1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 REPORTER'S TRANSCRIPT 7 JULY 30, 2019 8 9 10 11 ITEM K1 12 EXECUTIVE DIRECTOR'S REPORT; 13 ITEM K1(c) 14 ORGANIZATIONAL UPDATE 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 Brenda Fleming 13 Equalization Staff: Executive Director 14 Toya Davis Clerk 15 Board Proceedings 16 David Yeung Deputy Director 17 Property Tax Department 18 ---oOo--- 19 20 21 22 23 24 25 26 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 JULY 30, 2019 4 ---oOo--- 5 MS. DAVIS: Our next item that will be taken 6 up is K1(c), an Organizational Update from 7 Ms. Fleming to report on the status and upcoming 8 organizational issues, including but not limited to: 9 updates on office relocation, Statewide Informational 10 Hearings, and organizational priorities. 11 Ms. Fleming. 12 MS. FLEMING: Good morning. 13 MS. COHEN: Good morning. 14 MS. FLEMING: Happy Tuesday, everyone. 15 Chair Cohen and Honorable Members, I'm 16 Brenda Fleming, Executive Director. 17 This month's report, Members, will include 18 updates on some of the operational priorities, 19 including some good news about -- some further good 20 news about our Office Relocation Project. It will 21 include a presentation on the governor's fiscal year 22 2019/2020 budget. 23 We're going to have a special guest that 24 will be arriving a little bit before 11:00 a.m. this 25 morning. Mr. Vivek Viswanathan, who is the Chief 26 Deputy from the Department of Finance. 27 And then later after Vivek's presentation, 28 if we don't break for lunch, depending on the 3 1 timeframe, then I will facilitate a discussion today 2 on the forms and events that would allow the Board to 3 engage in discussions on important statewide property 4 tax matters that are on our horizons. For example, 5 things like split roll. Also to drill down on 6 subjects like the state of property tax 7 administration in general, lessons learned, what can 8 we look at to do better, and other emerging issues, 9 for example, opportunity zones. 10 We're looking for opportunities to have 11 statewide discussions perhaps on some technology, 12 where we could go to look for additional 13 efficiencies, etc. So I'll give more facilitation of 14 that discussion later today. 15 Members, we do have a full day today. I 16 think the estimates for today's schedule go to almost 17 6:00 o'clock. So we've got quite a bit. So 18 naturally what we'd like to do also is to give 19 Jillian an opportunity to rest her fingers a bit in 20 between. So that said, I'll be a little bit brief. 21 Because we're also expecting our next guest speaker. 22 So just a couple updates on the -- I'll draw 23 your attention to the slides up front. 24 And I want to say, Terri, if we should go 25 maybe to slide one. 26 So first of all, the BOE Web site is 27 certified. We've been reporting on that for the last 28 couple months. We had a requirement to satisfy an 4 1 ADA compliance requirement by July 1. And kudos to 2 the team, because they've completed a Herculean 3 effort to get all of that work done. 4 And so we've met compliance. It was 5 certified actually on June 28th. And our Web site 6 does show that we've got our compliance Web site, 7 compliance certificate there. 8 So if anybody has any additional questions, 9 we can -- we can circle back with you on that. 10 Secondly, Members, staff continue to make 11 really good progress on a number of items that I'll 12 highlight. Update on the Assessors' Handbook, 13 Handbook 531, Handbook 534 and Handbook 581. 14 Mr. Yeung and team have been reporting on that over 15 the last few months. 16 Staff continue to proceed through the 17 assessment surveys. And there will be more 18 discussion on that today on how many we've actually 19 completed, how many are in progress, and how many are 20 on the horizon. 21 We continue to make progress on the guidance 22 on the Community Land Trust. That's Senate Bill 196. 23 Again, Mr. Yeung has been making sure he keeps us 24 updated on that. 25 We are preparing, Members, a legislative BCP 26 for Senate Bill 791 on the certificated aircraft. 27 And so Mr. Durham is leading that effort for us and 28 making good progress. And as soon as we've got that 5 1 in a state of readiness, we'll bring that back and 2 have some discussion with you. So you'll get an 3 opportunity to take a look at it. 4 We continue to progress with our strategic 5 plan, and just a number of other things that are on 6 horizon. So those things that are listed, we 7 continue to make progress on them. 8 Again, as always, I'd like to pause and 9 applaud my staff for all their great work and the 10 successes that they've had as they handle our tax 11 program duties and responsibilities. You often don't 12 see all of them behind the scenes. 13 I had an opportunity to spend some time last 14 week with some of them on a trip to Central Valley. 15 And then we had a little celebration for the work 16 that was done on the Web site. And it's just good to 17 have some time with them. We've got some super 18 heroes behind the scenes that are doing a lot of good 19 work. 20 Members, to continue -- and thank you to the 21 team. 22 Our Taxpayer Rights Advocate, Ms. Lisa 23 Thompson, is preparing for our August Taxpayers Bill 24 of Rights Hearing. Ms. Thompson is currently on 25 vacation. She sent me a text this morning with 26 pictures from Santorini, Greece. But when she 27 returns, she'll reach out to you to really sit down 28 and have more detailed discussion about what -- how 6 1 you can assist us with getting the message out and 2 inviting taxpayers and people from your specific 3 areas to participate in that Bill of Rights Hearing. 4 MR. SCHAEFER: Where did -- where did she go 5 on vacation? 