1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 REPORTER'S TRANSCRIPT 8 NOVEMBER 17, 2009 9 10 11 LEGISLATIVE COMMITTEE 12 ITEM III FINAL STATUS OF PROPOSALS 13 FOR BOARD-SPONSORED LEGISLATION IN 2009 14 15 16 17 18 19 20 21 Reported by: Juli Price Jackson 22 No. CSR 5214 23 24 25 26 27 28 1 1 2 P R E S E N T 3 4 For the Board Jerome E. Horton of Equalization: Chair 5 6 Betty T. Yee Vice-Chair 7 Bill Leonard 8 Member 9 Michelle Steel Member 10 Marcy Jo Mandel 11 Appearing for John Chiang, State Controller 12 (per Government Code Section 7.9) 13 Diane G. Olson 14 Chief, Board Proceedings Division 15 16 17 ---oOo--- 18 19 20 21 22 23 24 25 26 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 NOVEMBER 17, 2009 4 ---oOo--- 5 MS. SHEDD: The next item on the agenda is 6 Roman numeral III. This is the final status of 7 proposals for Board-sponsored legislation in 2009. 8 There's a summary of date of that attached to 9 the agenda. And if there's any questions on any of 10 these items, I'd be happy to answer them. 11 MS. YEE: Mr. Chairman? 12 MR. HORTON: Yes? 13 MS. YEE: I've got comments or questions on two 14 of the items. 15 MR. HORTON: Please? 16 MS. YEE: First one is proposal 3-3, which is 17 AB 347 Block, that's actually numerated on page 4 of 8 18 of the matrix. 19 MR. HORTON: Okay. 20 MS. YEE: Okay. I note that the bill is 21 currently on the Assembly inactive file. And this is 22 the bill that imposes the penalty for taxpayers failing 23 to timely furnish records during an audit. 24 And this relates to the rulemaking process we 25 currently are going through right now that will be the 26 subject of the Business Taxes Committee. 27 But what I would like to suggest, or entertain 28 for discussion today, is actually amending the bill to 3 1 delete the 25 percent penalty provision. 2 I've been heartened and, actually, very pleased 3 with the progress that's been made on the regulation and 4 appreciate all of the interested parties coming together 5 and helping to craft a regulation that I think will 6 certainly work with respect to identifying and laying 7 out expectations of all parties to an audit as it 8 relates -- particularly as it relates to this issue 9 about the timely furnishing of records and would like to 10 actually ask the Board to abandon the 25 percent penalty 11 proposal at this point, but to look at exploring whether 12 we may need further strengthening, bolstering, 13 clarification of our existing subpoena authority, to the 14 extent that I understand our districts have been 15 reluctant to use that -- either because it's too 16 cumbersome or just not an easy tool to use in the event 17 that that is necessary as a last resort. 18 So, that is my suggestion. 19 MR. HORTON: Thank you. 20 Any comments from staff regarding that? How do 21 we go about accomplishing that? 22 MS. SHEDD: Well, your motion is to amend the 23 bill to delete the 25 percent penalty? 24 MS. YEE: Right. 25 MS. SHEDD: And then move it off the inactive 26 file? 27 MS. YEE: Well, I think we probably need to 28 have something substantive in there. 4 1 And my question really is -- or my direction 2 back to, Ms. Shedd, you and probably the Legal 3 Department and the Sales Tax Department, is to see 4 whether there is any additional statutory revisions that 5 are required -- that may be desired to be able to allow 6 the existing subpoena authority to be a more useful 7 tool. 8 The feedback that I think I have gotten from 9 the experience of some of our districts is that they're 10 reluctant to use the subpoena authority because of the 11 cumbersome nature of it. 12 MS. SHEDD: Why don't we explore that -- bring 13 it back for discussion in December? 14 Because if we do want to move this bill, it has 15 to clear the Assembly by January 31st. 16 MS. YEE: Right. 17 MS. SHEDD: So, we do have that deadline. 18 So, why don't we talk to the staff and bring it 19 back in December and see if the Board wants to look at 20 an amendment? 21 MR. HORTON: Okay. So, unless there is an 22 objection, we'll just carry this over -- 23 MS. SHEDD: Yes. 24 MR. HORTON: -- to December? 25 I don't think we need a motion on that, do we? 26 MS. YEE: No. I just wanted to, at least, put 27 forth that I would like to see the penalty provision 28 removed. 5 1 MS. SHEDD: Okay. 2 MR. LEONARD: Mr. Chairman? 