BILL ANALYSIS �
AB 2490
Page 1
Date of Hearing: April 30, 2014
ASSEMBLY COMMITTEE ON AGRICULTURE
Susan Talamantes Eggman, Chair
AB 2490 (Eggman) - As Amended: April 24, 2014
SUBJECT : District Agricultural Associations.
SUMMARY : Modifies District Agricultural Association's (DAAs)
requirements for activities needing prior approval by the California
Department of Food and Agriculture (CDFA) and/or the Department of
General Services (DGS); recasts language expanding duties; and, makes
technical conforming changes. Specifically, this bill :
1)Deletes the requirement for DAAs to have prior approval by CDFA, for
DAAs to sue.
2)Permits the Governor to remove any DAA's director, for cause, prior
to the expiration of their term.
3)Deletes the requirement that a DAA board (board) receive approval
from DGS prior to conducting any activity upon its property, and
makes conforming changes.
4)Deletes the requirement for prior approval by CDFA, for a DAA board
to arrange for, conduct, contract, or permit, any activity upon its
property, except for the following:
a) Deletes "revenue generating contracts" from prohibition; and
makes technical non-substitutive changes;
b) Adds the reference of the board entering into agreements to
secure donations, memberships, sponsorships, marketing and
licensing agreements in exchange for valued consideration(s);
and, requires written notification to CDFA prior to entering such
activity when the agreement exceeds $100,000.
5)Deletes requirements for DAAs to have approval by CDFA and DGS to do
the following:
a) Contract; purchase, exchange, or convey any interest in real
or personal property in accordance to the Government Code; lease,
let, grant licenses for the use of real or personal property for
whatever purpose approved by a DAA; jointly use or manage, in any
manner, property; rent or permit use of property; contract with
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county or fair associations; make permanent improvements upon
property adjacent to a DAA property when the improvements benefit
a DAA property; and, pledge revenues or rights pursuant to terms
approved by DAAs.
6)Recasts and expands a DAA's authority, without required approval of
CDFA or DGS, permitting a DAA to do the following:
a) Contract in accordance to the following:
i) Requires the board to develop and follow written
procedures for contracting in accordance with this section.
ii) In accordance to all applicable state laws except the
following:
(1) Any grant or contract for goods is not subject to
Public Contract Code (PCC) pertaining to information
technology, goods and services; and,
(2) Any grant or contract for goods is not subject to
PCC pertaining to electronic data-processing, goods and
services.
iii) Requires, if an estimated construction or similar work
exceeds $25,000, DAAs to solicit bids in writing and award to
the lowest responsible bidder or reject all bids, in accordance
with applicable PCC; and,
iv) Permits DAAs to be subject to the provisions of the
Uniform Public Construction Cost Accounting Act or the Small
Business Procurement and Contract Act (SBPCA), but exempts DAAs
from reporting requirements for use of infrastructure-related
bond acts.
b) Accept funds or gifts from the United States or any person to
aid in carrying out these purposes;
c) Conduct or contract for programs, purchases, leases of goods
individually or with others;
d) Establish and maintain a checking account in an approved
financial institution for depositing funds and to be used in
accordance for purposes of this chapter;
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e) Approve an annual budget and establish a method for payment of
vendors;
f) Contract with any county or fair association for holding a
fair;
g) Make or adopt all necessary orders, rules or regulations for
governing DAA activities, and exempts them from the review by the
Office Administrative Law, but permits them to be filed with the
Secretary of State in accordance with Government Code;
h) Operate a payroll system, accounting for vacation and sick
leave of employees;
i) Permits the DAA to delegate to officers and employees powers
vested by the board for orderly management and operation of DAAs;
j) Requires, with the approval of DGS, and in accordance with
Property Acquisition Law, purchase improvements on property, or
property adjacent or near to, a DAA when they materially benefit
the DAA;
aa) Permits DAAs, with the approval of DGS, to lease for use to
anyone for any purposes approved by the board;
bb) Use or manage any property with any lease, for purposes
approved by the board;
cc) Pledge revenues, with approval of DGS, of whatever kind,
pursuant to terms and conditions approved by the board, creating
a lien or security interest that attaches to the property making
it binding and enforceable against a DAA; and,
dd) Enter into a Joint Powers Agreement, with the approval of
CDFA, pursuant to the Joint Exercise of Powers Act.
