BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                       SB 1465|
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                                UNFINISHED BUSINESS 


          Bill No:  SB 1465
          Author:   De León (D), et al.
          Amended:  8/15/16  
          Vote:     21 

           SENATE GOVERNMENTAL ORG. COMMITTEE:  11-1, 4/12/16
           AYES:  Hall, Berryhill, Block, Gaines, Galgiani, Glazer,  
            Hernandez, Hill, Hueso, Lara, McGuire
           NOES:  Vidak
           NO VOTE RECORDED:  Runner

           SENATE APPROPRIATIONS COMMITTEE:  7-0, 5/27/16
           AYES:  Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen

           SENATE FLOOR:  35-1, 6/1/16
           AYES:  Allen, Anderson, Bates, Beall, Berryhill, Block,  
            Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall,  
            Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson, Lara, Leno,  
            Leyva, Liu, McGuire, Mendoza, Mitchell, Moorlach, Morrell,  
            Nguyen, Nielsen, Pan, Pavley, Roth, Stone, Wieckowski
           NOES:  Vidak
           NO VOTE RECORDED:  Hancock, Monning, Runner, Wolk

           ASSEMBLY FLOOR:  71-6, 8/30/16 - See last page for vote

           SUBJECT:   Public contracts:  2024 Olympic Games and Paralympic  
                     Games


          SOURCE:    Author
          
          DIGEST:   This bill authorizes the Governor to execute games  
          support contracts, in connection with the site selection process  
          for the City of Los Angeles to host the 2024 Olympic Games and  
          Paralympic Games, that accept financial liability (not to exceed  








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          $250 million) to provide the state security for amounts owed by  
          the Organizing Committee for the Olympic Games (OCOG), as  
          specified, and for any financial deficit accruing to the OCOG as  
          a result of hosting the games by the City of Los Angeles.  This  
          bill also establishes the Olympic Games Trust Fund (OGT-Fund) as  
          a special fund within the State Treasury for the sole purpose of  
          fulfilling the obligations of the state under a games support  
          contract to provide the state security.


          Assembly Amendments remove the restriction which limited  
          execution of contracts to agreements between the Governor and  
          only the International Olympic Committee (IOC); make express  
          that the funding security provided by the state shall be  
          accomplished solely by means of funding mechanisms identified by  
          the bill, only after specified conditions are met and are to be  
          paid into and from the special OGT-Fund; and, clarify that the  
          State Controller may use cash flow loans made from the OGT-Fund  
          to the General Fund to fulfill the state obligations, as  
          authorized under specified Sections of the Government Code.   
          Additional amendments are technical and conforming.


          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, to demonstrate 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 billions of dollars for the state's economy;








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              b)    The OCOG, on behalf of the City of Los Angeles, has  
                developed a self-sufficient bid and plan 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 will involve athletes, sports  
                professionals, environmentalists, business and financial  
                experts, nonprofit organizations, youth service leaders  
                and other individuals who represent the entire diversity  
                of the state; 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 in connection with the selection of a site  
             in this state for the location of the games.


           4) Defines "state security" to mean the financial obligation,  
             not to exceed $250 million, undertaken by the state pursuant  
             to a games support contract executed by the Governor in  
             accordance with this Act.


           5) Establishes within the State Treasury a special fund to be  








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             known as the "Olympic Games Trust Fund" (OGT-Fund) and  
             provides that the state may choose to fund the OGT-Fund in  
             any manner it considers appropriate and at the time or times  
             the state determines necessary.  Funds in the OGT-Fund may be  
             used only for the sole purpose of fulfilling the obligations  
             of the state under a games support contract to provide the  
             state security.  Also, permits the State Controller to use  
             monies in the OGT-Fund for cash flow loans to the General  
             Fund, as specified. 


           6) Authorizes the Governor to execute games support contracts  
             on behalf of the state that, in accordance with law and  
             subject to the provisions of this Act, accept financial  
             liability to provide the state security (not to exceed $250  
             million) for amounts owed by the OCOG, and for any financial  
             deficit accruing to the OCOG as a result of hosting the games  
             by the City of Los Angeles. 