6 MS. FLEMING: She -- actually she's doing a 7 bit of a tour through Europe, and today she's in 8 Santorini, Greece. So she's sending pictures from 9 the beach. 10 So, again, she'll return and then engage 11 with you to continue some of those outreach 12 activities. 13 Ms. Leslie Davis -- who is here with us 14 again today -- and I are discussing some plans for 15 the October meeting. It's the annual meeting with 16 the county assessors. I think last year we had it in 17 December. And I think times before that we've had it 18 in January. And so in conversations with Ms. Davis, 19 we'd like to have that in October. 20 So we'll start the planning discussions 21 there. And then make sure that we are briefing you 22 on the details, getting your input on what you'd like 23 to see. 24 Next, Members, we have -- 46 percent of our 25 vacancies are in active recruitment and moving well. 26 And since the last report, I think we've close -- or 27 close to closing about six of them. So as we've 28 talked about before, a bit of a slow progress -- 7 1 process, but we are making progress. 2 And, finally, just a bit of good news. 3 We've received the official clearance to procure the 4 desired offices in the downtown area for the Board 5 Members. We just needed one final check of the box. 6 So we've gotten that final. 7 The cost estimates are being finalized. So 8 we're excited about. And that allows -- and that's 9 both for the downtown Sacramento offices for the 10 Board Members and also for the Natomas facilities. 11 So still a little bit of detail to work out 12 on the Natomas facility, but good progress is being 13 made. 14 And so we're preparing to finalize the 15 leases, get you all settled, complete the 16 tenant-improvement activities. And so you'll start 17 to see soon preparation for those of you that are 18 relocating, packing boxes, etc. So we'll get into 19 the details -- 20 MS. COHEN: Could you let me know which 21 Members are packing boxes and relocating? 22 MS. FLEMING: So at this point -- I'll start 23 on this end -- Mr. Schaefer is relocating from 24 400 Capitol Mall to 925 L Street. Mr. Gaines is 25 relocating from 500 Capitol Mall on the 17th floor to 26 the 6th floor. 27 And so both the Chair Cohen and for Vice 28 Chair Vazquez are staying in your 621 Capitol Mall 8 1 offices. But there will be some construction that 2 makes the separation of those two office locations 3 permanently separated and designated. 4 MS. COHEN: And, Member Gaines, you'd 5 mentioned a desire to downsize in your office 6 footprint. Were you successful? 7 MS. FLEMING: Mm-hm. 8 MR. GAINES: Yes. 9 MS. COHEN: Okay. 10 MR. GAINES: We're on the 17th floor 11 currently. And the plans are still -- we're going 12 through that approval process, and then the move will 13 occur. It will probably take a couple more months, I 14 would imagine. 15 MS. FLEMING: Yeah, there's construction -- 16 or what we call construction are the tenant 17 improvements that would be needed. And so we would 18 finalize that work. So there's some detail to work 19 out some of that. 20 But I don't have the actual move estimates. 21 I'd be happy to provide that as soon as I get it. I 22 definitely will continue to give you updates at the 23 monthly reports. 24 But I'm looking for that final, like, when 25 is the actual lease going to be signed. I've been 26 signing a lot of documents lately, so I know there's 27 progress. 28 MS. COHEN: Mm-hm. 9 1 MS. FLEMING: I just haven't seen the final, 2 final lease to get -- 3 MR. GAINES: Yeah. It's less than half the 4 space we have currently. That should save taxpayers 5 about -- over 100,000 a year. 6 MS. FLEMING: It's a significant savings for 7 both Mr. Schaefer and Mr. Gaines. Their offices 8 are -- 9 MR. GAINES: I know we're all doing that. 10 MS. FLEMING: Exactly. Everyone's got a 11 smaller footprint, which is very helpful. 12 MR. GAINES: Yeah. Thank you. 13 MS. FLEMING: Yeah. And we're trying to 14 focus on, you know, there's the total square footage 15 of your office, the footprint itself for the office, 16 we're also trying to contain the cost to the extent 17 that we can contain the cost, the cost per square 18 foot. 19 But if you compare that to the leases that 20 we had previously, they were done some time ago. So 21 just inflation. But we are sensitive to that. 22 But the overall -- to your point, 23 Mr. Gaines, the overall cost to the state is 24 significantly less. So savings per month. 25 MS. COHEN: Thank you. 26 Mr. Schaefer. 27 MR. SCHAEFER: Well, I was thinking it's 28 very nice that Member Cohen and Vazquez were able to 10 1 sort of double up on some space. And my office and 2 Member Gaines' office, any way we can collaborate, 3 I'm very excited to see the taxpayers save some 4 money. And I think that's in the best interest of 5 our image. 6 MS. FLEMING: The other benefit, as we've 7 talked about before, to the downtown office location 8 is the proximity to the Capitol. And so I think for 9 all of you now, you know, one of the other benefits, 10 just in terms of proximity to the the Legislature 11 themselves for your interaction, but to be able to do 12 so in walking distance. 13 I know we walk from our location to the 14 Capitol on a regular basis. It's a nice walk. So 15 there's a number of other benefits just in terms of 16 proximity. 17 And as mentioned before, as we look at the 18 office relocation to working with DGS, it appears 19 that we will continue to use 450 N Street for our 20 Board room. And so also the downtown proximity 21 allows you to go from your downtown office spaces to 22 continue to come to 450 N Street for the monthly 23 Board Meetings. 24 MR. SCHAEFER: Is there still a hazard of 25 the glass falling at 450 N Street? 