BILL ANALYSIS
SB 1527
Page 1
SENATE THIRD READING
SB 1527 (Yee)
As Amended July 14, 2008
2/3 vote. Urgency
SENATE VOTE :27-9
BUSINESS & PROFESSIONS 7-2 APPROPRIATIONS 12-3
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|Ayes:|Eng, Carter, Hayashi, |Ayes:|Leno, Caballero, Davis, |
| |Hernandez, Horton, | |DeSaulnier, Furutani, |
| |Galgiani, Torrico | |Huffman, Karnette, |
| | | |Krekorian, Lieu, Ma, |
| | | |Nava, Solorio |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Duvall, Maze |Nays:|Walters, La Malfa, |
| | | |Nakanishi |
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SUMMARY : Directs the Department of General Services (DGS) to
enter into negotiations, prior to January 1, 2009, to sell at
fair market value, with certain restrictions, a parcel of state
property located in the County of San Mateo and the City and
County of San Francisco, known as the Cow Palace.
Specifically, this bill :
1)Requires DGS, in consultation with the Department of Food and
Agriculture (DFA), prior to January 1, 2009, to enter into
negotiations to sell at fair market value, as specified,
without any conditions relating to entitlement, to any
interested third party, with the Daly City Redevelopment
Agency (DCRA) afforded the right of first refusal, a specified
parcel of property located within the City and County of San
Francisco and the County of San Mateo known as the Cow Palace.
2)Specifies that if DCRA exercises its right of first refusal or
enters into negotiations with DGS pursuant to the above, then
DCRA and DGS shall enter into a written agreement within 90
days to complete the sale of the property at least at its fair
market value but for no less than the accepted bid, proposal,
or offer.
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3)Specifies that fair market value shall be evaluated at the
highest and best use of the property as entitled within its
existing zone designation, and as governed by the Uniform
Standards of Professional Appraisal Practice.
4)Specifies that if the DCRA and DGS do not enter into a written
agreement for the purchase of the property within 90 days, DGS
may sell, transfer, or otherwise dispose of the property as
provided by law.
5)Requires the sales agreement to include a requirement that the
purchaser develop the property for uses consistent with the
general plan of the City of Daly City, any amendment to the
general plan, and the Bayshore Revitalization Redevelopment
Plan.
6)Requires DGS to be reimbursed by the buyer for any costs or
expenses incurred in the disposition of the property.
7)Requires that the net proceeds from the disposition of the
property be paid into the Fairs and Exposition Fund (F&E Fund)
for the benefit of the District 1-A Agricultural Association
(DAA 1-A).
8)Provides that DFA, until June 1, 2012, shall assume only the
rights, duties, and powers of the board of directors of the
DAA 1-A affiliated with negotiating the sale of the property.
9)Requires the DFA, in coordination with DGS, to provide to the
Legislature a report analyzing the business operations of the
DAA 1-A for the previous five years and make recommendations
identifying the best use of the property, by June 1, 2013.
10)Contains an urgency clause, allowing this bill to take effect
immediately upon enactment.
EXISTING LAW :
1)Requires DGS to perform various functions with respect to
state property, and provides for the sale, lease, or transfer
of surplus state property, upon authorization by the
Legislature. Each state agency is required to annually review
proprietary state lands under its jurisdiction to determine
what lands are in excess of the agency's foreseeable needs and
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to report their findings to DGS.
2)Provides criteria for state agencies to use in determining and
reporting to DGS lands in excess of the agency's foreseeable
needs. Under existing law, DGS is responsible for determining
if surplus land is needed by any other state agency. The law
also provides that if the land is not needed by another state
agency, the property shall be offered to local governments for
local government facilities, parks and recreation, open-space,
low or moderate income housing, and local schools.
3)Requires, among other things, that the proceeds from the sale
of surplus state property, with specified exceptions, be used
to pay the principal and interest on the Recovery Bond Act of
2004 (Proposition 60A of November 2004, SCA 18 [Johnson],
Resolution Chapter 103, Statutes of 2004).
