A potential move by state officials to give private interests more control over California’s valuable, publicly-owned fairgrounds has reignited a long simmering debate over who exactly these properties are supposed to serve.
Supporters of Sacramento’s soft exit proposal say it’s not viable anymore for local fairgrounds to act at the pleasure of state rules and investment, steered by local boards which are appointed by the governor’s office.
State officials have said little in public about their still-nascent plan to step away from these properties’ business activities, which partly involves the formation of nonprofit entities to further fund and run each fair.
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Some local leaders and activists wonder whether privatization and abuse could arise from that vacuum, given some fairgrounds’ history of scathing audits and financial mismanagement findings.
“Who says ‘No’? Who says ‘Hey you can’t do that’? Where would the checks and balances be?” said Del Mar Mayor Terry Gaasterland in a Monday interview, overseeing a city in San Diego County where the Del Mar Fairgrounds covers somewhere around 30% of her town’s total area.
The state has been exploring such a move since as early as November 2020, Voice of OC reported at the time, most recently through a limited set of public workshops with interested stakeholders — the recordings of which aren’t online.
This year’s state budget summary also makes a fleeting, if not vague, mention of the plan.
Few places across the state have seen this debate play out as intensely as in Orange County, where fair board members a decade ago argued that Sacramento wasn’t a friendly landlord or neighbor to Costa Mesa and kept the property underutilized.
Yet their plan to fix those problems — privatization — triggered ferocious community pushback and even a local District Attorney probe that eventually cleared fair board members of corruption allegations over the effort to privatize the property.
Now Orange County Fairgrounds officials plan on bringing the newest debate over the state’s plans out into the open, at their meeting this Thursday, Sept. 23 among the fair’s Board of Directors.
Click here for instructions on how to access the meeting.
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A staff report attached to the Fair Board meeting agenda provides one of the first detailed, public-facing outlines of what type of governance change the California Dept. of Food and Agriculture (CDFA) has been mulling over.
The staff report says that “a framework is being developed” for all of California’s fairgrounds to form a joint powers authority, an entity which allows separate public agencies to jointly exercise common powers and develop common policies.
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Such policies may “include human resources, procurement, contracting and legal,” say OC Fair staff in the report.
And each member fair, under the proposed governance change, could form a local nonprofit corporation to maintain the fairgrounds, “managing its programs including the annual fair,” say OC Fair staff in their report.
That prospect raises privatization concerns by Reggie Mundekis, a close observer and watchdog over policymaking and governance at the fairgrounds property in Costa Mesa.
“Allowing a private non-profit to operate the annual fair is a de facto privatization, regardless of whatever name you want to call it,” she wrote in a Sept. 19 letter to the Fair Board ahead of Thursday’s meeting.
“This is an exit of the State from the business of California fairs by privatizing operations of the fairs, in addition to other functions,” adds her letter, which lays out a host of other questions — and alternative suggestions — regarding the state’s potential transition.
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After all, Mundekis recalled in an interview with Voice of OC, it was a nonprofit formed by OC Fair Board members more than a decade ago which pushed the hugely controversial fairgrounds land sale attempt.
The OC Fairgrounds sale was stopped in 2011 by former Gov. Jerry Brown in response to vocal protests by community activists.
There are 74 fairgrounds with a variety of governance structures across California, according to CDFA spokesman Steve Lyle, who said 53 of those are state-affiliated District Agricultural Associations (DAAs) under CDFA, employing state civil service employees and subject to various state requirements.
The annual fair is considered many fairgrounds’ largest revenue generator, though these state properties also act as disaster response areas, food banks, and more recently, COVID-19 vaccination sites.
Under the ownership models being discussed by CDFA, members of a current state fairgrounds’ Governor-appointed Board of Directors could still serve simultaneously on the local nonprofit board.
OC Fair staff say the state would still have a role in the joint powers authority, if formed, but new policies would be made under the body’s centralized administration, which would be under the direct control of its own governing board — appointed by each state fairgrounds property — in Sacramento.
