1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 REPORTER'S TRANSCRIPT 8 NOVEMBER 15, 2012 9 10 P OTHER ADMINISTRATIVE MATTERS 11 P4 PROPERTY AND SPECIAL TAXES 12 DEPUTY DIRECTOR'S REPORT 13 P4.1 FIRE PREVENTION FEE PROGRAM UPDATE 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 Joann Richmond Chief, Board 16 Proceedings Division 17 18 David Gau Deputy Director 19 Property and Special Taxes 20 21 ---oOo--- 22 23 24 25 26 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 NOVEMBER 15, 2012 4 ---oOo--- 5 MR. HORTON: Ms. Richmond? 6 MS. RICHMOND: Our next item is P4.1, Fire 7 Prevention Fee Program Update. 8 MR. GAU: Good afternoon, Mr. Chairman and 9 Members. David Gau, Deputy Director of the Property and 10 Special Taxes Department. 11 I have brief update for you today regarding the 12 ongoing effort to -- for the fire fee -- fire prevention 13 fee implementation. 14 You should have a -- had a report recently from 15 me that was current as of last Friday, November 9th, 16 that indicates that we've mailed about -- almost 17 600,000 -- 598,000 advance notices. We're currently 18 mailing in Tehama County. We've also mailed about 19 573,000 billings, currently in San Luis Obispo. 20 I just want to note for the record that we -- 21 hopefully we will be done with the -- all of the 22 billings by about December 11th and that will be the 23 825,000. So, we're getting there. 24 We've also received approximately $31 million. 25 CalFire indicates to us that they've acknowledged about 26 38,000 appeals. Of the appeals, about 22 percent have 27 made no payment, 1 percent make a partial payment and 28 then 77 percent have paid the amount in full. They've 3 1 resolved about 6200 appeals -- 15 percent with 2 adjustment and 85 percent without adjustment. 3 One of issues that I wanted to address this 4 morning -- or this afternoon has to do with kind of an 5 ongoing issue that we've encountered with the double 6 billings on manufactured homes. The data that the third 7 party vendor for CalFire received, in combination from 8 Housing Community Development and also then in the data 9 that they get on the property tax roll, when they're 10 merged and if they don't line up quite precisely, these 11 differences have resulted in double billings to some of 12 these owners. 13 Initially it was known that that was going to 14 happen. It was noted on the Petition for 15 Redetermination documentation -- that it was highlighted 16 as an item that they could appeal on. 17 One of the things that they have done is tried 18 to identify these in advance. They have identified 19 about 19,000 to us that have avoided the duplicate 20 billing. However, there are many that have not. 21 So, what they've done as far as indicating how 22 to handle these at CalFire, they're obviously reviewing 23 these when the feepayer has cited this duplicate billing 24 issue and they are adjusting as necessary. And this is 25 true even if they -- the feepayers missed their time for 26 filing a petition. 27 On our -- on the Board's end, what we have done 28 is we're advising callers to go ahead and petition both 4 1 accounts and only pay what -- which one they feel is the 2 correct amount. They don't necessarily need to -- they 3 don't need to pay either per bill for CalFire to accept 4 the petition and review the account. 5 Again feepayers that have missed the petition 6 deadline can send a letter to CalFire with that 7 supporting documentation. And then CalFire is reviewing 8 those and adjusting where they do find that duplication. 9 This is an effort -- they're -- in subsequent 10 years or in billing periods, hopefully, this will be 11 resolved or at least reduced as these duplicates are 12 resolved in their database. 13 That concludes my report. And I'd be happy to 14 entertain any questions at this time. 15 Thank you. 16 MR. HORTON: Member Steel. 17 MS. STEEL: Just question -- you know, those 18 burned down buildings and they still getting the bills. 19 And how long it's going to take to clear -- clean the -- 20 MR. GAU: Data? 21 MS. STEEL: -- data? 22 MR. GAU: Data base? 23 MS. STEEL: Uh-huh. 24 MR. GAU: Well, hopefully, if they file a 25 petition, CalFire has up to 60 days to resolve. And if 26 it is an issue of a habitable structure no longer being 27 there, it should be resolved within that period of time 28 and would be such that it would not in subsequent years 5 1 or in billing periods, then it should be resolved -- 2 MS. STEEL: Because most -- 3 MR. GAU: -- on an ongoing basis. 