BILL ANALYSIS Ó
SB 695
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Date of Hearing: August 21, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 695 (Wright) - As Amended: June 27, 2013
Policy Committee: Arts and
EntertainmentVote: 5 - 0
Agriculture 4 - 0
Urgency: Yes State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill prohibits the California Science Center (CSC) from
delegating the power to manage and operate CSC's parking
facilities to any other party, and prohibits CSC or the director
of Department of General Services (DGS) from approving a sale or
lease of more than 10 years of CSC's parking facilities, the Los
Angeles Memorial Coliseum, or the Los Angeles Memorial Sports
Arena without legislative approval, as specified.
FISCAL EFFECT
As part of the most recent lease negotiations, the University of
Southern California (USC) has agreed to take over the $70 to
$100 million in required improvements to the Coliseum.
Currently, the Coliseum Commission, the joint powers authority
responsible for the Coliseum, is obligated to make those
improvements under the current lease. However, due to
mismanagement and other financial difficulties, the commission
does not have the funding for the improvements. If this lease
amendment is not completed and the commission is unable to make
the required improvements, there could be cost pressure for the
state to provide the funding necessary to update the Coliseum
since the Coliseum would revert to state ownership if the
Coliseum Commission is dissolved.
COMMENTS
1)Background . The California Science Center (CSC), located at
Exposition Park in Los Angeles, designated as the Sixth
District Agricultural Association. The CSC is an entity within
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the California Natural Resources Agency. Exposition Park is a
160-acre complex that includes the Los Angeles Memorial
Coliseum, the Natural History Museum of Los Angeles County,
the Los Angeles Memorial Sports Arena, the California
African-American Museum, a rose garden, a handful of
businesses and administrative offices, and several parking
lots.
Existing law requires the CSC to manage or operate its parking
facilities in a manner that preserves and protects the
interests of itself and the California African-American Museum
and recognizes the cultural and educational character of
Exposition Park.
The CSC, the City of Los Angeles, and the County of Los
Angeles have formed a Joint Powers Authority, referred to as
the Commission. The CSC has leased the Coliseum and Arena to
the Commission. The University of Southern California (USC)
operates the Coliseum and Arena pursuant to a sublease from
the Commission that was entered in 2008. USC uses the
Coliseum and has access to some parking for various events
(primarily football games) in exchange for various payments
pursuant to the sublease. According to the USC lease, for
every sports event it pays to the Commission rent in the form
of 8% of ticket sales, 8% of broadcasting revenues, and a
specified portion of the costs of conducting each event. USC
has the option to extend the lease in five year increments to
2054.
The commission has been plagued by problems in recent years.
Several financial irregularities were alleged and publicized
and criminal charges were filed against eight individuals,
five of whom were former managers and employees. An additional
concern is that the commission has not paid its rent that was
due at the end of 2012, according to the author.
2)Purpose . According to the author, CSC has no statutory
authority to delegate control of the parking lots to USC. The
author relies on the Legislative Counsel opinion (discussed
below) for this conclusion and to support the provision in the
bill that this lack of authority is declaratory of existing
law. That opinion concluded that the CSC is required to
exercise its power in accordance with the manner prescribed by
statute. In this case, existing law requires the CSC to
exercise discretion regarding the parking lots and the
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management of the parking lots, which Legislative Counsel
believes is a responsibility of a non-delegable public trust.
The author believes that any leasing and management
agreements, including the proposed agreement released in
December 2012, should be subject to legislative oversight
prior to its implementation and to ensure that the state does
not lose money from parking that would otherwise be dedicated
to improvements at Exposition Park.
3)Legislative Counsel Opinion . Senator Wright obtained a written
opinion from Legislative Counsel that concluded CSC may enter
into a lease to manage any real property that is owned by it,
and that the CSC had authority to enter into the
"non-disturbance" agreement. That opinion also concluded that
the lease payments to the CSC by UCS were adequate to defeat
an argument that USC was benefiting from a gift of public
funds. The opinion did not reach any conclusion about the
proposed amendments to the non-disturbance agreement because
Legislative Counsel did not have adequate information about
those proposed amendments.
As for the parking issue, Legislative Counsel stated that the
provision of existing law, noted earlier, is a legislative
reaction to the fact that events at the coliseum sometimes
made parking impossible for patrons of the CSC or other
entities at the park. The opinion concluded that because of
the special circumstances that should be considered by the CSC
in operating the parking lots, the CSC may not delegate their
operation to a private entity.
4)Opposition . In opposition, USC asks that the current lease be
allowed to be implemented, and any concerns regarding the
lease terms be addressed through the contract process rather
than by statute. Specifically, while expressing their
continued commitment to work with their neighbors, the
Legislature and CSC, they remain concerned that this measure
provides a bad precedent for future lease agreements, stating,
"We continue to believe the legislation establishes an
unnecessary precedent with respect to the design and
administration of future state lease agreements." Of
particular concern is Section 2 of the bill, which covers
leaseholds of the Coliseum and Arena, along with the parking
facilities.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
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319-2081