BILL ANALYSIS Ó SB 1465 Page 1 Date of Hearing: June 29, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair SB 1465 (De León) - As Amended June 16, 2016 ----------------------------------------------------------------- |Policy |Arts, Entertainment, Sports, |Vote:|7 - 0 | |Committee: |Tourism, and Internet Media | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill enacts the 2024 Olympic Games and Paralympic Games Act for the purpose of establishing a structure to provide state financial guarantees, as required by the International Olympic Committee (IOC), to demonstrate that California and the City of Los Angeles are prepared to host the summer games. Specifically, this bill: 1)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 SB 1465 Page 2 financial deficit relating to the games. 2)Establishes the Olympic Games Trust Fund within the State Treasury 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. If the City of Los Angeles is not selected as the host city, this fund is immediately terminated and any moneys therein immediately revert to the General Fund. 3)Stipulates that all moneys deposited, transferred, or otherwise contained in the trust fund must, upon appropriation by the Legislature, be used for the sole purpose of obtaining adequate security to demonstrate the state's ability to fulfill its obligations to indemnify and insure up to $250 million of any net financial deficit and general liability resulting from the conduct of the games. 4)Specifies that the security provided by the state pursuant to this Act may not be accessed to cover a deficit from the games until all the following occur: a) Security provided by the OCOG is fully exhausted b) Security provided by any other person or entity is exhausted. c) Limits of applicable insurance policies are fully exhausted. d) Payment has been sought by the OCOG from all third parties owning moneys. SB 1465 Page 3 e) The City of Los Angeles has exhausted its $250 million security deposit. FISCAL EFFECT: Potential future one-time state costs of up to $250 million, if Los Angeles is selected for the 2024 Olympics, the games incur large financial deficits, and all other securities provided by non-state entities are first exhausted. The $250 million dollar liability may be secured by a General Fund appropriation or by insurance coverage, letters of credit, or other acceptable secured instruments purchased or secured by the General Funds, or by any combination thereof. COMMENTS: 1)Background. Los Angeles is one of four candidate cities vying for the 2024 Olympic Games, along with Paris, Rome, and Budapest. The IOC is scheduled to select a host city in September 2017. Los Angeles was chosen by the United States Olympic Committee (USOC) in August 2015, after the City of Boston, which was originally chosen to be the American bid, withdrew in July 2015 due to potential cost overruns. According to the LA 2024 Bid Committee, their bid has a strong risk mitigation strategy, mainly because almost all of the required venues already exist. SB 1465 Page 4 2)Purpose. 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 the IOC as a prerequisite before any city can be considered for hosting an Olympic Games. In support, the LA Area Chamber of Commerce notes that the only two times the Games made money were when Los Angeles served as host (1932 and 1984). This fact, they claim, will make passage of this measure very low risk to the state. They state, "hosting the Olympics will be good for tourism, good for tax revenues and business, and good for state pride and spirit." The State Building and Construction Trades Council also notes that proceeds from the 1984 games continue to support youth athletic programs all over southern California. 3)Prior Legislation. a) SB 41 (de Leon), of 2015, a similar bill, was held in the Senate Governmental Organization Committee at the author's request. a) AB 300 (Nunez), Chapter 4, Statutes of 2007, provided a similar guarantee in connection with the City of Los Angeles' bid to host the 2016 Summer Olympic Games. b) SB 1987 (Burton), Chapter 16, Statutes of 2002, provided a similar guarantee in connection with the San Francisco Bay Area's bid to host the 2012 Summer Olympic Games. Analysis Prepared by:Chuck Nicol / APPR. / (916) 319-2081 SB 1465 Page 5