As the City of Calistoga is preparing financial arrangements for the purchase of the Napa County Fairgrounds, and is looking at a long list of expensive repairs and upgrades to the neglected property, a potential deal-breaker has arisen in a dispute over upgrades made to the Speedway by a private party.
The dispute is between the county, the Napa County Fair Association and an unnamed party over an estimated $1.4 million investment in a sound system, digital scoreboard, and safety fencing installed at the Speedway, according to a city staff report.
“The individual is taking the position that the improvements are their personal property and never donated to the Fair Association or the County, and that they intend to remove them from the Speedway,” City Manager Mike Kirn wrote in a staff report to the council.
If a decision is made in favor of the private party, the improvements will not be included in the sale, and will render the Speedway unusable until replaced, Kirn said at Tuesday’s city council meeting.
What Kirn called a “hiccup” occurred after two years of negotiations between the city and the county, which owns the Fairgrounds. In August, the city reached an agreement with the county to purchase 34.3 acres of the fairgrounds property for $7.2 million. The deal is now in due diligence, with escrow expected to close approximately Feb. 19, 2020.
The city has until Dec. 18 to complete its due diligence and another 60 days after that to close on the property, according to a staff report.
Now, however, the mayor and council members agreed, the Speedway matter must be taken up with the county for yet further negotiation.
“I see the potential of an extension of due diligence with regard to the Speedway,” said Mayor Chris Canning. “This is a significant change in the situation, and until it is vetted, I don’t see it by decision date. We need to go back to the county on this matter. This is a significant oversight on their part. If the resolution renders the Speedway unusable, this changes the agreement. That is a deal changer.”
Vice-Mayor Michael Dunsford agreed, saying “This is so significant it could mean a deal or no deal.”
Unauthorized modifications to the crash wall at the Speedway took Fairgrounds officials by surprise in 2017, setting off a flurry of meetings and discussions to reach a resolution before a June 24 race, as reported in The Weekly Calistogan.
Former Fairgrounds CEO Carlene Moore told the Fair Association board at their regularly scheduled meeting that she received on June 2 an email from race promoter Tommy Hunt, of HMC promotions, with a list of improvements local racing supporter David Abreu and his associates “wish” to make at the Speedway, all at no cost to the Fair Association.
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The list included installing a personnel gate near the start/finish line and flag stand area. What that email didn’t say was that they had already begun dismantling the concrete crash wall and removed a section of fencing attached to it.
Condition of the Fairgrounds
Over the past five years the Fairgrounds have received minimal preventative maintenance, according to the staff report, and the list of needed improvements is extensive. Restroom facilities throughout the fairgrounds do not meet ADA standards; many parts of the RV park are subject to flooding; and irrigation systems need repair. Also, interior and exterior finishes are worn and need repainting; heaters are old but functional; trees need trimming; and fencing needs repair. There is no surveillance system, Telecom and internet facilities are limited, and the list goes on.
Although inspections revealed no real surprises, “It was as ugly as or uglier than expected. All buildings are extremely tired and need new roofs or significant attention,” Kirn said. Investment in upgrades and repairs is expected to be about $6.8 million in the first 10 years after purchase, he said.
Canning said the lack of maintenance was taken into consideration in sale negotiations. “We were going in with eyes wide open, and it was all taken into consideration,” he said.
City staff and its finance team have been preparing for the city to issue bonds for the sale which is expected to be Feb. 19, 2020. On Tuesday, the city council heard a presentation from the financing team and made a decision to advise the team to pursue a 30 year loan, with taxable debt service. The financing is expected to generate $9 million towards the sale.
As far as Fairgrounds revenue, the RV park is biggest generator, with annual revenues of approximately $500,000 with $200,000 in expenditures, Kirn said.
On-going annual maintenance costs have yet to be determined.
The city council will meet Dec. 3 for final financial authorization.