BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2490|
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THIRD READING
Bill No: AB 2490
Author: Eggman (D)
Amended: 8/13/14 in Senate
Vote: 21
SENATE AGRICULTURE COMMITTEE : 5-0, 6/17/14
AYES: Galgiani, Cannella, Berryhill, Lieu, Wolk
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 75-0, 5/27/14 - See last page for vote
SUBJECT : District agricultural associations
SOURCE : Author
DIGEST : This bill revises several provisions relating to the
state oversight of district agricultural associations (DAAs).
This bill authorizes these fairs to take specified actions
without the prior approval of state agencies, authorizes the
Governor to remove fair board members with cause, and reduces
the frequency of audits for smaller fairs, among other
provisions and technical changes. This bill specifies that a
DAA is not required to submit any written report to the
Governor, the Legislature, or a state agency, except as
specified.
Senate Floor Amendments of 8/13/14 eliminate DAA reporting
requirements, except as specified.
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ANALYSIS :
Existing law:
1. Divides the state into agricultural districts, and provides
for the management of these districts by DAAs.
2. Provides for a board of directors for each DAA, and provides
for the appointment of each director by the Governor.
3. Sets forth the duties and responsibilities of the board of
directors and the DAAs, and requires a DAA to take certain
actions only with the approval of the Department of Food and
Agriculture (DFA) or the Department of General Services
(DGS), or both.
4. Requires DGS to exercise oversight of the acquisition and
replacement of motor vehicles and other mobile equipment by a
state agency, as defined.
5. Requires the Trustees of the California State University
(CSU) to purchase vehicles using statewide commodity
contracts, to the greatest extent feasible, and to make an
interim report to the Governor and the Legislature on January
1, 2014, and a final report on January 1, 2015, containing
certain information relative to motor vehicle procurement by
the CSU. Repeals these provisions as of July 1, 2015.
6. Requires DGS to annually prepare a delegation program for
DAAs, to be administered by DFA and DGS.
7. Requires DFA, for DAAs and other fairs, to develop criteria
to be applied for purchases made locally at a price equal to
or lower than the price available through the state
purchasing program.
8. Requires each state agency to submit an annual report to the
Department of Resources Recycling and Recovery summarizing
its progress in reducing solid waste that is due on or before
May 1 each year.
This bill:
1. Authorizes DAAs to sue without the approval of DFA.
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2. Authorizes the Governor to remove for cause any fair board
director.
3. Authorizes a fair board, without prior approval from DFA or
DGS, to arrange, conduct or contract for any activity on
fairgrounds, except for the following:
A. Uninsured hazardous activities as determined by DFA in
consultation with DGS.
B. Enter into a settlement agreement over $100,000
without prior DFA approval.
C. Enter into personal services contracts.
1. Specifies that nothing in the above provisions should be
construed and is not intended to extend or limit personal
services contracting.
2. Authorizes DAAs to do the following without the approval of
DFA or DGS:
A. Contract, in accordance with all of the following:
(1) The written policies and procedures developed
and maintained by the fair board.
(2) All applicable state laws governing contracts
except for DGS requirements for the acquisition of
goods and information technology services.
(3) Competitive bidding for any construction project
that exceeds $25,000.
(4) May elect to become subject to the Uniform
Public Construction Cost Accounting Act and the Small
Business Procurement and Contract Act, but exempt from
reporting requirements.
A. Accept funds or gifts.
B. Conduct programs and contract for the lease of goods
either independently or in cooperation with any
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individual, public or private organization, or government
agency.
C. Establish and maintain a banking account approved by
the Director of the Department of Finance.
D. Approve an annual DAA budget and establish a program
for paying contracting vendors.
E. Contract with any county or county fair association
for holding a joint fair.
F. Make or adopt all necessary orders, rules, or
regulations for governing activities of the DAA, which are
exempt from state administrative regulations and
rulemaking requirements.
