BILL ANALYSIS �
AB 2490
Page 1
ASSEMBLY THIRD READING
AB 2490 (Eggman)
As Amended April 24, 2014
Majority vote
AGRICULTURE 7-0 APPROPRIATIONS 17-0
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|Ayes:|Eggman, Olsen, Lowenthal, |Ayes:|Gatto, Bigelow, |
| |Dahle, Pan, Quirk, Yamada | |Bocanegra, Bradford, Ian |
| | | |Calderon, Campos, |
| | | |Donnelly, Eggman, Gomez, |
| | | |Holden, Jones, Linder, |
| | | |Pan, Quirk, |
| | | |Ridley-Thomas, Wagner, |
| | | |Weber |
|-----+--------------------------+-----+--------------------------|
| | | | |
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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-substantive changes; and,
b) Adds the reference of the board entering into agreements
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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 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,
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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;
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 of 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) Permit the DAA to delegate to officers and employees
powers vested by the board for orderly management and
operation of DAAs;
j) Require, 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) Permit DAAs, with the approval of DGS, to lease for use
to anyone for any purposes approved by the board;
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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, 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;
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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 principal of, or interest on
this bond;"
g) Exempts the 6th DAA, known as the California Science
Center, 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
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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 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
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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 : According to the Assembly Committee on
Appropriations, this has insignificant costs to CDFA and DGS as
a result of expanded DAA authority, and potential savings as a
result of reduced oversight.
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 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, this bill 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
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preapproval requirements for DAAs to procure, purchase and
operate, by raising the dollar limits requiring approval by CDFA
and/or DGS.
Last year, the Assembly Agriculture Committee heard and passed
SB 741 (Cannella) of the current legislative session, on a vote
of 6-0, which is similar to this bill, and is currently in the
Assembly Appropriations Committee. SB 741 contains an urgency
clause.
Current legislation: AB 1647 (Bigelow) of the current
legislative session, would repeal several requirements for fairs
including: an annual report to CDFA related to free pass
admissions by fairs; CDFA expenditures on exhibits, as
specified; and, an annual conference related to judging
exhibits. This bill is pending in the Senate Agriculture
Committee.
SB 741 (Cannella) of the current 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 Appropriations Committee.
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 2009-10 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 Committee), Chapter 423, Statutes of 2001,
modified the relationship between CDFA and DAAs regarding
various the financial transactions of the DAAs and county fairs.
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AB 2688 (Agriculture Committee), 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 Committee), 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.
Analysis Prepared by : Jim Collin / AGRI. / (916) 319-2084
FN: 0003596