BILL ANALYSIS Ó
SB 1465
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Date of Hearing: June 29, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
SB 1465
(De León) - As Amended June 16, 2016
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|Policy |Arts, Entertainment, Sports, |Vote:|7 - 0 |
|Committee: |Tourism, and Internet Media | | |
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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
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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.
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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.
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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
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