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[Expo and Fair] - Review of Operations and Management of the CA State Expo and Fair, Part II (2 of 2)
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[Expo and Fair] - Review of Operations and Management of the CA State Expo and Fair, Part II (2 of 2)
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Ronald Reagan Presidential Library
Digital Library Collections
This is a PDF of a folder from our textual collections.
Collection: Reagan, Ronald: Gubernatorial Papers,
1966-74: Press Unit
Folder Title: [Expo and Fair] - Review of Operations
and Management of the CA State Expo
and Fair, Part II (2 of 2)
Box: P36
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https://reaganlibrary.gov/archives/digital-library
To see all Ronald Reagan Presidential Library inventories visit:
https://reaganlibrary.gov/document-collection
Contact a reference archivist at: [email protected]
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Now here -- I'll just kind of hold up the 1969 report where you
took the financial statement audited by the Department of Finance
and reported that to the Legislature. I don't see any figures in
your 1972 report just submitted to the Legislature having to do
with the financial condition of Cal Expo. There are a number of
general statements, but very little in there about the $11 million
of capital improvements needed that were mentioned at last week's
hearing in response to Mr. Cory's question. As management should
be responsible to your Executive Committee, Mr. Nissen, it seems
to me you should also be responsible to the Legislature --
MR. NISSEN: Right.
CHAIRMAN CULLEN: -- when they have made it very clear that
they wish to be kept informed.
MR. NISSEN: No financial statement accompanied this?
MR. BAIR: No financial statement is -- the financial conditions
are spelled out in other documents. We have on the -- the reason
that that financial statement that you are pointing to there, Mr.
Cullen, was put in the first report is that it is the financial
statement of the Corporation, and the reason it was in there was
to tell the Governor and the Speaker and the Lieutenant Governor
what the situation was when the Executive Committee took over from
the Corporation. And it was audited by the Department of Finance
and also the Auditor General came in and made an audit, which I
believe was somewhat close to what was determined by the Department
of Finance. But that is the reason that it was submitted in that
form and in subsequent reports we had never -- we submitted to --
between the first one and the one that you just -- that's just been
54
submitted, and we assume because we never had any -- had them
questioned that that was the type of a report that we were
supposed to submit.
CHAIRMAN CULLEN: Well, are you saying, then, that irrespective
of the law requiring the financial condition to be described, that
you can satisfy this requirement perhaps by a line in the letter
that if the Governor or the Speaker or the President pro Tempore
are interested that they find it in another document?
MR. BAIR: No, that is not our intent. Certainly, if it is
the feeling of your Committee or of anyone who is interested in
these reports that you should have a financial report as submitted
by the Corporation or something like that, we will certainly be
happy to submit this kind of a report. But, as I say, as we had
submitted two that did not have -- well, even the first one did not
have any financial statement as such of the Corporation -- I mean
of the Executive Committee, it was of the Corporation, and as I
say, I told you the reason why it was in there.
If it is the feeling that this should be done, well, this is
the way we will do it. We have never had anyone tell us before
that we should submit another kind of a report.
CHAIRMAN CULLEN: Mr. Bair, as an agency head and a man with
some governmental experience, do you adhere to the philosophy that
an agency head or department head should be very aggressive in
arguing for funds for his agency or his department in meetings
with the Director of Finance?
MR. BAIR: In this case I would say that yes, within --
in-house. I mean in discussions with the Executive Committee, and
55
if I feel an expenditure is an essential one.
CHAIRMAN CULLEN: Does your Executive Committee feel the same
way, Mr. Nissen? Does your Committee feel they should be very
aggressive in arguing for funds for his agency or his department
in meetings with the Director of Finance?
MR. NISSEN: Well, I would -- within reason, yes. I can't
say -- that's a pretty broad statement to make for every dollar
they should get. Are you talking about the Committee opinion or
the opinion of maybe a minority group within the Committee or
special --
CHAIRMAN CULLEN: No, I'm talking about loyalty to the group
you have been appointed to by the Governor --
MR. NISSEN: Well, I think the Committee is faced with two
-- they have the responsibility of loyalty to the Governor for
- over an appointment. They also have the responsibility to do
a decent -- a respectable job of handling the affairs of Cal Expo.
CHAIRMAN CULLEN: I didn't mean loyalty to the Governor.
I meant loyalty to Cal Expo.
MR. NISSEN: Yes.
