1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 8 REPORTER'S TRANSCRIPT 9 NOVEMBER 19, 2009 10 11 12 13 14 15 FINAL ACTIONS 16 17 18 19 20 21 22 23 REPORTED BY: JULI PRICE JACKSON 24 CSR NO. 5214 25 26 27 28 1 1 P R E S E N T 2 3 For The Board Betty Yee of Equalization: Chairwoman 4 5 Jerome E. Horton Vice-Chair 6 Bill Leonard 7 Member 8 Michelle Steel Member 9 10 Diane G. Olson Chief, Board 11 Proceedings Division 12 13 ---OOO--- 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 NOVEMBER 19, 2009 4 ---o0o--- 5 MS. OLSON: Our next item is E1, Qwest 6 Communications Corporation. 7 ---o0o--- 8 QWEST COMMUNICATIONS CORPORATION 9 NO. (2463) 494029 CF 10 ---o0o--- 11 MS. YEE: Okay, item E1, Qwest Communications 12 Corporation. 13 Is there a motion? 14 These are constitutional functions, Ms. Mandel 15 is not participating. 16 MR. HORTON: Move to adopt staff 17 recommendation. 18 MS. YEE: Okay, motion by Mr. Horton to adopt 19 the staff's recommendation. 20 Is there a second? 21 Let me second that motion. 22 Discussion? 23 Hearing none, let's call the roll. 24 Actually, is there objection? 25 Hearing none, that motion carries. 26 ---o0o--- 27 28 3 1 MS. OLSON: Our next item is E2, Sprint PCS. 2 ---o0o--- 3 E2 SPRINT PCS 4 NO. (2720) 495664 CF 5 ---o0o--- 6 MS. YEE: Okay, item E2, Sprint PCS. 7 Is there a motion? 8 MR. LEONARD: Madam Chair, I wonder if there's 9 any Board interest in the taxpayer's final, final 10 compromise of splitting the $191,000,000 difference and 11 lowering the staff recommendation by 95 and a half 12 million dollars because of the vagueness of both of 13 their reports as to as to the real value of the CDMA 14 system? 15 MS. YEE: Yeah. Mr. Horton? 16 MR. HORTON: You know, I have to say, Members, 17 that I -- that, you know, I do have some concerns about 18 the staff's valuation of the CPMA (sic). I just don't 19 know how to measure it. I mean, it's -- they have 20 proposed that there's a 5 percent reduction in their 21 operation commencing with the third quarter -- second 22 and third quarter of 2008 to currently. 23 It seems to me that is some additional 24 obsolescence. I just can't quite get there with the 95. 25 MS. YEE: Yeah. Let me make a comment and then 26 I will turn to Mr. Thompson. 27 I would agree with you, Mr. Leonard, that -- 28 actually that there was more vagueness entered into the 4 1 picture for me than clarity. But I think that a lot of 2 the points that were raised by the Petitioner today, 3 certainly as related to the CDMA network and the 4 potential justification for additional obsolescence 5 really is premature. I don't know that we've seen 6 enough to really be able to embrace a trend that may be 7 going on with respect to certainly the numbers that they 8 have brought forward relative to their customer base. 9 And that is one element, I think we have to 10 look at it in the context of other -- of other elements 11 that they also brought forward that -- and also much of 12 that data was after the lien date. 13 So, I think I would like to be sure that the 14 staff has an opportunity to look at those going forward, 15 certainly, and, hopefully, work with the Petitioner to 16 get more clear information. 17 Mr. Thompson? 18 MR. LEONARD: Madam Chair? 19 MS. YEE: I am sorry, Mr. Leonard? 20 MR. LEONARD: Did you ask him a question? 21 MS. YEE: No, it was just kind of an 22 observation but I wanted to get some input from 23 Mr. Thompson with regard to Mr. Horton's -- 24 MR. LEONARD: Is the Department allowed to 25 speak if the hearing is closed, unless you have a 26 question? 27 MS. YEE: Mr. Ambrose? 28 MR. AMBROSE: Generally not. I mean, not to 5 1 offer an opinion, but for informational purposes I think 2 it's okay. 3 MS. YEE: Did you have a question, Mr. Horton, 4 informational? 5 MR. LEONARD: I was going to comment to you, 6 Ms. Yee -- 7 MS. YEE: Okay. 8 MR. LEONARD: -- that this is the confidential 9 that the Department acquired, which I'd like to know 10 more about and discuss. 11 You made a valid point that the taxpayer's 12 information is -- is after the lien date, or some of it, 13 at least. 14 I don't know when the government's information 15 is derived from because they didn't tell us. That's why 16 I'm just splitting the difference because I can't choose 17 who's more right. 18 Just that it's vague. 19 MS. YEE: Okay. Mr. Horton? 20 MR. HORTON: I think I would like to -- staff 21 just two questions, just for clarification. 