DEL MAR — Actions at the Del Mar Fairgrounds have drawn some well-publicized criticisms from at least three state agencies, two local cities, one community activist and a small herd of animal rights advocates.
In its annual management reports, the CDFA (California Department of Food and Agriculture) has consistently accused the 22nd District Agricultural Association, the agency that runs the state-owned fairgrounds, of improperly providing board member benefits and employee leave buybacks.
As a result, the Fair Political Practices Commission, prompted in part by a request from community activist Ian Trowbridge, is investigating the allocation of more than 350 fair and concert tickets to four members of the 22nd DAA board of directors.
The California Coastal Commission has also launched an investigation on the possible misuse of overflow parking lots.
These issues are in addition to ongoing complaints from neighboring Del Mar and Solana Beach that the 300-plus activities at the fairgrounds, not the least of which are the annual San Diego County Fair and horse races, negatively impact those communities with noise, traffic and public services for which they are not fully reimbursed.
Topping off the fairgrounds’ woes is the board’s recent 4-3 decision to continue elephant rides at the fair despite allegations from two animal rights groups that claim the company that provides the rides abuses the animals.
According to management reports by the California Department of Food and Agriculture, from 2005 through 2010 and during the first two weeks of 2011, managers, supervisors and other exempt employees were improperly allowed to cash out leave balances, such as unused vacation pay, totaling almost $525,000.
That number includes at least 18 managers and supervisors and eight rank-and-file employees.
The report states the fair, “without sufficient authority,” established its own employee leave buyout program, allowing certain workers to cash out a maximum of 80 hours of their leave balances annually.
The state doesn’t permit such action without approval from the Department of Personnel Administration. Following a 2007 report, the DPA denied a fairgrounds request to approve 160 hours of annual leave.
From January 2008 to mid-January 2011, the DPA didn’t authorize any cash outs, yet during that time more than $350,000 of leave time was cashed out. That included 580 hours each by two employees, a move that violated the fairgrounds own policy, the report states.
The state has a leave buyback program, but it was suspended “because the state is broke,” said Tim Fennell, fairgrounds chief executive officer. “We’re not broke.”
“We have the cash to pay for this,” fairgrounds officials wrote in response to the report. “Most cash-outs were made due to financial hardships.”
“That money belongs to the employees,” Fennell said. “If they left tomorrow we would have to cash them out.
“It’s not the state’s money,” he said. “It’s not our (22nd DAA) money. Key people were in danger of losing their homes. They had college tuition to pay or health problems. People are hurting.”
The CDFA recommended the fair set up an accounts receivable balance so each employee could pay back any leave amount that was improperly paid out. Director Tom Chino agreed with that proposal, but director Russ Penniman said he would oppose it “until hell freezes over.”
Penniman said asking employees to return the money would likely cause some to quit and it would be a zero-sum gain financially.
Shortly after being named board president this summer, Adam Day directed Fennell to suspend the buybacks pending further review.
Day said that while the practice may make financial sense, it must be implemented according to state rules.
According to CDFA reports, board members have received unsupported fair and concert tickets worth approximately $100,000 since 2004.
State policy allows the unpaid board members to receive free tickets, for themselves and family members, to attend an event for a ceremonial reason or if their duties are required.
Fennell said for board members to make “good, sound decisions” about the fairgrounds they need to attend the events.
There is, however, a maximum number that can be allocated and they must be reported as income. The Fair Political Practices Commission is investigating Day, Penniman, Ruben Barrales and former board member Michael Alpert for allegedly violating the policy.
“I believe I am in full compliance, but I’m working cooperatively with them and am happy to acknowledge any past mistakes and correct them,” Day said.
The CDFA report also alleges the fair did not accurately track the number of courtesy passes issued. Policy allows the fairgrounds to give away passes totaling no more than 4 percent of the previous year’s gross ticket sales.
“But some fairs are free, so they can give away as many tickets as they want,” Fennell said. “No wonder the state is broke. In this economy it makes more sense to give away tickets so more people can come and possibly spend more money. That also creates jobs. Maybe that’s not all bad.”
According to the fairgrounds response, the facility “will continue to make every effort to meet” the 4 percent limit “while simultaneously making the annual Fair an achievable destination for everyone, regardless of financial, physical or other limitations.”
The CDFA criticized the fair for providing about $240,000 in catered dinners to board members and their families and guests from 2004 to 2009 without proper documentation to justify the meals.
Fennell said although it’s called directors dining, the meals are also offered to current and potential sponsors and partners.
“In 1992 we had $45,000 in sponsorships,” he said. “Now there are over $2.5 million, so there is a benefit to sitting down to discuss, promote and showcase the fairgrounds.
“Could we do a better job?” he asked. “I guess. We see it as a marketing tool.”
The California Coastal Commission, which is charged with protecting the adjacent wetlands, is investigating whether the fairgrounds should be allowed to use its overflow parking lots for other activities.
There are also issues with a permit for a volleyball tent, which expired in 2008, and one that was never submitted for a smaller tent for a swim school.
Becky Bartling, fairgrounds deputy general manager, said failure to reapply for approval for the volleyball tent was an oversight and a request has since been turned in.
She said the swim school tent was erected by the tenant, which didn’t realize a permit was required. Bartling said the fairgrounds and Coastal Commission staff are “coming to a positive resolution” on those issues, as well as a permit for a golf training facility for youngsters.
Fennell said the areas to the east and south of the fairgrounds were used for parking long before the Coastal Act was adopted. To the best of his knowledge nothing says they can only be used for parking.
He said they’ve been home to the pumpkin patch and Christmas tree lot for years. “God forbid, in this economy, we put something there that’s going to put people to work,” he said.
Day said he can’t speak to the way things were done in the past, which includes addressing the CDFA management reports in subcommittees rather than by the full board during a public meeting.
Since June, Gov. Jerry Brown has replaced five board members whose terms expired. He has yet to fill Alpert’s position
“This is a new board with a new path, and an appropriate one in my opinion,” Day said. The “new path” includes the creation at the Nov. 9 board meeting of two committees. One will address public transparency and the other will focus on dealing with the CDFA management reports.
“I’m happy to own up to past mistakes, correct them and move forward,” Day said. “I’m looking forward to open and transparent governance and compliance with all rules and regulations across the board.”
Fennell said he is working with the state on the CDFA recommendations but admits it can be frustrating at times.
“Some rules and regulations work fine in some state agencies,” he said. “But we’re running a business in a state bureaucracy and that becomes very challenging.”
For example, he said, the state can order the Department of Motor Vehicles to close on Friday and people will have one less day to conduct their business there.
“We couldn’t just close on Friday because we have contracts for events here,” Fennell said. “We have horses to feed. We can’t just tell Seabiscuit, ‘See you on Saturday. Don’t kick over your water bucket.’”
As CEO, Fennell said he had the final say on all decisions that are being scrutinized by the state agencies. “As far as I’m concerned, the buck stops with me,” he said. “If we did something great it’s because we have a great team. But if there’s an issue, it stops with me.”
Fennell said he believes the Del Mar Fairgrounds is a one-of-a-kind facility that continually breaks attendance records, has reinvested millions of dollars for improvements and creates jobs at no cost to taxpayers.
According to Fennell, about two dozen other state fairgrounds are in danger of closing down in the next two years “and we’re not one of them,” he said. Other facilities have problems with security and finances,” but you don’t read about that here,” he added.
“This belongs to the people of San Diego,” Fennell said. “They deserve a well-run facility, and I’m just trying to run the best facility I possibly can without bending too many rules.”
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