BILL ANALYSIS
SB 586
Page 1
SENATE THIRD READING
SB 586 (Yee)
As Amended August 24, 2009
2/3 vote. Urgency
SENATE VOTE :35-0
BUSINESS & PROFESSIONS 11-0 APPROPRIATIONS 17-0
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|Ayes:|Hayashi, Emmerson, |Ayes:|De Leon, Conway, Ammiano, |
| |Conway, Eng | | |
| |Hernandez, Nava, Niello, | |Charles Calderon, Coto, |
| | John A. Perez, Ruskin, | |Davis, Duvall, Fuentes, |
| |Smyth, Monning | |Hall, Harkey, Miller, |
| | | |John A. Perez, Skinner, |
| | | |Solorio, Audra |
| | | |Strickland, Torlakson, |
| | | |Hill |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Directs the Department of General Services (DGS), in
consultation with the Department of Food and Agriculture (DFA) to
enter into negotiations by 2010, to sell at fair market value, to
any interested third party, 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)Provides the coordinates of the 13-acre property at the Cow Palace
for sale, identified as "Parcel A."
2)Requires a notice of every public auction or bid opening on the
parcel for sale to be printed in a newspaper of general
circulation published in the county in which the parcel is
located.
3)Prohibits DGS from selling the parcel below fair market value.
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.
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4)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.
5)Requires DGS to be reimbursed by the buyer for any costs or
expenses incurred in the disposition of the property.
6)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).
7)Provides that DFA, following 30 days of this bill's enactment, to
assume only the rights, duties, and powers of the board of
directors of the DAA 1-A associated with negotiating the sale of
the real property of the DAA 1-A.
8)Makes legislative findings and declarations.
9)Takes effect immediately as an urgency measure.
FISCAL EFFECT : According to the Assembly Appropriations Committee,
unknown one-time revenue to the F&E Fund from the property sale, net
of any reimbursement to DGS for the department's cost to administer
the disposition.
COMMENTS : According to the author's office, "The structure commonly
known as the Cow Palace is located on 68 acres of property located
within the jurisdiction of the City of Daly City and the Daly City
Redevelopment Agency (DCRA) ? The Cow Palace imposes a financial
challenge to Daly City because of the high cost of providing excess
public safety services to the facility. The Cow Palace constrains
improvement of the Bayshore neighborhood and remains in blighted
condition due to its deteriorated physical infrastructure and
non-conformance with seismic and American Disabilities Act
requirements.
"This bill allows DGS to sell, at fair market value, 13 acres of
property adjacent to the Cow Palace. The 13 acres that the bill
identifies is an overflow parking lot. This bill will not result in
the sale of the Cow Palace. The funds that result from the sale of
the Cow Palace would be paid into the F&E Fund? State law provides
that of any amount paid into the F&E Fund in excess of $13 million
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in any fiscal year, half of the excess amount shall be transferred
to the General Fund (Business & Professions Code, section 19620.1)."
The Cow Palace 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.
In March 2008, the DAA 1-A released a request for proposal (RFP) to
lease the 13-acre 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. RFP responses were
initially due June 30, 2008, and the deadline was extended several
times to due to a lack of bids. DGS is currently in exclusive
negotiations with a developer on the lease.
This bill declares that the sale of the Cow Palace property would
not constitute a sale or other disposition of surplus state property
subject to Proposition 60A requirements. It is noted that this bill
is not consistent with provisions of other surplus property bills
because it does not require DGS to obtain approval to enter into
sale negotiations from the state agency that owns the property.
Instead, this bill requires DGS to consult with, but does not
require the approval of, DFA as the property owner prior to entering
negotiations.
SB 1527 (Yee) of 2008 was an identical measure, with the exception
that the DCRA was afforded the first right of refusal to the parcel
of property. The Governor's veto message stated the following: "SB
1527 circumvents the state's current competitive bid process and
would potentially limit the state's financial return for the sale of
state-owned land without creating any added value for the
surrounding community. By including the first right of refusal
provisions, this bill narrows the range of options for the use of
the property and places the state at risk to receive less revenue
than if the property was offered to all interested parties through a
normal competitive bid process."
Analysis Prepared by : Joanna Gin / B. & P. / (916) 319-3301
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