BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 5901 Green Valley Circle, Room 207 Culver City, California REPORTER'S TRANSCRIPT JUNE 21, 2011 ITEM F3 PROPERTY TAXPAYERS' BILL OF RIGHTS HEARINGS Reported by: Beverly D. Toms No. CSR 1662 1 1 2 P R E S E N T 3 4 For the Board Jerome E. Horton of Equalization: Chairman 5 Michelle Steel 6 Vice-Chairwoman 7 Betty T. Yee Member 8 George Runner 9 Member 10 Marcy Jo Mandel Appearing for John Chiang 11 State Controller (per Government Code 12 Section 7.9) 13 Diane Olson, Chief Board Proceedings Division 14 Board of Equalization 15 Staff: Todd Gilman Taxpayers' Rights Advocate 16 17 Mark Sutter Taxpayers' Rights Advocate 18 office 19 Richard Moon Legal Department 20 21 ---oOo--- 22 23 24 25 26 27 28 2 1 Culver City, California 2 June 21, 2011 3 ---oOO--- 4 MR. GILMAN: Okay, we'll move on to the 5 property tax portion of the hearing. 6 And for the record we have no written 7 submissions for Business Taxes, pardon me. So -- 8 MR. HORTON: Thank you. 9 MR. GILMAN: For Business (sic) Tax Hearings 10 the purpose of the hearings is to provide individuals 11 the opportunity to present their ideas, concerns and 12 recommendations regarding legislation, the quality of 13 agency services and other issues related to the Board's 14 administration of its tax programs, including State- and 15 County-assessed property tax programs and any other 16 problems identified in the Taxpayers' Annual Report. 17 Today we have one speaker, Mr. Peter Fatooh. 18 Mr. Fatooh, would you please come forward. 19 MR. HORTON: Mr. Fatooh, welcome to the Board 20 of Equalization. 21 MR. FATOOH: Thank you, Mr. Chairman. It's an 22 honor to be here and I'd like to thank the Members for 23 inviting me, and I'd also like to make special 24 facilitations to my district representative, Ms. Betty 25 Yee, who serves with distinction on your Board. 26 MS. YEE: Thank you. 27 MR. FATOOH: Mr. Chairman -- 28 MR. HORTON: We agree. 3 1 MR. FATOOH: I'd like to echo the Chair's 2 remarks relating to the Taxpayer Rights Advocate's 3 persons. Your office of Taxpayer Rights has been 4 nothing but cooperative, nothing but responsive, and 5 I'd like to personally point out Mr. Mark Sutter, Mr. 6 Gilman and Ms. Simpson -- Ms. Simpson. 7 I've been dealing with Mr. Sutter for over a 8 year on these matters and there's not a day that goes by 9 that an e-mail is not immediately responded to or a 10 phone call. And I think your staff at the Taxpayer 11 Rights office emanates good feelings to the taxpayers 12 and they perform in an admirable manner. 13 MR. HORTON: Thank you very much. 14 MR. FATOOH: Mr. Chairman and Members, as Ms. 15 Yee knows, I spent 24 years on the San Francisco 16 Assessment Appeals Board. And after leaving the Board I 17 now represent taxpayers before the Board. And I have 18 submitted to the Board a copy of the 19 -- of a 1975 19 Appellate Court decision that I believe is at the heart 20 of the discussion that I'd like to bring to the Board. 21 Section 408 of the Revenue and Taxation Code 22 clearly spells out the taxpayer's right to have the 23 comparables that will be used against the taxpayer in a 24 hearing, the price paid for those comparables, and the 25 location of the comparables from the Assessor. And 26 those rights are delineated in 408 and the Court 27 decision from 1975, the Appellate Court decision, which 28 still stands today, clearly delineates the Assessor's 4 1 obligations to the taxpayer. 2 Unfortunately, down my way we've run into a 3 roadblock for the taxpayer and you'll see an attachment 4 that I have submitted to the Board and this is typical 5 of what, unfortunately, San Francisco hands out two days 6 before a hearing. 7 Now, in a typical hearing in San Francisco you 8 have three comparables that the Assessor will use and 9 three comparables that the taxpayer will use. 10 Having 30 comparables with block and lot only 11 to me is hardly a sufficient response, let alone a legal 12 response from the Assessor. Taxpayer is entitled under 13 408 that location, the price paid and the date of sale, 14 and to obfuscate the matter by sending out 25 comps and 15 sending the taxpayer's rep. and the taxpayer on a 16 fishing expedition is not responsive. 