DEL MAR — Vowing to increase public involvement, City Council adopted a governance model that outlines future management and operation details should Del Mar be successful in its effort to purchase the state-owned Del Mar Fairgrounds.
The city may have time to do just that after Gov. Jerry Brown announced three days later that now is not the best time to sell real estate.
The draft plan, being called a public benefit trust indenture, was approved 4-0 at the Feb. 7 meeting. Councilman Carl Hilliard recused himself pending a ruling by the Fair Political Practices Commission because of complaints that as a horse owner his participation could present a conflict of interest.
The trust currently lacks detail and could be changed as it goes through the Legislature, but it is a necessary step to advance Senate Bill 1, legislation introduced by Sen. Christine Kehoe that authorizes the $120 million sale, Councilman Mark Filanc said.
“To satisfy the political realities of moving this project forward, Sen. Kehoe … needs the tools to go to the Legislature to be able to sell this thing to her fellow legislators,” he said. “A governance model is very important. Without it, we go nowhere.”
The bill is expected to continue through the legislative process. If it makes it through both houses, Brown’s signature will be required for the sale.
Filanc and Mayor Don Mosier, who was appointed Feb. 7 to replace Hilliard, make up the subcommittee working on the purchase.
The trust, which would be enacted at the close of escrow, would be fully enforceable under state laws. Under it, the roughly 350-plus acre site would be owned by Del Mar, but managed according to two leases.
A mandated nonprofit corporation with a nine-member board will operate the fair and other activities. That board will include appointed representatives from Del Mar, Solana Beach, the city and county of San Diego, the San Diego Farm Bureau, the San Dieguito River Park Joint Powers Authority and three members from other San Diego cities on a rotating basis.
Assembly Bill 181, similar to SB 1, was introduced and almost immediately pulled late last year. A governance model, which former Councilwoman Crystal Crawford said was not originated by Del Mar, gave Del Mar five representatives. SB 1 currently has no details on a governance structure.
Horse racing would be operated, according to a different lease, by a private group of horsemen who are providing $30 million for the purchase. The remaining funds will come from $45 million in bonds and a $45 million state loan.
About 80 percent of the property is in Del Mar, with the remainder in the city of San Diego. Each jurisdiction would have authority to regulate development standards for new construction in its portion of the facility.
However, as land owner, Del Mar could retain final approval authority under the terms of its lease with the nonprofit entity.
Under the trust, Del Mar will finally have land use jurisdiction for planning, zoning and permitting. It also ensures a future City Council cannot change the uses or develop the site.
Filanc said the trust will ensure the site remains a “true regional asset” by continuing to provide the existing events.
“We want to assure that racing continues and that the fair continues and the other wonderful activities that do occur on the fairgrounds facility do continue in perpetuity,” he said. “A proper governance model guarantees that.”
While nearly all residents favor those guarantees, as well as regional control, some were less supportive of the new governance model.
“I’m really upset by this,” Brooke Eisenberg-Pike said. “There has been no community conversation.
“I feel like a train is running over us because we’re being told this has got to go forth,” she said. “We’re the residents, and we’re the major stakeholders, and we’re being marginalized.”
“We all need more time to digest this,” Bill Michalsky said. “I think we really need to understand clearly … what we’re getting ourselves into. I want this as much as anyone but I really don’t feel comfortable with everything I’ve seen right here.”
“I like a lot about this,” Bud Emerson said. “But I really think that you’re way ahead of the community. … You’ve got to talk to us. You’ve got to involve us.”
Filanc said the subcommittee reviewed several governance models, including those used by other fairs, the port authority, the zoo and the airport.
“This one fits the situation the best,” he said. “We certainly have had a lot of input from some of the experts in the community.
“We have something that now we can start poking holes at and adding the finer details,” he said. “We do need regional support. Without it, I think that this will get shut down in getting Legislative approval.
“When we get the trust document prepared, we’ll have a community workshop to review the trust and provide input,” Filanc said. “We don’t want to short-circuit that process. That’s not the Del Mar way.”
Council members said they support the model as long as it benefits the city.
“I’m prepared to pull the plug if it doesn’t look good,” Mosier said. “It’s not a runaway train.”
Council members agreed to add the potential sale as an item on all future agendas so updates can be given regularly.
The 22nd District Agricultural Association, which currently operates the fairgrounds and does not support the sale, did not comment on the trust during its scheduled monthly meeting the following day.
Solana Beach Mayor Lesa Heebner said experts on behalf of that city are reviewing the proposal to ensure it meets certain goals, such as protecting the site from overdevelopment, maintaining traditional uses and protecting the San Dieguito River Valley.
Last month Heebner announced Solana Beach’s desire to form a JPA to own and operate the site. She said that proposal “is not off the table.”
Attorney Wayne Dernetz, former Del Mar city manager who helped develop the new governance model, said a JPA is best used when a number of cities want to jointly provide certain services.
“We don’t have that situation here,” he said. “What we have here is an enterprise activity that is mostly within the boundaries of one city and the rest in the bounds of another city. A JPA requires extensive negotiation and preparation of a partnership agreement among the parties.
“Once the partnership is created, if the partnership ends up owning the property you have a host of other problems and difficulties. Each of the parties must approve what happens on the property,” Dernetz said. “This model provides a unity of control that is in hands of the city of Del Mar subject to the trust indenture so that decisions can be made efficiently, transparently, with full public input.”
Dernetz said it is also favored by potential bond holders.
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