1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 8 REPORTER'S TRANSCRIPT 9 FEBRUARY 29, 2012 10 11 12 13 14 15 ITEM P5 ADMINISTRATION DEPUTY DIRECTOR'S REPORT 16 1. HEADQUARTERS FACILITIES UPDATE 17 18 19 20 21 22 23 24 25 26 27 REPORTED BY: Kathleen Skidgel 28 CSR NO. 9039 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 Marcy Jo Mandel Appearing for John 10 Chiang, State Controller (per Government Code 11 Section 7.9) 12 Diane G. Olson 13 Chief Board Proceedings Division 14 15 For Board of Equalization Staff: Liz Houser 16 Deputy Director Administration 17 Randy Ferris 18 Acting Chief Counsel Legal Department 19 20 Speakers: Angela Verbaere Department of General 21 Services 22 Jim Derby Department of General 23 Services 24 Nik Karlsson Department of General 25 Services 26 Jared Yocom SEIU Local 1000 27 District Labor Council 782 28 ---oOo--- 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 FEBRUARY 29, 2012 4 ---oOo--- 5 MR. HORTON: Ms. Olson. 6 MS. OLSON: Our next item is P5, Administration 7 Deputy Director Reports. And the first item is P5.1, 8 Headquarters Facilities Update. And we do have 9 speakers. 10 MS. HOUSER: Thank you. 11 Good morning, Chairman Horton and Members. I'm 12 Liz Houser, Deputy Director, Administration. 13 Before I begin my report, I would like to wish 14 everyone a happy Leap Year and thank our dedicated 15 employees for working one extra day this year. 16 MR. HORTON: Thank you. 17 MS. HOUSER: My first item is an update on the 18 450 N Street facility. The final reports regarding the 19 breaking spandrel glass from McGinnis Chen Associates, 20 Incorporated and Simpson Gumpertz Heger, Incorporated, a 21 structural engineering firm, indicate that the cause 22 cannot be determined definitively. But they expressed 23 the most likely reason was spontaneous fracture from 24 nickel sulfide impurity. 25 Since the failure was a spontaneous fracture, 26 the consultants indicated that additional failures could 27 occur. 28 We have asked DGS to get a second opinion on 3 1 the reason for the failure, as well as options to repair 2 the problem, and they are seeking that information now. 3 Given the circumstances, BOE has asked that 4 scaffolding be constructed around the building's 5 perimeter, to provide a tunnel over the sidewalk for 6 pedestrians. And that is in place now and will remain 7 in place until they resolve the issue. 8 In order to keep our employees informed and 9 answer any questions they have, we are working with SEIU 10 to host a Town Hall Meeting regarding the spandrel glass 11 failure. We've scheduled two sessions on March 1st, 12 here in the Board room, and they will be video-streamed. 13 Lastly, BOE is continuing our efforts to 14 replace the cafeteria vendor. In the meantime, a 15 variety of mobile food vendors will continue to make 16 meals available on a daily basis. 17 I would like to thank employees for their 18 patience and understanding as we work to provide a safe 19 quality work place for them. 20 And I believe we have a speaker on this issue, 21 Chairman. 22 MR. HORTON: Oh, we do. 23 Mr. Jared Yocom. Please come forward, sir. 24 Members, Jared is one of our team members, Tax 25 Tech III with the Board of Equalization. 26 Welcome. 27 MR. YOCOM: Chairman Horton, Vice Chair Steel, 28 and distinguished Members of the Board. I appreciate 4 1 the opportunity to address you on behalf of SEIU Local 2 1000 District Label -- District Labor Council 782 and 3 employees of the Board of Equalization. 4 On September 21st, 2011 our District Labor 5 Council President addressed this Board about health and 6 safety issues that concerned employees. I regret to 7 inform you that those concerns have only been magnified 8 and heightened in recent months after a win -- after a 9 window fell from the building onto the sidewalk, 10 shattering into countless pieces. 11 Perhaps the most troubling aspect of this 12 incident is that it has occurred before. Since 1999, 13 there have been six other window failures, some of which 14 have also resulted in glass crashing to the sidewalk. 15 The employees of this building have made it 16 known, through editorials, public comments to this 17 Board, and a letter with 465 signatures, that they 18 strongly support working in a new building. Yet month 19 after month, year after year, our voices are ignored. 20 We remain in a building that threatens our physical 21 health and undoubtedly impacts us on a psychological 22 level. 