BILL ANALYSIS Ó
AB 1069
Page 1
Date of Hearing: April 17, 2013
ASSEMBLY COMMITTEE ON AGRICULTURE
Susan Talamantes Eggman, Chair
AB 1069 (Dickinson) - As Amended: March 20, 2013
SUBJECT : California Exposition and State Fair.
SUMMARY : Changes the governance of the California Exposition and
State Fair (Cal Expo), makes legislative findings and declarations.
This bill contains an urgency clause. Specifically, this bill :
1) States that the legislative findings and declarations
establish the fair's annual exposition as an event of the best
of the state's agriculture, manufacturing, arts and science
innovations, emphasizing the state's economy, lifestyle and
culture. They establish that the fair is located on a 350 acre
portion of a 700 acre site within the City of Sacramento; that
they want to modernize the aging facilities that have deferred
maintenance in excess of $45 million, which causes higher
operating costs; that improvements would lower operating costs
and expand events, and increase revenues.
2) States that it is the intent of the Legislature to provide
Cal Expo management and Board of Directors (Board) the
necessary tools to improve business operations, develop new
revenue streams, and create and promote strategies to help Cal
Expo preserve and enhance this state asset by better competing
in the marketplace. By fully implementing this legislation,
new jobs will be created, generating significant economic
activity producing state and local tax revenues, while
providing a source of revenue for the long-term capital needs
of Cal Expo.
3) Rewords legislative intent and clarifies Cal Expo, as an
independent entity that celebrates this state, the diversity of
its people, and is required to showcase the state's industries
and agriculture in programs that recognizes the traditions and
explores the trends shaping the future.
4) Deletes outdated references pertaining to appointments to
the Board and allows an appointed Board member, whose term has
expired, to continue to serve and discharge his or her duties
until a successor has been duly appointed and is qualified to
serve.
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5) Eliminates pro rata cost sharing to the state from Cal Expo,
except for costs directly related to personnel administration
and no other administrative costs for services from other state
agencies, except for the cost of services rendered via specific
contracts with other agencies. Requires, on or before May 31
of each year, the general manager of Cal Expo to report to the
Governor all events, operations, and financial conditions that
occurred in the preceding calendar year. Requires Cal Expo's
books to be examined annually and audited once every five years
by a certified public accountant or certified public
accountancy firm.
6) Authorizes the Board to approve an annual budget for Cal
Expo, conforms delegation authority to its officers and
employees the independent authority to appoint all necessary
police, as described in existing law. Authorizes Cal Expo to
sell, exchange or convey any interest in real property, with
the approval of the Department of General Services (DGS).
Requires the proceeds from any lease, sale, or other
arrangement, to become property of Cal Expo and is required to
be available to them for any purpose of this part. Makes other
conforming changes.
7) Deletes Cal Expo's financial condition, present operations
and future planned activities reporting requirement to the
Legislature and Governor.
8) Establishes that the title, control, and possession of all
personal property acquired, held, managed, or operated by Cal
Expo, including property controlled or possessed before
enactment of this legislation, vests with Cal Expo.
EXISTING LAW establishes Cal Expo as a separate independent entity
in state government to be governed by its 11 member board, appointed
by the Governor, as specified, including one appointment each by the
Speaker of the Assembly, and the President Pro Tem of the Senate.
The board appoints the General Manager who serves at their pleasure,
while the Governor appoints the Deputy General Manager, Program
Manager, and Marketing Manager. The Board serves as the
policymaking body with the power to contract, conduct or contract
for programs, establish or maintain financial accounts with the
approval of the Director of Finance and in accordance with specified
Government Codes, make or adopt all necessary orders, rules or
regulations for governing the activities of Cal Expo, which are
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exempt from the Office of Administrative Law requirements. Further,
the Board can operate payroll systems; delegate Board authority to
officers and employees for orderly management and operation; appoint
necessary marshals and police; with the approval of DGS, purchase,
acquire, or hold real or personal property; with approval of DGS,
make permanent improvements, lease, manage or use any property for
any purpose approved by the Board. The Board is required to report
annually to the Legislature and Governor, on or before January 30,
with respect to the financial condition, present operations and
future planned activities of Cal Expo. Statutes permit Board
members to serve for 60 days past their term expiration date, if a
new appointee has not been made.
