BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Isadore Hall, III
Chair
2015 - 2016 Regular
Bill No: SB 1465 Hearing Date: 4/12/2016
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|Author: |De León |
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|Version: |3/29/2016 Amended |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Arthur Terzakis |
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SUBJECT: Public contracts: 2024 Olympic Games and Paralympic
Games
DIGEST: This bill authorizes the Governor to sign agreements
with the International Olympic Committee (IOC) and the
International Paralympic Committee (IPC) as part of the site
selection process for the City of Los Angeles' bid to host the
2024 Olympic Games and Paralympic Games. This bill also
authorizes the Governor to enter into an agreement for the state
to be jointly liable (up to $250 million), as specified, with
the Organizing Committee for the Olympic Games (OCOG), a
nonprofit corporation, for obligations of the OCOG and for any
financial deficit relating to the games, and establishes the
Olympic Games Trust Fund.
ANALYSIS: Existing law provides specified requirements in
awarding certain public contracts.
This bill:
1)Enacts the 2024 Olympic Games and Paralympic Games Act for the
purpose of establishing a structure to provide financial
guarantees, as required by the IOC, that California and the
City of Los Angeles are prepared to host the summer games.
2)Makes the following legislative findings and declarations:
a) Hosting the games in California is expected to generate
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billions of dollars for the state's economy;
b) The OCOG, on behalf of the City of Los Angeles, has
developed a self-sufficient bid for financing the games,
including sufficient funds to reimburse local and regional
governments for services provided during the games;
c) The City of Los Angeles plans to host a sustainable and
environmentally responsible games, has committed to sports
and recreational opportunities for young people throughout
the area and plans to develop and implement a unique and
broad-based cultural program;
d) The City of Los Angeles has involved athletes, sports
professionals, environmentalists, business and financial
experts, nonprofit organizations, youth service leaders and
other individuals who represent the entire diversity of the
Los Angeles area; and,
e) The City of Los Angeles expects there will be net
revenue exceeding expenses that can be devoted to legacy
programs for youth and citizens of California.
3)Defines "games support contract" to mean a joinder agreement
executed by the Governor and containing terms permitted or
required by this bill. Also, defines "joinder agreement" to
mean an agreement entered into by the Governor, on behalf of
the state, and the IOC and the IPC setting out representations
and assurances by the state in connection with the selection
of a site in this state for the location of the games.
4)Authorizes the Governor to enter into a joinder agreement
specifying that the state shall provide or cause to be
provided any or all of the state government funding,
facilities, and other resources specified in the OCOG's bid to
host the games.
5)Provides that the agreements shall accept liability for
obligations of the OCOG to a site selection organization,
including obligations indemnifying the site selection
organization against claims and liabilities to third parties
arising out of or relating to the games.
6)Provides that any liability for an amount in excess of $250
million shall be the responsibility of the OCOG. Also,
SB 1465 (De León) Page 3 of ?
provides that the OCOG will be bound by a series of agreements
with the site selection organization as set forth in the
joinder agreement.
7)Establishes within the State Treasury a special fund to be
known as the "Olympic Games Trust Fund" and provides that the
state may choose to fund the Olympic Games Trust Fund in any
manner it considers appropriate and at the time or times the
state determines necessary. Funds in the trust fund may be
used only for the sole purpose of fulfilling the obligations
of the state under a games support contract to provide
adequate security, as specified.
8)Provides that no additional state funds shall be deposited
into the Olympic Games Trust Fund once the Director of Finance
determines that the account has achieved a sufficient balance
to provide adequate security to demonstrate the state's
ability to fulfill its obligations under a games support
contract, or any other agreement, to indemnify and insure up
to $250 million of any net financial deficit and general
liability resulting from the conduct of the games.
9)Provides that if the City of Los Angeles is selected by the
site selection organization as the host city for the games,
the Olympic Games Trust Fund shall be maintained until a
determination by the Department of Finance is made that the
state's obligations under a games support contract, or any
other agreement, to indemnify and insure against any net
financial deficit and general liability resulting from the
conduct of the games are satisfied and concluded, at which
time the trust fund shall be terminated. Also, stipulates
that if the City of Los Angeles is not selected by the site
selection organization as the host city for the games, the
Olympic Games Trust Fund shall be immediately terminated and
any monies therein shall immediately revert to the General
Fund.