7)Requires the board, in developing written policies and procedures
for contracting, to incorporate the following to apply to contracts
and procurement by DAAs:
a) Requires a board to adopt and publish competitive bidding
procedures for the procurement of contracts involving
expenditures of more than $100,000, and requires them to
include, but not be limited to, requirements for bid submission
and required documentation, guidelines, for use of proposals,
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invitations to bid or other bidding methods, and bid protest
procedures. Requires a DAA manager to determine if goods and
services subject to this subparagraph are available through
existing contracts or price schedules of DGS. Provides
legislative findings regarding purchasing locally as opportunity
purchases, and defines them as purchases made locally, at a price
equal to or less than, available through state purchasing
programs;
b) Requires the board, for expenditures of more than $100,000, to
apply these same standards to subcontractors and as part of the
bidding procedures for general contracts, develop guidelines for
subcontractors;
c) Makes the board subject to the SBPCA, but exempts the board
from reporting requirements;
d) Requires the board and general manager, in advertising or
awarding any contract for the procurement of goods and services
exceeding $100,000, to require all bidders or contractors to
include specific plans, to use subcontractors with emerging small
business entities, and delineate the nature/extent of services
utilizes, if known;
e) Requires the board to have the affirmative duty to achieve the
most feasible and practical level of participation by emerging
small business entities, provides legislative intent to establish
as an objective of the utmost importance, the advancement of
business opportunities for emerging small business entities in
the business activities of DAAs;
f) Permits a board, with the approval of DGS, to pledge revenues
and other rights, pursuant to terms and conditions approved by
the board. Restricts the obligations of the state, for the
issuance of any bonds, contracts, debts, settlements, judgments
or liens created by a DAAs under the Joint Powers Authority
statutes, to not directly, indirectly, or contingently, obligate
the state, or any political subdivision or the state, to levy or
pledge any form of taxation or make any appropriation of for
their payment. Requires any such bonds to contain on its face
the following statement: "Neither the full faith and credit nor
taxing power of the state of California is pledged to the payment
of the principle of, or interest on this bond;"
g) Exempts the 6th DAA, known as the California Science Center,
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from this section;
h) Requires DAAs, notwithstanding any other law, adopt a fiscal
review policy as follows:
i) Requires DAAs, with annual budgets exceeding $5 million,
to conduct an annual audit by a certified public accountant
(CPA) or CPA firm selected by the board; and,
ii) Requires DAAs, with annual budgets of less than $5
million, to have its books and accounts examined and reviewed
annually and audited once every three years by a CPA or CPA
firm selected by the board; and,
i) Permits CDFA, notwithstanding h) i) and ii) above, to require
an audit of a DAA before the times previous specified, if it or
the state determines it necessary.
8)Increases the amount of a settlement agreement, without prior
approval by CDFA, from $10,000 to $100,000.
9)Deletes CDFA's ability to make available any DAA property that is
suitable for the DAA's purposes, which has been obtained by the
state without cost to the state.
10)Adds actions, obligations, commitments or contracts by DAAs to the
items for which the state is not liable.
11)Eliminates DAAs as a state agency from DGS's requirements of the
purchase or replacement of vehicles or mobile properties.
12)Deletes DGS's requirement to annually prepare a delegation program
for DAAs that is administered by CDFA based on the following
criteria:
a) DGS's annual review of acquisitions to be included in a
delegation program and amount for each type of acquisition;
b) DGS's annual review, with CDFA, of the aggregate limit for the
delegation program; and,
c) DGS's requirement to communicate with each DAA eligible for
the delegation program, as specified.
13)Deletes the requirement that CDFA include, as part of the annual
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expenditure and approval process by the legislative Joint Committee
on Fairs, Allocations and Classification (JCFAC), a section
describing the purchasing delegation authority of each DAA by DGS,
as specified.
14)Deletes legislative findings regarding DAAs being a valuable
community resource for local purchases; CDFA's requirement to
develop opportunity purchasing criteria for DAAs and definitions;
and, CDFA's permission to develop alternative reporting procedures
from the State Administrative Manual (SAM) for DAAs, county and
citrus fairs with $1 million annual budgets or less.
EXISTING LAW establishes DAAs, and provides for the management of
DAAs, as specified; provides for a board of directors for each DAA,
each to be appointed by the Governor for a term of four years; and,
sets forth the duties and responsibilities of the board of a DAA,
including that DAAs require the approval of CDFA prior to entering
into various types of agreements for an amount greater than $10,000;
and, requires DAAs to following purchasing and reporting requirements
in accordance with SAM and state law.
Existing law requires DGS to exercise oversight of the acquisition and
replacement of motor vehicles, and other mobile property by a state
agency, of DAAs, with a sunset date of July 1, 2015; defines "state
agency" for purposes of those provisions; and, requires the DGS to
annually prepare a delegation program for DAAs, to be administered by
CDFA and DGS, that is presented to JCFAC.
FISCAL EFFECT : Unknown. Legislative Counsel has keyed this bill
fiscal.
