San Mateo County Grand Jury • 2010-2011

It’s Not the Same Old County Fair Issue | Background | Findings | Conclusions | Recommendations | Responses |

Published: March 31, 2011 11 pages
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Note: Missing finding numbers detected: F6, F7, F8, F9, F10, F11, F12, F13, F14, F15, F16, F17, F18, F19, F20, F21, F22, F23, F24, F25, F26, F27, F28, F29, F30, F31, F32, F33, F34, F35, F36, F37, F38, F39, F40, F41, F42, F43, F44, F45, F46, F47, F48, F49, F50, F51, F52, F53, F54, F55, F56, F57, F58, F59, F60, F61, F62, F63, F64, F65, F66, F67, F68, F69, F70, F71, F72, F73, F74, F75, F76, F77, F78, F79, F80, F81, F82, F83, F84, F85, F86, F87, F88, F89, F90, F91, F92, F93, F94, F95, F96, F97, F98, F99, F100, F101, F102, F103, F104, F105, F106, F107, F108, F109, F110, F111, F112, F113, F114, F115, F116, F117, F118, F119, F120, F121, F122, F123, F124, F125, F126, F127, F128, F129, F130, F131, F132, F133, F134, F135, F136, F137, F138, F139, F140, F141, F142, F143, F144, F145, F146, F147, F148, F149, F150, F151, F152, F153, F154, F155, F156, F157, F158, F159, F160, F161, F162, F163, F164, F165, F166, F167, F168, F169, F170, F171, F172, F173, F174, F175, F176, F177, F178, F179, F180, F181, 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F2012, F2013, F2014, F2015, F2016, F2017, F2018, F2019

Findings and Recommendations 6 findings

F1
The Expo Association retains all revenues generated from all operations of the Event Center, as well as those from pari-mutuel wagering. Revenues generated by the Jockey Club are projected to increase if wagering is expanded with the passage of legislation legalizing wagering on sporting events.
No recommendations for this finding
F2
San Mateo County shares responsibility with the Expo Association for building maintenance or capital improvements over $100,000; yet it does not share in any revenues generated.
Related Recommendations (1)
R1
Direct the County Manager and County Counsel to work with the San Mateo County Exposition and Fair Association on an amendment to the operating agreement that would provide for new revenue opportunities for the County. The 2011 San Mateo County Civil Grand Jury recommends the Board of Directors of the San Mateo County Fair and Exposition Association:
F3
Commercial and residential development projects slated for land adjacent to the Event Center could provide further opportunities for increased revenue generation.
No recommendations for this finding
F4
The Board of Supervisors has significant control over the Association since the Board appoints the Association's Board of Directors who serves at the pleasure of the Board of Supervisors. The Board of Supervisors is required to approve the Association's budget.
No recommendations for this finding
F5
An "internal audit" of the Association has historically been performed by the County Controller's Office. Conclusions The 2011 San Mateo County Civil Grand Jury concludes that:
Related Recommendations (1)
R2
Use an external public accounting firm for the Association's annual audit. COUNTY OF SAN MATEO Inter-Departmental Correspondence County Manager’s Office DATE: August 12, 2011 BOARD MEETING DATE: September 13, 2011 SPECIAL NOTICE/HEARING: None VOTE REQUIRED: Majority TO: Honorable Board of Supervisors FROM: David S. Boesch, County Manager SUBJECT: 2010-11 Grand Jury Response RECOMMENDATION: Accept this report containing the County’s response to the 2010-11 Grand Jury report: It’s Not the Same Old County Fair.
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Any amendment to the original agreement requires approval by the Board of Supervisors and the Association’s Board of Directors. The Jockey Club, opened in 2008, is an on-site satellite wagering facility that offers patrons the opportunity to place bets on live horseracing broadcasts from around the world. Open Wednesday through Sunday, the club has filled the void left by the closure and demolition of the nearby historic Bay Meadows Racetrack. Based on the 2007 prospectus, it appears that the Jockey Club has generated revenues that have exceeded initial financial expectations.3 The operating agreement between the County and the Association stipulates that the Association shall manage the property and retain all income generated from activities in its use. By contract, revenues are to be used to maintain all buildings on the property. While the Association receives no subsidy from the County to run the Fair or other activities, it retains all of the earned revenue. The property used to be called the “Expo Center” but was changed to the “Event Center” in order to attract other events such as corporate events and trade shows. The Jockey Club at the Event Center is distinct from the now defunct Jockey and Turf Club at Bay Meadows Racetrack. Prospectus prepared for the San Mateo County event Center by Christopher Korby, Executive Director, California Authority of Racing Fairs 2007. However, the agreement provides that the County and the Association will share the cost of any capital improvements over $100,000 and all major maintenance on the Event Center property. The Event Center has a significant impact in the local community due to the County Fair and other major events. It generates an estimated $40 million in annual revenues for the local economy as event participants spend money at area hotels, restaurants, stores, and shopping centers.4 The 2011 San Mateo County Civil Grand Jury (Grand Jury), in the course of its review of financial records 5, examined the fiscal year 2009 audit report issued by the San Mateo County Controller's internal audit staff. It was noted that the Jockey Club opening in 2008 generated significant revenues that augmented the financial viability of the Event Center. In 2009, the addition of this single year round activity exceeded all other Event Center sources of revenue. Revenues generated by the Jockey Club in 2008 (opening of the facility in August to year end December 2008) were $900,000; in 2009, $3,300,000; and 2010 (estimated and unaudited), roughly $3,300,000. These revenues exceeded forecasts and enabled the Association to perform long-deferred maintenance and refurbishing of Event Center buildings. The Expo Association Board continues to explore potential long-term alternative sources of revenue for the property including, but not limited to, adding a Sports Book for wagering, and possible real estate projects. Investigation This report has been compiled from numerous sources. The methodology included the following: • A review of the 2009 audit of the San Mateo County Exposition and Fair Association by the San Mateo County Controller’s Office, including audit staff's recommendations. • Identification through the San Mateo County Assessor’s Office of the parcel number, size and deed of ownership to the property known as the Event Center.6 • Research of historic documents pertinent to the Event Center property, including original and subsequent agreements between the County and the Association. • Interviews with County and Event Center senior managers with direct knowledge of the Event Center operation. • A review of the agreement between The Jockey Club and Northern California Off-Track Wagering Inc., a state-licensed firm responsible for the pari-mutuel employees and collection of the wagers in the Jockey Club. • Revenue sources for the Event Center were identified. The Grand Jury reviewed documents pertaining to the creation of the Jockey Club, including a 2007 prospectus 4 “Economic Impact of California Fairs”, November 2010 and “Fairs: Exploring a California Gold Mine”, a report prepared by KPMG at the request of The California Department of Food and Agriculture, Division of Fairs and Expositions, 2003. Penal Code §925 6 San Mateo County Assessor’s Office, parcel number: 040-030-220. 3 prepared by the California Authority of Racing Fairs on potential revenues for the Event Center satellite wagering facility. • An anonymous visit was made to the Jockey Club to observe and better understand how wagering activities, particularly cash management, are handled at the facility. Findings The 2011 San Mateo County Civil Grand Jury finds that: 1. The Expo Association retains all revenues generated from all operations of the Event Center, as well as those from pari-mutuel wagering. Revenues generated by the Jockey Club are projected to increase if wagering is expanded with the passage of legislation legalizing wagering on sporting events.
No recommendations for this finding

Conclusions 2

No Responses Found 2

Government entities assigned to respond to this report. No response documents have been linked in our database.

San Mateo County County
San Mateo County Board of Supervisors Elected County Office