G. Operate a payroll system to pay employees.
H. Delegate powers of the fair board to officers and
employees for the orderly management and operation of the
DAA.
I. Use or manage any DAA property jointly with any lessee
or sublessee for any purpose approved by the fair board.
1. Authorizes DAAs to, with the approval of DGS but not DFA,
to:
A. Purchase, acquire, hold, sell, exchange, or convey an
interest in real property.
B. Make permanent improvements on nearby or adjacent
public lands if the improvements materially benefit the
DAA property.
C. Lease DAA property to any person or public body for
whatever purpose approved by the fair board.
D. Take out a lien or security interest on a DAA property
and pledge revenues, monies, accounts, accounts
receivable, contract rights, and other rights to payment.
1. Authorizes DAAs, with the approval of DFA, to enter into a
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joint powers agreement.
2. Requires a fair board, other than that of the California
Science Center, to adopt and publish competitive bidding
procedures for a procurement, contract, or subcontract
greater than $100,000 and, with DGS approval, pledge any
revenues, monies, or rights of payment pursuant to terms and
conditions approved by the fair board. The state shall not
be obligated to generate or appropriate funds for payment of
these contracts.
3. Requires DAAs to adopt a fiscal review policy and be audited
periodically by an independent certified public accountant or
firm selected by the fair board. DAAs with budgets exceeding
$5 million shall be audited annually, and DAAs with budgets
less than $5 million shall be reviewed annually and audited
once every three years. However, DFA may require an audit at
other times if the state deems the audit necessary.
4. Increases from $10,000 to $100,000 the threshold requirement
for DAAs to obtain DFA approval prior to entering a
settlement agreement.
5. Repeals the authority of the Secretary of DFA to make any
state property available to DAAs that has been obtained
without cost to the state.
6. Exempts the state from liability for any action, obligation,
or commitment made by any DAA.
7. Prohibits a DAA from being required to prepare or submit any
written report to the Governor, the Legislature, or a state
agency except as follows:
A. The report is required by a court or under federal
law;
B. The report is required in the Budget Act;
C. The report is required by the Secretary of DFA; or
D. The Legislature expressly requires a DAA to prepare
and submit a report.
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1. Clarifies that the above provisions should not be construed
and are not intended to extend or limit the provisions of the
California Public Records Act, as specified.
2. Exempts DAAs from DGS vehicle purchasing requirements.
3. Repeals the requirement that DFA annually prepare a
delegation program for DAAs.
4. Repeals the requirement that DFA develop purchasing criteria
for DAAs and other fairs.
5. Exempts DAAs from recycling and waste management reporting
requirements.
6. Makes technical and conforming amendments.
Background
California fairs have been in existence since 1854, and the
network has since grown to encompass 78 fairs statewide. This
network of California fairs is composed of 52 DAAs, 23 county
fairs, two citrus fruit fairs, and the California Exposition and
State Fair (Cal Expo). DAAs are state government entities that
are governed by nine-member gubernatorial appointed boards of
directors (fair boards). In contrast, county fairs are county
government or not-for-profit organizations; citrus fruit fairs
are not-for-profit organizations; and Cal Expo is a state
agency.
In 2009, California fairs generated a $2.85 billion economic
impact from consumer sales, $855 million in income for
California employees, $127 million in annual state and local tax
revenues, and provided 25,000 jobs. Fairs serve the local
community by providing a venue for a variety of agricultural and
local community events such as livestock shows and competitions,
county fairs, trade shows, exhibits, and food, nutrition, and
agricultural education. Fairgrounds also serve the state by
assisting in emergency preparedness and response. In the event
of natural disasters, fairgrounds may be transformed into
command centers for the Department of Forestry and Fire
Protection, California Emergency Management Agency, Homeland
Security, law enforcement, and Federal Emergency Management
Agency and also provide shelter for displaced persons and their
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pets and livestock.