3 MR. HORTON: Yes, sir? 4 MR. LEONARD: To Ms. Yee, is someone going to 5 talk to Mr. Block between now then so he's got a 6 heads-up on it? 7 My concern would be -- he may have fallen in 8 love with his bill. 9 MS. YEE: I think a lot of people have fallen 10 in love with the bill -- that's the problem. 11 MR. LEONARD: And our request may not -- may 12 not -- may just add to the stack. 13 MS. YEE: Well, my hope is that as we look at 14 the issue before the Business Taxes Committee, that 15 certainly reporting on progress being made on the 16 regulation and really hoping to allow some time for that 17 regulation to work and be implemented, would then be a 18 good rationale for at least amending the bill. 19 But we -- yes, if you could have that 20 conversation, I think that would be -- 21 MS. SHEDD: Yes, I would be happy to. 22 MR. LEONARD: Thank you. 23 MS. YEE: Thank you, Mr. Leonard. 24 MR. LEONARD: Thank you. 25 MR. HORTON: Next item, please? 26 MS. SHEDD: Ms. Yee, I think you had another 27 bill that you wanted to talk about? 28 MS. YEE: I am sorry, AB 151. This is 6 1 suggestion 5-3, related to our building issue. 2 I know that that was amended late in the 3 legislative year and just wanted to get your sense of 4 what the immediate disposition of the bill might be? 5 MS. SHEDD: The bill is currently in 6 Appropriations. 7 I've talked to Assemblyman Jones' office, who's 8 now the author of this bill. It provides authorization 9 for DGS to entertain negotiations and other bids or to 10 explore what the marketplace is to sell this building. 11 At this point I'm recommending that we take it 12 back to the appropriate policy committee as the bill is 13 written. 14 And then move it off the floor by the January 15 31st deadline. 16 And when we get to the Senate, we get down to 17 the real work, working with the budget committees to see 18 what is, in fact, doable with the Department of Finance, 19 DGS and the budget committees to resolve the building 20 issue. 21 MS. YEE: Okay, all right. 22 I think that makes sense, given our discussion 23 at the last Board meeting relative to the related budget 24 change proposal on the building. 25 That's okay. 26 Thank you. 27 MR. HORTON: Nothing? 28 Members, let me share -- 7 1 MR. LEONARD: Do we want a motion to strip out 2 the appropriation -- ask Mr. Jones to strip out the 3 appropriations so that he can more expeditiously move 4 the bill through the Senate? 5 MS. SHEDD: There's no appropriation on the 6 bill now. It has no money. 7 MR. LEONARD: Okay. So, we're not on suspense 8 in apropos (verbatim) for that? 9 MS. SHEDD: No, it was in Appropriations when 10 it was -- before the gun. 11 MR. LEONARD: Okay, gotcha, thank you. 12 MR. HORTON: Part of my concern is that we're 13 authorizing DGS to explore the possibility of taking an 14 action. 15 The concern goes back to DGS, not -- I am 16 trying to pick my words here -- DGS not performing the 17 appropriate evaluation of the various buildings under 18 control of the State to determine the economic 19 productivity, the environmental impact, the overall 20 effectiveness of the building. 21 I've had an opportunity to visit several 22 different offices. And one in particularly with the 23 support of Ms. Steel and approval of Ms. Steel, I was 24 able to go and visit the San Diego office. 25 And I tell you, the -- it was -- it's very 26 embarrassing the way that office looks. It's very 27 concerning about the asbestos that exists in the ceiling 28 as well as the floor. And the building is located in a 8 1 prime real estate area. 2 You have condominiums that are 700 square feet 3 that are selling for $400,000. So, that's indicative 4 that that's a very solid market and that an economic 5 analysis might yield different decisions relative to how 6 we move forward with that piece of real estate. 7 And, so, the concern goes to, are we -- when I 8 say "we," is the State being very fiscally conscious 9 about how they manage their real estate? 10 And, so, with that in mind, you know, you sort 11 of hate to dictate to another agency what they should 12 and shouldn't do. But when it starts to mount up to 13 millions and millions of dollars and costs to the State 14 of California and the potential risk to the health and 15 welfare of our employees. 