Political Analysis: The Proposed Sale Of The Del Mar Fairgrounds

Next week supporters of a deal to sell the state-owned Del Mar Fairgrounds to the city of Del Mar will try again to close the deal in the state legislature. A special session of the legislature has been called to address California's budget deficit and it's an opportunity to re-introduce legislation about the sale.

Joining us to examine the issues and complexities involved in a potential sale of the fairgrounds is KPBS Political Correspondent Gloria Penner.

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MAUREEN CAVANAUGH: I'm Maureen Cavanaugh, and You're listening to These Days on KPBS. Next beak, supporters of a deal to sell the state owned Del Mar fair grounds to the city of Del Mar will try again to chose the deal in the state sledge similarity, a special session of the legislature has been called to address California's budget deficit, and it's an opportunity to reintroduce legislation about the sale. And this morning, officials from Solana beach are meeting with the Del Mar city officials to see if they can pattern in the purchase of the fair grounds. Now, meanwhile, both support and opposition to the plan is strengthening as more people and special interests become aware that the city of Del Mar may take control of the fair grounds for what some say is the meager price of a hundred and $20 million. Joining us to examine the issues and complexities involved in a potential sale of the fair ground system my guest, KPBS political correspondent, Gloria Penner. Good morning, Gloria.

GLORIA PENNER: Good morning, Maureen. I'm looking forward to this.

MAUREEN CAVANAUGH: Now, I want to join our listeners to join the conversation. Do you think the city of Del Mar is qualified to run the fair grounds? Is it a good move for San Diego? Give us a call with your questions, your comments, the number here is 1-888-895-5727. That's 1888895 KPBS. Well, first of all, Gloria, give us some background, why are the Del Mar fair grounds up for sale in the first place.

GLORIA PENNER: Well, are the Del Mar city officials said that they want to buy the fair grounds to preserve it for the entire county. That sounds kind of philanthropic, doesn't it? But the truth is that Del Mar is only two square miles, and the income it receives from the various businesses it has, and property tax and so on, has to be limited by the amount of space it takes up. It's the smallest city in the county. And with only two square miles, you know, its income has to be limited. Well, you add the Del Mar fair grounds, some 350 acres of productive territory, and some of that money at least would flow to Del Mar and certainly help the Treasury. Now, there's a perfect blend here, Maureen, because the state -- because the state's in financial trouble has been discussing selling off real estate assets to help reduce the budget deficit. And the fair grounds had been on the consideration list. Last year, governor Schwarzenegger included the property on his list of proposed sales Burk he abandoned the idea last year. The mayor of Del Mar, the current mayor, although he'll be stepping down at the end of the year, said that the deal would be good for the over all region, that it may even save horse racing for Southern California in the long run, and he said that his City Council backs the strategy unanimously, and believes the city has enough assets to pull off the financial transaction. I'm gonna quote what he said, he said, we would like to make it a first class facility for horses and agriculture. That's the impetus for doing this, well, now, it makes it sound as though it isn't a first class facility for horses and agriculture. So at this point, we're talking about a proposal for the state to sell the Del Mar fair grounds to the city of Del Mar for air hundred and $20 million, and we can talk a little bit more about that later. This sale, the legislation was brokered by senator Chris Kehoe of San Diego.

MAUREEN CAVANAUGH: Right. There was a lot made when this story 50 broke about how people were not perhaps informed, that the proposed sale had gone as far as it did, and so forth. How did the city of Del Mar become the proposed buyer of the fair grounds?

GLORIA PENNER: This has been in conversation for a long time. I can remember when mayor Cheryl Crawford and I had a discussion about when this she was mayor a couple of years ago. Soap it's not a new idea. And the actual proposal had been in the works for months in Sacramento, but it didn't come to light until early October when the legislation was actually introduced in Sacramento. And then pulled for a later vote. So at this point, it's on the table, it hasn't yet been voted on by the legislature, and here's the fly in somebody's ointment, and that is that governor Schwarzenegger who becomes the idea will be out of office by January 3rd, on January 4th, the [CHECK AUDIO] a whole new way of approaching things and we can talk about that a little later.

MAUREEN CAVANAUGH: I am speaking with KPBS political correspondent Gloria Penner, and we are talking about the proposed sale of the Del Mar fair grounds to the city of Del Mar. And we're taking your calls with your questions and comments about this proposal, 1-888-895-5727. Now, there's been a lot said about the price set in this proposed deal for the fairgrounds the $120 million. 50 of all, who set that price? Had do we know?

