1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 REPORTER'S TRANSCRIPT 7 MARCH 27, 2019 8 9 10 11 ITEM K2 12 CHIEF COUNSEL REPORT 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 REPORTED BY: Jillian M. Sumner 28 CSR NO. 13619 1 1 P R E S E N T 2 3 For the Board of Honorable Malia S. Cohen Equalization: Chair 4 Honorable Antonio Vazquez 5 Vice Chair 6 Honorable Ted Gaines First District 7 Honorable Mike Schaefer 8 Fourth District 9 Yvette Stowers Appearing for Betty T. 10 Yee, State Controller (per Government Code 11 Section 7.9) 12 For the Board of Henry Nanjo 13 Equalization Staff: Chief Counsel Board Proceedings 14 Richard Moon 15 Tax Counsel IV 16 ---oOo--- 17 18 19 20 21 22 23 24 25 26 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 MARCH 27, 2019 4 ---oOo--- 5 MS. DAVIS: Our next item is K2. And 6 Mr. Nanjo will come forward with information from the 7 Chief Counsel Report. 8 MS. COHEN: Thank you. I appreciate that. 9 MR. NANJO: Thank you very much, 10 Chair Cohen, Members of the Board, Deputy Controller 11 Stowers. 12 So this actually dovetails really well into 13 my prior presentation. So thank you very much, Chair 14 Cohen. 15 As I previously reported, the BOE 2.0 Legal 16 Department consists of myself and five attorneys; of 17 which, two are in Southern California. Mr. Moon 18 being one of them. 19 We have one vacancy for a Tax Counsel who 20 left for another department, and we have been in the 21 process of filling that position since October of 22 2018. 23 We are awaiting approval of our selected 24 candidate. Our selection was made in early February 25 of 2019. 26 The good news is we have finally received 27 authority to offer a position to our Staff Services 28 Analyst candidate, giving the Legal Department its 3 1 first and only admin support position, who will be -- 2 person, who will be starting with us on April 15th. 3 That leaves us with three positions we are 4 still trying to fill: an analyst or AGPA position to 5 assist with opinion tracking, litigation support 6 tracking other matters, and a variety of other needs 7 currently taking up valuable attorney time; two 8 Attorney III positions to assist with disclosure and 9 litigation as well as property tax matters. 10 And hopefully it won't take the five months 11 that the SSA has taken to get those positions filled. 12 MS. COHEN: Hopefully. 13 MR. NANJO: Yeah. 14 To address your question by way of 15 historical comparison, it's kind of challenging, 16 because I wasn't really here for BOE 1.0. 17 But in looking back at the records and 18 talking to some of my colleagues at CDTFA, in 19 BOE 1.0, we had approximately four to five full-time 20 attorneys dedicated to property tax work; a Tax 21 Counsel III supervisor who spent a portion, if not 22 the majority of her time, on property tax matters; as 23 well as one mostly full-time litigation attorney 24 working on property tax litigation; and at least one 25 or two other litigation attorneys that supported 26 property tax litigation. 27 There were also two attorneys dedicated to 28 Board Member support, Bagley-Keene and other matters 4 1 related to Board Members, Board meetings, and 2 processes. 3 There were also one to two full-time 4 personnel and labor and employment attorneys who 5 worked on Property Tax Department personnel matters; 6 and the Disclosure Office for BOE 1.0 handled PRAs, 7 the Public Records Act request, and other such 8 matters was also under the Legal Department. 9 Disclosure Services included receiving, 10 reviewing and processing Public Records Act requests, 11 gathering documents from the IT Department, if you 12 will, and redacting documents. Which sometimes is a 13 very lengthy process. 14 In 2018 I remember I had one public records 15 request, which comprised of three of those storage 16 boxes of documents which had thousands and thousands 17 of documents, which I had to review and redact. So 18 that was approximately 80 hours of my time on that 19 one project. 20 There have been several of that kind of 21 large-scale requests since that -- since I've been 22 Chief Counsel. 23 Bottom line, as far as I can tell, BOE 1.0 24 easily had 12-plus full-time attorneys, several 25 disclosure office personnel, easily totaling -- as, 26 again, best as I can estimate, about 20 personnel, 27 full-time personnel equivalence to handle the work 28 that's currently done by your Legal Department of 5 1 six. 2 So that's kind of -- based on my analysis 3 time with BOE, kind of where the Legal Department is 4 really short-staffed. So -- sir. 5 MS. COHEN: Senator -- 6 MR. GAINES: Okay to interrupt? 