BILL NUMBER: SB 652 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 11, 2011
INTRODUCED BY Senator Steinberg
( Principal coauthor: Senator
Gaines )
( Principal coauthors:
Assembly Members Dickinson and Pan )
FEBRUARY 18, 2011
An act relating to redevelopment. An act
to add Title 2.3 (commencing with Section 1812.40) to Part 4 of
Division 3 of the Civil Code, relating to contracts, and declaring
the urgency thereof, to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
SB 652, as amended, Steinberg. Redevelopment: property
tax revenues: allocation amounts: report. Professional
sports teams: relocation agreements.
Existing law regulates contracts for particular transactions,
including contracts for health studio services, contracts for the
lease or rental of athletic facilities, and the sale of sport
memorabilia.
This bill would prohibit a professional sports team that has
previously entered into a financial agreement with a public entity
from entering into a relocation agreement, as defined, unless it
first provides to the public entity a bond, undertaking, or deposit
in an amount adequate to ensure that its obligations under the
financial agreement will be satisfied. The bill also would prohibit a
professional sports team from entering into a relocation agreement
if that team is in breach or default of any financial agreement, or
if entry into a relocation agreement would cause a breach or default
of any financial agreement, unless and until the breach or default is
cured. The bill would provide that any agreement entered into in
violation of these prohibitions is contrary to public policy and is
unenforceable. The bill would authorize the home public entity and
home community, as defined, to seek, and would require the court to
grant, an injunction to enjoin performance of any act under a
relocation agreement that is made unenforceable by this bill. The
bill would provide that performance under a relocation agreement
entered into in violation of these prohibitions shall not be enjoined
if all of the financial obligations the professional sports team
owes to a home public entity and home community under a financial
agreement are satisfied in full. The bill would require that any
action or proceeding pursuant to these provisions be brought in a
court of competent jurisdiction in the county in which the home
public entity and home community are located. The bill would provide
that these provisions apply to any relocation agreement entered on or
after January 1, 2011.
This bill would declare that it is to take effect immediately as
an urgency statute.
The Community Redevelopment Law authorizes the establishment of
redevelopment agencies in communities in order to address the effects
of blight, as defined, in those communities and requires those
agencies to prepare, or cause to be prepared, and approve a
redevelopment plan for each area. Existing law authorizes
redevelopment agencies to pay the principal of, and interest on,
indebtedness incurred to finance or refinance redevelopment, from a
portion of property tax revenues diverted from other taxing agencies.
The portion of taxes diverted is the amount attributable to
increases in assessed valuation of property in the redevelopment
project area subsequent to its establishment. This method of
financing is commonly known as tax increment financing and is
specifically authorized by Section 16 of Article XVI of the
California Constitution.
This bill would state the intent of the Legislature to enact
legislation to require county auditors to determine the amount of
property tax revenues allocated, or estimated to be allocated, to a
redevelopment agency, as specified, and to submit a report to the
Controller containing this information.
Vote: majority 2/3 . Appropriation:
no. Fiscal committee: no. State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all
of the following:
(a) Professional sports teams provide a valuable source of
family-oriented entertainment.
(b) These teams often help create a strong sense of community
pride and community identity.
(c) Professional sports teams are big businesses. Modern teams
require an arena, team headquarters, team practice facilities, and
other infrastructure that cost tens of millions, even hundreds of
millions, of dollars to construct, improve, and maintain.
(d) Frequently, and increasingly, professional sports teams call
upon local governments to partner with them to share the costs of the
improvements and the new facilities they want.
(e) In California, local governments have entered into
multimillion dollar agreements and financing arrangements to provide
public resources that professional sports teams said they needed to
either come to the community or stay in the community.
(f) Those teams have agreed to repay and compensate the home
communities for committing public dollars in a variety of ways. In
some cases, teams have promised that they would pay off bonds, buy
the arena, or otherwise pay back particular government debt if the
team decides to move.
(g) However, the mere promise of a professional sports team to pay
back public money is not enough if the team disputes or delays in
paying or performing its obligations.
(h) The dollar amounts of the financial commitments made by
professional sports teams to California local governments are so
large that any uncertainty about whether or when the teams will pay
back public money and satisfy their financial obligations is
critical.
(i) If a professional sports team relocates to another community
and delays or challenges its obligation to repay a local government
tens of millions of dollars, the home community will have to either
make huge cuts in its budgets and services or try to borrow money
while it attempts to collect from the team. California and its
largest cities and counties already face unprecedented financial
pressures that are forcing them to eliminate crucial services and
facilities that they provide to residents. Police and fire stations
and jobs are being cut. Parks are being sold or closed. Streets are
going without needed maintenance. A community with a professional
sports team cannot afford to make additional cuts if the team decides
to relocate without first paying its financial obligations to the
community.