17 MR. HORTON: If I may just for clarification, 18 this document before me that you refer to as an exhibit, 19 you received this from the State -- San Francisco 20 Assessor's office? 21 MR. FATOOH: Yes, in -- 22 MR. HORTON: Or this is a listing that you 23 compiled yourself? They actually gave you this list? 24 MR. FATOOH: This is the actual copy of what I 25 was given two days before the hearing in response to the 26 408. It's unconscionable. 27 And the Assessor's office in San Francisco 28 believes that I'm wrong in my interpretation of 408, but 5 1 they have nothing to rest their case on. The 1975 2 Appellate Court couldn't be any more clear. 3 And -- and when the assessor in San Francisco 4 or any county says, well, you could have used 1606, 5 well you know what, the assessor could have used 1606. 6 They don't use 1606 because they have to come forward 7 with the comparables before you do, and they're not 8 going to do that. 9 So they turn the tables and they say at the 10 hearings, well, Mr. Fatooh could have used 1606. I 11 could have, but I didn't. And they could have and they 12 didn't. 13 And when 1606 expires 408 is on the table. And 14 when I invoke 408 on behalf of taxpayers they must 15 respond. 16 MR. HORTON: Mr. Gilman, any thoughts on that? 17 MR. GILMAN: Well, Mr. Horton, thank you. My 18 office has been in contact with the San Francisco County 19 Assessor's office and to my understanding from what 20 Mr. Sutter has told me is that when the information is 21 available that's when they'll provide it to Mr. Fatooh, 22 in terms of what properties they're planning on using at 23 the assessment appeals conference. 24 And, Mark, did you want to add anything in 25 terms of what you discussed with them? 26 MR. SUTTER: Well, basically -- basically the 27 information that he was provided may not be 28 inappropriate at the time he asked for the information. 6 1 The format obviously is kind of -- unprofessional. 2 At the time he requested the information this 3 may be the information that they're working with, 4 themselves; they have not chose the three comparables 5 that they're going to use. 6 If this was given to him the day of the hearing 7 in all likelihood they're not going to use 30 8 comparables, they're going to use three. Maybe two days 9 before. Maybe a week before. Maybe a month before. It 10 depends on where they're at in the process of filing -- 11 or preparing for that appeal. 12 So, ultimately, like I say, this particular 13 format is not all that useful. There's a lot of data 14 that's required that's missing and obviously the format 15 itself isn't much use. 16 And if he receives this the day of the hearing 17 there's really not much use to him. He's not going to 18 have time to look at all these. He can request a 19 continuance. However, that continuance also extends the 20 amount of time -- the two-year statute. 21 So, ultimately, this -- in my opinion it's 22 unacceptable. 23 MR. RUNNER: I'm sorry, that you're ultimately 24 what -- I didn't hear that last phrase. 25 MR. HORTON: It's music to Mr. Runner's ears. 26 MR. RUNNER: I -- I actually -- I actually 27 didn't hear it. 28 MR. SUTTER: Oh, okay. No, I -- I -- this 7 1 isn't necessarily, like I say, appropriate -- 2 MR. RUNNER: Okay. 3 MR. SUTTER: -- but at the time you receive 4 something like this in professional format it may not be 5 inappropriate. 6 MR. HORTON: So -- 7 MR. RUNNER: It may not be inappropriate. 8 MR. SUTTER: Because this may be all they have 9 at that moment; they haven't actually prepared the 10 appeal. These are the comps they would work with. They 11 haven't chose the three most appropriate at that point. 12 MR. HORTON: Okay. 13 MR. RUNNER: Let me ask the -- 14 MR. HORTON: Member Yee and then Mr. Runner. 15 MS. YEE: Just I guess a question, and this may 16 be more of a legal question. Actually, let me just 17 start with a practical question. 