a tough deal. So thank you so much for being 27 able to move the ball forward as you did. 28 And the clerks, thank you so much for your 9 1 work. 2 CATA, thank you for pursuing and 3 persevering. 4 And Henry and -- Mr. Nanjo, I should say -- 5 and Mr. Moon, thank you so much for all your work. 6 And, Mr. Kinnee, thank you for ensuring that 7 this got resolved and came to the Board in a timely 8 fashion. 9 MR. LEONHARDT: You know, I think we would 10 be remised if we didn't acknowledge Member Ma and her 11 staff for facilitating some very important meetings 12 on these topics as well. 13 MR. RUNNER: Mm-hm. Yeah. Thank you. 14 MS. STOWERS: Chairman. 15 MR. RUNNER: Member Stowers. 16 MS. STOWERS: Thank you, everyone, for 17 participating. 18 And I think the assessor is correct that 19 Member Ma facilitated meetings to -- for that the 20 assessors, the clerks and CATA can come to an 21 agreement on some of the proposed rule changes. And 22 I'm very happy that we do have an agreement. 23 But I must comment that, although we have 24 resolution, we did disrupt the process in having the 25 interested parties meetings. And I take exception to 26 that, mainly because BOE staff was not at the table 27 when those meetings took place. And Member Ma and 28 her staff was there, and perhaps another Member's 10 1 staff was there, but the Board as a whole was not 2 there. So we did not really have an open process 3 throughout. We had open meetings when you came 4 before the Board. And I really thank the assessors 5 and everyone for coming to us in an open form. 6 I'm not really sure if the County Counsel of 7 Santa Clara County was at the table when agreements 8 were reached. And I'm not really sure if her 9 suggestions are necessary at this time. But I would 10 say that staff should take every effort to include 11 them in the manual. 12 With that being said, I'm prepared to make a 13 motion to adopt the changes as drafted without 14 including other changes. 15 MR. HORTON: I would second that motion and 16 augment it to include that the motion includes that 17 you take into consideration the issues brought forth 18 by the Santa Clarita County assessor as a direction 19 to the staff. 20 MS. STOWERS: I take that. 21 Santa Clara, not Santa Clarita. 22 MR. HORTON: Santa Clara. I apologize. 23 MS. HARKEY: What -- I have a question on 24 that. 25 What does that entail? Does that slow the 26 process down? Can we get this chunk done, or what's 27 the story? 28 MR. NANJO: We -- we are, as I understand 11 1 Controller Stowers -- Deputy Controller Stowers' 2 motion and Member Horton's motion, we're going to 3 move forward with the regulations as is. Which means 4 that it will not slow down the process. But we will 5 make an effort to make sure that Ms. Berkman's -- 6 County Counsel Berkman's comments are addressed 7 through, as we mentioned in the -- possibly in the 8 Assessment Appeals Manual, and other places as 9 appropriate, so that her concerns are addressed. 10 MS. STOWERS: That's my understanding too. 11 MR. RUNNER: Okay. So the process moves 12 forward. That will be addressed. Okay. 13 And I'm sure that's satisfactory? 14 Okay. There's a motion and a second. 15 Any objection? 16 Okay. Very good. That passes without 17 objection. 18 MR. NANJO: Great. 19 So my office, just so the Board Members and 20 others, the public, understands, my office will now 21 move forward in putting together the final rulemaking 22 package which includes the final statement of 23 reasons, update the information digest, history 24 notes, final text, and then we need to get our final 25 Department of Finance, DOF, 399 sign off. 26 They've given us their preliminary okay, so 27 we would hope that that's a quick process. And we 28 should be on track to get it filed, and at some point 12 1 it would be effective. 2 MR. RUNNER: Okay. Thank you very much. 3 MR. HORTON: Mr. Chair, if I may. 4 MR. RUNNER: Yes. 5 MR. HORTON: Let me just caution everyone 6 that even though we augmented the motion to 7 incorporate the concerns of County Counsel Berkman, 8 this is not the end of the process. So the process 9 will continue. 10 So to the extent that you've worked together 11 to resolve differences and found your common ground, 12 let me encourage you to continue to do that. Without 13 that, the process still could be disrupted as it 14 begins to go through the various different channels 15 as articulated by the Board of Equalization Chief 16 Counsel, Mr. Nanjo. 17 MR. NANJO: Thank you. 18 MR. RUNNER: Ms. Richmond, our next item. 19 ---oOo--- 20 21 22 23 24 25 26 27 28 13 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, Jillian Sumner, Hearing Reporter for 8 the California State Board of Equalization certify 9 that on December 12, 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 73 14 constitute a complete and accurate transcription of 15 the shorthand writing. 16 17 Dated: December 18, 2018 18 19 20 ____________________________ 21 JILLIAN SUMNER, CSR #13619 22 Hearing Reporter 23 24 25 26 27 28 14