26 MS. FLEMING: I think we resolved that 27 issue. I think we're -- I think we're fine. Thank 28 you for asking. 11 1 MS. COHEN: Mr. Vazquez. 2 MR. VAZQUEZ: And the other thing I think 3 you should mention is that, you know, the fact that 4 we're staying in our local, and we're not going to 5 Natomas. 6 MS. FLEMING: To the Natomas location. 7 MR. VAZQUEZ: That was to the tune of 8 $3 million, wasn't it? 9 MS. FLEMING: It was -- well, the budget, 10 the sealing of the budget that we had for the 11 construction and relocation was about $3 million. 12 MR. VAZQUEZ: So that's a huge savings. 13 MS. FLEMING: So there's definitely some 14 savings. 15 So part of what I'm waiting for is a couple 16 of the final numbers for the Natomas location. We're 17 still, as recent as yesterday I think, we were still 18 mapping out where offices were going to be at the 19 Natomas facility. So as soon as we get that level of 20 detail finalized, and I'll have more final numbers, 21 then we'll get the overall cost of this whole 22 project. 23 In working with DGS, they have definitely 24 indicated that the -- we would be significantly under 25 that $3 million budget. So definitely saving money. 26 MR. SCHAEFER: Ms. Fleming, you're so 27 efficient at so many of these things like what you're 28 talking about now. I just fail to see why you can't 12 1 squeeze an hour off of our program today. We have at 2 least 100 people following us; Ms. Leslie Davis, 3 assessors, and staff members. And every one of us 4 are patriotic people, and we want to watch the 5 presidential candidates today at 5:00 o'clock. And I 6 think it's a prejudice for us to steal an hour from 7 all of these wonderful people to have a longer day. 8 I'm not suggesting we come back in the 9 morning. But if we can take something out of today 10 and stick it to next month, I'd be in favor of that. 11 In fact, we could do a 15-minute lunch if we eat from 12 what we have in here. That would save us a 13 half-hour. I'm just trying to put on my thinking 14 cap. 15 MS. FLEMING: I appreciate that. 16 MR. SCHAEFER: Because I want all the 17 assessors to join me in watching the presidential 18 candidates. Right now, none of us can do that. 19 MS. COHEN: I appreciate that. But that's 20 actually the purview of this Chair. And I will do my 21 best to get us out there. But I would never want to 22 short the taxpayers. We have a job to do, and when 23 we're done, we will then commence and watch the 24 debates. But until then, we should keep moving 25 through the agenda. 26 I'd love to hear a little bit more about 27 your operational priorities. I've got several 28 questions for you as well. 13 1 So I think we left off at Office Relocation 2 Project; is that where you were? 3 MS. FLEMING: Yes, ma'am. So I was going to 4 say, that concludes my report, unless there are 5 additional questions. 6 MS. COHEN: Okay. So a couple of them. 7 So Taxpayer Rights Advocate Hearing and 8 taxpayer education. I had made the request about a 9 month ago to get the link of the flyer, so that we 10 could link it to our Web site, so we could start to 11 send it out just via electronically. And we haven't 12 gotten that yet. I'd love to get that. Just the 13 link of the art. 14 The other thing I'd like to do is to be able 15 to embed the flyer in some of our social media and 16 getting it out there. 17 MS. FLEMING: Okay. 18 MS. COHEN: And then something that's 19 probably aspirational is to begin to start to look to 20 translate the taxpayer flyers, as well as our 21 meetings, in multiple languages, so that we're not 22 exclusive and -- exclusive only to English speakers. 23 MS. FLEMING: Okay. 24 MS. COHEN: And I realize that that is a 25 loftier role. 26 I want to go back to, on your list, Item 6, 27 the Legal Entity Ownership Program, LEOP. I don't 28 think you specially teased that one out. If you 14 1 could just talk a little bit more about the new IT 2 system implemented, the fixes, like just where we 3 are. 4 MS. FLEMING: So at this point I don't have 5 all that specific detail before me. And I'd be happy 6 to come back and give you more details. But I'll 7 speak to what I know off the top of my head. 8 And I'll ask if Dave's around if he wants to 9 join me to add anymore detail. 10 The LEOP system is our Legal Entity 11 Ownership Program. And it's a program -- one of the 12 components of the property tax technology systems. 13 The age of those systems, off the top of my head, I 14 can't even tell you how old they are. But they are 15 systems that are on probably at least two generations 16 old of technology. And in the twenty -- 17 MS. COHEN: How -- how -- what's the 18 generation? Is it one year, ten years? 19 MS. FLEMING: Technology, six months. 20 MS. COHEN: Yeah. 21 MS. FLEMING: Think about the life cycle of 22 your cell phones. 23 MS. COHEN: Got it. 24 MS. FLEMING: So that's it. 25 In 2011/2012, we started to have discussions 26 about the age of those systems at that point. So 27 you'll get 2011/2012 timeframe to 2019, it's a couple 28 of -- easily, a couple of life-cycles old. 15 1 We engaged in the 2012 timeframe, 2012/2013; 2 2011/2012 to do the planning; 2012/2013 we started to 3 look at the modernization of a range of the property 4 tax systems, the LEOP system being one of them, to 5 start to modernize them to bring them up to speed to 6 more current versions of technology. 7 MS. COHEN: Okay. 8 MS. FLEMING: And so that project had a 9 longer life cycle than we expected and anticipated. 10 Lots of hiccups. Lots of -- 11 MS. COHEN: And you still have the revenue 12 you need in order to finish this project? 13 MS. FLEMING: Correct. So at this point the 14 project is completed and has been implemented. And 15 as with any tool that we implement, we do heavy 16 testing before it goes in and then afterwards. 