18 Have we issued guidance previously in this 19 area? An LTA or letter to assessors or -- 20 MR. SUTTER: My -- I'm sorry. My last 21 conversation with Dean Kinnee, the Chief of the Property 22 Tax Assessment Division and Richard Moon and a couple 23 other folks was that we were not quite sure whether we 24 were going to go one way or the other -- 25 MS. YEE: Okay. 26 MR. SUTTER: -- whether 1606 was more 27 appropriate. 28 MS. YEE: I guess even before we get there 8 1 about what specific guidance may or may not be needed -- 2 Mr. Moon, thank you. Could you just give us kind of 3 some foundational information with respect to the 4 difference between the two statutory provisions and 5 what -- under what circumstances they're invoked? 6 MR. MOON: Sure. Well, first let me preface it 7 by saying, you know, the Legal Department, we'd have to 8 really take a look at this, and we're happy to do that. 9 My understanding of the way the two statutes or 10 provisions work is that Section 408 is really a 11 confidentiality statute and then sub -- subdivisions "d" 12 and "e", the ones that Mr. Fatooh are referring to, are 13 exceptions to that confidentiality that allows the 14 taxpayer to get certain information, specifically 15 comparable sales. What are referred to as market data. 16 1606 is more of -- of a quote-unquote official 17 discovery mechanism that's to be used during a hearing, 18 an assessment appeals hearing. It's a little bit more 19 broad and it covers more information. 20 The key thing that -- of what may be the key 21 thing is that Section 408 allows the taxpayer to get 22 information upon which the assessor -- that the assessor 23 used to base the assessment on. 24 I'm not sure, and this is one of the things 25 that we'd have to look at -- I'm not sure that it also 26 allows the taxpayer to get information that the assessor 27 is planning to use at a hearing. Especially before he's 28 actually decided on what comparables that he's going to 9 1 use. 2 MR. FATOOH: May -- may I respond to that? 3 MR. HORTON: One second. Maybe -- 4 MS. YEE: No, that's very helpful, Mr. Moon. I 5 think before we jump to any kind of action I just want 6 to be sure that everyone is at least clear with respect 7 to the authority by which the assessor's office is 8 acting. And also the intent of the provision of 9 information under both of these statutory sections. And 10 they do seem to serve a somewhat different purpose in 11 terms of the context. 12 But I certainly wouldn't be prepared to provide 13 a response to you, Mr. Fatooh, without really kind of 14 looking at it with more detail. 15 But in any event I think in order to assist you 16 we -- I would hope that we could refer this to the Legal 17 Department so that they can take a further look and if 18 some additional guidance is appropriate we will consider 19 that, either to assessors or to taxpayers. 20 MR. FATOOH: I appreciate that, Member Yee and 21 Mr. Chairman. 22 This isn't about me. This is about the 23 taxpayers of California. 24 MS. YEE: Yes. 25 MR. FATOOH: And they're not being treated 26 right in San Francisco, I'm sorry to say. And it has to 27 be brought up. This has been going on and on and on and 28 this Court decision couldn't be any more clear. Next to 10 1 the Revenue and Taxation Code Ehrman and Flavin is about 2 the closest to the bible for tax people. And they quote 3 Ehrman and Flavin, and I'd just like to take one moment 4 to say from Ehrman and Flavin in the past those 5 attempting to understand the assessment process and 6 determine whether it was being properly carried out 7 often encountered a wall of secrecy around the 8 assessor's records. Few taxpayers had the courage or 9 financial resources to challenge the assessor's bald 10 ascertation that the information in his records was 11 confidential. 12 This Court was right on the mark and page after 13 page after page that I have highlighted in this Court 14 document clearly says the taxpayer has the right to that 15 information. 408(d) says it right there, the assessor 16 shall provide the date of sale, the price paid and the 17 location of the property being used against the 18 taxpayer. 