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The Fairgrounds Redevelopment Project

 

What is happening and why it matters to you.


Dan Levin

January 9, 2013


There was a joint meeting between Vallejo City Council and the Planning Commission on Monday, January 7, regarding the fairgrounds redevelopment project (Solano360).


County consultants presented an amendment to Vallejo's general plan, plus the EIR and financing plan, which were made public just two months ago. The entire process is being fast-tracked. The County is bypassing the normal review process because it was granted a right of expedited permitting. If you agree that the plan is a bad deal for Vallejo—it's actually a bad deal for the whole county—there's very little time to put on the brakes.

 

I've been following the Solano360 project since its inception and attended nearly every public meeting. My main focus has been on the financing, and the thrust of my argument against the project is that it's too risky, even for people (like myself) who consider themselves pro-business and pro-economic development. A huge amount of public funds are required—upwards of $90 million—for a payback that literally stretches over 50 years. All of that money will be spent at the front end, and it’s quite possible we'll have nothing to show for it but empty pads and parking lots.

Here's quick recap of what's happened over the last 3½ years:


The City Council approved a project vision in June 2009. It proposed a massive shopping center for the fairgrounds, which I felt was poorly conceived and outrageous in its predictions, but at least it didn't require any investment by Vallejo, only revenue sharing. A marketing study shot it down about 1½ years later. Then everything went quiet. Finally, on Nov. 9th, the County released a specific plan. Public financing shot up to $94 million (from $30M in the original vision), with $24M of that coming from Vallejo.


Now eight weeks later with no additional study, City Council is being asked to accept the new plan. Just thirty days from now, the County and City will approve the financing and give an official go-ahead, but that vote may be moot. If general plan changes are accepted on Monday, Vallejo may lose leverage over the development and may have to fall in place behind the County.


This project has dubious merit even at the County level, but I've not be able to fight that battle. Barbara Kondylis voiced repeated opposition, based on the cost, but was out-voted. Her replacement, Erin Hannigan, has supported it—at least when it involved no debt for Vallejo. No matter her views now, it's a looming problem for Vallejo: lots of municipal services and infrastructure costs for highly uncertain revenue.


Basically, Vallejo is lending $24M to the project so that the County can recapitalize the fair, get its own property tax revenue and ground leases, and put in about 30 acres of structured parking. But that's not all. Vallejo must split whatever revenue does come in to reimburse the County for money already spent on consultants (about $4.5 million).


While the revenue figures are wildly exaggerated—they have to be, to justify all the public expenses—that's almost beside the point. The County has an interest in the fairgrounds, including a new 100,000 sq ft exposition hall for the County Fair. It also wants, for reasons I cannot fathom, approval for 50 residential units on the property. Whatever the County's goals might be, it's a leap of faith to say that this is all in Vallejo's best interest. In fact, it's not.


Reason #1: The fairgrounds project provides Vallejo with no sustainable industries and no high-paying jobs. It does not provide any more hotel business, as the 25-acre retail-entertainment portion is designed for day trippers. It does not have a prospective tenant for the 30-acre commercial-entertainment portion; it relies on the shaky premise, “if we build it, they will come.” And the most unsettling thing for investors (which means Vallejo residents): revenue projections assume that the fair industry, consumer buying habits, amusement park draw and competition will not change at all over the next 30 to 50 years.


Reason #2: Vallejo has a very limited capacity to take on debt. In this situation, our city would be spending scarce infrastructure dollars on land it doesn't own and on a project that it doesn't control. The fiscal analysis completely ignores the issue of net gain. It is possible Vallejo's investment would produce very little new revenue and part of our tax base would simply shift to the County's favor. (The fiscal analysis has not been looked at by any independent source; all numbers come from the County's consultants.) Residents who are truly pro-development understand that $24M in bonds—assuming Vallejo can afford that amount at all—would yield a much better return on Mare Island or the waterfront. We have to make these hard choices.


Please do what you can to spread the word. Very few Vallejo residents know how the fairgrounds project has changed in the last few months or that City Council is about to commit $24M to the project—plus revenue sharing! There is a general consensus that the fairgrounds needs redevelopment, and I agree that it does. But we must not fall victim to the argument that something is better than nothing. That argument is coming from County officials, their consultants and certain City Councilmembers. The “something” in this case is debt, lots of it, and if we are not more careful about taking it on, we'll end up right back in bankruptcy.

 

 

Related Documents are HERE

 

 

Note: All opinions expressed in the "Primal Scream" column are those of the writer and not necessarily those of the Vallejo Independent Bulletin