I have been buying and selling land in San Diego for 25 years -- enough for 12,000 homes. And I have never seen anything like the unusual circumstances surrounding the proposed sale of the Del Mar Fairgrounds.
First of all, anytime you want to do anything with selling or buying land to or from any government agency, it takes a long time and everyone gets a say on how much the land is worth and how it is going to be used.
But not this time. These negotiations were secret.
News of the proposed sale of the fairgrounds for $120 million to a group led by the city of Del Mar caught many by surprise. Aside from secrecy, it is something of a hobby for the upper class denizens of Del Mar to do everything they can to close the fairgrounds. Now they want to buy it because they want to improve it?
That is beyond belief.
The surprises just keep on coming: No one else had a chance to offer a competing bid. How could they? No one knew about it -- not even members of the Del Mar Fair board.
The $120 million would not even cover the replacement costs for the buildings and infrastructure at the track. Never mind the cost of 400 acres of the most valuable coastal land in California. Most real estate experts would say this property should be appraised closer to $1 billion than $120 million.
The terms of the deal raise more red flags: From the $120 million the state will receive for this asset, deduct $55 million in bond debt the state will have to pay right away. Then deduct another $50 million from the sales price because that is the amount the state will carry as a loan.
California is at the cusp of a financial tsunami -- and all of a sudden we are lending people money?
Net proceeds to the state from the sale of this billion-dollar prize: $15 million.
There's more: In addition to selling the facility in secret, the proposal also provides that the new group lease the racetrack for 55 years to a friend of a member of the Del Mar City Council.
Again, no competing bids were solicited. Or accepted.
The new owners will be a quasi-public entity dominated by the one group whose main interest is shutting down the facility. We are talking about the Del Mar City Council, of course.
If you wonder why anyone would sell a billion-dollar property for $15 million net there is no good answer. The facility was not getting any tax money. It was well run and busy.
It was kind of inconvenient on occasion for people who live in Del Mar, so they say.
And now the state of California is going to take an $885 million-plus bath for that? And not one person is asking who will be responsible for paying the bills when the city of Del Mar finally does run this facility into the ground.
We will find out this month when Sen. Kehoe introduces this debacle once again. In the meantime, the state legislature is meeting in special session in just a few weeks to figure out why California is in such a financial disaster. And what to do about it.
The proposed sale of the Del Mar Fairgrounds is a great place to start.
Pattinson is the president and CEO of Barratt American and former president of the San Diego Building Industry Association and the California Building Industry Association.