1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 REPORTER'S TRANSCRIPT 8 APRIL 27, 2011 9 10 ITEM P OTHER ADMINISTRATIVE MATTERS 11 ITEM P5 12 13 ---o0o--- 14 15 16 17 18 19 20 21 22 Reported by: Juli Price Jackson 23 No. CSR 5214 24 25 26 27 28 1 1 P R E S E N T 2 3 For the Board Jerome E. Horton of Equalization: Chairman 4 5 Michelle Steel Vice-Chairwoman 6 7 Betty T. Yee Member 8 9 George Runner Member 10 11 Marcy Jo Mandel Appearing for John 12 Chiang, State Controller (per 13 Government Code Section 7.9) 14 15 Diane G. Olson Chief, Board 16 Proceedings Division 17 18 Liz Houser Deputy Director 19 Administration 20 21 ---oOo--- 22 23 24 25 26 27 28 2 1 INDEX OF ITEMS 2 ---o0o--- 3 Name Page 4 P5.1.a Nationwide Office Recommendation 4 5 P5.1.c San Diego/San Marcos office 5 6 P5.1.b Headquarters Facilities 12 7 P5.2.a Budget Update 14 8 P5.2.a Update on Union Agreements 16 9 10 INDEX OF SPEAKERS 11 ---o0o--- 12 Name Page 13 Andy Estrada, District Administrator 6 14 Randall Cheek, SEIU 1000 9 15 16 ---o0o--- 17 18 19 20 21 22 23 24 25 26 27 28 3 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 APRIL 27, 2011 4 ---oOo--- 5 P5.1.a 6 Nationwide Office Recommendations 7 ---o0o--- 8 MS. OLSON: Our next item is P5, 9 Administration, Deputy Director's report, P5.1, facility 10 update. 11 MR. HORTON: Welcome. 12 MS. HOUSER: Good afternoon, Chairman Horton 13 and Members. 14 I'm Liz Houser, Deputy Director Administration. 15 Here with me today is Mr. Andres Estrada, a District 16 Administrator from our San Diego office. 17 As part of our facilities master planning 18 process, the Administration Department has reviewed our 19 offices nationwide and has recommendations, which I will 20 be forwarding to each of your offices. 21 ---o0o--- 22 23 24 25 26 27 28 4 1 P5.1.c 2 San Diego/San Marcos Office 3 ---o0o--- 4 MS. HOUSER: In the interest of time today, I 5 will limit today's presentation to Mr. Estrada's 6 description of our offices of the future. Recently we 7 held a planning meeting with District administrators 8 representing each of your four districts who 9 collaborated on the design of the new service center 10 model, which will be piloted in San Diego. 11 Mr. Estrada will present the concept to you. 12 Can you go to Slide 21? 13 MR. HORTON: Before we proceed, Ms. Houser, I 14 believe we have an individual who wants to testify. I 15 am looking to see if -- 16 MS. HOUSER: Mr. Randall Cheek is here from 17 SEIU. 18 MR. HORTON: Mr. Cheek, would you -- there you 19 go, all right. 20 Please come forward, have a seat. We'll 21 provide you that opportunity. 22 Please continue with your presentation. 23 MS. HOUSER: I apologize, we're having to 24 quickly get to Slide 21. I think it's back -- a little 25 further. 26 No, there -- right there -- no, back one. 27 MR. HORTON: 1 through 20 is received in 28 file -- just kidding. 5 1 MS. HOUSER: One more, 21, keep going. One 2 back from here. 3 There (indicating). 4 ---o0o--- 5 ANDY ESTRADA 6 ---o0o--- 7 MR. ESTRADA: Chairman Horton, Board Members, 8 good afternoon. 9 Andy Estrada -- 10 MR. HORTON: Welcome. 11 MR. ESTRADA: -- San Diego District 12 Administrator. 13 And Ms. Houser has asked me to talk to you 14 about my involvement with the planning of the first 15 office of the future. 16 I'm in this unique, you know, project because 17 of the condition of the San Diego District building, 18 which Mr. Horton honored us with physically visiting and 19 looking at the condition of the building. 20 The building has been condemned for years and 21 has become an employee health and safety issue. And due 22 to Miss Gill's support and concern for our employees and 23 the public we serve, we're in the process of relocating 24 and working towards negotiating our lease of our new 25 facilities. 26 Ms. Steel, thank you for your support. We 27 really appreciate it. 28 Ms. Houser, thank you for successfully 6 1 negotiating a lease out of the DGS contract and all your 2 hard work and your staff's work. 3 The office of the future calls for a plan 4 that's flexible, depending on the needs of the specific 5 area and the customers. 6 For San Diego, we started with the placement of 7 a service center that was centrally located within the 8 District's -- within our District's taxpayer base and a 9 separate office location where our tax auditors and 10 collectors would be performing their duties. 11 And then the final decision on that site will 12 depend on the, you know, available space and whether it 13 meets our needs and the State's lease requirements. 14 The main difference of the office of the future 15 is the lobby. We envision a high tech lobby that's 16 designed -- you know, that provides both self-service 17 area and in-person service area where both our taxpayers 18 and our employees use technology to provide our 19 services. 20 The self-service area will offer taxpayer 21 choices. For instance, we'll have kiosks, such as the 22 one up there, you know, kind of depicts a lobby with 23 windows and kiosks that taxpayer will use to register, 24 perform account maintenance, file returns and make 25 payments. 