17 But usually in that first year or so, you 18 give the system an opportunity to go through all of 19 its cycles; 1st quarter, 2nd quarter, etc. Each of 20 those cycles gives you an opportunity to uncover 21 additional defects or inefficiencies. 22 I don't want to steal your thunder here. 23 But it gives an opportunity to really flush 24 out any of the defects. And so some of Dave's staff 25 have been working on that for quite awhile. 26 Lisa Thompson has been an active person engaged in 27 that also. 28 So I'm not hearing a whole lot of 16 1 significant problems. But I don't know if they've 2 just not been rolling across my desk. 3 MR. YEUNG: Well, the LEOP -- 4 Good morning, Chair Cohen. 5 MS. COHEN: Good morning, Mr. Yeung. 6 MR. YEUNG: And Honorable Members of the 7 Board. I'm David Yeung, Deputy Director of the 8 Property Tax Department. 9 The program itself is very, very heavy in 10 filing and handling of paperwork. So what we were 11 trying to do is we were trying to modernize and get 12 all that scanned so the paperwork can flow in a much 13 easier steps and review. And being able to get 14 real-time status reports as to what filings they're 15 working on, and how many are into que and whatnot. 16 So it's a management tool issue. 17 And right now the program is only 18 implemented. But with any new program, there are the 19 testers, and then there's the staff that does the 20 work. And as the staff does the work, we're trying 21 to find some extra efficiencies in the program where 22 we can perhaps truncate some stuff, and where stuff 23 needs actually more documentation. 24 So we're going through the process right 25 now. We're identifying some stuff, and hopefully 26 we'll be able to address that in the very near future 27 and get the program to its full potential. 28 MS. COHEN: Okay. Sounds good. I 17 1 appreciate that. So when will that be completed? 2 MR. YEUNG: It's fully implemented. 3 MS. COHEN: Oh, okay. 4 MR. YEUNG: The troubleshooting part now, 5 we're about six months into it where staff is fully 6 engaged. We've identified a couple of issues in 7 where we can find some efficiencies. 8 So we're looking at, right now, whether that 9 can be done with just a procedural, and handled, 10 which is procedural change, or whether it actually 11 needs any changes to the system itself. 12 So probably by the end of the year we should 13 have -- we should have most of the major issues 14 resolved, or at least have a plan as to how to move 15 forward and fix some of the stuff. 16 MS. COHEN: Okay. I appreciate it. 17 MS. FLEMING: Thank you for that, David. 18 Just to complement what Mr. Yeung is saying, 19 as you all know, when we roll out a new system -- 20 again, we talked about the age of the system. The 21 rolling out, or implementation of that new system 22 triggers also additional process reviews in terms of 23 other efficiencies. So it's not just the system as 24 Mr. Yeung eluded to. And you have to look at, Okay, 25 so what other changes can complement that system? So 26 its that handshake the team is working on. 27 The system has been implemented, so that 28 part is absolutely completed. 18 1 MS. COHEN: Thank you. I want to keep 2 moving on until Mr. Viswanathan comes to join us. So 3 we have a few more minutes, about 20 more minutes. 4 So I wanted to go onto Item 9 on the first 5 page, County-Assessed Certificated Aircrafts, Senate 6 Bill 791. 7 Now, Mr. Durham touched on it briefly in his 8 report. I just wanted to know if you had any 9 indication of the likelihood of the bill passing, if 10 there's any -- 11 MS. FLEMING: High probability. 12 MS. COHEN: High probability. 13 MS. FLEMING: We've got significant 14 engagement from the county assessors, from the 15 airline industry. There's been quite a bit of work 16 done. So I think there's a high probability it will 17 pass. So we're definitely focused on it. Dave's got 18 his people actively involved. 19 MR. YEUNG: That's correct. 20 MS. COHEN: Okay. That's good to know. 21 I know you're in the process of developing 22 the BCP. 23 MR. YEUNG: Yes. 24 MS. COHEN: Is it complete? Is it, like, 25 you're waiting for the legislation, and then you're 26 waiting to push send? Or where are we? 27 MS. FLEMING: You got it? 28 MR. YEUNG: Yeah. That's all right. 19 1 We've got our first draft. 2 MS. COHEN: Okay. 3 MR. YEUNG: We've been in contact with 4 different departments. We've done our internal 5 review. 6 MS. COHEN: Mm-hm. 7 MR. YEUNG: We are going to -- our goal is 8 to get it polished, ready, and ready to hit the send 9 button when it's adopted. So we know this is a short 10 timeframe. It's about ten days from adoption to when 11 we have to have that in. 12 MS. COHEN: So do you anticipate this 13 legislation passing by the end of this year? 14 MR. YEUNG: I hope so. My crystal ball is a 15 little faulty. But all indications are pointing to 16 that it should this year. 17 MS. COHEN: Fair enough. 18 MS. FLEMING: Especially based upon the 19 operative date. I believe the operative date -- 20 MR. YEUNG: Yeah. 21 MS. COHEN: All right. That's good to hear. 22 All right. I want to go to the next -- just 23 to the next page. And Items 11, Board Member 24 training. I don't know if there's any detail that 25 you want to provide. I'm excited. I'm going through 26 some of my own training, so this is very welcomed. 27 Is there any other details that you can 28 provide of them that's in process? 20 1 MS. FLEMING: So on that, within the next 2 two to four weeks -- you're starting tomorrow. The 3 first wave of the training will be on the accounting 4 and travel accounting activities. 