There is no significant fiscal impact from the report-backs. The fiscal implications of agreements with the Fairgrounds Management Corporation and third parties and resultant capital improvements, operations and maintenance will be addressed by the report-backs.
REASONS FOR RECOMMENDATION
This referral is intended to immediately begin the activation of the Fairgrounds into a grand public space for public events (including the Fair) and public recreation. It is premised upon the Guiding Principles adopted by the Board of Supervisors at the beginning of the Fairgrounds Master Plan process. It is also premised upon choosing the Fairgrounds Management Corporation as the County’s partner for developing revenue-producing uses (primarily on the Monterey Road and Tully Road frontages) which can upgrade recreational uses on other parts of the property.
This referral seeks to implement the activation and preservation of the Fairgrounds as a great public space, as envisioned in the Fairgrounds Master Plan process, by taking the following actions:
1. Reject all proposals submitted in response to the Fairgrounds Request for Proposals relating to real property located at the Santa Clara County Fairgrounds and terminate the Request for Proposals process (as per County Executive-recommended action on this agenda).
2. Direct Administration and County Counsel to negotiate a 20-year master agreement with the Fairgrounds Management Corporation (FMC), with any leases of Fairgrounds real estate in excess of one year to be approved by the Board of Supervisors.
3. Direct the FMC to pursue its master plan as consistent with the Guiding Principles adopted by the Board of Supervisors in the Fairgrounds Master Plan process.
4. Direct Administration and County Counsel to report back to the Board with a designation of approximately 55 acres of the Fairgrounds as a County Park (not including the Monterey Road and Tully Road frontages, the Off-Track Betting facility and the current fair/event space). This parkland would not be included in the Park Charter.
5. Direct Administration, in coordination with the FMC, to report back to the Board on the potential development of a Heritage Concourse of local historic neon signs at the Fairgrounds event space.
Fairgrounds Master Plan
In the Fairgrounds Master Plan Process, we have completed an exhaustive three years of study, public engagement and testing the market. The Board began the process by adopting Guiding Principles (attached to this referral), which included continued public land ownership, keeping the public space intact, making Fairgrounds land available for recreation, and reinforcing the Fairground’s traditional function as an event space including for the Fair.
Our Master Plan process was especially valuable for its public outreach. Opinions about the Fairgrounds were collected at pop-up kiosks at community events around the County and on-line, as well as in traditional public meetings at the Fairgrounds. The outreach reached an audience that is diverse ethnically, linguistically and geographically. The outreach consultants collected 1,100 opinions from face-to-face interviews and 1,000 online surveys.
As a result, we have a strong sense of current public opinion about the Fairgrounds. Among the key responses:
· 72% value the Fairgrounds as a public meeting and event space.
· 80% want active recreation on the Fairgrounds.
In the Fairgrounds Master Plan Process, we also learned lessons by testing the market. In particular, we learned from testing the market that revitalization of the entire Fairgrounds will require more revenue from the Monterey and Tully frontages than specified in the RFP.
Fairgrounds Management Corporation
The FMC has transformed itself since the County began the Master Plan process. Traditionally, the County had charged the FMC with scraping together just enough revenue from short-term uses to subsidize a money-losing Fair. The County kept the FMC on a short leash with one-year and three-year agreements, so the FMC could not negotiate long-term uses which could fund capital improvements. Essentially, the FMC’s role was to “play defense” – to keep the County’s General Fund from needing to subsidize the annual Fair.
Today the FMC has demonstrated that it can “play offense” and become the County’s partner for the renewal of the facility. Even constrained by the limits of a three-year agreement with the County, the FMC’s current leadership has brought exciting new partnerships, including becoming the new regional home for Cirque du Soleil and hosting a major corporate event for Amazon. For the first time in over 30 years, the Fair itself even turned a profit in 2018.
The FMC has also developed a sound financial plan for long-term renewal of the Fairgrounds and has cultivated potential new partners such as the San Jose Giants, Cricket USA, the San Jose Earthquakes and at least two hotel chains. Implementation of this plan would require a 20-year agreement between the County and the FMC. This plan has been considered and approved by the FMC Board (appointed by the Board of Supervisors) and is attached to this referral.
A 20-year agreement between the County and the FMC would allow the FMC to negotiate long-term ground leases for the development of facilities such as hotels, stadia and sports complexes. However, the County Board of Supervisors would still approve ground leases of Fairgrounds land of over more than one-year in duration. The agreement would provide for termination by the County at any point.
The FMC has always been ham-strung with the inability to negotiate long-term leases. This, of course, has prevented lessees from investing in capital improvements that can be amortized over many years.
Given the 20-year duration of the agreement, the Board should also receive Administration’s and County Counsel’s recommendations about the required qualifications of FMC board members and any other aspects of the FMC Board’s composition.
County oversight and control of risk
The County will be able to control risk in the FMC’s operation of the Fairgrounds with these requirements:
· The governing board of the FMC will continue to be appointed by and to serve at the pleasure of the Board of Supervisors.