CHAIRMAN CULLEN: The Governor appointed you to do the best
job possible in running -- operating Cal Expo, right? That leads
me to a paragraph in your letter. Why in the world is the Committee
concerned with the area of Health and Welfare to the extent that
they -- that you sympathize with the Governor? Why aren't you in
there telling the Governor, as you told us last week, that you
need $11 million to finish this and the Governor's Review Committee
Report says you need $11 million? Mr. Bair says you need $11 million.
56
Why are we keeping it a secret from the Governor?
MR. NISSEN: It is no secret from him, I'm sure.
CHAIRMAN CULLEN: It is not in the annual report.
MR. NISSEN: He is aware of it as any of us are, and our
position is that we are in the same position with other State
agencies that certainly are competing against welfare and schools.
It is pretty rough competition.
CHAIRMAN CULLEN: Now, in discussing future development at
Cal Expo in your letter, you highlight a permanent amusement park.
"Since our last report we contracted with Atlas Greater Shows at
Cypress for a 20 year project which will include five permanent
spectacular rides," and so forth. Now, that's the one -- I think
Mr. Cory discussed last week, Mr. Bair, where he -- I think you
brought up they have to be finished in ten years.
MR. BAIR: Yes, we -- we estimate that -- well, the operator
himself feels that it will be ready for operation for longer than
just the Fair period in probably two or three years. I'm inclined
to doubt that this is so because he made -- unless he's going to
put in a lot of money than I think he is over this period of time.
Mr. Cory's point, as I remember it, is simply that perhaps it would
then have the benefits of the income from it immediately.
CHAIRMAN CULLEN: What do you think about it?
MR. BAIR: Obviously the financial benefits are -- would be
greater if we build all at one time, I suppose. However, that
doesn't happen to be the policy that we are working under. The
policy was to develop it the best we could.
CHAIRMAN CULLEN: Whose policy?
57
MR. BAIR: The policy of the Executive Committee.
CHAIRMAN CULLEN: The Executive Committee. Mr. Nissen, what
does the Executive Committee think about spending $7 million to
save $5 million or to save $13 million really? But if you spend
$7 million now and stop losing it immediately, and every year for
ten years. That was Mr. Cory's premise, you would continue to
lose $1 million a year.
MR. NISSEN: Does the State Legislature want to put us in the
amusement park business or the --
CHAIRMAN CULLEN: Why don't you tell the State Legislature?
If I ran a Finance Committee, and you came before us and persuaded,
as Mr. Bair or Mr. Cory almost persuaded me -- if the State and the
Governor could -- would agree to appropriate $7 million we would
stop losing $1 million for ten years, why didn't you bring it up?
Give us the alternative, we are not clairvoyant. Who do you talk
to, Verne Orr? Is he the only one or do you speak to Earl Coke?
Talk to all of us by way of a letter. Send a letter. What about
the amusement contract? Mr. Cory asked if you could terminate it.
I think Mr. Relat or someone said it was a ten year contract or
20 year contract.
MR. BAIR. It is a ten year contract, I think. Mr. Relat is
the best one to comment on the provisions of the contract. They
are known to me and Mr. Nissen. However, Mr. Relat is the legal
man who helped us draw it up during the negotiations. I think
he's better qualified to answer that.
CHAIRMAN CULLEN: Let me come to it in a minute, and pursue
this. Last week it is my recollection that -- Mr. Nissen, and I
58
pick on you, sir, because you are the Chairman.
MR. NISSEN: Sure.
CHAIRMAN CULLEN: I believe you, supported by Mr. Bair,
testified that it was the policy of the Administration and the
Executive Committee that there be no significant deviation from
the Master Plan. The long-range goal is to complete the capital
construction at Cal Expo.
MR. NISSEN: This is true, with us seeking private capital
to do the job.
CHAIRMAN CULLEN: All right. Now, am I correct in thinking
that when you say the Master Plan that you are referring to the
ERA projection prepared for the Department of General --
MR. NISSEN: So-called "Gold Book" plan.
CHAIRMAN CULLEN: Right, the "Gold Book".
MR. NISSEN: Right.
CHAIRMAN CULLEN: That's published by ERA. Economics Research
Associates. And would I be correct in assuming that those objectives
have been modified by the Governor's Blue Ribbon Commission headed
by General Lolli, that is, Governor Reagan's committee to review
the California Exposition? Was that adopted, do you recall, Mr.
Nissen, by Governor Reagan?