The Division of Fairs and Expositions within DFA provides fiscal
and policy oversight for the network of California fairs; and
DGS provides oversight for use of state property, procurement,
and services contracts.
The source of state funding for these fairs has historically
been dependent on horse racing license fees, which in recent
years have significantly declined. In 2009, the Legislature
recognized the need for a new source of funding for the
continuation of fairs and, thus, continuously appropriated $32
million from the state's General Fund (GF) to be paid into the
Fairs and Exposition Fund (F&E Fund).
However, the 2011-12 state Budget eliminated GF contributions to
the F&E Fund, requiring DAAs to be self-sufficient as of January
1, 2012. Since that time, several bills have been introduced
and proposals have been discussed that aim to reduce DAA
operating and administrative costs. Given that DAAs are state
entities, these proposals have generally focused on reducing
state oversight and specified requirements while increasing
local decision-making and flexibility.
Informational hearing . The Senate Agriculture Committee held an
informational hearing in 2012 titled "The Future of Fairs in
California" to examine the financial status of fairs and discuss
alternative funding solutions to ensure the vitality of
California fairs. Testimony from fair industry representatives
acknowledged that many smaller fairs were at risk of closing if
alternative funding strategies and/or governance structures were
not utilized.
Prior Legislation
AB 95 (Assembly Budget Committee, Chapter 2, Statutes of 2011)
repeals the $32 million annual GF appropriation for the support
of the network of California fairs.
SB 16X2 (Ashburn, Chapter 12, Statutes of 2009-10, Second
Extraordinary Session) provides that horse racing license fees
shall no longer be paid into the F&E Fund, but instead,
beginning July 1, 2009, $32 million shall be continuously
appropriated from the state GF to the F&E Fund for the support
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of the network of California fairs.
SB 1085 (Runner, Chapter 320, Statutes of 2010) allows the 50th
DAA, with consent of the Secretary of DFA, to enter into a joint
powers agreement with a nonprofit organization to operate,
maintain, and improve the 50th DAA.
AB 2250 (Runner, Chapter 452, Statutes of 2008) authorizes
officers and employees of DAAs to receive compensation from
nonprofit corporations.
SB 281 (Maldonado, Chapter 346, Statutes of 2007) requires DFA
to develop criteria to be used for the disposal of property by a
DAA and Cal Expo.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/14/14)
Rural County Representatives of California
Western Fairs Association
OPPOSITION : (Verified 8/14/14)
Orange County Fairgrounds Preservation Society
ARGUMENTS IN SUPPORT : The Rural County Representatives of
California (RCRC) writes in support of this bill stating that it
provides a good first step in addressing the governance
structure of fairs by providing needed flexibility at the local
level as it relates to the operation and oversight of the
network of fairs. RCRC believes that in light of no foreseeable
state funding, it is time to evaluate the governance structure
to allow fairs to operate more efficiently.
ARGUMENTS IN OPPOSITION : The Orange County Fairgrounds
Preservation Society (OCFPS) writes in opposition to the bill
citing concerns with amendments relating to leasing, purchasing,
or conveying interests in district fair property. OCFPS
believes this bill eliminates or diminishes many of the checks
and balances in current law that constrain what district fair
boards can without higher level approval or review.
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ASSEMBLY FLOOR : 75-0, 5/27/14
AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Dickinson, Donnelly, Eggman, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,
Gorell, Gray, Grove, Hagman, Hall, Harkey, Roger Hernández,
Holden, Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal,
Maienschein, Medina, Melendez, Mullin, Muratsuchi, Nazarian,
Nestande, Olsen, Pan, Perea, John A. Pérez, V. Manuel Pérez,
Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Skinner,
Stone, Ting, Wagner, Waldron, Weber, Wieckowski, Wilk,
Williams, Yamada, Atkins
NO VOTE RECORDED: Daly, Mansoor, Patterson, Quirk-Silva,
Vacancy
JL:k 8/14/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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