19 Two days before a hearing I hardly believe that 20 in San Francisco they've got 25 parcels that they're 21 still considering on a single family house. It gets a 22 little ridiculous. 23 MS. YEE: Mr. Chair. 24 MR. HORTON: Member Yee. 25 MS. YEE: Mr. Fatooh, I appreciate you coming 26 forward. I -- I think we would agree with you this 27 affects all taxpayers, this is not specific to San 28 Francisco. And certainly our role with respect to our 11 1 relationship to the County Assessors is to be sure that 2 there is -- you know, some modicum of uniformity in 3 their practices, whether it's an assessment or I would 4 hope in Appeals that they're applying the statutes 5 appropriately, as well. 6 I do want to -- Mr. Chairman, if I may, perhaps 7 direct staff to -- in the Taxpayer Rights Advocate's 8 office to work with Mr. Moon in the Legal Department to 9 examine this further. 10 What I don't want to have happen, Mr. Fatooh, 11 is really not have more of an expansive examination of 12 this, particularly as it relates to other related 13 sections of the statute that may have some impact with 14 respect to how this is supposed to be operative and 15 effective. And -- but I think what needs to probably 16 come out of this is some sort of guidance, at least my 17 gut tells me that will need to happen. And I'm -- just 18 not sure yet what the best mechanism for that will be, 19 but I think you've brought forward a very important 20 issue. 21 And just so you know, this Board just recently 22 in another related area of the Revenue and Taxation Code 23 around confidentiality, we really are trying to be more 24 transparent with respect to what happens in the whole 25 property tax area. 26 So I think a lot of times -- and I've said this 27 with respect to what we do here at the Board, I think it 28 happens at the assessor's office level, as well, that we 12 1 oftentimes hide behind taxpayer confidentiality against 2 the larger interest of a public's right to know. 3 MR. FATOOH: Thank you, Ms. Yee. 4 May I also add, my six cases that I've had in 5 San Mateo County, like that, they respond to a 408 like 6 that. They give the property address, all the 7 appropriate information. 8 MS. YEE: And that inconsistency is enough for 9 us to take a look. So we appreciate that. 10 MR. FATOOH: Thank you very much. Thank you, 11 Mr. Chairman. 12 MR. HORTON: Yes. One -- one just question, if 13 I may, Mr. Fatoohs. This information, was it -- was it 14 provided -- it seems to me that in addition that -- in 15 addition there might be a timing issue where -- 16 MR. FATOOH: Well -- 17 MR. HORTON: -- where the assessor really is 18 not -- not -- hasn't decided exactly which property he's 19 going to take under consideration in his -- 20 MR. FATOOH: They're in -- they're so inundated 21 with work they know exactly the three they're going to 22 the table with. Two days before a hearing there's no 23 way a deputy is going to be looking over all these 24 parcels on -- 25 MR. HORTON: So this was provided to you two 26 days before a hearing? 27 MR. FATOOH: Two days. They told me I had to 28 come into the office to get the information, no more 13 1 e-mails. They used to e-mail them. They shut that down 2 and this is what's given me over the counter two days 3 before the hearing. 4 MR. HORTON: Okay. 5 MR. FATOOH: And I might add, Mr. Chairman, if 6 I may, one -- one last item, to tell you how serious 7 this is, I've -- this particular client as well as the 8 other nine that I went down to the assessor's office 9 for, we had exchanged e-mails, they invited me to come 10 down and look at the file. 11 I get to the counter; my agency had been on 12 record for over a year. You know what the Chief 13 Appraiser said to me? "Mr. Fatooh, produce your agency 14 letter." 15 MR. RUNNER: Mr. Chair. 16 MR. HORTON: Yeah, there may be some deeper 17 issues at play here. 18 Mr. Runner. 19 MR. RUNNER: Yeah, I'm wondering if we can -- 20 since obviously we want to look -- take a look at this, 21 if this would be appropriate for us to kind of get 22 involved in with the Property Tax Committee to review. 