23 We have warned you and others that we fear this 24 situation will ultimately require a preventable tragedy 25 before the State advocates for our safety by moving us 26 into a new building. 27 We should not need to wait for someone to 28 eventually be fatally wounded by falling glass or 5 1 threatened by a separate calamity before action is 2 taken. But that will certainly be the case if apathy 3 and reservation continue to triumph over thoughtful 4 concern and proactive proposals. 5 I work diligently, along with my fellow 6 co-workers, for you and the State of California each 7 day. I think it's reasonable to expect to conduct that 8 work in a significantly safer environment where I never 9 have to weigh my job against my health and safety. 10 We will ultimately need the approval of people 11 who do not work in this building to decide if we must 12 continue to do so, which seems to divorce years of 13 personal experiences from important decisions. I would 14 hope that you actively raise these concerns with those 15 decision-makers by asking them to envision how they 16 would react to being told that their new office was 17 located at 450 N Street. I cannot imagine that they 18 would be very pleased. And if they would, then I know 19 at least 465 people who would gladly switch places with 20 them. 21 We appreciate the Board's continued efforts to 22 move our employees out of this building. We ask you to 23 redouble your support in light of this almost tragic 24 event. 25 Thank you. 26 MR. HORTON: Thank you very much. 27 Members? 28 Member Yee. 6 1 MS. YEE: Thank you. 2 Um, I know we're in the process of asking DGS 3 for a second opinion on the reason for the failure. 4 But, um, I would agree it does not give anyone great 5 comfort that these are, uh -- additional failures could 6 occur and that these are spontaneous fractures. So 7 we're kind of just taking it a day at a time and 8 crossing our fingers that nothing happens. Um, not a 9 way to really feel secure in a work environment. 10 What's the timing on the DGS second opinion? 11 MS. HOUSER: I do have representatives from DGS 12 here, and I'd ask that they come forward and provide 13 that information on timing. 14 MS. VERBAERE: Good morning. I'm Angela 15 Verbaere. I'm the Branch Chief for the Building and 16 Property Management Branch, Department of General 17 Services. 18 The timing on the second opinion, um, is that 19 we should have that work started within the next 30 20 days. And then we anticipate 20 to 30 days to get a 21 report back from the structural engineering firm. 22 MS. YEE: Okay. 23 Mr. Chairman, I -- I'm happy to entertain the 24 second opinion. But to the extent that there's not any 25 definitive determination about the cause and that 26 this -- these incidents continue to happen, um, I mean, 27 I feel a huge responsibility with respect to the safety 28 of our employees. And I think, uh, we ought to at the 7 1 same time ask Ms. Houser to look at what other options 2 we may have. 3 Um, I know it's always been challenging to 4 think about how we continue to move our employees out of 5 this building, uh, given the financial condition of this 6 building. And then also, just options generally with 7 respect to where to relocate employees. But, um, 8 that -- I think we'd all like to be able to sleep better 9 at night knowing that this isn't going to be happening. 10 So, um, I -- I want to thank DGS for coming in 11 and trying to get that second opinion as quickly as 12 possible. But if it ends up being the same result where 13 these no definitive determination, then we, as a Board, 14 kind of needed to take our best shot. And I -- I don't 15 know about my colleagues, but I don't want to take any 16 chances. 17 MR. HORTON: Further discussion. 18 Member Steel. 19 MS. STEEL: I have a question that within 30 20 days you're going to come back to report. What report? 21 Is it something has to be done or something -- 22 MS. VERBAERE: We'll have a report back from 23 the firm that's doing the second opinion as to what 24 their opinion is on the failure, whether or not they 25 found something that the first, um, vendor, McGinnis 26 Chen, didn't identify. And we're hoping that they'll 27 also come back with some recommendations for what can be 28 done as McGinnis Chen did in their report. 