5 MS. COHEN: Okay. 6 MS. FLEMING: That will be followed by the 7 training on some HR practices. And then the next 8 series, I think, we shift over to some additional 9 property tax. I'm sorry, I don't have that list in 10 front of me. But we'll then start to shift over to 11 some other elements of property tax programs 12 activities. 13 And I think -- I'm sorry, I don't have the 14 details in front of me -- but then -- and I'll circle 15 back with the additional schedules. Some of the 16 delays in that is that we needed to make sure that 17 the materials to complement that training were fully 18 intact. And so we're working with our partners on 19 that in the Department of Tax and Fee -- CDTFA. 20 I'm just having a day. 21 So we're working with CDTFA to finalize the 22 materials for that. 23 So what's ready to go now is the accounting, 24 and then the HR training. 25 MS. COHEN: Fantastic. Which brings me to 26 my next thing, Item 13, HR delegation. A very 27 important and critical function for the Board of 28 Equalization. 21 1 So tell me in as much detail as you can 2 where are we on this? And give me a status update. 3 You kind of brushed over that. Give me the details. 4 Give them to me. I want them. 5 MS. FLEMING: Okay. Yes, ma'am. 6 MS. COHEN: Thank you. 7 MS. FLEMING: So the -- we've got a lot of 8 work to do -- 9 MS. COHEN: Yeah. 10 MS. FLEMING: -- before we can get the 11 delegation back. 12 So in the first of the year and some early 13 first quarter, and even discussions for 2018, 14 conversations that I had with CalHR, we were very 15 optimistic about getting our delegation back. I 16 maintain that optimism. 17 I think where it's shifted is as we've 18 peeled away -- as each month has passed from me 19 starting this role in January until now, I've had the 20 opportunity to peel away layers of the onion. And as 21 each layer is peeled back, I find additional level of 22 material or issues or programs, policies, a number of 23 issues that we still need to address to move forward 24 with the delegation back. 25 In general, there is -- and I'm careful to 26 call it formula -- but there's a process that you 27 have to go through to get the delegation back. And 28 we've talked briefly about that before. 22 1 As a part of getting that delegation back, 2 there's somewhat of a checklist that you work with 3 CalHR on. Based upon what triggers caused you to 4 lose your delegation, we have to remedy those items. 5 And in each of the items that we would have 6 to remedy, and many of those items are articulated in 7 the reports that were produced after the audits and 8 the investigations. You have to find a remedy for 9 each one of those. 10 And so the prescriptions to remedy those has 11 some details that require us to do training for 12 managers and staff, to have reports in place, regular 13 reports in place, you know, policies, procedures, 14 checks and balances. And we don't currently have all 15 of that in place. 16 So as we move forward to try to get that 17 delegation, you have to check off those lists, and 18 make sure all of that's in order. 19 So since we are doing that work, trying to 20 establish that delegation while concurrently having a 21 lot of the management team that was there before that 22 retired, and a lot of new managers in place, we're 23 having to really sort of reevaluate where the 24 baseline of the training starts. Because there's 25 some things that we should have in place that are not 26 there yet. 27 And so as I drill down on the detail of 28 those activities, we're having to identify, Okay, so 23 1 where do you start with that training activity, and 2 how much more of the policy needs to be 3 revitalized. 4 MS. COHEN: When you're talking about 5 training -- 6 MS. FLEMING: Management training. So 7 managers -- 8 MS. COHEN: For your staff? 9 MS. FLEMING: My staff, correct. 10 MS. COHEN: Mm-hm. Okay. 11 MS. FLEMING: And there will be, some of the 12 training you'll get also when we start the next wave 13 of training for your offices, which is the HR 14 training, we'll start the training, you'll be exposed 15 to some of that. 16 But there's basic management activities, 17 especially in the recruitment process. And once 18 you've recruited employees and they're on there, 19 there's certain reports that you have to continue on 20 an annual basis with employees as part of their 21 evaluation and their individual development plans. 22 You know, just tracking things in terms of mandated 23 training, a lot of our practices -- and this is no 24 fault of the staff. It's just really a program that 25 wasn't necessarily implemented with discipline on our 26 property tax side. And so now we're really having to 27 go back, and really foundationally focus on it at 28 that layer, and try to reestablish some practices 24 1 that we just have not been very disciplined about for 2 quite some time. 3 MS. COHEN: Okay. 4 MS. FLEMING: So as I get more exposure to 5 that level of detail, the gap that I originally 6 assessed is a bit more significant than I originally 7 anticipated. So here, and here, it's going to take a 8 little bit more time to get through it. 9 MS. COHEN: So how can we, as the Board, 10 support you? 11 MS. FLEMING: So at this point, in terms of 12 direct engagement, there's not much the Board can do. 13 Because this is within the Tax Program Administration 14 side of it. 15 I think the greatest thing is just to allow 16 us the time. And it really -- because a lot of this 17 training, as you know, when you're having to take 18 staff off-line to do training, and a lot of the 19 documentation reviewing policies, etc., actually 20 takes time. 21 So it really is just us having the time in 22 our schedules on top of, you know, all the other work 23 that this team is doing. Just having the flexibility 24 in their schedule and the time. 25 So to the extent that we can make sure that 26 the Board Members are solid, and you're staffed and 27 equipped, and then we can make sure that you have the 28 resources and all the materials that you need for 25 1 Board Meetings. Really just allowing that bandwidth 2 in our schedules to really just focus on it and get 3 to it. There's not much else that you can do in this 4 aspect. 