GLORIA PENNER: Oh, this is what the city of Del Mar has offered. The fair ground president, noose balm, said the property is worth far miles an hour a hundred and $20 million. And he said figured that this is worth as much as eight hundred million or even $100 billion. There are members of my no, ma'am that would say, Gloria, don't ever do the math for radio, that was not your strong point, but if you take 350 acres and you divide it into a hundred and 20 million, if I'm accurate and I had enough zeros on my calculator, that's about $350,000 an acre. Now, that sounds like a lot, but when you take I look at how much coastal properties are going for in San Diego, some quarter acre lots in coastal properties can go for a million each. And so -- and that doesn't count the amenities, it doesn't count the track, it doesn't count the buildings. So I can see why some people would call it a steal at a hundred 20 million dollars.

MAUREEN CAVANAUGH: I remember when Del Mar mayor Richard Ernest was on this program, he defended that price by saying, well, it might be worth $800 million if it were broken up and gonnaed, but if you want to keep the fair grounds the way it is, that's a fair price. That's what he said.

GLORIA PENNER: It's a fair price by the way, it's a fair pry from Del Mar's point of view. But take a look at Del Mar's budget. Del Mar's budget for the year is only 34.4 million whiches.

MAUREEN CAVANAUGH: So that brings me to, of course, Del Mar is one of the smallest cities in the conty. How do they propose to pay for this hundred and $20 million price tag.

GLORIA PENNER: Again, this comes from the mayor, Ernest, he said the city's figured out a way to pay for the fair grounds without it affecting the city's general fund, and without having the taxpayer pay one dime for this. We've heard that before, haven't we? In the City of San Diego. [CHECK AUDIO]. We will borrow money as partial payment for it. There's going to be a loan back to pay for part of it. So there are two loons right there, and there is somebody, he said, who wants to prepay a lease for the race track. These are the thorough bread race people who know what they're talking about. A lodge term prepaid lease will take care of the rest of it. So two loons and a prepaid lease.

MAUREEN CAVANAUGH: All right, let's now move then to what the critics are saying about this. One of the major critics of this proposed deal to sell the fair grounds to the city of Del Mar, is the group who manages the fair ground, the 27th district cultural association. Can you 28 us why they're opposed to this? [CHECK AUDIO].

GLORIA PENNER: Oh, where shall I start? Let's start with the price that we were just talking about. The fairground CEO, Tim Fennell, said that there has been $191-million of upgrades in the fairgrounds' property over the past 18 years. So the propose the $120-million purchase price is less than the cost of recent capital improvements. And second, there's the politics with the negotiations going on behind those well known closed doors. I'd love to see those doors some time. They seem to show up all over, don't they? And there it is, suddenly, on the legislative agenda with the governor clearly in favor, and third, there are 300 events aside from horse racing and the fair, and the board chairman claims that all that's now in jeopardy by turning over management to people who don't run fairs, they don't run horse racing, they haven't, according to him, even been to the fair or to the fair grounds to look at the books. So there's also the job picture. The activities at the fair grounds at this point provide 5000 full time jobs, according to the CEO, and they have a $400 million economic impact on the region, and there's concern that all of this could be put in jeopardy if the city took control. So there you have it. The politics of it, the cost of it, and what happens to the ongoing activities and the employees who are there.

MAUREEN CAVANAUGH: Right. I want to invite our listeners to join this conversation. Do you think that the management of the Del Mar fair grounds will be in jeopardy if the city of Del Mar were to take over operations of the fair grounds? Give us a call, tell us what you think the number is, 1-888-895-5727. So the fair grounds right now, is it doing well under the administration of this group?

GLORIA PENNER: Well, first of all, let's take a look at the activities that go on there. I know a lot of people in San Diego go for various reasons, that's the San Diego County fair, very popular, and very popular with tourists too. There's the annual horse racing mete, there's satellite [CHECK AUDIO] on horserating, and there are some 300 additional events issue the popular scream zone at Halloween. Then there's the Christmas holiday of lights and that's going on right now, and the Del Mar national horse show. All of those are very popular. And then there are other things. There are gun clubs issue there's the harvest festival.

MAUREEN CAVANAUGH: There's almost always something going on at the fair grounds.

