BILL ANALYSIS
AB 1590
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Date of Hearing: January 21, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 1590 (Solorio) - As Amended: January 6, 2010
Policy Committee: Business and
Professions Vote: 11-0
Urgency: Yes State Mandated Local Program:
No Reimbursable:
SUMMARY
This urgency bill repeals the Department of General Services'
(DGS) authority to sell the state-owned Orange County
Fairgrounds (OCF) in Costa Mesa.
FISCAL EFFECT
Potential revenue loss to the state exceeding $50 million, based
on bids received last week.
COMMENTS
1)Background . ABX4 22, a trailer bill to the 2009-10 state
budget, authorized DGS to sell the OCF in order to help
address the state's ongoing budget shortfall. On January 11,
DGS received seven bids for the property. In a live auction
conducted on January 14, the high bid for the property was
$56.5 million. (This amount, however, is less than the $96
million assumed in the governor's recent budget proposal to be
received in 2011-12 for the OCF property.) Should it go
forward with a sale, DGS must notify the chairs of the
legislative fiscal committee 30 days prior to executing an OCF
purchase agreement.
2)Purpose . The author, while initially supportive of ABX4 22,
asserts "the process for carrying out this sale has been
tainted by misinformation, misrepresentation, conflicts of
interests, questionable legal and ethical activities, and that
a potential constitutional barrier regarding the sale of the
property exists."
AB 1590
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With regard to the author's last point, ABX4 22 declares sale
of the OCF "does not constitute a sale or other disposition of
state surplus property within the meaning of Section 9 of
Article III of the California Constitution," which earmarks
the proceeds of such sales to debt service on the state's
Economic Recovery Bonds until those bonds are retired.
According to the author, his preliminary consultation with
Legislative Counsel indicates that this language in ABX4 22
may be invalid.
It should be noted, however, that if the proceeds did have to
be used to help retire bond debt, this would still be a
benefit to the General Fund.
3)Support . The bill is supported by the Orange County Board of
Supervisors and numerous cities within the county, as well as
the county chamber of commerce and other groups. Supporters
argue the bill will have a negative economic impact on the
community and more directly, on the businesses who operate at
the fairground and to over 100 state fair employees.
4)Opposition . The State and Consumer Services Agency disagrees
with removing the state's opportunity to sell this
"high-value" property. The agency notes that, to address
concerns that the market is currently not favorable for
selling real estate, the request-for-proposal for the sale
includes a profit participation provision, such that if a
change in use of the fairgrounds property results in an
increase in value, the buyer must pay the state 15% of the new
value above the original purchase price.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081