1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 REPORTER'S TRANSCRIPT 8 February 28, 2012 9 10 PUBLIC HEARING 11 ITEM F1 12 PROPERTY TAXES 13 STATE ASSESSEES PRESENTATIONS ON CAPITALIZATION 14 RATES AND OTHER FACTORS AFFECTING VALUES 15 16 17 18 19 20 21 22 23 Reported by: Juli Price Jackson 24 No. CSR 5214. 25 26 27 28 1 1 For the Board Jerome E. Horton of Equalization: Chairman 2 3 Michelle Steel Vice-Chairwoman 4 5 Betty T. Yee Member 6 7 Marcy Jo Mandel 8 Appearing for John Chiang, State 9 Controller (per Government Code 10 Section 7.9) 11 Diane G. Olson 12 Chief, Board Proceedings Division 13 14 15 ---oOo--- 16 For Staff: Ken Thompson Chief 17 State-Assessed Properties Division 18 19 20 ---o0o--- 21 INDEX OF SPEAKERS 22 Name Page 23 24 Peter Michaels 3 25 26 ---o0o--- 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 FEBRUARY 28, 2012 4 ---oOo--- 5 MR. HORTON: Ms. Olson? 6 MS. OLSON: Our next item is F1, Property Tax, 7 State Assessees' Presentation on Capitalization Rates 8 and Other Factors Affecting Values. 9 We do have one public speaker. 10 MR. HORTON: Okay. Members, we have before us 11 Mr. Peter Michaels speaking on F1. 12 We will call him as well. I am going to take 13 his testimony first, allow staff an opportunity in their 14 presentation address anything that they deem relative -- 15 although I think everything is. 16 Go right ahead. 17 ---o0o--- 18 PETER MICHAELS 19 ---o0o--- 20 MR. MICHAELS: Thank you very much, Members of 21 the Board and I don't know if Mr. Thompson expected to 22 go first. 23 MR. HORTON: That's okay. 24 MR. MICHAELS: Usually he does just to kind of 25 set the stage, but, either way is perfectly fine. And 26 these remarks will be brief. 27 The returns for State assessees are not even 28 filed yet, so, we're very early in the season. Those 3 1 returns are -- the deadlines is two days from today. 2 This is a capitalization rate hearing, but a 3 capitalization rate study hasn't been published and 4 Mr. Thompson and his staff -- we've been working closely 5 the whole year with Mr. Thompson and his staff on the 6 development of cap rates and on key issues of concern to 7 us. But the cap rate study won't being published for 8 another couple of weeks. So, we really can't comment on 9 something that hasn't been published. 10 But we can assure you that we're working 11 collaboratively on the cap rates. We're working 12 collaboratively on a couple of other key issues, 13 including embedded software and also treatment of 14 construction work in progress for some of the big 15 utility companies. 16 And, finally, I wanted to just acknowledge or 17 thank the Board, really, Mr. Thompson was able to send a 18 member of his staff to the Technology Futures conference 19 in Austin, Texas a few weeks back. And I think that was 20 a very excellent opportunity for one of the State 21 assessment appraisers, one of the experts on State 22 assessment to really hear from the experts what the 23 dynamics are in the telecommunications marketplace. I 24 think it made a pretty strong impression on the gent who 25 attended. 26 And I'm grateful that he was in the audience 27 there because there's a lot of of emerging property tax 28 related developments -- economic, technological, 4 1 legal -- and you had a representative in the room to 2 soak it all in and see how serious it is and how legit 3 it all is. 4 So, that said, we do have a pre-value hearing 5 set in Culver City for the 24th of April and at that 6 point we will have met specifically with the staff about 7 individual companies and about specific issues. So, at 8 that point I'm sure I'll have a little more to say than 9 today. 10 But at that maybe I'll conclude and thank the 11 Board for all the support we're getting out of the State 12 Assessed Properties. 13 MR. HORTON: Thank you very much, Mr. Michaels. 14 Mr. Thompson. 15 MR. THOMPSON: Thank you, Mr. Michaels, for his 16 input and with the companies he represents and other 17 companies we're working to complete the cap rate study 18 soon. And we'll be available in April to answer any 19 other questions or issues that arise at that time. 20 MR. HORTON: Thank you very much. Appreciate 21 that. 22 MR. MICHAELS: And just for the record, I want 23 to make sure you do have, I believe, a list of the 24 companies on whose specific behalf -- there are 19 25 companies today on whose behalf I'm here, including 26 local interexchange and wireless phone companies, 27 railroads, pipelines and gas and electric companies. 28 So, I believe you have the list of the 5 1 individual companies. 2 MR. HORTON: Yes. We appreciate your 3 continuing engagement in the process. 4 MR. MICHAELS: Thank you. 5 MR. HORTON: Thank you so very much. 6 ---o0o--- 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 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 February 28, 2012 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 6 constitute a complete and accurate 14 transcription of the shorthand writing. 15 16 Dated: March 16, 2012 17 18 19 ____________________________ 20 JULI PRICE JACKSON 21 Hearing Reporter 22 23 24 25 26 27 28 7