5 MS. COHEN: Okay. 6 Item 15 on your list, the Split Roll System 7 Proposal. I just wanted to take the next ten 8 minutes, maybe you can really give us a thorough 9 status update on how that -- how the impact analysis 10 in the initial BCP planning is unfolding. 11 MS. FLEMING: Well, I'm going to pause first 12 to see if Mr. Yeung has recovered from his initial 13 cardiac shock to put together a preliminary document 14 for us. And then we'll ask Dave to participate in 15 this response with -- 16 MS. COHEN: And have you shared that 17 document with us? 18 MS. FLEMING: We have not. We are just 19 doing our internal work. 20 MS. COHEN: Okay. 21 MS. FLEMING: Again, the first -- the 22 first -- first -- well, one of the early discussions 23 that Dave and I had, I remember where he was sitting 24 one day, and I walked by his desk, and he had a smile 25 on his face, and he took the assignment, and he said, 26 "Okay, fine." And I think within a matter of hours, 27 I walk by his desk, and he was flat. And his 28 response was something like, after a while, like, "Oh 26 1 my gosh," etc. So that's it. 2 Really where we are with this is they're 3 working much more, taking a broader review of all 4 that's involved with the split roll. So -- because 5 they impact so many other people. So I've asked more 6 for a 360 kind of review of all of the stakeholders 7 that would be impacted by it. 8 And then we're taking a look at, for each of 9 those -- imagine it as a pie chart for each of the 10 stakeholders or representative groups in it, to try 11 to understand what their roles and responsibilities 12 are, and then determine what might be the shifts that 13 would occur as a result of the split roll. 14 So it's a typical analysis using pretty 15 normal methodologies and some of that just to 16 determine how you would attack the workload, what 17 does it include, what are the shifts. Then we could 18 examine policies and procedure changes and roles and 19 responsibilities. 20 Ultimately, once you define the scope of the 21 work and the changes, then you can identify what 22 kind -- what level staff and expertise you'll need, 23 what kind of training you'll need to develop that 24 staff, and then ultimately how many staff. 25 MS. COHEN: So, Mr. Yeung, I'm going to 26 direct my question to you. 27 MR. YEUNG: Yes. 28 MS. COHEN: So you've been chewing on this 27 1 for a little bit of time. 2 MR. YEUNG: Yes. 3 MS. COHEN: and I was curious to know what 4 your analysis -- how is it structured? What are some 5 of the key things or topics that you're looking at? 6 MR. YEUNG: Well, internally, for the Board 7 itself, and in the Property Tax Department, we're 8 looking at how we're still -- how we're going to, 9 one, staff up our training and our certification 10 program when -- if split roll happens, there's going 11 to be three main parties that it affects: the Board, 12 the assessors, and the general public. 13 So when and if the split roll happens, there 14 will be cyclical reassessment of commercial 15 industrial property. It's going to be a tremendous 16 workload on the assessors, and they will have a lot 17 more work to do. They have already commissioned, and 18 had a white paper written on the effects, and what it 19 would take the assessors as a community, 58 counties, 20 in order to implement. 21 MS. COHEN: May I make a -- just jump in 22 here and make a request? 23 MR. YEUNG: Yes. 24 MS. COHEN: Could you send us a copy of that 25 white paper and the assessors? 26 MR. YEUNG: I believe I have it, and I -- 27 I -- I will be in contact with Ms. -- 28 MS. COHEN: I appreciate that. Thank you. 28 1 For all of us, but I, specifically, would 2 love to see that white paper. 3 MR. YEUNG: Right. 4 So with the extra workload involved in the 5 assessment, for appraisers to do ad valorem tax work, 6 they have to be certified. 7 MS. COHEN: Mm-hm. 8 MR. YEUNG: And they have to take continuing 9 education hours in order to maintain that 10 certification. So it will be a tremendous workload 11 on the Board to, one, provide that certification; 12 and, two, to provide the training in order to 13 maintain it. So we have that workload that we're 14 looking at. 15 We also have the workload of a lot of our 16 Assessors' Handbooks now. I made a presentation 17 about three months ago. A lot of those will need to 18 be updated. 19 There are -- there are some issues there 20 that will, one, we'll have to tackle from as 21 assessment point of view, how do we -- how do we 22 change how we look at change of ownership. Because 23 for a whole category of property, that will no longer 24 be the trigger for reassessment. It will just be 25 done. 26 And, two, we'll have to take a look at the 27 appraisal end of it. We'll have to refresh our 28 guidance on the appraisal of commercial property, 29 1 industrial property. We have a whole litany of 2 properties that are covered by the handbooks that 3 will need updating. 4 And then, three, we also have an internal 5 program where our LEOP program, the one we just 6 mentioned, that we implement a new system for that 7 tracks a change in ownership specific to legal 8 entities. When you buy and sell interest in that 9 legal entity, and to current law, it triggers -- if 10 certain things happen, it triggers a reassessment of 11 that property. And most of that property was 12 probably commercial and industrial. 