BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 1907 (Daly) - Orange County Fair: sale of state property
-----------------------------------------------------------------
| |
| |
| |
-----------------------------------------------------------------
|--------------------------------+--------------------------------|
| | |
|Version: May 27, 2016 |Policy Vote: G.O. 13 - 0 |
| | |
|--------------------------------+--------------------------------|
| | |
|Urgency: No |Mandate: No |
| | |
|--------------------------------+--------------------------------|
| | |
|Hearing Date: August 1, 2016 |Consultant: Mark McKenzie |
| | |
-----------------------------------------------------------------
This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 1907 would repeal the authority for the Department
of General Services (DGS) to sell all or part of the Orange
County Fairgrounds, as specified.
Fiscal
Impact: Unknown foregone revenues, potentially in excess of
$100 million (General Fund), to the extent DGS were to exercise
the authority to sell the property in the future. Staff notes
that previous attempts to sell the property were unsuccessful,
and there are no current plans to sell any part of the property.
(see staff comments)
Background: Existing law divides the state into 54 agricultural districts,
including the 32nd District, located in Orange County, and
District 32a, which consists of all real property within
District 32 that is commonly known as the Orange County Fair in
AB 1907 (Daly) Page 1 of
?
the City of Costa Mesa. Existing law authorizes DGS to sell all
or any portion of the property that composes District 32a
pursuant to a public bidding process designed to obtain the
highest, most certain return for the state from a responsible
bidder, and specifies that such a transaction would be deemed to
be the fair market value. Existing law also requires DGS to
report specified information to the Legislature 30 days prior to
executing a transaction, including the financial terms, a
comparison of fair market value and the agreed upon price, and
any basis for agreeing to terms and conditions other than fair
market value. Proceeds from the sale would be deposited into
the General Fund, after paying off any bonds that involve the
property and reimbursing DGS for any administrative costs.
The 2009-10 budget agreement authorized the sale of Orange
County Fair property as one part of a larger effort to generate
revenue from the state's high value assets to help close
significant state budget gaps following the 2008 financial
crisis. In October 2009, DGS began soliciting bids for the sale
of the property. The highest bid of $56.5 million was far below
the assumed value of $96 million to $180 million, so DGS
rejected all bids for the sale in March of 2010, and instead
commenced negotiations with the City of Costa Mesa for sale of
the property. In August 2010, DGS again put the Orange County
Fair property out to bid, and Facilities Management West was
selected as winning bidder after offering $100 million for the
property. However, the Fourth District Court of Appeal blocked
that sale, citing a flawed bidding process, as well as a lack of
approval and oversight from the Legislature. DGS has not
attempted to sell the property since that ruling, and currently
has no further plans for selling the property.
According to the Department of Food and Agriculture, the Orange
County Fair operates with a surplus and attracts over 1.3
million visitors annually.
Proposed Law:
AB 1907 would repeal provisions in existing law that create
District 32a, commonly known as the Orange County Fair, and
those that authorize DGS to sell all or any portion of the
property that composes District 32a, as specified.
Related
AB 1907 (Daly) Page 2 of
?
Legislation: AB 4x 22 (Evans), Chap. 20, 2009-10 4th Ex.
Session, authorized DGS to sell all or part of the Orange County
Fair, among other things related to state property.
Staff
Comments: This bill would repeal the authority for DGS to sell
the Orange County Fairgrounds, thereby removing the potential
for future one-time state revenue gains. While the estimated
value of the property in 2009 was $96 million to $180 million,
it is safe to assume that the current value could be much
higher, considering the original estimate was at the depths of
the recession. Staff notes, however, that the City of Costa
Mesa has consistently opposed the sale, and indicated that they
would not entitle the property for development or reuse for any
purpose other than as a fairgrounds, which accounts for dampened
buyer interest and low bids in the initial sale attempts.
Furthermore, Costa Mesa voters passed an ordinance that requires
voter approval for any change to the use of the property. It
appears highly unlikely that DGS would consider advertising the
property for sale in the near future, and highly unlikely it
would sell for a fair price if it were offered for sale,
considering local opposition to changing the allowable use of
the property (thereby depressing development interest), and a
lack of interest among DGS and the current Administration in
selling the property.
-- END --