16 Then, you know, maybe discussion needs to be 17 taking place or some disclosure needs to be provided to 18 the legislature and to the Governor that we're not being 19 as effective as we could in managing these properties. 20 And the State may be incurring some potential loss as a 21 result of our failure to make the appropriate 22 evaluation, economic evaluations, prior to making some 23 of these decisions on whether or not to sell, remodel, 24 relocate. 25 And if I took the two in particular, the 26 San Diego office and the Sacramento office, it seems to 27 me that we are incurring multiple millions of dollars 28 because of our failure to evaluate the situation -- not 9 1 ours, but because of another agency's failure to make te 2 appropriate economic and environmental evaluations on a 3 timely basis. 4 That seems to be the case in San Diego as well. 5 Members, the carpet there was like a botched up surgery 6 of some sort. I almost tripped over the carpet myself. 7 It looks like it's about 50 years old. There is lumps 8 in it. The asbestos, they're afraid to change the light 9 because they might trigger or release the contaminants 10 into the air. 11 It's very concerning, to some degree, to me. 12 And particularly when it's in a -- it's in a real estate 13 market where we could probably tear the building down, 14 build a 23-story high-rise, consolidate all of the State 15 agencies in the San Diego area into one. 16 What have we accomplished in doing that? 17 Well, at the end of the day we make money, by 18 virtue that we're no longer paying lease receipts for 19 all of the other State agencies. We create a more 20 comfortable working environment for our employees, which 21 I think is important. We minimize the risks of them 22 contracting cancer somewhere down the road. 23 I know Legal probably doesn't want me saying 24 that, but -- my apologies. 25 It's just -- I guess I am saying all this to 26 say that I'm very concerned, not only for the employees, 27 but I'm also concerned for the State of California. 28 If we're making -- if we're not, at least, 10 1 studying these matters, we're not authorized to take 2 the -- be deliberative in our discussion or assessment 3 of our properties that are out there, then we're losing 4 millions of dollars. 5 And we're losing opportunities to maximize the 6 potential for the State of California. And during a 7 time when universities are shutting down their 8 classrooms and the legislature's having to make some 9 tough decisions, I don't know if we can afford to 10 continue to operate this way. 11 So, my concerns relative to the legislation 12 is -- it simply says, you can entertain the possibility, 13 I think, DGS, prior to -- should have some method of 14 deferred maintenance in their original assessment. And 15 they should have some assessments somewhere along the 16 lines. And they should have some liability for a failed 17 decision and that liability should not be shifted to the 18 Board of Equalization or any other State agency. Not 19 because we're not one integral agency, State of 20 California, but because liability breeds accountability. 21 And if this was any other landlord, quite 22 frankly, it would make -- the decisions might be quite a 23 bit -- quite a bit different. 24 And, so, it's unfortunate that I'm having to 25 say that we have to codify character and culture and in 26 law I don't think we should do that. But at some point 27 we've got to get this under control. 28 This is only two examples. I would imagine if 11 1 this exists, from a policy perspective, 1, policy being 2 that you don't have deferred maintenance and you don't 3 have an account for deferred maintenance; 2, you don't 4 make an economic assessment as to whether it's 5 economically beneficial and productive and profitable to 6 continue to operate this way. It's not required. And 7 you're not making health assessments for the employees, 8 well, you know, there is a little concern there 9 because -- those requirements don't exist. 10 And I mean I would defer to my to staff as to 11 how we accomplish this, whether we codify in law, 1, we 12 make a public disclosure of our concerns and let the 13 legislature and the Governor do what they will with this 14 or we sit down and have discussions with DGS about going 15 forward as an agency. 