4 MS. STEEL: -- right. Those buildings that 5 burned down -- 6 MR. GAU: Right. 7 MS. STEEL: -- and there is no structures and 8 they never really received those bills. 9 So, I think it's going to take longer because 10 some of them, like the double billings, and that I 11 understand, but if there's no structure and they're not 12 getting any, you know, bills, then I think -- you know, 13 we have to do something about it because I get 14 e-mails -- at least couple of them. 15 I think Member Runner gets many, many more 16 because his district is more there. But, you know, I -- 17 I still get couple of complaints every day. So -- 18 MR. GAU: I'd be happy to -- 19 MR. HORTON: We get them too. 20 MR. GAU: -- work with you to resolve those. 21 MS. STEEL: Thank you. 22 MR. GAU: So, I will specifically contact your 23 office to deal with those. 24 MS. STEEL: All right. 25 MR. HORTON: Member Yee. 26 MS. YEE: Thank you, Mr. Chairman. 27 First, I just want to commend the staff for 28 continuing to implement a program that just pretty much 6 1 started out being a little bit of a mess with respect to 2 the data with which we had to work. But I also think 3 that with the volume of feepayers that we're looking at 4 here, it's what, over 800,000 -- 5 MR. GAU: That's correct. 6 MS. YEE: -- that we're dealing with? 7 That I want to be sure that we're being very 8 open and truthful about the stress that this has put on 9 our own resources. I don't think this was really 10 anticipated, contemplated, but certainly, given the fact 11 that we are dealing with multiple problems associated 12 with implementation of this fee, I not only want this 13 Board to highlight what those problems are, we've all 14 heard about them in our district or our legislative 15 leaders and the Governor, but also with respect to the 16 strain that it's placed on our own resources. 17 It's not a coincidence, I think, that we're 18 getting all of the complaints and, you know, trying to 19 resolve them as quickly possible. But I think this use 20 of -- and I'm not sure if Ms. Houser's in the room -- 21 but this use of overtime, particularly seasonal 22 employees, just to try to continue to keep up with the 23 backlog just -- created as a result of, you know, 24 dealing with just not very robust data from the 25 beginning, is starting to put some strain our resources. 26 And I wanted to just have a discussion about 27 what that's going to look like going forward. I know 28 you're in the process of preparing a timeline for how 7 1 we're going to resolve much of this. And this is not to 2 point the finger to the staff, but it's just -- the 3 taxpayers are -- the feepayers are unhappy. And I just 4 want to figure out how we're going to expedite resolving 5 some of these problems that have surfaced, particularly 6 those who have paid the fee and are being, you know, 7 obviously getting demand notices now I think is really 8 not a very pleasant situation and is probably our top 9 complaint day to day. 10 But I would just like to ask if -- and if 11 anyone in the Administration Department is listening, we 12 really need to get a handle on this with respect to the 13 resources. It's not something that I would normally 14 think about having seasonal employees, you know, 15 participating in. 16 It's a new program. I would hope that had we 17 had more robust data given to us, that we'd have the 18 proper staffing to deal with this -- permanent, 19 full-time staff. We also are incurring a lot of 20 overtime in dealing with the problems that have come up. 21 But I'd like to just have some good 22 documentation of all of that. And, you know, I know the 23 fee is contentious, it's being challenged. We still do 24 have to implement it, but I do not want it implemented 25 at a -- at a price in terms of our other, you know, 26 programs and services that we're providing to taxpayers. 27 So, if we can have an accounting of what all 28 has -- has been incurred with respect to implementation 8 1 of the fee, that would be great. And then other 2 alternatives besides using seasonal employees and 3 overtime. 4 MR. GAU: Uh-huh. 5 MR. HORTON: Mr. Runner. 6 MR. RUNNER: Yeah. And I -- and I do want to 7 again add onto that and thanks to the staff because it 8 has been a challenging issue. 