BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 450 N Street, Room 121 Sacramento, California REPORTER'S TRANSCRIPT MAY 27, 2009 STATE ASSESSED PROPERTIES VALUE SETTING Reported by: Beverly D. Toms No. CSR 1662 1 1 2 P R E S E N T 3 4 For the Board Betty Yee of Equalization: Chair 5 Judy Chu 6 Vice-Chair 7 Bill Leonard Member 8 Michelle Steel 9 Member 10 John Chiang State Controller 11 Diane Olson 12 Chief, Board Proceedings Division 13 Board of Equalization 14 Staff: Ken Thompson 15 Don Jackson 16 Richard Moon 17 David Yeung 18 19 ---oOo--- 20 21 22 23 24 25 26 27 28 2 1 INDEX 2 Page 3 ELECTRIC GENERATION FACILITIES 6 4 ENERGY COMPANIES 7 5 PIPELINE COMPANIES 12 6 RAILROAD COMPANIES 13 7 RADIO TELEPHONE AND PAGING COMPANIES 14 8 INTEREXCHANGE TELEPHONE COMPANIES 15 9 WIRELESS TELEPHONE COMPANIES 16 10 LOCAL EXCHANGE TELEPHONE COMPANIES 17 11 ---oOo--- 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 1 Sacramento, California 2 May 27, 2009 3 ---oOO--- 4 MS. YEE: Okay. Very well. Good morning. We 5 will -- let's see, let me welcome our State Controller, 6 Mr. Chiang to our meeting this morning. 7 And, Ms. Olson, why don't we start with the 8 State Assessed Properties Value Setting. 9 MS. OLSON: Okay. Good morning, Madam Chair 10 and Members. The State Assessee Property Value Setting 11 process is as follows: 12 The Chair will announce the name of each 13 industry group. Each industry group will be completed 14 before moving on to the next group. 15 If there are members of the public signed in to 16 speak on the industry group, the Chair will announce the 17 names. Please come forward and take a seat to the right 18 facing the dais. If no one has signed in, the Chair 19 will ask if anyone would like to speak. 20 Three minutes has been allocated per speaker. 21 After the speakers' presentation -- presentations have 22 concluded, the Chair will ask the Members if there are 23 any items to be pulled for that industry. The Chair 24 will then ask for a motion on the remaining consent 25 items. Following the Board's decision on the consent 26 calendar the Chair will request a motion from the 27 Members on the pulled items. 28 Finally, the Chair will call for a motion on 4 1 the non-consent items. 2 Madam Chair. 3 MS. YEE: Thank you very much. 4 ---oOo--- 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 1 ELECTRIC GENERATIONFACILITIES 2 MS. YEE: All right, Members, our first 3 industry group is Electric Generation Facilities. We 4 have a number of items here. I believe 44 of our 5 assesses are on the consent calendar. 6 Any items that Members wish to pull off 7 consent? 8 Okay. Hearing none, is there a motion? 9 MR. CHIANG: Move consent. 10 MS. YEE: Okay. Motion by Controller Chiang. 11 Is there a second? 12 DR. CHU: Second. 13 MS. YEE: Second by Dr. Chu. 14 Without objection, consent calendar is adopted. 15 Okay. And then with respect to the non-consent 16 items, we have -- let's see. 17 MR. CHIANG: Move staff recommendation. 18 MS. YEE: Okay. Is that for all remaining 19 items, Mr. Chiang? 20 MR. CHIANG: Yes. 21 MS. YEE: Okay. We have a motion to adopt the 22 staff recommendation for the remaining items not on 23 consent. 24 Is there a second? 25 DR. CHU: Second. 26 MS. YEE: Second by Dr. Chu. 27 Without objection, such will be the order. 28 Thank you. 6 1 ---oOo--- 2 ENERGY COMPANIES 3 MS. YEE: Okay. Our next item is -- next 4 industry is Energy Companies. We have 29 of the 5 assessees that are on the consent calendar. 6 Are there any assessees that Members wish to 7 pull off of consent? 8 Okay. Hearing none, is there a motion? 9 MR. CHIANG: Move staff recommendation. 10 MS. YEE: Motion by Controller Chiang to adopt 11 the staff recommendation. 12 Is there a second? 13 DR. CHU: Seocnd. 14 MS. YEE: Seconded by Dr. Chu. 15 Without objection, that motion carries. 16 Then we have, I believe -- let's see, is this 17 a -- okay, then we have the items not on consent. 18 What -- I would request that we pull item 5, 19 Pacific Gas and Electric Company and discuss that one 20 separately. 21 Any other items that Members would like to 22 discuss individually? 23 Okay. Hearing none, is there a motion on the 24 remaining items not on consent? 25 DR. CHU: So moved. 26 MS. YEE: Motion by Dr. Chu -- 27 MR. CHIANG: Second. 28 MS. YEE: -- second by Controller Chiang to 7 1 adopt the staff recommendation. 2 Is there any objection? 3 Hearing none, such will be the order. 