26 Taxpayers may also use their own equipment, 27 their IPhone, their IPad devices with -- our lobby will 28 be designed with a limited wi-fi. 7 1 And if taxpayers are, you know, using our 2 equipment and they need assistance, at a push of a 3 button, a tax -- staff will be there to assist them. 4 All the while, you know, there'll be BOE 5 advertisements and spot announcements on Board Member 6 information, resources available online streamed through 7 a flat screen in the lobby. 8 We will still continue to provide in-person 9 assistance. We'll still have a receptionist where, you 10 know, taxpayer can go and seek assistance. And we'll 11 assist the taxpayer or refer them to a window where they 12 can do their registration, file return or submit 13 payments. 14 We'll still have cashier staff that will, you 15 know, take payments where the taxpayer did not complete 16 the payment online. 17 The -- in the long term, we envision that, you 18 know, as our e-services expand, our in-person services 19 may reduce and -- as well as the space for the service 20 center. 21 In San Diego we did a very informal -- we got 22 some very informal input from our taxpayers during, you 23 know, high peak filing periods. And they're looking 24 forward to our new facility where they have free parking 25 and really the expansion of e-services is well received. 26 MR. HORTON: Excellent, thank you. 27 Is there an -- is there some transitional 28 training that may take place? I mean, do -- are we 8 1 including in the process an element of training for 2 staff to be orientated to the new technology? 3 MR. ESTRADA: We are. We have our e-filing, 4 where, you know, they -- you know, any taxpayer that's 5 coming into the office, we not only train our 6 technicians, but our tax reps to assist taxpayers in 7 e-filing. 8 And soon we'll have the expansion to e-payments 9 and all of the e-services will be provided on-the-job 10 training, as well as formal training. 11 MR. HORTON: Thank you very much. Good to see 12 you. Welcome to Sacramento. 13 MR. ESTRADA: Thank you. 14 ---o0o--- 15 RANDALL CHEEK 16 ---o0o--- 17 MR. CHEEK: Thank you, Mr. Chairman, good to 18 see you again. 19 MR. HORTON: Yes. 20 MR. CHEEK: Randy Cheek with SEIU Local 1000. 21 We are actually very much in support of this 22 issue. We are strong supporters of Assembly Member 23 Dickinson's bill, AB 1143. 24 We feel that this will help get better employee 25 facilities that work in a good environment to help 26 taxpayers to help the State of California. 27 And we just came here to support Ms. Houser and 28 say what we think is a good idea and strongly support 9 1 her program. 2 MR. HORTON: Excellent. 3 MS. HOUSER: Thank you, Mr. Cheek. 4 MR. HORTON: The Board's -- I mean, I want, on 5 behalf of the Board, to thank Ms. Yee was well. 6 She's certainly been the champion of this 7 project, following through, making sure that all of 8 these elements that we're discussing today are 9 addressed. 10 So, I want to thank her. 11 MS. STEEL: I want to say something. 12 MR. HORTON: Okay. 13 MS. STEEL: We went really complex the process 14 for this and I really appreciate Liz and, especially, 15 Andy, who went through try to find so many different 16 locations. And we saw how many -- 80? 17 MR. ESTRADA: It was a significant number. 18 MS. STEEL: It's just amazing that effort that 19 he put it in. 20 Finally, San Diego office is going to get free 21 parking. We used to have only two spots in the 22 building. So, actually, one time one staff was pregnant 23 for six months, we had to switch from one supervisor not 24 to park there and the pregnant, you know, staff had to 25 park there so she doesn't have to take a bus or walk for 26 few blocks. 27 And I really, really appreciate that, you know, 28 we finally getting out. 10 1 And please, you know, process really fast so we 2 can really move from that building -- just out of that 3 building and going to much, much better location. 4 And thank you very much, Andy and thank you, 5 Liz. 6 MR. ESTRADA: You're welcome and thanks for 7 your support. 8 MS. STEEL: Great job you guys did. 9 I really appreciate it. 10 MS. HOUSER: We'll be happy to have the move 11 completed. We hope it'll be done by the end of the 12 year, but it's not completely under our control. 13 MR. HORTON: Okay. 14 ---o0o--- 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11 1 Item P5.1.b. 2 Headquarters Facilities Update 3 ---o0o--- 4 MS. HOUSER: My next item is an update on our 5 building here, 450 N Street and our remediation project. 6 Currently DGS has estimated -- has a new 7 construction completion date of July 2011, which is more 8 than seven months beyond the original target date, with 9 estimated costs of $30.9 million. 10 Just a reminder, in April of 2009, BOE proposed 11 an alternate -- an alternative to move staff out before 12 remediation began, however, DGS assured the 13 administration of BOE that the floor by floor 14 remediation could be completed in twenty months with 15 construction completion date of December 2010 at a cost 16 of $14 million. 