(j) If a professional sports team relocates and challenges or
delays the repayment of its financial obligations, the home community
may also be unable to borrow money because financial markets may
respond to the uncertainty of the team's repayment by increasing
interest rates the community pays to borrow money, or even refusing
to lend money altogether.
(k) Large cities and counties and the regions they serve cannot
absorb the additional financial pressure and cuts that would result
from a professional sports team relocating to another community
before first paying off its financial obligations to the home
community. Under current law, there are no mechanisms in place to
ensure that a relocating team pays all of its financial obligations
before leaving, causing large cities and counties to suffer the
uncertainties created by the team's departure.
(l) This act recognizes that, under the commerce clause of the
United States Constitution, state law may not indefinitely prohibit a
professional sports team from relocating either within California or
to another state. This act is not intended to bar or in any way
restrain a team's ability to relocate consistent with its applicable
league rules or bylaws. The sole intent and purpose of this act is to
require that, before a professional sports team relocates, it must
satisfy its financial obligations to its home public entities and
home community.
(m) This act is an exercise of the sovereign right of the state to
protect the lives, health, morals, comfort, and general welfare of
the people of the state, and is paramount to any rights under
contracts between individuals. The economic interests of the state
justify the exercise of its police power to protect the fiscal
integrity of public entities and home communities whose ability to
provide essential services to their residents may be harmed by a
professional sports team's relocation without payment of its
financial obligations to the home public entities and home
communities.
(n) This act is intended to support professional sports teams and
leagues and encourage local governments to partner with professional
sports teams and leagues by giving local governments greater
certainty that the public money they invest to attract and retain
teams will be repaid.
SEC. 2. Title 2.3 (commencing with Section
1812.40) is added to Part 4 of Division 3 of the Civil
Code , to read:
TITLE 2.3. Contracts for Relocation of Professional Sports
Teams
1812.40. The following definitions shall apply for purposes of
this title:
(a) "Breach or default" means any present or anticipated failure
to perform an obligation of a financial agreement between a
professional sports team and a public or private entity, including,
but not limited to, any of the following:
(1) Any act that is defined as a breach or default under the terms
of the financial agreement.
(2) Any failure to make a required payment or perform a specific
material act required under the terms of the financial agreement.
(3) Any act that, under the terms of the financial agreement,
would trigger an obligation to accelerate or immediately tender
payment or performance of an obligation, a requirement to pay
liquidated damages, a requirement to pay penalties, or similar
advanced payment obligations.
(4) Any act rendering it impossible to perform a material
obligation under the terms of the financial agreement.
(5) Any act amounting to a repudiation of a material term of the
financial agreement.
(6) Any act of waste or destruction of property owned by the
public entity or property in which the public entity has a security
interest under the terms of the financial agreement.
(b) "Current location" or "home community" means the city, county,
or city and county in the state in which a professional sports team
plays at least 50 percent of the regular season and playoff games
that are designated or considered by the professional sports team's
governing professional sports league as "home games" or the
equivalent.
(c) "Financial agreement" means any binding legal obligation
between a public entity and a professional sports team by which
public moneys, public property, public assets, or any interests
therein, are transferred, loaned, expended, conveyed, or guaranteed
for the use of a professional sports team, including, but not limited
to, any of the following:
(1) A loan from the public entity to the professional sports team.
(2) A commitment of the public entity to issue, or to cause the
issuance of, debt obligations, whether in the form of notes, bonds,
certificates of participation, or like instruments, the proceeds for
the sale of which will be applied to the benefit of the professional
sports team.
(3) Authorization for the professional sports team to utilize
public property or facilities in connection with its professional
sports activities.
(4) A guarantee by the public entity or the professional sports
team of any loan or other debt obligations, the proceeds of which
are, or will, be applied for the benefit of the professional sports
team.
(5) A lease or sale of, the financing or making of improvements
to, or the management of, any public property or facilities that are
proposed to be used, or that are being used, by the professional
sports team in connection with its professional sports activities.
(6) Purchase of the professional sports team by the public entity.
(7) Revenue sharing.
(8) Any other provision or arrangement of a like nature by which
the public entity provides financial assistance or other economic
incentives to encourage or induce a professional sports team to
either bring its professional sports activities to the home community
or, if already located within the home community, to remain in the
home community.
(d) "Home public entity" means any public entity that has entered
into a financial agreement with a professional sports team playing
its regular season and playoff home games in the home community.