8 1 MS. STEEL: So you don't know exactly what can 2 be done and when it's going to be done. 3 MS. VERBAERE: No. At this point we have a -- 4 we have a couple of suggestions that have been made for, 5 um, either replacing the spandrel glass with another 6 material or different glazing and/or -- 7 MS. STEEL: Whole building? 8 MS. VERBAERE: Yes. 9 MS. STEEL: Okay. 10 MS. VERBAERE: And/or putting, um, safety film 11 over the glass so that it would keep it from falling. 12 But before we move to do those measures, we'd like to 13 get the second opinion and see if we have agreement from 14 a second firm that that really is the remediation 15 efforts that need to be undertaken. 16 MS. STEEL: Because really, it's interesting to 17 hear because, uh, it's been problem before even I came 18 to the Board. 19 MS. VERBAERE: Mm-hmm. 20 MS. STEEL: So, you know, I been here, what, 21 this is my sixth year. It's really interesting we 22 didn't do anything until we really waited until one 23 window fall down. And then now we are moving all over 24 again. 25 So, I thought it's been working on it and it 26 already done. So I am just kind of like really -- last 27 time when I heard that one of the window fall from the 28 building, I was really actually shocked. Because how 9 1 many years it's been that we been talking about this? 2 It's very dangerous for the employees. 3 As I said, maybe all the employees have to stay 4 inside of the building, so not go near the window 5 because you don't know what's going to happen. And you 6 cannot walk around the building because it's so 7 dangerous right now. 8 And, I mean, I -- I am just really shocked 9 that, you know, we have to wait another month and we 10 don't even know what we are doing to the building. And 11 I wish we can just really, same as, uh, Ms. Yee, that, 12 you know, we want to move out of this building so we can 13 have safe environment for the staff. But, you know, at 14 this point we are waiting another 30 days and then, you 15 know, I don't know how long it's going to take to do it. 16 If we can expedite that process a little faster 17 to -- you know, what we going to do, concrete report 18 that, you know, what we going to do and how long it's 19 going to take and it's not going to hurt our staff. I 20 think I really appreciate that. 21 MS. VERBAERE: When the previous glass, uh -- 22 spandrel glass, um, fractured some years ago, there were 23 measures taken at that time that we thought, um, took 24 care of the problem. So we were surprised as well. Um, 25 but there was a whole gasket system that was done on the 26 building. There's been considerable work done. 27 So now what McGinnis Chen is telling us is they 28 believe that this may be a flaw in some of the glass, 10 1 the spandrel panels. These are not windows. This is 2 the architectural feature on the building. 3 Um, so there were, um, remediation efforts that 4 were taken prior, in prior years when the other glass 5 fell. So, um, we're under the impression that this may 6 be a new issue, and that's what the second opinion will 7 tell us. 8 MS. STEEL: Okay. Something has to be done. 9 MS. VERBAERE: Mm-hmm. 10 MS. STEEL: As fast as we can move, you know. 11 Thank you. 12 MS. MANDEL: Question, Mr. Horton. 13 MR. HORTON: Yes, Ms. Mandel. 14 MS. MANDEL: Um, so, I remember when we had all 15 the scaffolding before. So now we have the -- or is 16 that what we call it? 17 MS. HOUSER: Scaffolding, yes, Ms. Mandel. 18 MS. MANDEL: Okay. Um -- I, um -- I had 19 occasion to be on the roof of the garage yesterday and 20 there's scaffolding. And then there's, you know, 21 scaffolding for a pathway out. And then there was a, 22 like, a caution tape sign for part of it on the -- what 23 street is that -- 4th Street side. But there's -- 24 there's nothing on those spaces on the -- what street is 25 that -- O Street side. Um, and there were a couple cars 26 parked there. Probably everybody else didn't want to 27 park there. 28 But I'm just curious as to the O Street side, 11 1 uh, I know it was a little windy yesterday, so I don't 2 know if there was -- was there a reason? I mean, is 3 there -- do we not have the spandrel glass on the O 4 Street side? I mean those -- I thought that you were 5 trying to block off, you know, close around the building 6 where things might (sound effect). 7 MS. HOUSER: Yeah, the scaffolding -- 8 MS. MANDREL: If they did. 9 MS. HOUSER: -- is supposed to be along the 10 area where the employees walk if the glass was to fall. 11 But we need to look -- 12 MS. MANDEL: Okay. 13 MS. HOUSER: -- at whether it's facing the row 14 of cars there. 