COMMENTS : There are 54 DAAs, of which 52 are operating, with 41
operating on state owned properties. Historically, and until 2009,
DAAs had been funded by a portion of horse racing revenues, and then
by the state General Fund (GF), which was eliminated in 2011. DAAs
remain state entities, and so are obligated to operate under the state
procurement and reporting requirements, even though they are not
receiving state funds for operational needs. This is causing
significant hardships for many of the smaller and midsized DAAs, which
may have limited or only part-time employees, or only volunteers to
maintain the grounds and buildings.
DAAs are important to state emergency service agencies and are used
for staging areas for fire fighters, shelter for the public and
animals during times of natural or man-made disasters, and community
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gatherings, besides for annual fairs. With the loss of state funding
assistance, many fairs have significantly deferred maintenance to the
grounds and buildings. It is likely that some DAAs may need to be
closed due to fiscal or public safety concerns.
According to the author, AB 2490 has been developed in cooperation
with CDFA, in an attempt to address the new reality of DAAs not
receiving any state funds, and move them away from the requirement to
adhere to SAM, and state laws, in operating their respective fairs.
This bill eliminates many of the preapproval requirements for DAAs to
procure, purchase and operate, by raising the dollar limits requiring
approval by CDFA and/or DGS.
Last year, this committee heard and passed SB 741 (Cannella), on a
vote of 6-0, which is similar to this bill, and is currently in the
Assembly Committee on Appropriations. SB 741 contains an urgency
clause.
While AB 2490 removes many approval and existing procurement
requirements, it also adds some. The committee may wish to consider
if it is appropriate to require DAAs to be subject to the SBPCA, and
to require DAAs to have the affirmative duty to participate with
emerging small business entities?
Further, the committee may wish to extend the sunset (page 12, line
11-12) for DAAs to be exempt from DGS motorist procurement
requirements. The sunset occurs on July 1, 2015, which, should AB
2490 become law, provide six months of exemption.
The committee may wish to have the author clarify what appears to be a
conflict in language. The DAA authority (page 4, lines 1 through 12)
to conduct specified activities without prior approval by CDFA, except
for specified hazardous activities and those referenced in Sections
4051.1 and 4051.2. Section 4051.1 includes, "notwithstanding any
other provision of law," language to authorize a board to enter into
an agreement on marketing and licensing under $100,000 in value. The
"notwithstanding" language in 4051.1 would preempt the prohibition.
The committee may wish to clarify the reference to "Section 14" (page
6, line 28), by rewording the reference to "subparagraph 14, of this
section."
CURRENT LEGISLATION : AB 1647 (Bigelow), of the 2013-14 Legislative
Session, would repeal several requirements for fairs including: an
annual report to CDFA related to free pass admissions by fairs; CDFA
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expenditures on exhibits, as specified; and, an annual conference
related to judging exhibits. This bill is to be heard in the Assembly
Committee on Agriculture, April 310, 2014.
SB 741 (Cannella), of the 2013-14 Legislative Session, would make
several substantive and clarifying changes to current law related to
the operation, oversight, and funding of the network of California
fairs; and, contains an urgency clause. This bill is currently in the
Assembly Committee on Appropriations.
RELATED LEGISLATION : AB 95 (Budget Committee), Chapter 2, Statutes of
2011, repealed the $32 million annual GF appropriation for the support
of the network of California fairs.
SB 16 X2 (Ashburn), Chapter 12, Statutes of 2009, Second Extraordinary
Session, provides that horse racing license fees no longer be paid
into the Fairs &Exposition (F&E) Fund, and instead provides that
beginning July 1, 2009, $32 million shall be continuously appropriated
from the state GF to the F&E Fund for the support of the network of
California fairs.
SB 281 (Maldonado), Chapter 346, Statutes of 2007, required DFA to
develop criteria to be used for the disposal of property by DAAs and
Cal Expo.
AB 1628 (Agriculture), Chapter 423, Statutes of 2001, modified the
relationship between CDFA and DAAs regarding various the financial
transactions of the DAAs and county fairs.
AB 2688 (Agriculture), Chapter 938, Statutes of 2000, authorized CDFA,
in consultation with DGS, to create an alternative expenditure
reporting procedure that shall, at a minimum, maintain an audit trail,
and maintain fiduciary responsibility by DAAs, county and citrus fruit
fairs, and will be for fairs that have annual reportable
expenditures of not more than $1 million.
AB 2756 (Agriculture) Chapter 535, Statutes of 1998, permitted DGS, in
conjunction with CDFA, to delegate purchasing authorities for
individual DAAs, based upon each one's financial resources and fiscal
performance. The Division of Fairs and Expositions, within CDFA,
would be required to annually report what levels of delegation are
requested and granted, to JCFAC.
REGISTERED SUPPORT / OPPOSITION :
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Support
None on file.
Opposition
None on file.
Analysis Prepared by : Jim Collin / AGRI. / (916) 319-2084