BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 1465| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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 SB 1465 Page 2 $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; SB 1465 Page 3 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 SB 1465 Page 4 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 SB 1465 Page 5 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 SB 1465 Page 6 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 SB 1465 Page 7 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) SB 1465 Page 8 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, SB 1465 Page 9 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 **** END ****