10) Stipulates that all moneys deposited, transferred, or
otherwise contained in the trust fund shall be, upon
appropriation by the Legislature, used for the sole purpose
of obtaining adequate security to demonstrate the state's
ability to fulfill its obligations under a games support
contract, or any other agreement, to indemnify and insure up
to $250 million of any net financial deficit and general
liability resulting from the conduct of the games.
SB 1465 (De León) Page 4 of ?
11) Makes it explicit that the state, along with the City of
Los Angeles, will be the payer of last resort with regard to
any net financial deficit. Also, provides that any
financial security provided by the bill may not be accessed
until the security provided by the OCOG or by any other
entity is exhausted and any insurance policies covering the
state's liability are exhausted.
Background
Purpose of SB 1465. The Los Angeles bid for the 2024 Summer
Olympics and Paralympics is an ongoing attempt to bring the 2024
Olympic Games (XXXIII Olympiad) to the City of Los Angeles. Los
Angeles is one of four candidate cities vying for the games -
along with Paris, France; Rome, Italy; and Budapest, Hungary.
The IOC is scheduled to select a host city in September 2017.
Los Angeles was chosen by the United States Olympic Committee
(USOC) on August 28, 2015 after the Los Angeles City Council
voted unanimously to back the bid. The City of Boston was
originally chosen to be the American bid, but withdrew in late
July 2015 due to potential cost overruns.
According to the author's office, this bill would establish a
structure to provide state financial guarantees to demonstrate
that California is serious and prepared to host the 2024 Olympic
Games and Paralympic Games. This guarantee is required by the
USOC and IOC as a prerequisite before any city can be considered
for hosting an Olympic Games. Furthermore, the USOC and IOC
require that all bid states and bid committees execute certain
agreements including the authorized agreements contain in this
bill.
This bill proposes that the state's liability shall not exceed
the amount of funds appropriated (up to $250 million) to the
Olympic Games Trust Fund. The funds may only be used for the
sole purpose of fulfilling the obligations of the state under a
games support contract to demonstrate adequate financial
security. Any liability above this amount shall be the
responsibility of the OCOG.
Los Angeles has hosted two prior Olympic Games with great
success - in 1932 (the X Olympiad) and 1984 (the XXIII
Olympiad). The author's office notes that hosting the 2024
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Olympic Games and Paralympic Games in Los Angeles is expected to
generate billions of dollars of economic revenue for the state
and local economies.
Prior/Related Legislation
SB 41 (De Leon, 2015) would have authorized the state to enter
into an agreement with the USOC in connection with the City of
Los Angeles' bid to host the 2024 Olympic Games and Paralympic
Games. (Held in this committee at author's request.)
AB 300 (Nunez, Chapter 4, Statutes of 2007) authorized the
Governor to sign agreements required by the USOC as part of the
City of Los Angeles' 2016 Olympic Games bid process. This bill
also authorized the Governor to make the state jointly liable
(not to exceed $250 million), as specified, with the OCOG, a
nonprofit corporation, for obligations of the OCOG and for any
financial deficit relating to the games, and established the
Olympic Games Trust Fund.
SB 1987 (Burton, Chapter 16, Statutes of 2002) established a
structure for the state to indemnify, insure and provide
financial guarantees up to $250 million as required by the USOC
to further the bid of the San Francisco Bay Area to host the
2012 Summer Olympic Games. The bill also provided the Governor
the authority to sign any contracts on behalf of the state as
part of the bid process.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: No
SUPPORT:
City of Anaheim
City of Bakersfield
City of Fresno
City of Long Beach
City of Los Angeles
City of Oakland
City of Sacramento
City of San Diego
City of San Francisco
City of San Jose
City of Santa Ana
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Los Angeles Area Chamber of Commerce
Los Angeles Olympic Games 2024
Los Angeles/Orange County Building Trades Council
State Building and Construction Trades Council of California
OPPOSITION:
None received