DEL MAR — Thanks to a bond refinance that was completed on Aug. 13, the Del Mar Fairgrounds has about $25 million of “new money.”
But it won’t be used to replace the aging main exhibit halls, considered by many to be the most-needed project on the 340-acre site and according to one report estimated to cost about $150 million.
“This doesn’t get us there,” said Russ Penniman, the 22nd District Agricultural Association board member who spearheaded the bond refinance effort.
“The preponderance of funds are earmarked for projects related to horse racing, which makes sense given that we’ll be hosting two race meets per year going forward, and we’ll be hosting the Breeders’ Cup — the equivalent of the Super Bowl of horse racing — in the fall of 2017,” he added.
The 22nd DAA, which governs the state-owned facility, had a bond issuance in 2005 for about $50 million. Much of that was used for the grandstand, to build multipurpose exhibit halls and to install the mandated Polytrack synthetic horse racing course.
About half of that debt was paid off. The earliest any of those bonds could have been called was this month.
“Because rates were down it made sense to go back to the market,” Penniman said. “The timing worked out really well for us.”
The total new bond sale was for about $47.4 million, but about half will be used for the previous issuance.
Approximately $5 million of the remaining money will pay for the conversion of the synthetic track back to dirt, a project that was completed before the start of the current race season because the Polytrack reached its end life.
More than $9 million is earmarked for grandstand improvements, including $5 million to replace or renovate suites, boxes and seating and about $1.3 million to upgrade elevators and escalators.
Another $3 million will go toward heating, air conditioning, roof and deck coating in that facility.
“About $2 million is anticipated for improvements to the racing backstretch, including the replacement of adobe barns and living quarters,” Penniman said. Video boards in the paddock and on the main track will be replaced at an estimated cost of $1.3 million.
Other projects include infrastructure improvements such as sewer system, storm water and electrical upgrades.
“Not real exciting stuff,” Penniman said, adding that there are certain restrictions as to how the tax-free bonds can be spent. “We’re not in any gray area.”
The 22nd DAA was previously paying about $4.7 million annually on the bond debt. The new minimum payment will be approximately $3.3 million a year, but Penniman said a higher amount will likely be paid.
Profits from the Del Mar Thoroughbred Club, as well as up to $4 million from food and beverage sales, will be used to make the payment.
The refinance will save the fairgrounds about $1.6 million overall in interest. The new series of bonds goes out to 2038, but Penniman said he expects to have them paid off at least two or three years earlier, or sooner “if we have some really great years.”