9 And oftentimes we hear about these things even 10 when we go away with people who we want to go away with 11 and have a good time with and they bring up this kind of 12 an issue. 13 I can personally -- let me just -- 14 MR. GAU: I agree with that one, yes. 15 MR. RUNNER: -- let me just -- a couple of 16 observations. 17 But, again, I think Member Yee's comments are 18 -- are appropriate and we need to be able to make sure 19 we're reflecting back on those issues, the strain that 20 it's put on the system. 21 The challenge I think we're going to have is 22 not only what's been -- had been done in the past, but 23 what's going to go on in the future. And, again, I know 24 we're kind of working through these, but -- but to -- 25 kind of my notes tell me that we've got about a 32 26 percent noncompliance rate after determinations. 27 So, now the question's going to be, how much 28 money do we spend and what's the process that we're 9 1 going to do on the collection side for a bill that is up 2 to, what, $150, but many of them are only $115? And how 3 quickly do we burn through the costs in trying to chase 4 down $115? 5 So, I think that's -- I think we're going to -- 6 I think we not only have the past issue in regards 7 what's going on, all that, but now we've got this 8 follow-up with a significant amount of noncompliance. 9 You know, one of issues that I know that in our original 10 estimates we thought we'd have, I think, a seven or 11 eight percent, something like that. 12 MR. GAU: That's correct. 13 MR. RUNNER: Now I assume that this -- after a 14 little bit of time, I assume the 32 will go -- percent 15 will go down, but I don't imagine it's going to go down 16 to seven or eight percent. 17 So, I think we're going to end up with even 18 additional costs beyond what we had even originally put 19 in the BCP as a result of that higher noncompliance. 20 So, I think both looking back in regards to 21 what the costs are and I think looking forward is 22 something that we need to be able to communicate and get 23 clarity on because it's going to be with us for a 24 while. 25 MR. HORTON: Thank you. 26 You had mentioned that the taxpayer was being 27 encouraged to file an appeal on both sides of the -- 28 MR. GAU: Yeah, as a protection matter. 10 1 MR. HORTON: Are these obvious appeals? Is 2 there a way that we can minimize the burden on the 3 taxpayer to actually file an appeal or simplify it at 4 least? 5 MR. GAU: You know, it's one -- it's a data 6 issue. And it requires them to provide, in this case, 7 CalFire, with that documentation that they have got -- 8 they got -- they are that same owner, although it may 9 look different because the name doesn't specifically 10 match, but we're one and the same. And they have to 11 just prove that out. 12 MR. HORTON: Okay. Let me echo Member Yee's 13 and Member Runner's concern relative to the utilization 14 of non full-time employees. 15 As the Board of Equalization is burdened with 16 these responsibilities, we want to encourage the 17 legislature and others to provide the funding to allow 18 us to -- to -- to adequately fulfill the intent of the 19 legislation. And that can, in my opinion, as best 20 happens, if we're able to bring on limited term 21 employees in a full-time capacity. 22 Having to bring on seasonal employees because 23 we need to expedite to address particular challenges and 24 so forth creates long-term deficiencies from my 25 perspective. 26 MR. GAU: Clearly understood. 27 And we'll -- we'll come back with that timeline 28 and those corrective actions and how we're going to 11 1 address the resource issue, as well as on the collection 2 efforts, where we anticipate going with that. 3 MR. HORTON: Maybe we can make a report to the 4 legislature, a quarterly report to the legislature, on 5 all of these items so that they are publicly made aware 6 of the challenges that we face, as well as the benefits. 7 You know, certainly there are benefits to it as well. 8 Thank you -- 9 MR. GAU: Thank you. 10 MR. HORTON: -- very much. 11 ---o0o--- 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 12 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 15, 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 12 constitute a complete and accurate 14 transcription of the shorthand writing. 15 16 Dated: December 12, 2012 17 18 19 ____________________________ 20 JULI PRICE JACKSON 21 Hearing Reporter 22 23 24 25 26 27 28 13