17 There have been a number of issues that have 18 caused the project to go beyond the original schedule 19 and budget, which was part of BOE's initial concern. 20 DGS identified extensive unanticipated mitigation work 21 in the mechanical floors on the 12th floor. 22 BOE is also experiencing new concerns on floors 23 that have been previously remediated by DGS and returned 24 to us for occupancy. 25 Over the winter odors were reported on the 26 recently remediated 21st and 22nd floors, requiring 27 closure and displacement of our employees from the 21st 28 floor. 12 1 BOE's hygienist conducted air testing on the 2 floors, which returned unremarkable results. However, 3 DGS discovered suspected mold growth in several rooms in 4 the core of the floor, which may have been the source of 5 the odor. The cement moisture and pH levels tested 6 higher than normal in these areas. 7 Based on these findings, DGS has engaged the 8 services of Jim LaCroix with LaCroix Davis as the 9 forensic architect that will investigate the 21st floor 10 odors and related issues on the 22nd floor. 11 A report of findings should be reported -- 12 should be provided in late May and we will be posting 13 that on the web site and reporting it to the Board. 14 The elevator modernization continues and is on 15 schedule. 16 Upgrading mechanical systems is the next step. 17 Mr. Estrada gave you an update, I think, on 18 San Diego and San Marcos. We're pleased to have that 19 moving along. 20 Are there any questions on the facilities? 21 ---o0o--- 22 23 24 25 26 27 28 13 1 Item P5.2.a 2 Budget Update 3 ---O0O--- 4 MS. HOUSER: My next item is an update on the 5 budget. 6 For the 10/11 fiscal year, the Department of 7 Finance has informed us that we will have a one time 8 budget reduction of $5.8 million to our operating 9 budget, due the savings realized in our headquarters 10 rental rate from not selling the bonds on the building, 11 plus a small rental rate reduction from DGS for the 12 450 N Street building. And we will be able to absorb 13 this reduction. 14 On April 26th, as a measure to reduce current 15 year operational expenditures, Governor Brown issued 16 Executive Order B0611, restricting travel for 17 departments under his direct authority to those trips 18 that are for mission critical purposes. 19 The Governor's order defines "mission critical 20 travel" as those directly related to enforcement 21 responsibilities, auditing, revenue collection, a 22 function required by statute, contract or Executive 23 Directive or job required training necessary to 24 maintaining licensure or similar standards required for 25 holding a position. 26 As a constitutional agency, BOE is not subject 27 to this order. However, the Governor has asked that we 28 conduct an analysis to determine the discretionary 14 1 nature of our travel in order to reduces unnecessary 2 costs. 3 As a revenue generating department, the 4 majority of BOE's travel is related to enforcement, 5 auditing and revenue collection activities. 6 In a high level review today of past 7 expenditures, we estimated approximately 95 percent of 8 our out-of-state travel is directly related to 9 enforcement, auditing and revenue collection. 10 BOE has capped its out of state travel blanket 11 to the fiscal year '06-'07 funding levels as part of our 12 effort to address the economic situation. 13 The only exception to this has been our more 14 recent out-of-state travel blanket submittals to the 15 Governor's office, which included augmentations based on 16 legislative mandates or approved budget change 17 proposals. 18 Instituting this spending cap has us to 19 prioritize our travel requests to only those that meet 20 the mission critical criteria. 21 I feel that BOE's substantially following the 22 direction that's currently in the order, however, if the 23 Board wishes, we can have our programs do a further 24 analysis on their travel to insure only mission critical 25 trips are being taken. 26 ---o0o--- 27 28 15 1 P5.2.a 2 Update on Union Agreements 3 ---o0o--- 4 Ms. HOUSER: My last item is an update on the 5 union agreements. 6 The tentative agreements for Bargaining Unit 2, 7 California attorneys and hearing officers, or CASE, and 8 Unit 9, professional engineers in California government, 9 or PECG, have been ratified by the memberships and are 10 waiting approval by the legislature. I will 11 forward the details of these agreements to your offices. 12 This concludes our presentation. 13 We would be happy answer any questions. 14 MR. HORTON: Thank you very much. 15 Discussion, Members? 16 Hearing none, thank you so very much for your 17 presentation today. 18 Appreciate it. 19 ---o0o--- 20 21 22 23 24 25 26 27 28 16 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 APRIL 27, 2011 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 pages 1 13 through 16, constitute a complete and accurate 14 transcription of the shorthand writing. 15 16 Dated: MAY 13, 2011 17 18 19 ____________________________ 20 JULI PRICE JACKSON 21 Hearing Reporter 22 23 24 25 26 27 28 17