Text of Senate Bill 282 - California

[VF21]

I thought people might find it interesting to read the text of the SB mentioned in the recent articles about the arena and Cal Expo. I found this at http://www.leginfo.ca.gov/pub/07-08/bill/sen/sb_0251-0300/sb_282_bill_20070907_amended_asm_v96.html

BILL NUMBER: SB 282 AMENDED
BILL TEXT

AMENDED IN ASSEMBLY SEPTEMBER 7, 2007
AMENDED IN ASSEMBLY JULY 3, 2007
AMENDED IN SENATE JUNE 5, 2007

INTRODUCED BY Senator Cox

FEBRUARY 15, 2007

An act to add Chapter 5 (commencing with Section 3351) to Part 2 of Division 3 of the Food and Agricultural Code, relating to state fairs.

LEGISLATIVE COUNSEL'S DIGEST

SB 282, as amended, Cox. State Fair Leasing Authority.
Existing law authorizes 2 or more public agencies to enter into a joint powers agreement to conduct agricultural, industrial, cultural, or other fairs or expositions. Under existing law, entities formed pursuant to a joint powers agreement have the authority to issue revenue bonds for the purposes of conducting a program or completing a project under its jurisdiction.
This bill would authorize the formation of a joint powers entity, the State Fair Leasing Authority, to be composed of the Department of Food and Agriculture, the Department of Finance, the Department of General Services, and the California Exposition and State Fair, appointed as specified. The authority would be authorized to enter into leases or other agreements for the use of the State Fair Race Track or any other property owned or controlled by the California Exposition and State Fair, and to enter into indebtedness, including issuing bonds, in order to carry out its purposes. The bill would require the California Exposition and State Fair, in consultation with the authority, to prepare a master plan approved by the board of directors of the fair for the long-range comprehensive development and improvement of the property of the California Exposition and State Fair.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

SECTION 1. Chapter 5 (commencing with Section 3351) is added to Part 2 of Division 3 of the Food and Agricultural Code, to read:
CHAPTER 5. STATE FAIR LEASING AUTHORITY
3351. (a) There is hereby created the State Fair Leasing Authority, a joint powers authority formed pursuant to Chapter 5 (commencing with Section 6500) of Division 7 of Title 1 of the Government Code, which shall be composed of the Department of Food and Agriculture, the Department of Finance, the Department of General Services, and the California Exposition and State Fair.
(b) For the purposes of Section 6502 of the Government Code, the common powers to be exercised by the State Fair Leasing Authority shall be the powers of a district agricultural association.

3352. (a) The authority shall be governed by a board of directors which shall be composed of the Secretary of Food and Agriculture, the Director of Finance, the Director of General Services, and four individuals, appointed as provided in paragraph (1), who are members of the Board of Directors of the California Exposition and State Fair. The Treasurer and Controller shall be members of the board of the authority only for the purposes of hearing and deciding upon matters related to the issuance of revenue bonds pursuant to this chapter. The Director of Finance shall serve as chairperson of the authority. All meetings of the authority shall be open and public.
(1) Of the four appointed members of the Board of Directors of the California Exposition and State Fair, one shall be appointed by the Speaker of the Assembly, one shall be appointed by the Senate Committee on Rules, and two shall be appointed by the Governor.
(2) The authority may contract with consultants as approved by the board of the authority. The authority may not employ any other staff.
(3) The general manager of the California Exposition and State Fair may only serve in an advisory capacity to the authority.
(b) The authority is a "department" for the purposes of hearings pursuant to Article 2 (commencing with Section 11180) of Chapter 2 of Part 1 of Division 3 of the Government Code.

3353. (a) The California Exposition and State Fair shall provide clerical services and the use of its staff without charge to the authority. The Department of Finance, the Department of Food and Agriculture, the Department of General Services, and the California Horse Racing Board shall cooperate with the authority, and, upon request of the chairperson of the authority, shall provide the authority with the reasonable and periodic use of their staffs.
(b) The Attorney General shall serve as counsel for, and adviser to, the authority, and shall approve outside counsel to the authority in furtherance of the provisions of this chapter, as requested by the chairperson of the authority.
(c) The costs, if any, for services to the authority specified in subdivisions (a) and (b) shall be paid for by the authority, with funds generated pursuant to this chapter. Any costs in excess of the funds available to the authority shall be paid by the California Exposition and State Fair.