16 But I'm not only concerned as an agency, I'm 17 concerned as a representative of the people of the State 18 of California and how any agency might be allowed to 19 continue to operate the way that this seems to have 20 occurred. 21 Just a comment. 22 Any response from staff? 23 MS. HOUSER: Liz Houser, Director of 24 Administration. 25 First, I very much welcome your participation 26 in discussions with Department of Finance and DGS on 27 trying to resolve this matter. 28 We have been discussing the 450 N Street 12 1 building and the San Diego building issues with -- not 2 only DGS, but the State Consumer Services agency, to 3 whom DGS reports to, the Department Finance up to the 4 director level and we've held -- there was Senate 5 Special Committee held on the issue at the 450 N Street 6 building. 7 I think everyone agrees that ideally it would 8 be nice to get the San Diego building sold. It's 9 supposed to have been sold for the last ten years that 10 I'm aware of. 11 MR. HORTON: If I may interrupt? 12 I don't know if I'd sell it. I mean, I might 13 suggest that they tear it down and then rebuild it. 14 I mean, it's five stories now, and you could 15 probably tack on another 15 stories and get away with 16 it. And if you do the multiplying, the math, maybe the 17 State's not in the business of making money, but this 18 certainly would be a nice venture for the State of 19 California. 20 And it's my understanding that there are other 21 State offices in and around California that could be 22 moved downtown. They're centrally located. We have a 23 one stop shop and we're generating a profit. 24 And, so, it is not the State's intent to make a 25 profit, we just donate the money or reduce the lease or 26 something. 27 But it certainly is not the intent to lose 28 money. But, I mean, that's just an aside. 13 1 MS. HOUSER: I think there's a lot of options 2 with the San Diego property. We just need someone to do 3 something. 4 This has been an ongoing discussion with us and 5 DGS for a number of years. As late as -- as early as 6 last week I was sitting with Finance discussing, once 7 again, why, you know, we have BCPs going forward to try 8 to move BOE out of this building and out of the 9 San Diego building. 10 The carpet issue -- why would we want to put 11 another $160,000 in carpet in the San Diego building, 12 which what some of the prices are starting to look like? 13 MR. LEONARD: Asbestos. 14 MS. HOUSER: Because of the asbestos abatement 15 to do it, when the cost to move out us out is around 16 300,000. 17 So, it's -- it's kind of -- it doesn't make 18 sense for us to continue to try to solve their building 19 problem at San Diego. 20 It's -- it's a difficult path for BOE because, 21 you know, we're kind of the tenants assigned to these 22 buildings. It's not our core business to try to resolve 23 the building issue. 24 But we are being pulled into having to resolve 25 the building issues because we're not allowed to leave 26 the buildings without finding a backfill tenant, or we 27 have to continue to pay the rent at the buildings 28 because of the way the Government Code is written. 14 1 So, I think there is lots of room for 2 improvement in the current system and in how the 3 deferred maintenance is handled. As you've pointed out, 4 they don't have adequate funding to actually perform all 5 of the deferred maintenance in the buildings. They 6 provide a bill to the State offices who are assigned to 7 the buildings when they finally do get around to doing 8 the deferred maintenance. 9 In the case of this building, where there was 10 extensive work, BOE has had to identify funding for the 11 last two or three fiscal years to pay for this ongoing 12 repair, as no new monies were provided to us through any 13 budgetary process. 14 So, if you amortize what we're actually paying 15 per square foot in rent, I think we could have the 16 penthouse of most of the large buildings around here. 17 When you take our square foot, about two bucks 18 a square foot and then add another 10 million to 14 19 million a year on top of that, it -- we don't have a 20 deal. Let's just say it's not a good deal. 21 So, I welcome your participation in these 22 discussions. I do agree with Ms. Shedd's recommendation 23 that we do need to get that bill out of Assembly. We 24 have been working for the last two years to try to get 25 any sort of forward movement and this is the first time 26 we've actually had a bill in play that would begin that 27 first process. 