(e) "New community" means any city, county, or city and county in
the state other than the current location or home community.
(f) "Professional sports league" means an association or entity
that acts as the governing body for a set of regularly scheduled
professional athletic competitions in a particular team sport and is
responsible for defining competition rules, setting schedules, and
approving the relocation of teams. "Professional sports league"
includes, but is not limited to, the entities commonly known as the
Major League Baseball, Major League Soccer, the National Basketball
Association, the National Football League, and the National Hockey
League.
(g) "Professional sports team" means a person, corporation,
partnership, limited partnership, limited liability partnership,
joint venture, or other business entity that operates or owns a
substantial or controlling interest in a team organized to
participate in professional team sports as part of a professional
sports league, and that conducts over 50 percent of its home regular
season and playoff games or competitions in an indoor or outdoor
arena or stadium with permanent seating capable of accommodating more
than 9,000 persons attending the team's games or competitions.
"Professional sports team" shall not include a minor league sports
team.
(h) "Public entity" means a city, county, city and county, joint
exercise of powers authority, special district, redevelopment agency,
or other board, district, or agency exercising governmental powers
in this state.
(i) "Relocation agreement" or "agreement to relocate" means any
binding legal obligation, entered into on or after January 1, 2011,
by which a professional sports team, in accordance with the rules,
constitution, or bylaws of its governing professional sports league,
agrees to, obligates, or conditions the exchange of consideration
upon the professional sports team's relocation from its home
community to a new community. Relocation agreements or agreements to
relocate include, but are not limited to, agreements that pertain to
the lease or use of an arena or stadium, practice facilities, and
related parking; the pledge, sharing, or allocation of revenues from,
or surcharges on, tickets, food, team merchandise, concessions,
parking, television, radio, cable or broadcast or podcast rights; and
the repayment of public or private obligations necessary for
facilities improvements for the benefit of the professional sports
team.
1812.41. (a) A professional sports team that has previously
entered into a financial agreement with a home public entity shall
not enter into a relocation agreement unless it first provides to the
home public entity a bond, undertaking, or deposit meeting the
requirements of Chapter 2 (commencing with Section 995.010) of Title
14 of Part 2 of the Code of Civil Procedure in an amount adequate to
ensure that all of its obligations under the financial agreement will
be satisfied.
(b) A professional sports team shall not enter into a relocation
agreement if that team is in breach or default of any financial
agreement, or if entry into a relocation agreement would cause a
breach or default of any financial agreement, unless and until the
breach or default is cured.
1812.42. (a) A relocation agreement entered into in violation of
Section 1812.41 is contrary to public policy and is unenforceable.
The home public entity or home community may seek, and,
notwithstanding any other provision of law, the court shall grant, an
injunction to enjoin performance of any act under a relocation
agreement that is unenforceable under this subdivision.
(b) Performance under a relocation agreement entered into in
violation of Section 1812.41 shall not be enjoined, or continue to be
enjoined, pursuant to subdivision (a) if all of the financial
obligations the professional sports team owes to a home public entity
and home community under a financial agreement are satisfied in
full. The financial obligations under a financial agreement are not
satisfied in full for purposes of this subdivision merely by
providing the bond, undertaking, or deposit pursuant to subdivision
(a) of Section 1812.41.
(c) Any action or proceeding pursuant to this section shall be
brought in a court of competent jurisdiction in the county in which
the home public entity and home community are located.
1812.43. The remedies provided by this title are cumulative and
not exclusive of any other remedy or cause of action provided by law
or equity, including, but not limited to, any joint and several
liability that may arise in contract or tort.
SEC. 3. The provisions of this act are severable.
If any provision of this act or its application is held invalid, that
invalidity shall not affect other provisions or applications that
can be given effect without the invalid provision or application.
SEC. 4. This act is an urgency statute necessary
for the immediate preservation of the public peace, health, or safety
within the meaning of Article IV of the Constitution and shall go
into immediate effect. The facts constituting the necessity are:
In order to reduce the uncertainty regarding the substantial
financial obligations owed to local governmental entities by
professional sports teams, and the potential impact on critical
government services funded by public moneys in the event those
financial obligations are breached, it is necessary that this act
take effect immediately.
SECTION 1. It is the intent of the Legislature
to enact legislation to require county auditors to do both of the
following:
(a) Determine the amount of property tax revenues allocated, or
estimated to be allocated, to a redevelopment agency within each
county's boundaries for the 2009-10 to the 2013-14 fiscal years,
inclusive.
(b) Submit a report to the Controller containing the information
determined in subdivision (a).