Orange County denies $5 million loan requested by Del Mar Fairgrounds

The Orange County fair board turned down a $5 million loan request from the Del Mar Fairgrounds Thursday, July 23, noting that fairgrounds across the state are in financial distress with little chance of rebounding soon as the number of coronavirus cases continues to surge.

“The uncertainty when it comes to the economic side of this ... makes it very difficult for us to outlay this amount of cash without knowing for certain it would be coming back,” said Nick Kovacevich, one of two Orange County board members on an ad hoc committee that investigated the request.

A delegation from the 22nd District Agricultural Association, which runs the Del Mar Fairgrounds, went to its Orange County neighbor, the 32nd District Agricultural Association, in May to request the financial assistance. Unable to host the annual San Diego County Fair and other large events, the 22nd DAA expects its revenue to be down 90 percent this year. The district plans to lay off 60 percent of its staff Oct. 15.

The Del Mar fair board also appealed to Gov. Gavin Newsom in April for $20 million in emergency aid. Since then, Newsom has included $40 million in the state budget to be shared by the state’s 54 district agricultural associations, all suffering financially from the pandemic. The 22nd DAA will get about $1 million of the money.

“It certainly isn’t the $20 million that we requested, but it is a contribution to our overhead,” board President Richard Valdez said Thursday, July 23.

One other possibility appeared Thursday, July 23, when a Central Valley congressman introduced a bill that would create a $5 billion grant program to offset coronavirus losses at fairs nationwide. If approved, states could apply to the U.S. Department of Agriculture and then distribute the grants to the fairs in their state.

Meanwhile, cases of the novel coronavirus continue to spike across the United States.

California reported a record high 12,807 new cases in 24 hours on Wednesday, July 22, Newsom said. The Golden State surpassed New York this week and now has at least 413,000 confirmed coronavirus infections, more than any other state.

San Diego County had 25,608 confirmed COVID-19 cases and 512 deaths as of Thursday, July 23, according to county health officials. Hospitalizations were down sharply in Thursday’s county COVID report, but officials said that a technical glitch had unintentionally excluded hospitalizations from some facilities across the state. The issue was expected to have been corrected by the time Friday’s report is released.

Fairgrounds across the United States are suffering financially because of the COVID-19 bans on large gatherings, but the Orange County district is in better shape than many. It has some consistent sources of revenue, no significant debt, and reserves of close to $50 million.

Still, Orange County is depleting its reserves and now is not the time to loan money, Kovacevich said.

“Lending the $5 million would have an adverse effect on our own morale, given that we have pay cuts, and it’s a trying time for everybody,” he said.

One speaker at Thursday’s virtual meeting, Orange County resident Mike Robbins, told the board that because the fairgrounds in both districts are owned by the state, the 32nd DAA should lend the San Diego district the money.

“This is not your money, it’s the people’s money,” Robbins said. “This is about stepping up, doing the right thing.”

But no one on the Orange County board backed that idea.

“We are understanding of the dilemma that the 22nd DAA has, but unless things dramatically change we are going to be down to cash on hand of $32 million,” said Director Doug La Belle, who served on the ad hoc committee with Kovacevich.

Instead of lending money, La Belle said the Orange County district should work with the 22nd DAA and “the whole network of fairs” to help them get through the economic crisis.

The 22nd DAA has virtually no reserves and about $74 million in debt. Some of that money was for the grandstands rebuilt in the early 1990s, and some was for the remodeling under way to add a live music and performance venue to the floundering Surfside Race Place offtrack wagering complex.

Now the district is looking at multiple ways to offset its ongoing losses. It leased parking space this spring to rental car companies to store thousands of vehicles in their idled inventory, and since June the regular fair food vendors have been selling turkey legs, kettle corn, cinnamon rolls and other favorites to drive-thru customers.

Also on the table is a proposal to lease fairgrounds property to a company that would operate temporary housing for homeless veterans and their families. Gov. Gavin Newsom suggested in his State of the State address in February that state-owned properties, including fairgrounds, could provide solutions for homelessness and asked local agencies to investigate.

The housing concept has generated widespread opposition from residents in Del Mar and Solana Beach, who say the idea is inappropriate and poorly planned. More details and possibly a decision are expected at the board’s meeting in August.

Valdez had read the Orange County committee’s recommendation that the board not loan the money, so the decision Thursday was no surprise.

“We understand that they have their concerns with what is going on with COVID,” he said. “We appreciate their willingness to consider (the request) ... and enjoyed the conversations we had.”

The 22nd DAA and other district agricultural associations in California do not receive tax money and depend almost entirely on revenue from large events such as county fairs, expositions and other shows to stay open.

Some fairs could be forced to close permanently or even sell their fairgrounds if they don’t get financial assistance, said U.S. Rep. Josh Harder, a Democrat from Modesto, who introduced the Protecting Fairs During Coronavirus Act grant program Thursday, July 23.

“We don’t want to lose a single acre of fairgrounds or see a single fair shut down permanently because of this pandemic,” Harder said in a news release. “I went to the Stanislaus County Fair as a kid and even won some blue ribbons along the way — but these fairs are more than family fun — they are an economic engine and job creators for rural communities. We have to do everything we can to protect them.”

In a normal year California fairs generate $3.5 billion in revenue and contribute $200 million in tax revenue for state and local governments, according to the California Fairs Alliance.

— Phil Diehl is a reporter for The San Diego Union-Tribune