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Fairgrounds valued at double sale pricing

DEL MAR — A preliminary appraisal of the Del Mar Fairgrounds, authorized by the 22nd District Agricultural Association, valued the property at $250 million, more than twice the purchase price being offered by the city of Del Mar.
Russ Penniman, a 22nd DAA board member who also serves as president of the Del Mar Race Track Authority, said he directed staff to have CB Richard Ellis proceed with a full appraisal.
In a recent letter to the Race Track Authority board of directors, Penniman noted that the proposed sale of the state-owned fairgrounds to Del Mar “has brought up several areas of concern” regarding bonds issued in 1996 and 2005.
“Some of the most significant of these are the restrictions on the ‘private use’ of property financed with tax-exempt bonds,” the letter states.
Because the city has indicated it would grant a 55-year lease to a group of private horse owners, there is speculation the bonds would become taxable, Penniman said at the Jan. 11 meeting of the 22nd DAA.
Penniman said he ordered the preliminary appraisal based on bond counsel advice to document that the sale was entered into under fair market value terms.
A 2009 appraisal by Integra Realty Resources commissioned by the state valued the property at $120 million. How each company defined fair market value is part of the reason for the large discrepancy, Penniman said.
According to the CBRE definition, the buyer and seller are typically motivated, both parties are well-informed and a reasonable time is allowed for exposure in a competitive and open market.
According to Penniman’s letter, Integra defined fair market value as the measure of compensation for property taken, which is language derived from the state’s eminent domain law.
Integra appraisers also indicated they didn’t specifically use a sales comparison approach because data from similar sales wasn’t available, Penniman wrote.
Penniman disagreed, noting the pending sale of the Orange County Fairgrounds for $100 million. He said that facility is about two-fifths the size of Del Mar and doesn’t include a covered arena or horse racing. It is also not coastal property.
Meanwhile, Solana Beach City Council members said support is growing for the formation of a joint powers authority to purchase and govern the fairgrounds, a proposal that city presented at a Jan. 4 press conference.
Councilman Dave Roberts said he has had positive comments about the idea from all members of the County Board of Supervisors except Pam Slater-Price.
Heebner said a representative from U.S. Rep. Brian Bilbray’s office told her the congressman “is 100 percent with you” on this JPA idea.
Heebner also said she had a “very, very good dialogue” with state Sen. Christine Kehoe, who introduced Senate Bill 1 authorizing the sale.
“She pointed out that it really is a new ballgame because it is a new governor … and she doesn’t know if he wants to sell or not,” Heebner said. “She’s heard the same that we have, that he’s not for selling their assets but is for local control.
“She said she’s not going to amend SB 1, as we had requested, but she’s not going to not amend SB 1, as we had requested,” Heebner said. “It’s not the time right now. She said that the timeline is now very long.
“It’s not a priority of the governor’s,” Heebner said. “(Kehoe) wants us to continue to work with Del Mar and find some sort of a formula for coming to agreement on governance and ownership.”
The ad hoc committees from the two cities have no meetings scheduled, but the city managers will continue to talk, Solana Beach City Manager David Ott said.
Council members will continue to seek support for the JPA by speaking at meetings of various groups such as the Chamber of Commerce, Sierra Club and Surfrider Foundation.
They also planned to meet with Assemblyman Martin Garrick, who said he supports local control but believes the $120 million sale price, determined without a competitive bidding process, is too low.

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