28 The economic analysis, we have asked for that 15 1 through both Finance and DGS because we feel there is 2 a point here where you need to stop throwing money at 3 the problem and really look at the problem and have a 4 true assessment done. 5 If this bill accomplishes nothing else but to 6 start that first step, it will be, in my opinion a first 7 step in the correct direction. Because all we're doing 8 right now is continuing to throwing -- throwing money at 9 the symptoms, we're not really looking at the problem. 10 I think, Mr. Horton, you have framed the 11 problem perfectly. We have an issue with lack of 12 deferred maintenance funds to address State-owned 13 properties. So, those properties have a lot of work 14 that needs to be done on them and no source of funds 15 easily available. And there's no funds available in the 16 overall general fund to address this now. 17 And it's all coming to head at a very, very 18 difficult fiscal time for the State. But it still needs 19 to be addressed because it's not going to go away this 20 year or in ten years. It's going to continue to 21 escalate as other buildings continue to age. 22 And if you don't do repair on your building, 23 it's just like your home. If you don't put a new roof 24 on it, if you don't upgrade the HVAC, it's going to fall 25 apart. 26 So, I do welcome your participation. And I do 27 hope the Board will continue to support us moving this 28 bill forward to at least start that first step to -- to 16 1 look at getting authority for BOE to be able to leave 2 this building. 3 MR. HORTON: I'm a little lost as to what the 4 solution is. 5 We've got legislation that really Department of 6 Finance should probably be moving the legislation to 7 give them the authority to be accountable to California 8 taxpayers. They don't have that authority. 9 Or maybe, possibly, administratively they 10 should be doing this. 11 My understanding of the law is that they don't 12 have -- they need the authority from the legislature in 13 order to sell the building; is that correct? 14 MS. HOUSER: That's correct. They need 15 authority -- according to DGS, they need authority to 16 even begin discussions about a possible sale of the 17 building, which is what they asked -- they agreed would 18 be an appropriate first step. 19 MR. HORTON: Do they need authority to do an 20 economic analysis of the property that they currently 21 own? 22 MS. HOUSER: They need either authority or 23 funding identified through a BCP process. DGS is 100 24 percent reimbursable, which means they don't -- do not 25 have any base budget. All of the work that they do is 26 reimbursed through bills -- billings to tenants, such as 27 ourselves. 28 MR. HORTON: Do they see the need for that 17 1 authority? 2 I mean -- I mean, does DGS acknowledge that 3 they would like to have that authority? That, at a 4 minimum, the authority to do an economic analysis of the 5 property currently owned by the State of California? 6 MS. HOUSER: DGS has a new director as of this 7 month and we have not had an opportunity to brief him on 8 this yet. So, I can't speak for where DGS sees -- sees 9 their need in regard to this building. 10 Their current plan would be to continue the 11 floor by floor remediation. They seem to be quite 12 satisfied with that approach. 13 MR. HORTON: Well, such that I'm new on the 14 Board, I would kind of like to hear from my colleagues, 15 if I can, and I'm asking for some guide guidance on a 16 solution, approach. I certainly have my own style of 17 dealing with this type of problem. 18 And I would share that I believe in disclosure, 19 transparency. And I believe in shifting responsibility 20 to where it's supposed to be. 21 We're making decisions and taking on the 22 responsibility of identifying solutions and we're really 23 not the agency that is -- has the liability here, aside 24 from our potential liability, which I believe we've 25 addressed by acting affirmatively to resolve the matter 26 and to be very protective of our staff and protective of 27 the monies that people of California has entrusted the 28 Board of Equalization. 