FISCAL EFFECT : Unknown. Legislative Counsel has keyed this bill
fiscal.
COMMENTS : The Cal Expo facility was constructed in 1969 and had
operated in other locations prior to creating the current permanent
site. In 1980, Cal Expo was separated from the California
Department of Parks and Recreation and established as a separate
state entity. In the early 90's, most all state general fund budget
support was removed; later, all general funds were removed and the
legislature required it be fiscally self-sufficient.
Since this policy has been in place, Cal Expo has had many
successes, but also has struggled financially, needing to take loans
to meet cash flow needs at times. Understandably, much deferred
maintenance has occurred. Improvements have been made to address
priority issues such as the Americans' with Disabilities Act
requirements, and health and safety needs, but few other capital
improvements could be afforded and after four decades there are
considerable needed improvements to bring the facility up-to-date.
Cal Expo's Conceptual Strategic Development Plan, developed by the
Board in 2004, has an estimated $150 million in upgrades and
identified replacement needs for inadequate facilities. They state
that these are needed to modernize the site and secure Cal Expo's
future, as well as, to be competitive as an entertainment venue in
today's market. Cal Expo, operating as a business enterprise, has
been able to survive but must find new revenue sources if it is to
have a future. If significant improvements are to be made to the
Cal Expo site, substantial funds will be needed and real property
sale, lease or alternative revenue generation will likely be needed.
AB 1069 is intended to help provide new revenue streams, allow Cal
Expo to operate more independently, while keeping DGS oversight and
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without state general funds or other taxpayer revenues.
The Legislative policy with Cal Expo has been a gradual expansion of
their independence from state oversight and rules, partly due to
state revenue sources being removed from them, as well as, to allow
for a competitive business model. AB 1069 moves that policy further
by clearly stating that Cal Expo and not potentially the general
fund, receives any revenues from the sale, lease or other agreement
on real property, and the elimination of state allocation payments.
Although no real property has ever been sold, there have been
discussions in the past regarding a property swap with the National
Basketball Association and Cal Expo regarding an arena for the
Sacramento Kings.
The state allocation payment currently is $265,000 annually, which
would definitely help Cal Expo's budget and cash flow. Cal Expo
will still be paying other state entities for services rendered on a
cost basis.
The committee may wish to consider, if Cal Expo is to continue and
is to compete as a self-sustaining entertainment center, are these
appropriate policy changes, and are they in the state's best
interest. Further, is it appropriate to eliminate Cal Expo's
reporting to the Legislature, of its activities.
Permitting an expired Board member to continue to exercise the
powers of a Board member is important to the smooth operation of Cal
Expo. Due to delays in appointees beginning to serve in the past,
the Board has had difficulties at times having a quorum to conduct
the business of the Board, causing problems in running programs or
events at Cal Expo. This is a minor but important policy change for
a businesslike approach to managing Cal Expo affairs.
The clarifying of ownership of personal property by Cal Expo (item
#8 above), is intended to resolve a gray area in dealing with DGS
and ensure that revenues from such property, if sold, remains with
Cal Expo. This is the DGS current practice.
PREVIOUS LEGISALTION : AB 1204 (Dickinson), 2012 Legislative
Session. Changed Cal Expo to an independent governing body that
reports to the State Fair Leasing Authority, Joint Powers Authority,
rather than the Legislature; moved all revenues derived by Cal Expo,
including sale of real property, from the general fund to Cal Expo;
and permitted Cal Expo to enter into contracts outside of DGS
oversight and requirements.
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REGISTERED SUPPORT / OPPOSITION :
Support
American Federation of State, County and Municipal Employees,
AFL-CIO
California Exposition and State Fair
Norman C. Towne, Consulting and Advocacy
Opposition
None on file.
Analysis Prepared by : Jim Collin / AGRI. / (916) 319-2084