FISCAL EFFECT : According to the Assembly Appropriations
Committee analysis:
1)Unknown one-time revenue to the Fairs and Exposition Fund from
the property sale, net of any costs to DGS to administer the
transaction. It is unclear whether the disposition process
required in the bill would result in less than optimum
revenues to the state. (See Comment #5.)
2)One-time cost, probably under $50,000, to DFA for the report.
COMMENTS : According to the author, "The Bayshore neighborhood
in Daly City is in desperate need of basic services. There are
no post offices, no pharmacies and no grocery stores in the
area. In fact, residents who live in proximity to the facility
must take three buses to get to the closest grocery store.
"The structure commonly known as the Cow Palace is located on 68
acres of property located in the Bayshore neighborhood within
the jurisdiction of Daly City. Within the footprint of the Cow
Palace property is a 13 acre overflow parking lot, which is
rarely used.
"Unfortunately, The Cow Palace is currently running an operating
deficit of nearly $700,000. Over the past five years the Cow
Palace has lost over $1.5 million dollars. The facility is in
great need of a cash infusion in order to provide much needed
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updates. State estimates show that in order for the structure to
become seismically safe it would cost nearly $50 million
dollars. Additional funds are needed to allow the property to
become ADA (Americans with Disabilities Act) compliant and to
replace the faulty roof."
The state's network of fairs includes 81 fairs operating under a
variety of governance structures, including 54 district
agricultural associations (state agency fairs), 23 county fairs,
two citrus fruit fairs (independent nonprofit organizations with
state oversight), and the California Exposition and State Fair
(Cal Expo), also a state agency fair. The 54 district
agricultural associations are managed under the DFA within the
Division of Fairs and Expositions. Each fair operates with a
degree of autonomy with a board of directors appointed by the
Governor and in accordance with state law. For 75 years,
license fees assessed against California horseracing have been
the sole state support for the California network of fairs
through the Fairs and Expositions (F&E) Fund. Existing law
guarantees the Fairs and Exposition Fund will receive $40
million annually generated by horseracing license fees.
The initial proposal for construction of the Cow Palace was a
result of the success of the 1915 Pan Pacific International
Exposition in San Francisco. After several attempts to develop
the Cow Palace locally, a legislative appropriation was passed
in 1931 to purchase a suitable site. Twenty years after its
inception, and at the height of the Depression, the Cow Palace
was built under the New Deal "Works Progress Administration"
(WPA) program as part of a federal effort to put Americans back
to work. Since opening in 1941, the Cow Palace has hosted a
wide variety of sporting events, and concerts, etc., including
the Grand National Rodeo, Ringling Bros. Barnum & Bailey Circus,
the San Francisco Flower and Garden Show, the Golden Gate Kennel
Club Dog Show, and Disney on Ice. Events at the Cow Palace can
bring over 500,000 visitors. The facility is currently running
a deficit of $600,000. The Division of Fairs and Expositions is
providing a loan of $336,000 to the Cow Palace to help address
the shortfall. This loan is in addition to an annual allocation
of approximately $175,000 from the F&E Fund to the Cow Palace
for the Grand National Rodeo.
This bill would require DGS to enter into negotiations to sell,
at fair market value, a 12.97 acre parcel of state owned
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property adjacent to the Cow Palace that is currently used as
overflow parking. DCRA will be given a right of refusal to
purchase the property, and if a sale agreement between DGS and
the DCRA is not executed within 90 days of entering
negotiations, DGS is authorized to sell the property to other
parties.
In March 2008, the DAA 1-A released a request for proposal (RFP)
to lease this parcel with the expectation that the lease could
generate $1.5 million in revenue annually. The RFP is
consistent with the City of Daly City's master plan to construct
a grocery store, bank, and affordable housing on the site.
Responses to the RFP were due June 30, 3008 and DGS, DFA, and
the DAA 1-A are currently negotiating with three bidders who
responded to the RFP.
Analysis Prepared by : Ross Warren / B. & P. / (916) 319-3301
FN: 0006601