7 MS. COHEN: Absolutely. 8 MR. GAINES: Well, I just need clarification 9 on that. So -- 10 MR. NANJO: Yes. 11 MR. GAINES: Was that Legal Department 12 exclusive to property? 13 MR. NANJO: What I've done is, as far as I 14 can tell from talking to people and looking at who 15 worked on what documents, those would be the people 16 who would have been equivalent to working on property 17 tax full time. 18 The Legal Department at BOE 1.0 was, I 19 think, 200 attorneys or 200 staff. Yeah, I think 20 about 200 staff. So of that, about 20 full-time 21 equivalence. And I may be a little bit conservative 22 on that. It may be more than that was dedicated to 23 property tax-type matters, or the work that BOE 2.0 24 has under its belt right now. 25 MR. GAINES: Okay. Well, we appreciate what 26 you're doing. And we've got a long way to go in 27 terms of -- we can start with filling the vacancies. 28 MR. NANJO: Yes. 6 1 MR. GAINES: And try to speed that up. I 2 know that our Executive Director has been working 3 hard on that, and we're seeing progress. I'm 4 encouraged by that. 5 But thank you for holding the fort down in 6 the interim. 7 MR. NANJO: Absolutely. My pleasure. 8 The SSA candidate, we -- it took so long 9 with that, that one of our -- our first choices, if 10 you will, was not available. She had already taken 11 another position. So it leads to challenges like 12 that when it takes so long to fill a position. In my 13 estimation, it shouldn't take five months. That's a 14 long time. 15 MR. GAINES: Yeah. If you just stay in 16 communication with the Board -- 17 MS. COHEN: Yeah. 18 MR. GAINES: -- to note your progress. And 19 if there are other challenges, we want to know about 20 it. 21 MR. NANJO: Yeah. As I think you'll hear 22 from the Executive Director, it appears things are 23 getting better. But if it backslides, I will 24 definitely let the Board know. 25 MR. GAINES: Okay. Great. Thank you. 26 MS. COHEN: All right. 27 Mr. Vazquez has a question. 28 MR. NANJO: Sure. 7 1 MR. VAZQUEZ: Just a quick question. And I 2 know we had this conversation before, and I think you 3 just hit on it again. 4 So the major hang up for you is that the 5 Human Resource folks that are -- that are not under 6 our department anymore, or -- there seems to be 7 another layer somewhere in there that's obviously 8 taking you -- what -- you're saying five months -- 9 MR. NANJO: Yes. 10 MR. VAZQUEZ: -- to get this thing moving. 11 MR. NANJO: Yeah. 12 So when we do -- just going through the 13 process of doing the paperwork and getting the 14 authority to set up the interviews and everything, it 15 just seems like it's taking longer. 16 I believe the Executive Director has 17 previously reported that we kind of are reliant in 18 CDTFA to do that. They have their own workload. So 19 consequently, it's just taking a long time. 20 It has -- I want to be fair to CDTFA, it 21 has -- appears to be getting better more recently. 22 But that was an extremely challenging time for us. 23 MR. VAZQUEZ: Thank you. 24 MS. COHEN: All right. 25 Well, that's a good -- that's a good sign 26 that we're on our way. 27 Thank you for the presentation. 28 One of the things that I'm listening that I 8 1 hear that's very clear -- there are two things. 2 First, the important work that you're doing. 3 The -- that we -- in that we are providing guidelines 4 for the 58 county assessors and to the taxpayers and 5 to the stakeholders. 6 As Chair, I'm pleased as we discussed 7 earlier, that your attention is to conduct a 8 systematic review and a comprehensive review in the 9 updating of this information of the guidelines. 10 Going back to what I was asking previously, 11 I'm just -- you identified where the discrepancies 12 have been. What do you think the time lines are 13 moving forward? How do we continue to rectify this? 14 And I'm going to assume that you're going to 15 continue to keep us informed. 16 MR. NANJO: Absolutely. 17 I think the -- again, Richard Moon's 18 primarily my person working on this. I think we've 19 come up with a strategy where we're trying to get the 20 Rule 100, or the easier changes out of the way, 21 because those are going to be quicker. 22 MS. COHEN: Mm-hm. 23 MR. NANJO: And we're engaging with program 24 on prioritizing some of the other areas of the RTA 25 and what have you. 26 The Rule 100 changes are going to help a 27 lot. Because those are the really quick and 28 hopefully noncontroversial things that are just gonna 9 1 make us more in line with reality as it exists now. 2 Richard, do you want to -- 3 MR. MOON: Yeah. We're hoping to have a 4 couple of the Rule 100 changes before the Board in 5 April. 