3354. The authority may enter into leases or other agreements for the use of the State Fair Race Track or any other property owned or controlled by the California Exposition and State Fair which are necessary to further the purposes of Section 3331 or to provide horse racing at the State Fair Race Track. A lease or agreement entered into pursuant to this section shall be on behalf of the California Exposition and State Fair, and the State Fair shall continue in control of its property, subject to the conditions and terms of that lease or agreement.

3355. The California Exposition and State Fair, in consultation with the authority, shall prepare a master plan approved by the board of directors of the fair for the long-range comprehensive development and improvement of, and construction upon, the property of the California Exposition and State Fair. The plan shall prescribe the amounts which may be expended for the various features of the plan, the period authorized for the completion of each project, and the terms of any revenue bond financing undertaken with respect to the plan. The plan shall require that any revenue bond financing shall be rated in one of the four highest rating categories by two nationally recognized rating agencies. Upon its completion, the master plan shall be submitted to the Joint Legislative Budget Committee for review. The master plan is subject to amendment by the authority, with the approval of the board of directors of the California State Fair.

3356. The California Horse Racing Board, at the request of the authority, shall certify the eligibility of any prospective lessee or user of the property to be licensed to conduct horse racing at the State Fair Race Track.

3357. (a) In leasing, or entering into agreements for the use of, the State Fair Race Track or other fair property property owned or controlled by the California Exposition and State Fair , the authority shall follow the same procedures, as appropriate, as the Department of General Services follows in leasing or entering into similar agreements for other state real property. The authority shall also consult with and present for comment the lease or agreement to the governing bodies of the city and county of Sacramento prior to awarding the lease or entering into the agreement.
(b) Prior to awarding a lease of, or entering into an agreement for the use of, the State Fair Race Track or other property owned or controlled by the California Exposition and State Fair , the authority shall consider all the factors concerning appropriate capital improvements of the race track, the financing of the race track, additional racing opportunities, and any use of new or additional properties or facilities, including, but not limited to, a grandstand or grandstand improvements, which factors shall be considered in the award of the lease or entering into the agreement. The authority shall also consult with any affected local governing bodies and present for comment the lease or agreement to the governing bodies of the city and county of Sacramento prior to awarding the lease or entering into the agreement.

3358. If the authority makes a determination pursuant to this chapter about an action it proposes to take in awarding the State Fair Race Track lease or entering into the agreement, it shall report to the Legislature, setting forth the procedures followed by the authority in reaching its determination and the reasons the proposed award or agreement is in the best interests of the state. The authority shall also make recommendations regarding any additional legislation which it deems necessary. However, no legislative action is required to make a lease or agreement entered into by the authority effective and operative.

3359. After the award of a lease or upon entering into an agreement for the use of State Fair property, the authority shall meet periodically to review the operation of the lease or agreement, and the master plan, and to consider any other related matters. It shall also make any recommendations that it deems proper to the Legislature, other state agencies, including, but not limited to, the California Exposition and State Fair, and to the lessee or user of the property.

3360. (a) The authority, in the exercise of its powers, may pledge any and all revenues, moneys, accounts, accounts receivable, contract rights, and other rights to payment of any kind, pursuant to the terms and conditions approved by the authority. The revenues, moneys, accounts, accounts receivable, contract rights, and other rights to payment pledged by the authority or its assignees constitute a lien and security interest which immediately attaches to the property so pledged, and is effective, binding, and enforceable against the authority, its successors, purchasers of the property so pledged, creditors, and all others asserting rights therein, to the extent set forth, and in accordance with, the terms and conditions of the pledge, irrespective of whether those persons have notice of the pledge and without the need for any physical delivery, recordation, filing, or further act.
(b) The California Exposition and State Fair shall be responsible for any debt incurred pursuant to this chapter, and the capital of the California Exposition and State Fair shall be used to guarantee any indebtedness.

 

[VF21]

cont...