15 MS. MANDEL: You might want to look because 16 there are parking -- 17 MS. HOUSER: I know what you're talking about 18 there. 19 MS. MANDEL: Yeah. And, you know, our 20 employees, I don't know how tired they are when they 21 drive in in the morning, but they may just see a -- a 22 empty sparking space and go, "Oh." 23 So it was interesting to me that that side 24 didn't have the caution tape the way it did over on the 25 4th Street side. 26 MS. HOUSER: Yeah. And we'll go double-check 27 it. Because if they need scaffolding there, we'll have 28 it put up also. 12 1 MS. MANDREL: Thank you. 2 MS. HOUSER: Because our -- our plan is for the 3 scaffolding to stay until the situation is remedied. 4 MS. MANDEL: Okay. 5 MS. HOUSER: So it could -- it could be a 6 while. I don't know how -- I think it took a year or so 7 for the last repair to occur. 8 MS. MANDEL: I just remember scaffolding a long 9 time. Felt like a New York State construction project. 10 Thank you. 11 MR. HORTON: Thank you. 12 Ms. Houser, um, the Town Hall Meeting that 13 we're going to be conducting, um, will DGS be there as 14 well? 15 MS. HOUSER: Yes. We'll have DGS 16 representatives there, as well as representatives from 17 McGinnis Chen so that they can describe in more detail 18 what this type of fracture is caused by. 19 MR. HORTON: Okay. Can you refresh our memory 20 as to what happened when the Board sought legislation to 21 address -- I mean, to deal with the number of issues 22 that we face here in this building? 23 MS. HOUSER: Yes. We -- we have -- uh, the 24 Board has pursued, um, both legislation and Budget 25 Change Proposals requesting -- to start the process to 26 move BOE out of the building. 27 Uh, the first bill was AB 151, and that bill 28 was vetoed by the Governor. We had a bill last year, 13 1 um, AB 1143 that, um, was going through the Houses and, 2 uh, at Finance's request, the bill was, uh, put on hold 3 so that we would have an opportunity for BOE and DGS to 4 work together to come up with firm numbers, uh, related 5 to the move and the cost of a back-fill tenant into this 6 building. 7 So we're working with DGS on those numbers now. 8 Um, and we're working to try to get a meeting with the, 9 uh, officials at Department of Finance to kind of show 10 them what the numbers are starting to look like and get 11 their feedback. So we are still pursuing, um, an 12 opportunity to go for -- receive funding to move us out. 13 Um, obviously in the current fiscal climate it 14 does present quite a challenge to be able to make a 15 strong enough case. Um, there -- there is the 16 perception that the building is repairable. So we're 17 still working with, uh -- with Finance and DGS to try to 18 come up with a solution that would, uh -- would meet our 19 business needs and resolve this matter. 20 MR. HORTON: Hm. The cost associated with the 21 challenges that we're facing seem to outweigh the 22 potential loss, in my mind. And particularly when 23 you've got glass falling, uh, out of a window, you've 24 got elevators dropping, you know, you've got mold 25 continuing to be found in various different areas. 26 You know, despite the best effort of our 27 qualified experts that come forth and DGS's -- they're 28 doing a -- I think they're going a yeoman's job, quite 14 1 frankly. I mean, they are doing what they can under the 2 circumstances. 3 But with all of that under consideration, one 4 would think that that's a cost that we, uh, shouldn't 5 risk. 6 But, question of DGS. Um, during the pre -- 7 during the, uh, process of the legislation, did DGS 8 weigh in on whether to veto the bill or not? Were you 9 supportive of the legislation? Do you recall? 10 MR. DERBY: Uh, Mr. Chairman, I apologize that 11 I was not at DGS at the time. I don't know if, uh, DGS 12 had an independent opinion or administration guidance 13 on -- on the bill. So I can't answer. 14 MR. HORTON: Do you recall, Ms. Houser? 15 MS. HOUSER: DGS was unable to give us an 16 official position on the bill publicly. Um, but when 17 the Governor's office was veto -- was briefed on the 18 bill -- generally someone makes a recommendation that 19 the bill should not be signed. I don't know who it was 20 that made that recommendation. It certainly wasn't BOE. 21 Uh, but they -- they were not given the ability -- you 22 know, when you work for the Governor's office, you can't 23 always say which way you want to go on a bill. So they 24 were not, um, allowed to weigh in on that bill when it 25 went through. 