6 MS. COHEN: Great. 7 MR. MOON: And then we're hoping to have the 8 Rule 100 changes to the Rules for Tax Appeals in May. 9 MS. COHEN: Okay. 10 MR. MOON: So that's our -- that's our hope. 11 MS. COHEN: Good. That's -- that's -- I'm 12 happy to hear this, because this is something that I 13 wanted to share with you that I'd like to see this 14 done before June. So it sounds like we're on the -- 15 on the same time line there. 16 What steps have been taken to regain our 17 Legal team? 18 MR. NANJO: We have -- every opportunity 19 we've had to, we've had -- we've requested additional 20 positions. I think part of it has been that AGPA and 21 the two Tax Counsel IIIs that we're getting, it's 22 kind of a -- as you know in the state system, it's 23 challenging because if you have a vacancy, they're 24 not going to give you more positions until you fill 25 your vacancies. So we have to check that box even 26 though we know that even when we get those vacancies, 27 we're going to have a need that needs to be filled. 28 MS. COHEN: Mm-hm. 10 1 MR. NANJO: I think I speak for a lot of the 2 staff and the Board Members that one of the 3 challenges is, is a lot of departments I don't think 4 are really knowledgeable about what it is BOE still 5 has left and how much we have to do. That's, I 6 think, why we were left with such short staff. And 7 that's part of the process that we're trying to do 8 when I meet with other departments and other 9 agencies. 10 And I know your Executive Director is doing 11 that, too, is educating them on -- there's a lot that 12 BOE still has to do. And I'm sure the Board Members 13 are doing that with your legislative colleagues as 14 well. 15 At some point I'm hoping a light bulb goes 16 on, and somebody realizes, yes, we need to get these 17 people resources so they can do their job. 18 MS. COHEN: That light bulb is where? 19 Because we get it. The light bulb is on. 20 MR. NANJO: Yeah. No, it's definitely not 21 within BOE. I think it's with some of our other 22 sister departments and probably with the 23 Legislature. 24 MS. COHEN: Fair enough. We will keep 25 pushing. 26 What -- what steps have we taken to rebuild 27 the disclosure team? 28 MR. NANJO: So what I'm doing is working -- 11 1 I have one of my attorneys who's working on 2 disclosures now. 3 I was -- a lot of these non-property tax 4 functions, if you will, I was taking kind of the 5 laboring oar on during the first part of my tenure. 6 But I need to bring other staff along. So I have one 7 of my staff that's being trained up and working on 8 disclosures. 9 When we get the Tax Counsel III, I'm hoping 10 that -- filled, I'm hoping that we're going to get 11 somebody with some disclosure background that we can 12 really dedicate to filling that up. 13 And then we're going to need to get 14 additional staff to fill in behind that. Because 15 really an attorney is great, but you need the ground 16 troops to do the first-level redacting, doing a lot 17 of the notifications, the communicating with Board 18 Members if any of the documents are related to Board 19 Members, things of that nature. 20 MS. COHEN: So one of my favorite questions 21 when I'm out and about in the community, and they're 22 talking about the BOE and what I'm doing and how's 23 the transition been, people always say, "How can I 24 help?" 25 I love that question. I love that question. 26 And even if I don't have an answer immediately, I'm 27 like -- I will circle back with them, or I will come 28 up with something. 12 1 So my question to you is how can this Board 2 help you? 3 MR. NANJO: Support us in our attempts to 4 get more staff and more resources. I really think 5 that, personally -- this is just Henry Nanjo. Not 6 necessarily your Chief Counsel, or, you know, 7 Executive Team Member of BOE. But I really think 8 that we are severely understaffed. And I think we 9 have a lot of work to do, and not enough people to do 10 it. 11 MS. COHEN: All right. That's good. 12 All right, colleagues, when people ask how 13 can they help, we'll let them know we need more staff 14 over here. 15 That concludes my question. 16 Gentlemen, let me see -- on this side, are 17 there any other questions down here? We're good? 18 How about down here? 19 MR. SCHAEFER: Well, it's been asked to me 20 if we have any ability to improve our salary levels 21 competitive to the other agencies. He mentioned a 22 number of people. But, you know, what we pay them is 23 also important. 