3361. The State of California pledges to, and agrees with, the holders of any bonds, other indebtedness, or obligations for the financing of the improvements described in the master plan pursuant to Section 3355, and which are issued or executed and delivered by the authority, or the California Exposition and State Fair, that the state will not alter or change the structure of funding of, and deposits to, the authority or to the California Exposition and State Fair pursuant to the provisions of Article 9.2 (commencing with Section 19605) of Chapter 4 of Division 8 of the Business and Professions Code, or the pledge of funds for debt service, security, including any coverage factors, and expenses entered into pursuant to this chapter until the bonds, other indebtedness, or obligations are fully paid or discharged or have been fully provided for in accordance with their terms. However, nothing precludes any alteration or change if and when adequate provision has been made by law for the protection from impairment of the contract represented by the bonds, other indebtedness, or obligations, and the right to alter or change is hereby reserved. The authority, and the California Exposition and State Fair, are each authorized to include this pledge and undertaking of the state in their bonds, agreements evidencing other indebtedness, and other indebtedness or obligations for the financing of the improvements described in the master plan pursuant to Section 3355. The authority shall notify the Joint Legislative Budget Committee at least 90 days prior to authorizing the sale of revenue bonds pursuant to this chapter. The notice shall specify all the terms and conditions of the revenue bonds, including, but not limited to, the total amount of the bonds, the revenue source, and the repayment period. Any bond so issued shall contain on its face a statement to the following effect: "Neither the full faith and credit nor the taxing power of the State of California is pledged to the payment of the principal of, or interest on, this bond."

 

[Arena Skeptic]

Nice formatting there, VF.

(Sorry).

The key provision that sticks out for me is:

Provides that the authority may enter into binding and
enforceable rights to payment, which constitute a lien and
security interest attached to the property so pledged. Cal
Expo shall provide security against any indebtedness incurred
pursuant to a lease or agreement, and the master plan. Any
bond issued shall bear the statement "Neither the full faith
and credit not the taxing power of the State of California is
pledged to the payment of the principal of, or interest in,
this bond."

In other words, if you occupy it, you pay for it.

As always, that's the sticking point: Money. It's right there in black and white, the State will not pay for it. So, who will?

I think the max the local taxpayers would ever agree to contribute is around 20%, and the max the Maloofs will ever agree to contribute is 20%, which leaves the project 60% unfunded. That's a round guess; it may be more like 50% unfunded, or 70% unfunded. So we need corporations to take up the middle.

Don't get me wrong, I think this is progress; it's just that the most difficult part of this -- funding -- is still entirely unresolved. There is potential here, but without the money to pay for it, it can't really go anywhere.

 

[VF21]

The bill seems to have NO opposition in either the Assembly or the House and, as a result, I would expect the Governor to sign it if/when it reaches his desk...

 

[VF21]

Nice formatting there, VF.

(Sorry).

The key provision that sticks out for me is:

Provides that the authority may enter into binding and
enforceable rights to payment, which constitute a lien and
security interest attached to the property so pledged. Cal
Expo shall provide security against any indebtedness incurred
pursuant to a lease or agreement, and the master plan. Any
bond issued shall bear the statement "Neither the full faith
and credit not the taxing power of the State of California is
pledged to the payment of the principal of, or interest in,
this bond."

In other words, if you occupy it, you pay for it.

As always, that's the sticking point: Money. It's right there in black and white, the State will not pay for it. So, who will?

I think the max the local taxpayers would ever agree to contribute is around 20%, and the max the Maloofs will ever agree to contribute is 20%, which leaves the project 60% unfunded. That's a round guess; it may be more like 50% unfunded, or 70% unfunded. So we need corporations to take up the middle.

Don't get me wrong, I think this is progress; it's just that the most difficult part of this -- funding -- is still entirely unresolved. There is potential here, but without the money to pay for it, it can't really go anywhere.

Um I corrected the formatting. It took a few minutes...

As for the rest, I don't have time to argue it right now but I'm sure some others will read the bill and discuss it. That's what we're here for, right? I think it's a possible move in the right direction and could be a precursor to additional plans by the NBA.

You have to walk before you can run and this piece of legislation could well be the first step in the marathon.

 

[kennadog]

This is exactly the no public vote kind of bonding authority I was saying requires only CDLAC approval. Although obviously the plan needs legislative approval.

The public does vote on a lot of bond issues.....if they are general revenue bonds (payback guranteed out of general fund moneys). The wording here is that any bonds issued by the JPA is the sole liability of the JPA. And the JPA is required to have public hearings.

 

[Arena Skeptic]

The way it's written, sure, there's no state requirement for a state vote. I can see that.

But the occupant of the building is required to pay for it. The potential occupant could turn to local voters and ask for funds; they can't just take the money out of local coffers.

Or pay for it themselves.

So, it's either

1) The Maloofs pay for the whole thing, which is fine, or

2) They ask the public for money, which will be a really hard sell in this area.

It's just an opinion, but my gut feeling says that if the public is asked to pay for more than 20% of the bill, it's an impossible dream.