18 1 But we can't necessarily say that about the 2 other agencies that are involved. And, so, Members, if 3 you have any comments, I certainly would like to hear 4 those? 5 MS. YEE: Mr. Chairman? 6 Go ahead. 7 MR. HORTON: Mr. Leonard? 8 MR. LEONARD: Right on, keep asking those 9 questions. 10 It's my personal opinion that the Department of 11 General Services is happy with the current situation. 12 They should be totally disgusted. But, nevertheless, 13 they either have bigger problems, which I'm not aware 14 of, or they don't see this is an issue. 15 Where they want to move, they've been very 16 aggressive in other State buildings and other properties 17 in selling them for budgetary reasons and remodeling 18 them or relocating the staff as necessary. 19 For us, they have not. They have asked for 20 advance authority and money every time. And it's put us 21 in the box, as you've pointed out, that we're -- we're 22 not -- we're a tenant with not even a power to walk 23 away, which puts us as a tenant in a very, very 24 difficult position to make any kind of changes to 25 protect our employees, to get better service to the 26 public, both in this building and the San Diego 27 building. 28 I -- it -- this bill now is the fount of our 19 1 hopes, that by getting the legislature to go on record 2 and saying they want to do something -- and you're 3 exactly right, it needs to drop all of the passive and 4 the weak words and put in some very strong mandates to 5 General Services -- nevertheless, that's kind of what we 6 negotiated with them to this point. 7 I think as the bill moves along and we get the 8 legislature better educated, it would be worth 9 discussing with our legislative friends about some 10 stronger language to impress upon General Services the 11 need to act expeditiously. 12 And you're also exactly right, if you have done 13 an economic study of this building, I have continually 14 argued that this has potentially a usable building. But 15 it needs to be emptied and completely -- completely 16 rebuilt from the inside out. And then it can be 17 reoccupied by a host of people, maybe even us, for that 18 matter. 19 But, in the meantime, we need somewhere else to 20 be. We need to locate our people. We have an 21 additional problem that, in one sense, we haven't been 22 loud enough about it, but now we are because we've 23 outgrown this building. It no longer fits our needs. 24 And, like any other State agency that needs a 25 new headquarters and has outgrown this building, we need 26 to develop our own master plan for the long range of 27 this Department. We know that there is going to be 28 modest growth in employment in this Department over time 20 1 and we know that the legislature has a habit of adding 2 new fees and they like to assign it to us to collect 3 because we do a good job. That's more employees for 4 this Department, more administration and standards to 5 that have to be housed in a building somewhere in the 6 capital city. 7 Now, how we impress that upon General Services 8 is -- is the challenge. And I, like Ms. Houser, are 9 happy to have your voice added to ours. Because I think 10 it will start to have an impact and make a difference. 11 And if you weren't appointed to this Board, I'd 12 be urging you to be appointed as the new Director of 13 General Services. 14 So, take your pick. 15 MR. HORTON: Ms. Yee? 16 MS. YEE: Thank you, Mr. Horton. 17 I think in terms of direction, this bill 18 certainly needs to continue to move forward. And as 19 Ms. Shedd had alluded to, I think we've had good 20 progress with several members of the legislature, 21 particularly those related to the budget committees to 22 really kind of take up the banner on our behalf with 23 respect to the concerns around the building. 24 And I would just encourage Ms. Houser, and I 25 know she's doing this with every conversations she's 26 having with the administration and certainly making the 27 case with her colleagues in the legislature, but this 28 economic analysis that you've referred to, I do hope 21 1 there is going to be an opportunity for that to be 2 funded and to take place in the near term. 3 And, so, whatever we can do to, hopefully, try 4 to free up some minimal funding for that purpose would 5 be very, very helpful. I think the case will be made 6 along the lines of what Mr. Leonard has suggested, that 7 there is a use for this building. We certainly have 8 outlived its -- the use of the facility. But I think 9 for the State to really take a broader look at what 10 ought to be the appropriate course for this building 11 makes sense. And, so, whatever alternative we can have 12 to try to encourage that analysis be done in return 13 would be helpful. 