BILL ANALYSIS
AB 1590
Page 1
Date of Hearing: January 12, 2010
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Mary Hayashi, Chair
AB 1590 (Solorio) - As Amended: January 6, 2010
SUBJECT : Orange County Fair: sale of state property.
SUMMARY : Repeals Department of General Services (DGS)
authorization to sell the property known as the Orange County
Fairgrounds (OCF) in the City of Costa Mesa. Specifically, this
bill :
1)Repeals the provisions creating agricultural district
(District) 32a out of the OCF property.
2)Repeals the creation of the District 32a Disposition Fund in
the State Treasury.
3)Takes effect immediately as an urgency measure.
EXISTING LAW :
1)Authorizes DGS to sell all or any portion of the property that
composes the OCF, by means of a public bidding process deemed
to be the fair market value for the property and designed to
obtain the highest, most certain return for the State from a
responsible bidder.
2)Requires DGS, 30 days prior to executing a sale transaction,
to report to the chairs of the fiscal committee chairs of the
Legislature the financial terms of the transaction, a
comparison of fair market value for the real property and any
basis for agreeing to terms and conditions other than fair
market value.
3)Requires DGS to report to the Legislature on or before June
30th of each year on the status of the OCF's sale.
4) Requires that the proceeds of the sale be deposited in the
General Fund (GF).
5)Stipulates in Government Code (GC) 1090 that members of the
Legislature, state, county, district, judicial district, and
city officers or employees shall not be financially interested
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in any contract made by them in their official capacity, or by
any body or board of which they are members. Nor shall state,
county, district, judicial district, and city officers or
employee be purchasers at any sale or vendors at any purchase
made by them in their official capacity.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author's office, "With
little oversight of [ABX4 2, the bill that authorizes the OCF
sale] and very little understanding of the implications of what
would happen should this measure be enacted, [ABX4 22] passed
the Assembly on a 76-4 vote. Since that time new information
has emerged, which has raised many questions about the proposed
[OCF] sale. Minimally, there appears to be widespread support
at the local level to at least postpone the [OCF] sale until
more is known about the ramifications of the sale."
In a letter to Governor Arnold Schwarzenegger, the author writes
that although initially he supported the legislation authorizing
the sale of the OCF, his opinion has since changed because he
asserts that, "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."
Background . ABX4 22, approved on July 28, 2009, authorized DGS
to sell OCF as part of an effort to balance the 2009-10 state
budget. DGS is proceeding with the sale.
Potential OCF buyers must submit qualifying financial
information to DGS by Friday, January 8. An auction will follow
on January 14th. According to the terms of ABX4 22, DGS will
determine the highest bidder and notify both Legislative
committee chairpersons if they decide to proceed with the sale.
This report to the Legislature triggers a 30 day waiting period
before DGS may execute the OCF purchase agreement.
The bill did not, however, necessarily provide for legislative
approval of the OCF sale. ABX4 22 requires that DGS report the
terms of sale, but did not specify whether the Legislature may
act on the information. Further, the bill lacks timelines for
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DGS to assess the highest bid amount, notify the Legislature, or
complete the OCF sale.
ABX4 22 and OCF Sale Authorization
The Orange County Counsel (Counsel) raised concerns to the
Attorney General about the OCF sale on October 30, 2009.
Counsel was concerned that the Orange County Fair Board (Board),
also known as the Board of Directors of the 32nd District
Agricultural Association, illegally formed the Orange County
Fair and Event Center Foundation (Foundation). The Board used
public funds to contract with a firm to lobby the Governor's
office regarding the terms and conditions of the OCF sale.
Counsel questioned the Board's decision to use its funds to
influence the OCF sale terms because some Board members were
also Foundation members, and would stand to personally benefit
financially from the OCF sale under the Board's requested terms.
Thus, the use of public funds for private benefit would be
illegal and thus, void. According to the author's office, the
District Attorney is conducting a criminal investigation into
the use of public funds.
Concerns have also been raised about the constitutionality of
ABX4 22 because it attempts to circumvent a mandate in the state
constitution requiring the sale of surplus state property to
service bond debt. ABX4 22 declares that the OCF sale "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," thereby freeing the money for other uses. A
preliminary consultation with Legislative Counsel indicates that
a statute may not amend the California Constitution, and thus,
ABX4 22 may be invalid.
Finally, AB 1590's author does not believe the OCF sale will
generate the revenue initially projected, nor does it consider
the fate of over 100 state fair employees.
Support . According to the City of Costa Mesa, "For the State to
sell this valuable resource in a down real estate market as a
Fairgrounds will not generate anywhere near the original revenue
estimate, and therefore the sale will have little positive
impact on the budget crisis."
According to the Mayor of Irvine, "Selling the Orange County
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Fair and Event Center would only add to the tremendous economic
impacts being felt by residents and businesses throughout Orange
County. It serves as a significant asset to the hundreds of
small businesses who operate at the Fairgrounds throughout the
year."
The Student Senate of Orange Coast College supports the bill
because the Coast Community College District has agreements with
District 32a to allow students to use the OCF parking lot and
the amphitheater for commencement ceremonies.
According to Service Employees International Union (SEIU) Local
1000, "A sale of the fairgrounds would reverberate throughout
the community, negatively affecting more than our members, but
the Orange County Marketplace, fair vendors, fair promoters, and
others with direct and indirect economic relationships with the
fairground."
Prior Legislation . ABX4 22 (Evans), Chapter 20, Statutes of
2009, authorized DGS to sell the property known as the OCF.
Double-referred . This bill is double-referred to Assembly
Budget Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
California-Nevada Conference of Operating Engineers
City of Brea
City of Costa Mesa
City of Fountain Valley
City of La Habra
City of Laguna Niguel
City of Lake Forest
City of Mission Viejo
City of Newport Beach
City of San Juan Capistrano
City of Santa Ana
City of Yorba Linda
Coast Community College District
Councilmember Brad Reese, City of Villa Park
Friends of Harbors, Beaches, and Parks
International Association of Bridge, Structural, Ornamental and
Reinforcing Iron Workers, Local Union 416
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Mayor Carolyn V. Cavecche, City of Orange
Mayor Sukhee Kang, City of Irvine
Mayor W. Richard Ulmer, City of Villa Park
Orange Chamber of Commerce
Orange County Board of Supervisors
Orange County League of Conservation Voters
Orange Park Association
SEIU Local 1000
Sierra Club
Student Senate of Orange Coast College
Tel Phil Enterprises, Inc.
Opposition
None on file.
Analysis Prepared by : Joanna Gin / B. & P. / (916) 319-3301