GLORIA PENNER: Yes am you always see cars parked there. According to the financial statement that was provided by district officials, I'm talking about the Del Mar fairgrounds district, in 2009, the fair grounds' operating revenue totaled $62.7 million, and the operating expenses were just under $54 million, now, after costs such as dent service and depreciation, the fair grounds bottom line was a surplus of about $4 million. Four million. I mean, that doesn't sound like a lot, and that was reinvested into the property for maintenance and improvements. And that was all reported by the Carmel Valley news.

MAUREEN CAVANAUGH: I see. Okay. So when you -- they're still inviting the officials of the city of Del Mar to come up and look at the books and see whether or not they can run the Del Mar fair grounds in the black, so to speak. So who -- we know that the -- the present board of the Del Mar fair grounds is against this sale, and of course the city of Del Mar is for it. Who -- where are the sides being drawn in this proposed sale? Who's on which side?

GLORIA PENNER: I'm going to tell you that in a minute. There was something I wanted to add.

MAUREEN CAVANAUGH: Sure, sure.

GLORIA PENNER: To what I just said about how well the fair grounds is doing. There was an assist apt professor of management and entrepreneurship at San Diego state university school of business who did an analysis. And she questioned some of the district a business practices after she reviewed the agency's annual statements for 2009 and 28. And what she said was, I'm not sure they're running this as best as they can, as most efficiently as they can, and what she was questioning was the district's payroll and the benefits of $18.5 million in 2009. She felt that was a huge amount of overhead. And apparently there were accounts that were also written off by the district and that nearly doubled she said from a hundred and 43000 to 248000. [CHECK AUDIO] so it means moneys that just did not come in, and they said just forget those. What was your last question?

MAUREEN CAVANAUGH: I want to go to whose taking sides on this proposed sale, but we have a couple of people who want to comment, and I want to get those calls in. Evan is calling from La Jolla. Good morning, Evan welcome to These Days. Of.

NEW SPEAKER: Hi. It's actually, it's Kevin.

MAUREEN CAVANAUGH: Kevin, yes, thank you.

NEW SPEAKER: I want to respond to and make a comment about the offer to have Del Mar come take a look at the books of the Del Mar fair grounds. And I've actually tried to go look at the books and I had to get myself an attorney to get the fair grounds to release their budget to me so that I could take a look. So I'm hoping that whatever happens here in the end that the fair ground is being run a more transparent way, that's more accessible to the public. And there is a little bit more accountability to the people of San Diego so that they can have a more direct route to having a say in what's happening at the fair grounds.

MAUREEN CAVANAUGH: Kevin, thanks very much for the call. Opening up the closed doors that you were talking about.

GLORIA PENNER: Yes, exactly. Well, the doors I was talking about, specifically, were political doors, stuff that goes on in Sacramento. Unfortunately too often. But in terms of opening, you know, the fair grounds board is appointed by the governor. And so the representatives on the board really represent this state of California. And one of the issues that we can talk about would be the issue of local control with some of the proposals saying that the new constitution of a new board should involve people this are local and that theoretically, if they're local, if they represent Del Mar and Solana beach and other cities in North County that this would be a more transparent process, because they would be beholden to the people who elect them right here in San Diego.

MAUREEN CAVANAUGH: Now, you just mentioned Solana beach. I want to talk about what actually is happening today, actually this morning, in Del Mar before the dell mar-City Council. They're hearing from a number of officials from Solana beach, and people who seem to want to support and even partner in this proposed deal to buy the fair grounds. Tell us about that.

GLORIA PENNER: Right, and this was a report from sign on San Diego, that the Del Mar City Council will meet this morning to consider a proposal from Solana beach which is a very close neighborhood to Del Mar. When you get off Highway 5 at the -- I think it's the loma porto Solana beach exit, if you move slightly to your left, you're in Del Mar, if you move slightly to your right, you're in Solana beach. They are truly neighbors. They would be [CHECK AUDIO] and the concept is they would meet in a closed session this morning at 1030, there we go again, another closed session, but you know, negotiations like this often happen in closed sessions. And then hold a public update on the potential purchase afterwards. The details of Solana beach's offer have not been released but that it would include acquisition of the property, the benefits of working together, the organizational structure, and the control, the land use control and sharing expenses. The Solana beach mayor, Tom Campbell, and one of the counsel man, Dave Roberts have been meeting privately with the Del Mar mayor and with one of the councilman, and a comment from the CEO of the Del Mar fair grounds, Mr. Fennel, says that Solana beach receives hotel and sales tax revenue from those who attend the fair ground events as well as money from off track betting that the facility provides jobs and other business opportunity for Solana beach residents, it provides storage space, and loans equipment to the city at no cost and sponsors local coastal cleanup programs each year. In other words I believe what he is saying, hey, Solana beach, look what we're doing for you. Are you going to go ahead and partner with Del Mar and buy this thing away from us?