14 MR. HORTON: Can we -- can the legislation deal 15 specifically with two buildings or -- relative to the 16 economic analysis? 17 We've already -- my understanding is staff has 18 already done some preliminary work on determining the -- 19 the economics of the decisions that we have to make 20 relative to the building. And, so, we could just share 21 that with the legislature. 22 So, the question is, does the bill -- does it 23 specify this building? Or if we were to give general 24 direction, which I would have some hesitation -- I mean, 25 I just hate to do that to another agency -- you're not 26 doing your job, you need to do your job and here's how 27 you need to do your job and so forth -- but this may be 28 what's necessary in this case. 22 1 I just don't know if the -- I know the general 2 public may not be aware. I know the legislature is 3 aware, but I don't know if we've quantified it before, 4 $68 million is a lot of money. In San Diego I would 5 speculate that the potential of earning -- making maybe 6 somewhere around 2, $300 million would be a nice number. 7 Those numbers we can't ignore in this environment. 8 So, I mean, short of saying, "Let's hold a 9 press conference on this matter and let's go that 10 route," or call up and have a direct conversation with 11 the leadership in the Governor's office and the 12 legislature, or just simply disclose the economic 13 analysis that we have, make that information available 14 to them, which I'm presuming we're going to do. 15 I agree we should move the bill only because 16 procedurally we start modifying the bill at this point, 17 we create opposition -- not necessarily opposition, but 18 opposition that exists solely because they want, really, 19 to have further discussion and debate about the language 20 that we put in the bill, so -- and have that discussion 21 on the Senate side. So -- 22 MS. HOUSER: If I could, Mr. Horton, to try to 23 address a few of your comments? 24 In regard to, perhaps, adding the San Diego 25 building to this bill, Member Kehoe had already 26 successfully moved a piece of legislation through that 27 actually authorized the sale of the San Diego building. 28 And that was two years ago. 23 1 So, the San Diego -- DGS has been given 2 authority to sell the San Diego building and it's any 3 variety of sale you may want to do -- sell, lease back, 4 lease purchase -- you know, whatever, like our language 5 in this one. So, that authority already rests with DGS. 6 And it is our understanding that they're -- 7 they have it on their list of to be sold buildings. I'm 8 not privy to how they prioritize or how they actually 9 work that list, but they do have authority to sell that 10 San Diego building -- or do something, dispose of it. 11 Just simply -- they actually have more authority for 12 that building than we're asking for in the current 13 version of AB 151 for this building. 14 As far as making sure that the administration 15 is aware of the current economic burden they're taking 16 on in regard to this building, the $68 million number, 17 those refresh -- we periodically require a meeting with 18 the Department of Finance and the Department of General 19 Services to try to get those numbers nailed down on what 20 it's actually costing to fix this building. 21 The refresh numbers were provided to Department 22 of Finance last week. And we asked that they get a 23 meeting put together with DGS, BOE and themselves to 24 really go over these numbers and talk about where is the 25 money coming from to repair this? And this is the best 26 approach? 27 Our principle budget analyst from Finance 28 agreed that they would pull that meeting together. We 24 1 also asked that they elevate this information through 2 their chain of command, which goes into the Capitol 3 office. 