13 So we'll have to figure out how that affects 14 that program, whether we need to divert resources to 15 it, or perhaps reassign resources already committed 16 to that program. 17 MS. COHEN: Mm-hm. 18 MR. YEUNG: So there's a lot of internal 19 review of our own functions, how we interact with 20 assessors, and we haven't even begun to approach yet 21 is how it will affect the public. And that's part of 22 the 360 look that we'll hopefully be able to, you 23 know, give you a little more detail on this as we 24 develop that. 25 MS. COHEN: Member Vazquez. 26 MR. YEUNG: Yes. 27 MR. VAZQUEZ: Along those lines, I was 28 speaking at a luncheon, Chamber meeting in West 30 1 Hollywood last week -- 2 MR. YEUNG: Yes. 3 MR. VAZQUEZ: -- and the business community 4 is really nervous about this. 5 MR. YEUNG: Right. 6 MR. VAZQUEZ: But it sounds like some of 7 them are a little, maybe, confused or not real clear. 8 And they're kind of lumping it into, like, we're 9 going to change Prop 13, the residential side, which 10 it doesn't. 11 MR. YEUNG: It does not. 12 MR. VAZQUEZ: But that -- but it seems to be 13 out there, the fear. 14 MR. YEUNG: Right. 15 MR. VAZQUEZ: And maybe they're using that 16 to try to stop it from moving forward. 17 So I think we need -- and I don't know if 18 you've thought about this -- but looking at maybe 19 some good hearings or public information forums, 20 something that we can start getting out. Or even -- 21 I know it's probably expensive -- but to do a whole 22 PR campaign, you know, through the media on this to 23 try to explain to people that, in fact, this is just 24 targeting the commercial properties and not 25 residential. 26 MR. YEUNG: Right. Yeah. 27 MS. COHEN: I don't know if that's a role 28 for the Board of Equalization. 31 1 MR. VAZQUEZ: Well, that's why I'm throwing 2 it out there. I don't know if it is either, 3 legally. 4 MS. COHEN: We are the enforcers. We'll be 5 enforcing the policy -- 6 MR. YEUNG: Yes. 7 MS. COHEN: -- should the voters approve it. 8 MR. YEUNG: Right. 9 MS. COHEN: I think what you're describing 10 is a case for the politics, the campaign. 11 MR. VAZQUEZ: Well, I'm talking about the 12 information. Let's forget about the campaign side. 13 MR. YEUNG: Yeah. 14 MR. VAZQUEZ: I'm saying, you know, just 15 getting the information, the correct information out. 16 MR. YEUNG: Right. 17 MR. VAZQUEZ: I don't think that's really 18 getting into the politics. Or is it? 19 MS. FLEMING: I do -- 20 MS. COHEN: Ms. Fleming. Ms. Fleming, did 21 you want to say something? 22 MS. FLEMING: So just to comment on that -- 23 MR. VAZQUEZ: It's just educational. 24 MS. COHEN: Ms. Fleming. 25 MS. FLEMING: So we have to be careful. 26 That's a slippery slope for us going into a role. 27 Because this is an initiative that goes before the 28 voters. And so our practice has been anything that's 32 1 going to go before the voters, we want to be careful 2 to maintain our neutrality so we're not influencing 3 the vote one way or another. 4 So from an educational perspective, one of 5 the things that we're talking about is at these sort 6 of venues, or some of the other events we'll talk 7 about in the statewide hearings, we can take a look 8 at hearing all of the information. And to the extent 9 that the public wants to participate or listen in to 10 those kind of events, they're welcome to. But it 11 really isn't our role to go back and clarify. 12 Because one of the things in our experience 13 also is that sometimes the positions change over 14 time. So we're talking about an initiative that goes 15 before the voters in 2020 -- in November 2020. So 16 we've had other pieces of legislation that have 17 shifted. So we're careful to take on that role, just 18 so that we don't -- we're not in the role of 19 interfering or influencing, or creating any biases 20 one way or another. 21 We can have neutral discussions, as I 22 mentioned, just in terms of -- Leslie and I have been 23 talking about how we pull that together along with 24 the statewide hearings, to bring those issues before 25 us. Then you hear both sides of it. 26 And, again, back to the 360, because this is 27 something -- and you've heard me comment about this 28 before -- this is an issues that is going to be a 33 1 California issue. And so it's not just a BOE 2 function. The assessors are heavily impacted. And 3 as Dave mentioned, you know, the public will be 4 heavily impacted. And that also has other dominos. 5 So the 360 allows us to get a greater understanding 6 of really how big is this, and what are we talking 7 about, and what are all the implications that we 8 probably haven't even thought of all of them yet. 9 So educationally we can do things here, but 10 we can't engage more. 11 MS. COHEN: I also want to point out that 12 later on in the agenda we will be talking about the 13 statewide listening, hearing sessions that we are 14 going to be organizing in a matter of a few months. 15 And with that endeavor, I'm sure the issues that 16 you're discussing, policy matters, will come up. And 17 so we will have an opportunity to listen and develop 18 a strategy on how we're going to respond. 19 MR. SCHAEFER: Madam Chair. 20 MS. COHEN: Yes, Mr. Schaefer. 21 MR. SCHAEFER: I wanted to ask Ms. Fleming, 22 what if we get all prepped up for it passing, and it 23 doesn't pass? 24 MS. FLEMING: That's a probability. I would 25 rather be on the side of investing the time and 26 energy to do the work so that if it passes, that's a 27 heavier lift. If for some reason it does not pass, 28 there's always going to be something -- when we do 34 1 that kind of analysis, there's always going to be 2 something that we can take advantage of to continue 3 to make progress improvements or efficiencies in 4 other areas. 