BILL ANALYSIS
SB 586
Page 1
Date of Hearing: August 19, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
SB 586 (Yee) - As Amended: May 6, 2009
Policy Committee: Business and
Professions Vote: 11-0
Urgency: Yes State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill, as proposed to be amended , directs the Department of
General Services (DGS) to enter into negotiations, prior to
January 1, 2012, to sell a 13-acre parking lot portion of the
state-owned Cow Palace property, located in the County of San
Mateo and the City and County of San Francisco. Specifically,
this bill:
1)Requires DGS, in consultation with the Department of Food and
Agriculture (DFA), prior to January 1, 2012, to enter into
negotiations to sell the property at fair market value, with
an all-cash sale or cash equivalent without any conditions
relating to entitlement, to any interested third party.
2)Specifies that fair market value shall be evaluated at the
highest and best use of the property as entitled within its
existing zone designation.
3)Requires the sales agreement to require the purchaser to
develop the property consistent with the general plan of the
City of Daly City and the Bayshore Revitalization
Redevelopment Plan.
4)Requires that the net proceeds from the disposition of the
property be paid into the Fairs and Exposition Fund (F&E Fund)
for the benefit of the District 1-A Agricultural Association
(DAA 1-A).
5)Provides that DFA, until January 1, 2010, shall assume only
those rights, duties, and powers of the board of directors of
the DAA 1-A associated with negotiating the sale of the
SB 586
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property.
FISCAL EFFECT
Unknown one-time revenue to the Fairs and Exposition Fund from
the property sale, net of any reimbursement to DGS for the
department's cost to administer the disposition.
COMMENTS
1)Purpose . The author indicates that the Bayshore neighborhood
in Daly City is in desperate need of basic services. This
neighborhood has no post offices, pharmacies or grocery
stores. Some residents living near the Cow Palace must take
three buses to get to the closest grocery store. The Cow
Palace property occupies 68 acres within this neighborhood,
including a 13-acre overflow parking lot that is rarely used.
The author states that the Cow Palace is currently running an
operating deficit of about $600,000, and over the past five
years the Cow Palace has lost over $1.5 million dollars. This
bill, sponsored by the City of Daly City, provides for the
disposition of the overflow parking lot, with the proceeds
going to Fairs and Exposition Fund.
2)Background . The state's network of fairs includes 54 district
agricultural associations (state agency fairs), which are
managed under the DFA within the Division of Fairs and
Expositions. Each fair operates with a degree of autonomy
through a board of directors appointed by the governor. State
support to these fairs comes through the Fairs and Expositions
Fund, principally from a portion of license fees assessed
against California horseracing.
According to the DFA, the Cow Palace is currently running a
deficit of $600,000. The Division of Fairs and Expositions is
providing a loan of $336,000 to the Cow Palace to help address
the shortfall. This loan is in addition to an annual
allocation of approximately $175,000 from the F&E Fund to the
Cow Palace for the Grand National Rodeo.
3)Proposition 60A . Under Proposition 60A, the net proceeds of
the sale of surplus property must be used to pay the holders
of the state's deficit reduction bonds. These payments
accelerate the redemption of the state's debt and reduce
future General Fund payments to the bondholders. The proceeds
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of sales of property purchased with gas-tax revenue i.e.,
revenue constitutionally dedicated to highway construction, or
special funds, are exempt from the deficit payment
requirement.
SB 1527 declares that sale of the Cow Palace property does not
constitute a sale of surplus state property subject to the
requirements of Proposition 60A, and directs the sale proceeds
into the appropriate special fund for district agricultural
fairs.
4)Prior Legislation . In 2008, a similar bill (SB 1527, Yee) was
vetoed because it included a provision providing the Daly City
Redevelopment Agency the right of first refusal to the
property. This provision is not included in SB 586.
5)Amendments . The author's proposed amendments simply fill in
the blanks in the current version of the with the dates shown
in #1 and #5 of the analysis summary above.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081