24 MS. COHEN: Can you speak to that? What is 25 the process? I don't believe you have the ability to 26 dictate -- 27 MR. NANJO: No, that -- 28 MS. COHEN: -- but maybe you can enlighten 13 1 us on what that process is. 2 MR. NANJO: A lot -- actually, that's 3 probably a better question to address to Ms. Fleming. 4 MS. COHEN: Okay. 5 MR. NANJO: Because that's more in her daily 6 wag. So I will, if you do not mind, pass that til 7 the Executive Director's report. But I appreciate 8 that. 9 Member Schaefer, it's always easier to get 10 more experienced and more qualified -- or not 11 qualified -- more experienced and skilled staff when 12 you pay higher salaries. 13 At this point, I'm kind of working with 14 whatever I can get. I need people to do the work so 15 Mr. Moon doesn't have to spend, you know, 80 hours a 16 week doing all the things I'm asking him to do. 17 MR. SCHAEFER: I would -- I would think it 18 would be easier to recruit once we had some 19 resolution on the legislative problems that we are 20 discussing. People like to know that if they're 21 going to work for an agency, the agency will be 22 around in five years. 23 MR. NANJO: That's probably true, sir. 24 MR. SCHAEFER: We believe that, but we don't 25 know that. 26 MS. COHEN: Appreciate it. Thank you. 27 Senator, do you have any remarks? 28 MR. GAINES: Yes. 14 1 I mean, we're all aware of it, but I think 2 it's worth noting again that we need our 3 administrative authority. And I know that our 4 Executive Director is working hard on that. But if 5 we had that administrative authority, the HR 6 authority, we could move forward very quickly. 7 MR. NANJO: Yes. 8 MR. GAINES: And so I've been letting 9 members of Legislature know that. That as a result 10 of AB 102, we still don't have a full back where 11 other agencies have received it. 12 So, you know, to the degree that that could 13 be accelerated, it's going to improve our level of 14 service, and be able to perform the task that the 15 constitution calls out for. 16 MR. NANJO: Absolutely. I appreciate that. 17 And I would be remised not to recognize Mr. Moon is 18 fantastic, as I've already said. But I have a great 19 Legal staff. They are all kind of working extra 20 hours and kind of going above and beyond, in my 21 opinion. So we really have -- I'm really impressed 22 by the Legal team that BOE has. And I think we just 23 build on it. 24 MS. COHEN: I have a question. And I'm 25 curious to know if there are -- if there are gaps 26 in -- well, we know. Not if. But there are gaps on 27 the team. 28 I'm curious to know, one of the things that 15 1 we would do in San Francisco is we would go to the 2 city attorney's office and ask for some support. I 3 was just wondering if we have considered going to the 4 AG's office and asking Mr. Becerra for some support 5 in that respect. 6 MR. NANJO: We have in some -- to some 7 extent in that one of the things that -- one of the 8 things I lost is the litigation attorneys. And I, 9 frankly, as your Chief Counsel, can't spend all my 10 time running around in courts and doing litigation 11 for the Board. 12 So we have a couple of litigated matters 13 that I've requested, and have -- we've been assigned 14 AGs who are working on that. 15 MS. COHEN: When did that assignment happen 16 and when was that request made? 17 MR. NANJO: Those requests were made, I want 18 to say, shortly after I got here. So I think that 19 was -- that was in 2017 -- 20 MS. COHEN: Okay. 21 MR. NANJO: -- for both those cases that I'm 22 thinking of. 23 MS. COHEN: Okay. All right. 24 MR. NANJO: And, generally speaking, the 25 AG's office is supportive. But we kind of have a 26 unique area of law. So it's really challenging to 27 try to find attorneys from other agencies that can 28 really do the work that we do. 16 1 MS. COHEN: Got it. All right. I think we 2 have exhausted this item. 3 I appreciate you both for being here. Thank 4 you very much. 5 MR. NANJO: Thank you very much for your 6 time and attention. I appreciate it. 7 ---o0o--- 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 17 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 March 27, 2019 I recorded verbatim, in 10 shorthand, to the best of my ability, the 11 proceedings in the above-entitled hearing; that I 12 transcribed the shorthand writing into typewriting; 13 and that the preceding pages 1 through 17 14 constitute a complete and accurate transcription of 15 the shorthand writing. 16 17 Dated: March 26, 2019 18 19 20 ____________________________ 21 JILLIAN SUMNER, CSR #13619 22 Hearing Reporter 23 24 25 26 27 28 18