4 Going back to item 5, Pacific Gas and Electric 5 Company, I believe, Members, we have all received this 6 letter. It came in -- actually, provided by Board 7 Proceedings yesterday evening from Engineers and 8 Scientists of California, Local 20, that raised a number 9 of issues. And I just wanted to pose a question to 10 staff with respect to -- I'm not interested in holding 11 up, obviously, the value setting today for PG&E, but 12 will there be an opportunity to look at some of the 13 issues that have been raised in this letter, subsequent. 14 MR. THOMPSON: Yes, we received -- received the 15 letter last night and a couple of the issues were not 16 addressed in -- in the appraisal. And we -- we use the 17 opportunity after the value setting to -- to have an 18 audit of the company and look into those issues. 19 MS. YEE: Okay. And the time frame for such an 20 audit? 21 MR. THOMPSON: We -- we would -- we can get the 22 letter out soon. We usually allow 30 days before the -- 23 the audit would start. And then it really depends on 24 the -- the scope and -- and the bredth of the field work 25 and what the findings will be as to how long it would 26 take to complete the audit. 27 MS. YEE: Okay. Very well. Members, I'd -- 28 I'd like to move the staff recommendation for this item 8 1 and also direct the staff to conduct an audit so that 2 these issues that have been raised can be more 3 thoroughly examined. 4 Is there a second? 5 DR. CHU: Second. 6 MS. YEE: Second by Dr. Chu. 7 Discussion? 8 MR. LEONARD: Just a question. 9 MS. YEE: Mr. Leonard. 10 MR. LEONARD: Just in terms of our process then 11 the -- the audit results might result in an escape 12 assessment being proposed by the Department. 13 MR. THOMPSON: Well, the -- the result of any 14 audit may result in an escape assessment or it may 15 result in -- 16 MR. LEONARD: That's how we deal with a new -- 17 a new number that was developed, is what I'm asking. 18 MR. THOMPSON: Yes. 19 MS. YEE: Yes. 20 MR. THOMPSON: Well, it's possibly -- if it's a 21 factual situation. If it's a judgment situation, we 22 generally don't bring those issues up on -- on an audit. 23 But we -- we generally make the -- the changes 24 prospectively going forward. 25 But the result of any audit could result in 26 either an escape or an excessive assessment adjusting 27 the value of -- staff's recommendation of value that was 28 adopted by the Board. 9 1 MR. LEONARD: On the point of -- of the Chair, 2 is would the issues raised in this letter be addressed 3 in the audit or are they judgment issues as opposed to 4 evidence issues? 5 MR. THOMPSON: Well, there are three major 6 issues, and -- and one of them is related to -- to 7 financial issues that definitely would be addressed in 8 any audit. 9 The other two issues are -- we really don't 10 know right now. We have to look into them and see 11 whether the -- either the major H issue or with -- 12 having to do with the allocation of San Francisco or 13 the -- 14 MR. LEONARD: Right. 15 MR. THOMPSON: -- the value of land would have 16 an impact on the audit. So, it's too early to tell. 17 MR. LEONARD: You will look at all of those, is 18 what you're saying? 19 MR. THOMPSON: Yes. 20 MR. LEONARD: Okay. I thought you said you 21 distinguished between judgment and evidence, factual 22 evidence. 23 MR. THOMPSON: Well, it -- during our audit 24 process we sometime look at judgmental issues, but as 25 whether the -- the distinction is whether we would 26 recommend an escape based on judgmental issues. We 27 would probably do our research and use that information 28 in -- in future assessments. 10 1 MR. LEONARD: Okay. Gotcha. 2 MS. YEE: Very well. 3 Thank you very much, Mr. Thompson. 4 Thank you, Mr. Leonard. 5 We have a motion by Yee, seconded by Dr. Chu. 6 Without objection, that motion carries. 7 Thank you. 8 ---oOo--- 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11 1 PIPELINE COMPANIES. 2 MS. YEE: Okay. Our third industry group is 3 Pipeline Companies. We have in this industry group 27 4 companies that are on the consent calendar. 5 Are there any items that Members wish to pull? 6 Okay, I believe on this -- in this particular 7 industry group, Ms. Steel, you have some 8 non-participations. 9 MS. STEEL: I have non-consent items, that 10 465, 467, 484, 486 and 488, because of potential 11 financial conflict. 12 MS. YEE: Okay, these are not -- these are -- 13 MS. STEEL: They're on consent. 14 MS. YEE: Okay. Very well. So, with respect 15 to the consent calendar is there a motion? 16 MR. CHIANG: Staff recommendation. 