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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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;
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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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