26 MR. HORTON: You did that very well. 27 Um, Mr. Ferris, could you please come forward, 28 please. 15 1 I mean, the Board has introduced legislation. 2 We have, um -- we're putting these units around the 3 building and we're doing everything we can to possibly 4 protect our employees, um, in addition to protecting 5 ourselves because we are housed here ourselves and 6 exposed to all of the issues that our colleagues and 7 team members are exposed to as well. 8 If glass was to fall on one of the Board 9 Members and if we were to contract some health issue 10 relative to this building, or if for some reason the 11 elevator shaft was -- we got on the elevator and there 12 was challenges -- and I can go on and on relative to -- 13 what would be our legal options? 14 MR. FERRIS: Well, if we weren't a State agency 15 in a captive lease arrangement with the State, we would 16 consider ourselves to be constructively evicted or take 17 other kinds of actions along those lines. 18 But -- but we're not a typical tenant. So, um, 19 our legal options are, uh, limited. 20 MR. HORTON: As an agency? 21 MR. FERRIS: Yes. 22 MR. HORTON: I'm not asking you for legal 23 advice. So I'm going to, uh, indemnify you. But what, 24 personally, our employees could -- 25 Um, in fact, I'm going to leave that alone 26 because I happen to know the answer, but, um -- 27 Let's, um -- let's meet with the leadership of 28 DGS and have a discussion, uh, going forward, um, on how 16 1 we can best address this. Please set a meeting up for 2 myself and any of my colleagues that would like to join 3 us. And let's just have a discussion about this. 4 I'd like to have you present as well, um, 5 Randy. 6 MR. FERRIS: Mm-hmm. 7 MR. HORTON: And possibly confer with their 8 attorneys as well. 9 I mean, the exposure is ultimately to the State 10 of California and to the taxpayers of the State of 11 California, even though we're talking -- DGS is the 12 State. State Board of Equalization is the State. DGS 13 employees are State employees, and so forth and so on. 14 And so, we don't want to be penny-wise and found -- and 15 pound foolish, and there are a number of other terms 16 that you use to express that. Um, and we don't want to 17 necessarily wait on the crime before we begin to take 18 enforcive action to protect the community, in this case 19 the community being, uh, State Board of Equalization 20 employees. 21 Um, so -- um, I know we've addressed this 22 before, but maybe we reintroduce the legislation and 23 just keep the issue out there at the forefront. It made 24 it through the process. The Governor vetoed it. Uh, we 25 have a new Governor, uh, now, and -- or maybe we 26 introduce some budget proposal language again to try to 27 address that. 28 But let's see if we can get DGS's support. I 17 1 mean, they're our sister agency. I don't want to get 2 into a situation where we're pointing the fingers and 3 blaming DGS. But unfortunately, without DGS's support 4 no Governor's going to sign a bill if their advisors, 5 which happens to be the entity, uh, overseeing the area, 6 DGS says, "Well, we think we can fix it." You know, I 7 mean, after X number of years, "Well, we think we can 8 fix it" is just not going to work after a while. 9 So, uh, and we've got a -- do we have a new 10 Director over there at DGS? 11 MS. VERBAERE: Yes, we do. 12 MR. HORTON: Yeah. Very talented individual. 13 Very sensitive to employees and employees' issues. 14 MS. VERBAERE: Yes, he is. 15 MR. HORTON: I mean, I am very excited about an 16 opportunity to meet with him. 17 How about you, Ms. Yee? 18 MS. YEE: Uh, he's a great individual. 19 MR. HORTON: Okay. Good. All right. 20 So, um, thank you very much. Appreciate your 21 presentation. 22 Thank you as well, DGS, for your conscious 23 efforts and all that you're doing to try to make this 24 thing happen for us. 25 ---oOo--- 26 27 28 18 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, KATHLEEN SKIDGEL, Hearing Reporter for the 8 California State Board of Equalization certify that on 9 February 29, 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 18 constitute a complete and accurate 14 transcription of the shorthand writing. 15 16 Dated: March 7, 2012 17 18 19 ____________________________ 20 KATHLEEN SKIDGEL, CSR #9039 21 Hearing Reporter 22 23 24 25 26 27 28 19