           7) Provides that the contracts shall provide the state security  
             for amounts owed by the OCOG to the IOC and the International  
             Paralympic Committee (IPC) for claims by third parties  
             arising out of or relating to the games and any financial  
             deficit accruing to the OCOG as a result of the hosting of  
             the games by the City of Los Angeles.


           8) Makes it explicit that any liability for an amount in excess  
             of $250 million shall be the responsibility of parties other  
             than the state.  


           9) Stipulates that the state shall, subject to the limitations  
             set forth in this Act and the games support contract, be the  
             payer of last resort with regard to the use of the state  
             security.  Also, 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 of the following occur:


              a)    Security provided by the OCOG is fully expended and  








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                exhausted;


              b)    Security provided by any other person or entity is  
                fully expended and exhausted;


              c)    The City of Los Angeles has expended and exhausted its  
                $250 million security deposit;


              d)    Limits of available insurance policies have been fully  
                expended and exhausted; and,


              e)    The OCOG has exhausted all efforts to seek payment  
                from all third parties owing moneys or otherwise liable to  
                the OCOG. 


           10)Provides that no additional state funds shall be deposited  
             into the OGT-Fund once the Director of Finance determines  
             that the account has achieved, or is reasonably expected to  
             otherwise accrue the balance necessary to provide the state  
             security pursuant to a games support contract. 


           11)Provides that if the City of Los Angeles is selected by the  
             IOC as the host city for the games, the OGT-Fund shall be  
             maintained until the Director of Finance makes a  
             determination that the state's obligation to provide the  
             state security under a games support contract has been  
             satisfied and concluded, at which time the OGT-Fund shall be  
             terminated.  Also, stipulates that if the City of Los Angeles  
             is not selected by the IOC as the host city for the games,  
             the OGT-Fund shall be immediately terminated and any monies  
             therein shall immediately revert to the General Fund. 


           12)Requires the OCOG to list the state as an additional insured  
             on any policy of insurance purchased by the OCOG and  
             prohibits the OCOG from engaging in any conduct that reflects  








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             unfavorably upon this state, the City of Los Angeles, the  
             games, or that is contrary to law or the rules and  
             regulations of the United States Olympic Committee (USOC) and  
             the IOC/IPC.


          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 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 will 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.  


          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  
          Olympic Games and Paralympic Games in Los Angeles is expected to  
          generate billions of dollars of economic revenue for the state  
          and local economies.


          Related/Prior Legislation










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          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 the Senate Governmental Organization 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.  The 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  
          OGT-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.:YesLocal:   No


          According to the Assembly Appropriations Committee, potential  
          one-time 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 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.


          SUPPORT:   (Verified8/29/16)










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          California Hotel and Lodging Association
          California Travel Association
          City and County of San Francisco
          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 Jose
          City of Santa Ana
           International Brotherhood of Boilermakers, Iron Ship Builders,  
            Blacksmiths,        Forgers and Helpers Local 92
          Los Angeles Area Chamber of Commerce
          Los Angeles County Federation of Labor, AFL-CIO
          Los Angeles Olympic Games 2024
          Los Angeles/Orange County Building Trades Council
          S.M.A.R.T. Local Union 105
          SEIU California
          State Building and Construction Trades Council of California
          The Valley Industry and Commerce Association


          OPPOSITION:   (Verified8/29/16)


          Howard Jarvis Taxpayers Association


           ASSEMBLY FLOOR:  71-6, 8/30/16
           AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins,  
            Bigelow, Bloom, Bonilla, Bonta, Brown, Burke, Calderon,  
            Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper,  
            Dababneh, Dahle, Daly, Dodd, Frazier, Cristina Garcia, Eduardo  
            Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove,  
            Hadley, Harper, Roger Hernández, Holden, Irwin, Jones,  
            Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,  
            Maienschein, Mathis, Mayes, Medina, Mullin, Nazarian,  
            Obernolte, O'Donnell, Patterson, Quirk, Ridley-Thomas,  
            Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond,  








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            Ting, Wagner, Weber, Wilk, Williams, Wood, Rendon
           NOES: Baker, Brough, Beth Gaines, McCarty, Melendez, Waldron
           NO VOTE RECORDED: Eggman, Gallagher, Olsen



          Prepared by:Arthur Terzakis / G.O. / (916) 651-1530
          8/30/16 19:51:49


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