5 So I don't think the work or the studies, 6 etc., will be wasted completely. But I think there 7 will be something we can leverage out of it. 8 The lift would be -- the risk and the 9 benefit, when you weigh both of those, it's -- the 10 benefits to us doing it to be prepared are more 11 important than the risk of us not doing so. 12 MR. SCHAEFER: Thank you. 13 MS. FLEMING: Thank you. 14 MR. GAINES: If I could just briefly. 15 MS. COHEN: Member Gaines. 16 MR. GAINES: Thank you. 17 I think maybe where we're headed with this 18 is an opportunity for not only outreach to our 19 districts on this issue and other issues, perhaps in 20 the form of townhall meetings, but also panel 21 discussion, where you can bring people together on 22 both sides of the issue. 23 MS. FLEMING: Mm-hm. 24 MR. GAINES: And I think that's what you're 25 talking about, Tony. 26 MR. VAZQUEZ: Yeah. 27 MR. GAINES: Perhaps is bring kind of all 28 parties and let them present, and then we're 35 1 educating ourselves, and we're educating our 2 constituents through that process. 3 MS. FLEMING: Yes. 4 MR. GAINES: Thank you. 5 MS. FLEMING: Thank you. 6 MS. COHEN: All right. Colleagues, I don't 7 want to dominate the entire presentation of the 8 Executive Director, but if you have any questions. 9 Does anyone have any other questions that 10 are on the topics that we discussed, topics that we 11 have not discussed, please -- 12 MR. GAINES: In conclusion? 13 MS. COHEN: Absolutely. 14 MR. GAINES: Yeah. I just want to thank 15 Brenda for coordinating. Because there's a lot of 16 pieces to the puzzle. And so you're working with 17 CDTFA, you're working with the administration, you're 18 working internally. 19 MS. FLEMING: Yes. 20 MR. GAINES: And also with CalHR. I mean, 21 there's a lot of -- 22 MS. FLEMING: A lot of players. 23 MR. GAINES: -- different players. So I 24 just appreciate the way you're moving forward -- 25 MS. FLEMING: Thank you. 26 MR. GAINES: -- in a methodical way. I 27 think we're -- I can see the progress, so I'm 28 encouraged by that. 36 1 MS. FLEMING: Thank you. I appreciate it. 2 MR. GAINES: So thank you. 3 MS. FLEMING: Kudos to the staff who are -- 4 I can sit here and tell you about what's going on -- 5 MR. GAINES: Absolutely. Yeah. 6 MS. FLEMING: -- but the lifting, a lot of 7 lifting is happening behind me. 8 MR. GAINES: The whole team. Yeah. 9 MS. FLEMING: Thank you. 10 MS. COHEN: I, too, want to just compliment 11 your leadership. We're grateful for it. 12 Particularly in this precarious time that we find 13 ourselves in. 14 MS. FLEMING: We're rebuilding. 15 MS. COHEN: Yes. 16 MS. FLEMING: But we will rebuild and we'll 17 modernize at the same time. We recognize the sky is 18 the limit in terms of opportunities ahead of us. 19 The more time I spend with the assessors, 20 with my staff, and with the assessors, there is a lot 21 there for us to focus on in terms of leadership for 22 the Board of Equalization going forward. So I look 23 forward to working with this Board to achieve those 24 objectives. 25 MS. COHEN: As we close out, you -- you 26 presented a lot of good things, I'm curious to know 27 if there's any -- I don't want to say bad things -- 28 MS. FLEMING: No, ma'am. 37 1 MS. COHEN: But things that concern you that 2 you do want to bring to our attention. 3 You know, oftentimes directors come and 4 present a rosy picture. But I just want to give an 5 equal opportunity to both the good and the challenges 6 that we may be facing ahead of us. 7 MS. FLEMING: I think the greatest challenge 8 that I'm having right now is really the -- if I put 9 things in the framework, which is in the framework of 10 red, yellow, green. 11 MS. COHEN: Mm-hm. 12 MS. FLEMING: Green being that things are 13 going well, we can continue to move forward. Yellow 14 are things that we should pay more attention to, to 15 either correct or, you know, revise or pause. And 16 then reds are things, like, you know, there's a 17 problem, and we should drill down on it. 18 If there's anything in that yellow to red 19 zone right now is the gap that I'm getting my arms 20 wrapped around for the -- for the delegation. And 21 really there's a lot more inside there than I had 22 hoped. 23 MS. COHEN: Okay. 24 MS. FLEMING: So just candidly, we've got 25 some work to do. And the challenge that's going to 26 be there is that I'm going to need a lot of my 27 management team to work with me to achieve that, and 28 they are quite busy. Because they're, you know, 38 1 doing the work, and then they're heavy in 2 recruitments. And recruitments take time. Sometimes 3 I don't even talk to them for awhile, because 4 everybody is off-line doing recruitments. 5 So I think that's the greatest challenge, if 6 I had a red. And it's nothing that's going to impact 7 our ability to keep work moving. We still are going 8 to achieve that. It just takes a little bit more 9 time. And I'm pretty optimistic about almost 10 everything, so that one put a little kink in my plan. 11 MS. COHEN: All right. I appreciate that. 12 Thank you. 13 I just want to check in with our guest. I 14 don't think he's here yet. 15 MS. FLEMING: I'm supposed to meet him 16 outside. 17 MS. COHEN: Thank you for your presentation. 18 We're grateful. 19 ---o0o--- 20 21 22 23 24 25 26 27 28 39 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, Jillian Sumner, Hearing Reporter for 8 the California State Board of Equalization, certify 9 that on July 30, 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 40 14 constitute a complete and accurate transcription of 15 the shorthand writing. 16 17 Dated: January 8, 2020 18 19 20 ____________________________ 21 JILLIAN SUMNER, CSR #13619 22 Hearing Reporter 23 24 25 26 27 28 40