MAUREEN CAVANAUGH: Good morning, Charles, and welcome to These Days. Of.

NEW SPEAKER: Thank you. I just wanted to comment on the really, I think, which hasn't been mentioned by Gloria or anyone that I've heard, that we -- I think one of the primary motivations Del Mar's wanting to buy this familiar -- buy this track, and that is Barry noose balm's plan to develop the track, condos, gyms, above ground parking structures. Being a former member of the coast commission staff, I know that this is not consistent with the coastal act, nor is it consistent with the general plan of the county of San Diego. And it's certainly not in keeping with the perspectives of Del Mar or Solana beach.

MAUREEN CAVANAUGH: Charles.

NEW SPEAKER: That's the real motivation behind Barry noose balm.

MAUREEN CAVANAUGH: Thank you very much for the call, Charles, and remind us who Barry news balm is.

GLORIA PENNER: Barry noose balm is the chair of the Del Mar county [CHECK AUDIO].

MAUREEN CAVANAUGH: Actually has plans to develop the fair ground track. Is any of that -- [CHECK AUDIO].

GLORIA PENNER: No, that has been floated around. Idea is there. I hear it talked about every now and then, it's referred to in some of the research that I've done, as far as I know, that's been nothing actually put on the table saying we are going to did this, but people around that area are very concerned, they always have been concerned that their beautiful, pristine wet land area, because a lot of this is wet land, is going to change and the next thing you're going to see are buildings coming up and the subterranean wet garages being built, so yes, there is concern about this. Now, Charles may know more than I do because he said he served on the coastal commission. And coastal commission would be very much aware of this.

MAUREEN CAVANAUGH: And so the point that he's making is that he would be in support of Del Mar buying the fair grounds because he wanted to see it be preserved as the way it is now without this development. Now, let me just find out from you, you said before Gloria, that there's a certain amount of urgency in supporters of this plan because of the changing of the guard in Sacramento, a new governor coming in. Why? Do we know that governor brown would be against this sale?

GLORIA PENNER: No, governor elect brown.

MAUREEN CAVANAUGH: Yes, the new governor brown.

GLORIA PENNER: Has not made a public statement about his views on the proposed sale. And brown's spokes person did -- was contacted. He hasn't returned any messages. So we don't know. But we know that governor brown -- governor elect Brown, is a big believer in moving control of government from the state to the local level, and this seems to favor the fair grounds sale that Del Mar is proposing. And it would also favor the idea of that board I was talking about, an 11 member board that includes five appointees in Del Mar and one each from Solana beach and the city and county of San Diego, there would also be a county agricultural representative and the director of the San Diego association of governments, that's SANDAG, and the San Diegito river powers authority. So although brown has not made that public statement, he may be receptive to the argument more local troll. And also to the arguments of environment and conservation groups which support the sale. So we do not know yet, and he doesn't come in until January 4th. The current governor does back the idea of selling it, and so if they can move it along, they're gonna move it along as quickly -- by they, I mean Chris Kehoe and the city of Del Mar.

MAUREEN CAVANAUGH: That's my time question to you, in the last minute that we have, Gloria, is what happens now if something is going to be reintroduced to the legislature next week, but does the legislature have to approve this? Can this deal just be done between Del Mar and the governor.

GLORIA PENNER: No, at the state level, two things must happen before a deal could go through. First a deal authorizing the sale would have to be approved by the state legislature.

MAUREEN CAVANAUGH: Okay.

GLORIA PENNER: That's one. Second, governor Arnold Schwarzenegger would have to approve the sale if he's still in office, and locally, the Del Mar City Council will have to approve the purchase. So there we are. Three levels of approval, and then it could be a done deal. And where did our time go, Maureen?

MAUREEN CAVANAUGH: I know, it really went fast. But we talked -- we really got out a lot of information about this, and I want to thank you for that Gloria, thanks.

GLORIA PENNER: You're welcome.

MAUREEN CAVANAUGH: I've been speaking with KPBS political correspondent Gloria Penner, who was also the host of the Editors' Roundtable, and San Diego week. If you would like to comment, please if on line, KPBS.org/These Days. Coming up, we'll hear about the mission of San Diego's project compassion. That's as These Days continues here on KPBS.