4 So, that's where we are in regard to making 5 sure through the channels that we use the appropriate 6 parties are aware of their financial commitment that 7 they're either making or not making here by -- by 8 failing to act in any other manner. 9 MR. HORTON: Okay. In the current environment 10 this would be classified as a sin, but it is what it is. 11 So, I guess we entertain a motion to move the 12 bill as-is, with staff to take our discussions under 13 consideration? 14 And the bad thing is we can't -- I guess we 15 can, possibly -- let me ask my colleagues. 16 If it might be appropriate for us to 17 collectively, since we all seem to agree, collectively 18 move forward some communications to the ultimate 19 decision makers, i.e., the legislature and the 20 Governor's office, to, at a minimum, disclose what we 21 believe to be a potential loss to revenue and potential 22 hazard -- looking at legal counsel -- there relative to 23 the environmental issues, that we move something 24 collectively and being mindful of -- being mindful that 25 we want to -- I mean, I would suggest that we, 26 irrespective of the other agencies, because it just 27 seems to be something that is lost in discussion between 28 two the agencies and, for some reason, we're not getting 25 1 treated the same way as others are in resolving these 2 matters. 3 So, I think there is a question of my 4 colleagues, is it possible for us to do that? Or is 5 it -- I mean, currently -- currently what I think staff 6 is at some -- staff is somewhat limited in their ability 7 to communicate directly with the other elected 8 officials. We're not. And I don't know if it's -- 9 staff can send a letter directly to the Governor, 10 Miss Kennedy and the budget and Speaker and Senate that 11 delineates all of the issues that are -- that we believe 12 have merit and the actions that we believe might be 13 taken in order to prevent this from occurring again or 14 to insure that it doesn't exist elsewhere other than the 15 Board of Equalization. 16 And, again, I got to say, I'm always 17 uncomfortable with legislating professional judgment, I 18 just don't necessarily think that's the appropriate 19 thing to do. 20 So, maybe we can do it in a letter somehow. 21 Any thoughts? 22 MS. YEE: Mr. Chairman, I don't have any issues 23 with a formal communication going over, essentially, it 24 might be a good time to kind of compile and refresh and 25 just have the one single communication with all of the 26 information that is going to guide our legislators going 27 forward. 28 I think what's been happening is as they 26 1 deliberated on this issue, they certainly got the 2 information, but it's been pretty piecemeal and I think 3 maybe a comprehensive communication at this point might 4 be a good starting point for going into next year. 5 MR. HORTON: Yes. 6 MS. MANDEL: Just to advise legal review of the 7 letter. 8 MS. YEE: Yes. 9 MR. HORTON: Yeah. 10 Mr. Leonard? 11 MR. LEONARD: I concur. 12 MS. HOUSER: Then I'll work on that. 13 Thank you. 14 MR. HORTON: I would suggest that letter maybe 15 come back at our December meeting and all of the Members 16 have an opportunity to sign off, mindful that if I had 17 to write the letter myself, I probably wouldn't be that 18 nice. 19 But I think as a body we can find a nice way to 20 say these things. 21 Thank you. 22 Thank you, Members, I appreciate your insight. 23 I really, really appreciate the work done by Ms. Steel 24 on this and share with her folks in the San Diego office 25 wanted to extend their appreciation and to thank you for 26 your diligence relative your operation over there. 27 They asked me to share that with you. 28 MS. STEEL: Thank you. 27 1 MR. HORTON: Ms. Shedd? 2 MS. SHEDD: That concludes the business of the 3 Committee. 4 MR. HORTON: Thank you. 5 ---o0o--- 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 28 1 REPORTER'S CERTIFICATE. 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, JULI PRICE JACKSON, Hearing Reporter for the 8 California State Board of Equalization certify that on 9 NOVEMBER 17, 2009 I recorded verbatim, in shorthand, to 10 the 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 pages 1 13 through 28 constitute a complete and accurate 14 transcription of the shorthand writing. 15 16 Dated: February 21, 2010 17 18 19 ____________________________ 20 JULI PRICE JACKSON 21 Hearing Reporter 22 23 24 25 26 27 28 29