BILL ANALYSIS �
AB 35
Page 1
ASSEMBLY THIRD READING
AB 35 (Solorio)
As Amended May 24, 2011
Majority vote
BUSINESS & PROFESSIONS 9-0 APPROPRIATIONS 11-2
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|Ayes:|Hayashi, Bill Berryhill, |Ayes:|Fuentes, Blumenfield, |
| |Allen, Butler, | |Campos, Davis, |
| |Eng, Hagman, Hill, Ma, | |Gatto, Hall, Hill, Lara, |
| |Smyth | |Mitchell, |
| | | |Smyth, Solorio |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | |Nays:|Nielsen, Wagner |
| | | | |
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SUMMARY : Authorizes the Board of Directors (Board) of the
Orange County Fair (OCF) to enter into a revenue-sharing plan
related to real and personal property assets owned by the 32nd
District Agricultural Association (32nd DAA) if the plan
generates over $100 million, as specified. Specifically, this
bill :
1)Authorizes the OCF Board to enter into a revenue-sharing plan
related to the real and personal property assets owned by the
32nd DAA if the plan generates over $100 million for the state
over a period not to exceed 40 years from the initial date of
the agreement.
2)Requires the Department of General Services (DGS) to submit
the complete terms of the agreement to the Legislature at
least 30 days prior to entering into any agreement pursuant to
this bill.
EXISTING LAW :
1)Authorizes DGS to sell all or any portion of the property that
composes the OCF, by means of a public bidding process deemed
to be the fair market value for the property and designed to
obtain the highest, most certain return for the state from a
responsible bidder.
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2)Requires DGS, 30 days prior to executing a sale transaction,
to report to the chairs of the fiscal committees of the
Legislature the financial terms of the transaction, a
comparison of fair market value for the real property and any
basis for agreeing to terms and conditions other than fair
market value.
3)Requires DGS to report to the Legislature on or before June
30th of each year on the status of the OCF's sale.
4) Requires that the proceeds of the OCF sale be deposited in
the General Fund (GF).
FISCAL EFFECT : According to the Assembly Appropriations
Committee, given all the work DGS has done to date regarding the
potential sale of this site, if the state elected to instead
pursue a cost-sharing agreement, administrative costs would
likely not exceed $100,000.
COMMENTS : According to the author, "AB 35 adds a provision to
the law authorizing the �OCF] sale that would allow the Governor
to enter into a revenue-sharing agreement between the state and
the Board or their agents if the agreement would generate a
minimum of $100 million in revenue.
"AB 35 would allow the state to keep this important asset, but
still generate revenue to replace the amount projected by the
proposed �OCF] sale. During a time of economic crisis, all
possibilities should be on the table. A revenue-sharing plan
could mean a win-win. The State would still own the fairgrounds
and generate revenue at least equal to what was proposed through
a sale, and Orange County residents could keep OCF."
OCF conducts business by hosting events that generate revenues
of approximately $28 million through admissions, carnival, food
and beverage, attractions, and parking. OCF also generates
revenue through its on-site Equestrian Center, farmer's markets,
weekend swap meets, and parking rentals. According to the
District Economic Impact report, OCF creates 2,184 local jobs,
generates $2.5 million annually in local tax revenue, and
contributes more than $185 million annually to the local
economy. As of October 31, 2010, OCF's cash on hand was
approximately $12.2 million, and its year-to-date revenues
exceeded expenses by approximately $3.2 million. OCF is
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self-sufficient from its fair and event operations and does not
rely on state funding.
In 1949, the 32nd DAA purchased the current OCF land in the City
of Costa Mesa for $130,195 from the federal government's War
Assets Administration in the wake of World War II using revenue
earned from the 32nd DAA's operations and state grant money
originating from horse racing proceeds. While the 32nd DAA,
more commonly referred to as OCF, is a state division, the 32nd
DAA holds the title to the OCF with the Board operating as its
stewards.
AB 22 X4 (Evans), Chapter 20, Statutes of 2009, Fourth
Extraordinary Session, authorizes DGS to sell OCF as part of an
effort to balance the 2009-10 State Budget. In October 2009,
DGS began soliciting bids for the OCF sale, while the City of
Costa Mesa worked on a ballot measure to issue a restrictive
covenant on OCF use with the intent to preserve and maintain the
existing attractions at OCF. The Orange County Counsel
(Counsel) raised concerns to the Attorney General about the OCF
sale, claiming the Board illegally formed the Orange County Fair
and Event Center Foundation (Foundation) in order to purchase
OCF for personal financial gain. The Board used public funds to
contract with a firm to lobby Governor Schwarzenegger's office
regarding the terms and conditions of the OCF sale. Counsel
questioned the Board's decision to use its funds to influence
the OCF sale terms because some Board members were also
Foundation members and would stand to personally benefit
financially from the OCF sale under the Board's requested terms.
Thus, the use of public funds for private benefit would be
illegal and void. The District Attorney launched a criminal
investigation into the use of public funds.
In March 2010, DGS rejected all bids for the OCF sale, and the
state commenced negotiations with the City of Costa Mesa for the
OCF sale. In August 2010, DGS put the OCF property out to bid
again, and Facilities Management West (FMW) was selected as the
winning bid. Assembly Member Solorio, the author of this bill,
Senator Correa, local and state officials, the OCF Preservation
Society, and business leaders filed a lawsuit to halt the OCF
sale to FMW. In February 2011, after assuming office, Governor
Brown postponed the OCF sale.
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Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916)
319-3301
FN: 0000794