23 I mean, I -- clearly I'm con -- I don't -- I 24 don't want to step on -- this is a constitu -- specific 25 constituent issue that's obviously happening in -- 26 MS. YEE: No, it's a larger policy issue. 27 MR. RUNNER: Okay. Well, in that -- in that 28 case then I would I feel like maybe that would be a good 14 1 way for us to continue down that path so that we could 2 begin to explore that and then help develop whatever 3 policies or issues may -- 4 MS. YEE: Yeah -- 5 MR. RUNNER: -- may come up. 6 MS. YEE: -- I mean I think once the staff 7 takes a further look at it we can determine the proper 8 avenue to bring this -- 9 MR. RUNNER: Well, I -- 10 MS. YEE: -- back to the Board. But the 11 committee certainly is one of the avenues. 12 MR. RUNNER: Yeah. Actually I think I'd like 13 this committee to be -- would like as the committee 14 chair of the -- of the Property Tax we'd like to be 15 involved in the beginning of that discussion with the 16 staff -- 17 MS. YEE: Okay. 18 MR. RUNNER: -- in order to know and -- and see 19 what's going on at that point, whether or not we believe 20 then it would take the place or take -- route through a 21 discussion through the Property Tax Committee. 22 MR. GILMAN: And -- and, Members, just to let 23 you know, we've been in contact with the Legal 24 Department as well as the County-Assessed Property Tax 25 Division and also recommended maybe this be added to the 26 next survey, which I believe if I'm not mistaken for San 27 Francisco is -- 28 MS. YEE: They're always in survey mode. 15 1 MR. GILMAN: -- July. July. July. 2 MR. HORTON: Members, if I will -- if I may, 3 allow a -- just add a caveat, if I can, is that the 4 testimony was is that San Mateo seemed to have -- seemed 5 to be doing it differently and that there -- there may 6 be some subjective variables involved here. And I, for 7 one, would like to be able to resolve this expeditiously 8 and -- as soon as possible, and that may just be a mere 9 conversation and a fair assessment as to what's going on 10 as far as workload in San Francisco. 11 There may be some issues there. It may not be 12 a legal issue. It may be a subjective issue that we 13 can -- a simple conversation would be able to address. 14 So, as we look at the larger issue, whether 15 it's Legal, whether there are some personnel workload 16 issues or whether there's just some misunderstanding of 17 what the statutes -- the various statutes actually mean, 18 let's keep in mind that we want to try to resolve this 19 at the lowest level possible as expeditiously as 20 possible, and cognizant of the subjective factors. 21 Okay. 22 All right. 23 MR. FATOOH: Thank you very much, Mr. Chairman 24 and Members. 25 MR. HORTON: Thank you, as well. Appreciate 26 that. 27 MR. GILMAN: Thank you. 28 Mr. Chairman, real quick, if there -- I'd like 16 1 to extend the same opportunity to those in the audience 2 right now if there's anybody else that would like to 3 come -- come up and comment on property tax matters to 4 please do so now with your permission. 5 MR. HORTON: Okay. 6 MR. GILMAN: Okay. And -- 7 MR. HORTON: Here they come. 8 Oh, sorry. 9 MR. GILMAN: Okay. Well, we -- and we have no 10 written submission on the property tax matter. So that 11 concludes the Taxpayer Bill of Rights hearing for June 12 21, 2011. 13 Thank you. 14 MR. HORTON: Thank you very much. 15 MS. STEEL: Mr. Chairman, can I just say one 16 thing. I think Taxpayers Rights Advocate is the 17 toughest job that they have in BOE and they've been 18 doing a great job. And thank you. 19 MR. GILMAN: Thank you. 20 MR. HORTON: Okay. 21 MR. GILMAN: Thank you very much. 22 ---oOo--- 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 June 21, 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 17 13 pages constitute a complete and accurate transcription 14 of the shorthand writing. 15 16 Dated: July 14, 2011. 17 18 19 ____________________________ 20 BEVERLY D. TOMS 21 Hearing Reporter 22 23 24 25 26 27 28 18