17 MS. YEE: Okay. Motion by Controller Chiang to 18 accept the recommendation, second by Dr. Chu. 19 With the noted non-participation by Ms. Steel 20 on -- without objection, that motion carries. 21 Okay. Then for the remaining items not on 22 consent -- actually, one item not on consent, Pacific 23 Pipeline System, LLC, is there a motion? 24 MR. CHIANG: Move column G. 25 MS. YEE: Okay. Motion by Controller Chiang to 26 move the staff recommendation. 27 Is there a second? 28 DR. CHU: Second. 12 1 MS. YEE: Seconded by Dr. Chu. 2 Without objection that motion carries. 3 ---oOo--- 4 RAILROAD COMPANIES 5 MS. YEE: Okay. Our fourth industry group is 6 our Railroad Companies. We have 29 companies that are 7 on the -- I'm sorry, we have 27 companies that are on 8 the consent agenda. 9 Any items Members wish to pull off consent? 10 Hearing none, is there a motion? 11 MR. CHIANG: Move staff recommendation. 12 MS. YEE: Motion by Controller Chiang to adopt 13 the staff recommendation. 14 Is there a second? 15 DR. CHU: Second. 16 MS. YEE: Second by Dr. Chu. 17 Without objection that motion carries. 18 Okay. The remaining items not on consent. 19 Central Oregon and Pacific Railroad, and Pacific Sun 20 Railroad, LLC, is there a motion? 21 MR. CHIANG: Staff recommendation. 22 MS. YEE: Motion by Controller Chiang to adopt 23 the staff recommendation. 24 Is there a second? 25 Second by Dr. Chu. 26 Without objection, that motion carries. 27 ---oOo--- 28 13 1 RADIO TELEPHONE AND PAGINGCOMPANIES 2 MS. YEE: Okay. Our fifth industry group, 3 Radio Telephone and Paging Companies. We have all 8 4 items here on consent. 5 Any items Members wish to pull off consent? 6 Okay. Hearing none, is there a motion? 7 MR. CHIANG: Staff recommendation. 8 MS. YEE: Motion by Controller Chiang to adopt 9 the staff recommendation. 10 Second by Dr. Chu. 11 Without objection that motion carries. 12 ---oOo--- 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14 1 INTEREXCHANGE TELEPHONE COMPANIES. 2 MS. YEE: Okay. Next industry group, 3 Interexchange Companies -- telephone Companies. We have 4 here 165 of the assessees are on the consent agenda. 5 Any items Members wish to pull off consent? 6 Okay. Hearing none, is there a motion? 7 MR. CHIANG: Staff recommendation. 8 MS. YEE: Motion by Controller Chiang to adopt 9 the staff recommendation. Second by Dr. Chu. 10 Without objection, that motion carries. 11 The remaining items not on consent -- 12 MR. CHIANG: Staff recommendation. 13 MS. YEE: Okay. Motion by Controller Chiang to 14 adopt the staff recommendations. Second by Dr. Chu. 15 Without objection that motion carries. 16 Thank you. 17 ---oOo--- 18 19 20 21 22 23 24 25 26 27 28 15 1 WIRELESS TELEPHONECOMPANIES 2 MS. YEE: Okay. Next industry group, Wireless 3 Telephone Companies. We have 26 of the assessees on the 4 consent calendar. 5 Any items Members wish to pull off consent? 6 Hearing none, is there a motion? 7 MR. CHIANG: Staff recommendation. 8 MS. YEE: Motion by Controller Chiang to adopt 9 the staff recommendation. Second by Dr. Chu. 10 Without objection that motion carries. 11 And we have then five items that are not on 12 consent. 13 MR. CHIANG: Staff recommendation. 14 MS. YEE: Okay. Motion by Controller Chiang to 15 adopt the staff recommendation. Second by Dr. Chu. 16 Without objection that motion carries. 17 ---oOo--- 18 19 20 21 22 23 24 25 26 27 28 16 1 LOCAL EXCHANGE TELEPHONE COMPANIES. 2 MS. YEE: Okay. Our last industry group, Local 3 Exchange Telephone Companies. We have 19 assessees on 4 this calendar. All are on consent. 5 Any items Members wish to pull off consent? 6 Hearing none, is there a motion? 7 MR. CHIANG: Staff recommendation. 8 MS. YEE: Motion by Controller Chiang to adopt 9 the staff recommendation. Second by Dr. Chu. 10 Without objection, that motion carries. 11 Very well. Thank you, Members. Thank you, 12 staff, very much for the work in bringing us to this 13 point. 14 Thank you. 15 ---oOo--- 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, BEVERLY D. TOMS, Hearing Reporter for the 8 California State Board of Equalization certify that on 9 May 27, 2009 I recorded verbatim, in shorthand, to the 10 best of my ability, the proceedings in the 11 above-entitled hearing; that I transcribed the shorthand 12 writing into typewriting; and that the preceding 17 13 pages constitute a complete and accurate transcription 14 of the shorthand writing. 15 16 Dated: June 20, 2009. 17 18 19 ____________________________ 20 BEVERLY D. TOMS 21 Hearing Reporter 22 23 24 25 26 27 28 18