22 The Petitioner indicated that there was a 23 5 percent a year decline in their overall utility market 24 share and so forth. And then they -- they argued the -- 25 that there was -- that the churn had some impact. 26 And I think our response was that we said we 27 didn't take that necessarily into consideration. 28 However, there was an offset -- and in discussion of the 6 1 offset, retail versus wholesale. 2 These were two of -- I am trying to find the 3 other thing I sort of took into consideration that 4 seemed to imply that there is some subsequent decline in 5 value. 6 Can you speak to the merit of those arguments? 7 MS. YEE: Let me -- Mr. Ambrose? 8 MR. AMBROSE: Yeah, I don't think that he can 9 offer an opinion or argument. 10 I think that if you needed clarification on, 11 perhaps, the arguments that the staff was making, then 12 he can clarify those, certainly, but -- 13 MR. HORTON: Yeah, this is one of those where I 14 think I specifically asked the taxpayer -- I mean the 15 Petitioner's representative, did they have an argument 16 somewhere in between where staff was and where their 17 current number was? And they just didn't seem to defend 18 it. 19 I think I kind of hate to do up here what 20 appears to defend their case for them. So -- and try to 21 accumulate an argument that is -- I would consider a 22 good argument for reduction, but not necessarily the 23 argument that they put forth. 24 So, I'd like to just sort of hear from my 25 colleagues to see if there's -- if they saw any light at 26 the end of the tunnel, if you will? 27 MS. YEE: Mr. Leonard? 28 MR. THOMPSON: If it please the Board, there 7 1 were a couple of issues that were raised by the 2 Petitioner that were not briefed that I heard just 3 today. And it may be beneficial for further discussions 4 with Sprint to -- to look at those issues that were -- 5 that were introduced here today. 6 And with that case, we could come back in 7 December, if that pleases the Board? 8 MS. YEE: What is your sense? 9 That's how I feel, I feel like there was a lot 10 of -- that there was some new information that I just 11 don't think -- I mean, I am certainly not prepared to 12 say with any kind of comfort that, you know, we split 13 the difference. 14 But if we can have some further additional 15 briefing, that might better inform us. 16 MR. HORTON: That would be helpful. 17 MR. LEONARD: Yes. 18 MR. HORTON: And if you can go back and just 19 have a conversation with the taxpayer, verify some of 20 the things that they put forth that wasn't necessarily 21 considered in our original evaluation -- I understood 22 the arguments and the counter arguments to the 23 information that they provided. 24 I didn't necessarily agree with staff on a 25 couple of the arguments. So that -- that concerned me a 26 little bit. And I don't -- I would prefer for staff to 27 be able to sort of nail it down to what it is and what 28 impact it actually has. 8 1 So, if we could put it over? 2 MS. YEE: Okay. Why don't we put this over to 3 the December Board meeting and ask that staff and, 4 certainly, Appeals, if you could oversee the additional 5 briefing of the new issues? 6 MR. AMBROSE: And then prepare a summary 7 decision? 8 MS. YEE: Yes. 9 MR. AMBROSE: And it'll be a nonappearance 10 matter? 11 MS. YEE: Yes. 12 MR. AMBROSE: Okay. 13 MS. YEE: That would be very helpful, thank 14 you. 15 ---o0o--- 16 17 18 19 20 21 22 23 24 25 26 27 28 9 1 MS. YEE: Okay. Next item? 2 MS. OLSON: The next item is E3, Golden State 3 Water Company. 4 ---o0o--- 5 E3 GOLDEN STATE WATER COMPANY 6 NO. (101) 495665 CF 7 ---o0o--- 8 MS. YEE: Okay, E3, Golden State Water Company. 9 Is there a motion? 10 MR. HORTON: Move to adopt the staff 11 recommendation. 12 MS. YEE: Motion by Mr. Horton to adopt the 13 staff recommendation. 14 Is there a second? 15 MR. LEONARD: Second. 16 MS. YEE: Second by Mr. Leonard. 17 Without objection? 18 MS. STEEL: Objection. 19 MS. YEE: Please call the roll. 20 MS. OLSON: Madam Chair? 21 MS. YEE: Aye. 22 MS. OLSON: Mr. Leonard? 23 MR. LEONARD: Aye. 24 MS. OLSON: Ms. Steel? 25 MS. STEEL: No. 26 MS. OLSON: Mr. Horton? 27 MR. HORTON: Aye. 28 MS. OLSON: Motion carries. 10 1 MS. YEE: Okay. 2 ---o0o--- 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11 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 19, 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 11 constitute a complete and accurate 14 transcription of the shorthand writing. 15 16 Dated: DECEMBER 1, 2009 17 18 19 ____________________________ 20 JULI PRICE JACKSON 21 Hearing Reporter 22 23 24 25 26 27 28 12