· The FMC budget and business plan will continue to be annually approved by the Finance and Government Operations Committee (FGOC) and the full Board of Supervisors.
· The agreement between the County and the FMC may be terminated at any time by the County.
· Land ownership of the Fairgrounds will always remain with the County.
· Fairgrounds operations will continue to be funded in a self-sustaining enterprise fund.
· The deal points for any prospective FMC agreement of over one year in duration will be presented to the FMC Board and to the Board of Supervisors.
· Any prospective FMC agreement of over one year in duration will be approved by the Board of Supervisors.
· The Administration will be able to retain independent consultants (such as those who advised the Board in the Fairgrounds Master Plan process) to vet each proposed FMC agreement of over one year in duration.
Rejection of all bids for the County’s previous Fairgrounds RFP and the new 20-year agreement with the FMC will signal that the Fairgrounds is “open for business”, consistent with the Guiding Principles. The FMC will consider any and all proposals, consistent with the Guiding Principles, and bring the best to the FMC Board and the Board of Supervisors.
The opportunity to invest in the Fairgrounds will not be limited to any potential partner who has already or has not yet been in discussions with the FMC. Current or past Fairgrounds partners may submit proposals to the FMC. Although the FMC has already developed many promising potential partners that are identified in the Business Plan and mentioned in this referral, the Board will still make the final decisions on all partnerships.
The FMC Board is a Brown Act body, so all FMC actions will be sunshined in public. For each FMC agreement of more than one year in duration, the deal points will be sunshined at the Board of Supervisors and the final agreements will be approved by the Board of Supervisors, consistent with the Brown Act.
Designation as Park
This referral calls for a report-back on the designation of approximately 55 acres of the Fairgrounds as a County Park. The intent would be to insure the perpetual preservation of the Fairgrounds property as a large public space. This would also conform to the will of the 80% of the public in the Master Plan outreach who wanted active recreation on the Fairgrounds.
This parkland would be able to be utilized for the recreational purposes proposed in the FMC’s current plan because parkland in California can be used for stadiums, museums, concert spaces, etc.
The designated parkland would not include the Monterey Road and Tully Road frontages, the Off-Track Betting facility or the current fair/event space – the space needed in FMC’s plan to generate revenue for the activation of the “back forty”.
The urban area around the Fairgrounds is becoming developed more and more densely. As a result, there is the need for large, open spaces for residents, that are enjoyed elsewhere in our community, such as Martial Cottle County Park or the expanses of the Stanford University campus. In San Jose, the Pleasant Hills Golf Course, which is in private ownership and which has been proposed for development, is the only remaining under-utilized property other than the Fairgrounds that could be available. It is essential to preserve the Fairgrounds as a single large public property.
Designation of Fairgrounds land as a County Park would be de-coupled from the Park Charter. Instead, the Fairgrounds would be responsible for the development, operation and maintenance of the County Park land at the Fairgrounds. The Park Charter’s general fund set-aside is not sufficient for the development, operation and maintenance of a major new urban park such as Martial Cottle. The Parks and Recreation Department’s able management of the existing parks system with the Parks Charter should not be disrupted by the potential expense (or potential revenue windfall) of the new Fairgrounds parklands.
The County Fair and youth activities
This referral – by preserving the Fairgrounds as 1) a public space perpetually open to the public and 2) a public event space – seeks explicitly to assure the Fairgrounds as a home for the County Fair and the associated youth activities, such as 4-H and FFA. Youth who participate in 4-H and FFA agricultural and animal husbandry competitions must first compete at the County level to advance to State and national competitions; it is important that our County’s youth retain this ability to participate.
Heritage Neon Signs
History San Jose has become a de facto repository of historic neon signs that have been saved from demolition. These include the neon signs for Wings Chinese Restaurant, Mel Cotton’s, Greyhound Bus and many more. Fortunately, the signs have been preserved, but there is no current feasible plan for the signs to once again light up the night. They should be displayed and once again enjoyed by the public as a reminder of our heritage. Installed together at the Fairgrounds event space, these signs could constitute a vibrant and popular attraction.
There has been talk of facilities and housing for the homeless at the Fairgrounds. I addressed this in my referral of August 13, 2019, and approved by the Board, but it bears repeating in this context. That referral sought to build housing for the homeless at other identified County-owned properties, but I chose not to include the Fairgrounds for these reasons:
· The County has already developed over 500 units of permanent affordable housing on approximately 12 acres at the Fairgrounds.
· The Board has already adopted Guiding Principles for the Fairgrounds Master Plan, specifying its use as a public space without housing.
· The County has completed an exhaustive two-year-long public engagement process on the Fairgrounds Master Plan, and the public was engaged on the premise that the Fairgrounds would not be used for housing. To diverge from the broad outlines of the Master Plan’s Guiding Principles would betray the thousands who participated in the Master Plan process.
· The Fairgrounds is currently being used for its core purpose – as a public events space.
· No entity in the region has surpassed the County in building housing for the homeless at locations which are not already in public ownership or use.
· The surrounding area (San Jose District 7) has much of the highest density development in Silicon Valley, and open space is especially important to support this density.