The Maloofs could ask to form a JPA to sell revenue-anticipation bonds on their behalf, but it's highly unlikely the politicians would be inclined to sell such bonds without a vote. Courts have ruled this is a legal approach, but politically, this would be suicide.

I don't want to dismiss the idea entirely. Just want to point out that the #1 problem is money. #2 is location; this is a potential resolution for that problem. But if you don't solve problem #1, the biggest hurdle still remains.

We don't even know if the Maloofs like this idea.

 

[VF21]

So are you constantly this pessimistic or just around here?

It's a step. It's a little teeny tiny ray of light where there's been only darkness. Sorry but I'm going to be very cautiously optimistic - because it is a first step and nothing more.

There's no state requirement for a state vote. Period.

The rest of your comment is speculation and, at this point, I think it's really putting the cart before the horse or the rickshaw in front of kupman.

 

[KevinSalvadori]

Remember Angelo Tsakapoulos, the investor and land salesman that wanted to architect the "land swap" to put the new Arco next to the old Arco? Now would be the perfect time to step in and pledge the money that would be demanded in principle from the Cal Expo side for naming rights and initial costs...he was, I believe, prepared to put some $40m up front for it, and then generate additional revenue from later deals. That could help get this off the ground, as well as the blanket language to help improve infrastructure in the Cal Expo area and thus push it through the Assembly (more importantly, the civic authority).

One thing that might help this along (I hope) is that a lot of the "split ends" and phantom costs that damaged the last deal are absent here...

...now if the Maloof's can avoid making ads for $6,000 value meals the month of the vote, we'll be all set...

 

[VF21]

...now if the Maloof's can avoid making ads for $6,000 value meals the month of the vote, we'll be all set...

Hear, hear!!

 

[VF21]

The last status report shows SB282 as item #28 on the unfinished business list of the Senate, effective 9/11/07.

 

[cfechter]

Remember Angelo Tsakapoulos, the investor and land salesman that wanted to architect the "land swap" to put the new Arco next to the old Arco? Now would be the perfect time to step in and pledge the money that would be demanded in principle from the Cal Expo side for naming rights and initial costs...he was, I believe, prepared to put some $40m up front for it, and then generate additional revenue from later deals. That could help get this off the ground, as well as the blanket language to help improve infrastructure in the Cal Expo area and thus push it through the Assembly (more importantly, the civic authority).

One thing that might help this along (I hope) is that a lot of the "split ends" and phantom costs that damaged the last deal are absent here...

...now if the Maloof's can avoid making ads for $6,000 value meals the month of the vote, we'll be all set...

I believe the proposal was to have the county/city re-zone a great deal of farmland in Natomas/West roseville/north sacramento county for development, then use development fees to fund an arena - it was a bit bizarre at the time that Lou Blanas (the Sheriff) brought up this funding option and I think the whole thing blew up when it was revealed that Blanas' wife was a minority partner in a partnership which owned a lot of the land which would be opened for development (i.e. - the land which is currently valued at around 30k per acre would then be valued at 300k per acre, more or less)

I doubt this is still on the table or would even be considered at this point.

 

[Circa_1985_Fan]

So are you constantly this pessimistic or just around here?

Hey, it's either the greedy Maloofs pay for everything, or they can 'move to Vegas'(which will NEVER happen, btw, now that Harrah's is building the new arena in Vegas...the Maloofs arent about to move THEIR team to a competing casino's arena)...those are the only 2 options according to A.S. Jeez...

 

[Circa_1985_Fan]

...now if the Maloof's can avoid making ads for $6,000 value meals the month of the vote, we'll be all set...

Amen to THAT!!

 

[kennadog]

The way it's written, sure, there's no state requirement for a state vote. I can see that.

But the occupant of the building is required to pay for it. The potential occupant could turn to local voters and ask for funds; they can't just take the money out of local coffers.

Or pay for it themselves.

So, it's either

1) The Maloofs pay for the whole thing, which is fine, or

2) They ask the public for money, which will be a really hard sell in this area.

The Cal Expo JPA could build the arena and lease it to the Maloofs. Of course:

1) We have no idea if this will have anything to do with what Stern's proposal will be.

2) Even if it is the general idea, we have absolutely no details and everything we're discussing is sheer speculation.

 

[VF21]

Note: Sorry I forgot to update. The bill was sent to the governor for action on Sept. 14 at 4 p.m.

As of today, Gov. Schwarzenegger has not yet signed it.

 

[VF21]

Just to complete the thread, I should make it official:

This bill was approved by Governor Schwarzenegger and signed into law on October 5, 2007.