“The California Department of Food & Agriculture will be a member of the joint powers agreement and approves the participation of the DAAs,” says the OC Fair staff report.
Lyle, who would only take a reporter’s questions over email, said the state’s focus “is to develop a better business model for the fairs without changing the ownership of the fairgrounds. This means local governing models will still be subject to state laws.”
“The state is committed to making fairs more viable, more diverse, more responsive to their communities, and better equipped to embrace a wide range of opportunities,” Lyle said, adding:
“A change of operating model could put fairs in a position to access additional funding that may not be available currently, such as certain types of grants and increased revenue sharing. “
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The state’s ongoing discussions have been happening in public workshops with no available recordings online, while the state has made little documentation of its proposal in writing available for public consumption.
“That tells me this is something they’re just trying to run under the floor of the ocean, because they know that as soon as it surfaces, it won’t go over very well,” said Mundekis.
Lyle said CDFA held three public workshops in 2020. He said CDFA noticed the meetings on its website and to the public by alerting people and organizations on a “stakeholder list maintained by the agency.”
Lyle, asked whether the public could find the recordings of such workshops online, said the recordings could be available upon request.
The Covid-19 pandemic created restrictions on the very public gatherings and business activities that fairs across the state — some already struggling at the time to remain fiscally solvent — have long relied on for revenue, forcing them to go virtual for less profit.
Finding other operating models, according to CDFA and supportive fairgrounds officials, could pave the way for new and more sustainable fairgrounds business.
“Please do not box us up and hold us back by locking us into a ‘one size fits all’ platform like we are currently oppressed by,” reads one note from the Santa Cruz County Fairgrounds’ CEO, Dave Kegebein, attached to one document from CDFA’s Nov. 23 public workshop.
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Kegebein said the pandemic hasn’t been the only sign: “The current 2020 economic condition is just another of many reasons why different operating platforms should be considered. In my opinion, the current DAA operating system aged out 50 years ago.”
He, like others who submitted notes, recalled remarks by former CDFA Secretary Henry Voss in 1991, telling the fair industry that “it was time for state-owned fairgrounds to expand their local community connections & financial support as state funding was expected to diminish over the next few years to a point of becoming insufficient to maintain infrastructure and operations.”
The Santa Cruz County Fairgrounds took that seriously, Kegebein said, and formed its own nonprofit to manage community fundraising.
Indeed, Del Mar Mayor Terry Gaasterland said while there are overarching concerns about the state relaxing its control, a nonprofit corporation could be “more tuned into more local needs and be more empowered to pay attention to local needs.”
“Right now, we have state-appointed board members and employees who effectively work for the state. That creates in each jurisdiction where fairgrounds sit, a competition, a competition between local needs and state priorities,” Gaasterland said.
“The City of Del Mar receives a sizable portion of its annual revenue either directly or indirectly due to the fairgrounds — probably more than that, when you think of the hotels,” she said.
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Lyle, the CDFA spokesman, said “JPAs and governing nonprofits have been and continue to be considered by CDFA and stakeholders as possible components of a new model of governance.”
He added “many of the details have not yet been determined, including how fairground operations may be transferred to non-profits.
Lyle emphasized the state would “retain ownership of any property currently under its ownership, even if an alternative business model was adopted.”
“And CDFA would continue to have oversight in various ways, including but not limited to ensuring the state-owned properties continue to be utilized in the interests of communities and the public-at-large, and also by virtue of having representation within a new governing body, such as a JPA,” he said.
The last time a fairgrounds property transitioned out of direct state control was in 2012, when the 50th DAA (Antelope Valley Fair) moved to a model which delegated management to a nonprofit.
“Legislative authorization is needed for any change in business model,” Lyle said.
Brandon Pho is a Voice of OC reporter and corps member at Report for America, a GroundTruth initiative. Contact him at bpho@voiceofoc.org or on Twitter @photherecord.