MR. NISSEN: Well, he had -- you are talking about the -- their
recommendation putting us on a pay-as-you-go basis?
CHAIRMAN CULLEN: Yes, the whole report.
MR. NISSEN: You say adopted. Adopted by who now?
CHAIRMAN CULLEN: By your Executive Committee. I mean are we
talking about the ERA Master Plan or are we talking about recommended
59
changes or the plan as changed by this report?
MR. NISSEN: Yes, this -- you don't have a copy of that
report we made to the Governor?
MR. BAIR: Your recommendations --
MR. NISSEN: I have the excerpts on it right here, Mr. Cory.
I'm sorry, Mr. Cullen. In this --
CHAIRMAN CULLEN: I can't --
MR. NISSEN: It is lengthy, it is about a page long.
CHAIRMAN CULLEN: What is recommendation three? What does
that have to do with it?
MR. NISSEN: "a thorough review by the Committee" -- if I
can just read these few lines.
CHAIRMAN CULLEN: All right.
MR. NISSEN: "A thorough review by the Committee", that's
Lolli's Committee, "resulted in a report to the Governor that the
Exposition and Fair proceed as planned in accordance with its
recommendations. The Governor approved the Committee Report
April 1, 1967. The Committee recommendations were" -- and then
there is this lengthy group of recommendations, sir. I can read
them if you want me to.
CHAIRMAN CULLEN: No, I want to address myself to recommen-
dation three, which in my copy of the -- what appears to be a
photocopy of the -- of the typed Lolli report, recommendation three
has to do with all entertainment in the recreation park and the --
MR. NISSEN: Can I -- I can read it to you the way it is here
in this report. Recommendation three is that "the concessionaires
install, maintain and operate entertainment features there by the
60
Capitol
CHAIRMAN CULLEN: Same one. What's the estimated cost of those
rides?
MR. NISSEN: There is no -- the figure isn't given there.
CHAIRMAN CULLEN: All right. Now I have the Lolli report
here, that is what I purport to be the Lolli report.
MR. NISSEN: This is the condensed --
CHAIRMAN CULLEN: That's the summary. Now here, Mr. Bair,
you may recognize this. It describes rides and games with a total
hourly capacity of 14,5000 people: Riverboat, Flume, Sky Ride,
Carousel, Roller Coaster and so forth, together with rest rooms,
personnel maintenance building and fees for a total of $5.13
million. Do you recognize that, Mr. Bair?
MR. BAIR: Yes.
CHAIRMAN CULLEN: Now, in your "Gold Book", if you turn to
Page 36, a firm that the State of California paid a great deal of
money to for their expertise, Economics Research Associates,
estimates the capital cost of the rides, without the rest rooms
and so forth, to be $1.7 million, the recreation area is at
$3.7 million. Does anyone question the difference -- does anyone
here know? We have got a turnover between these two figures. How
did we jump from $3.7 million to $5.1 million?
MR. BAIR: I have speculated a good deal about this, Mr.
Cullen and I am not sure. I have never been able to determine
how ERA arrived at that figure. I want to make the point that
regardless of what the figure is, the Executive Committee wants
to have the amusement park and we want to build it. I would say
61
that the figuring in General Lolli's report is much more realistic.
However, there is another factor at work there and that is that
an amusement park consists not only of rides, like the Flume Ride
and Minirail and things like that, and this is a large expenditure,
but there are things like a Western Street, concession stands, rest
rooms; there are -- there's landscaping, and the electrical equip-
ment for one thing is very expensive. I imagine that in the ERA
report that when I look at it, it seems to me that they probably --
that this figure is hidden in there in some of these other items
that they have mentioned in their report.
CHAIRMAN CULLEN: They include the Minirail and General Lolli
segregated the Minirail into another section of the report. It
is not included in the $5 million. How much is that Minirail
contract?
MR. BAIR: The Minirail, if I remember right --- I cannot tell
you exactly, but I think it cost in the neighborhood of $1.3
million to $1.8 million, somewhere in that area alone.
CHAIRMAN CULLEN: So I have to increase this figure to $7
million, so we are practically doubling the figures in General
Lolli's report; the estimates contained therein are almost double
of what ERA consultants estimated.
MR. BAIR: I spent a good deal of time looking that over
and, as I say, I can only conclude that first there was perhaps
somewhat of an understatement in the amount to be spent for the
rides proper and that also that they have listed it -- in the
other assets of the amusement park or the other expenditures in
other areas, like for example, landscaping and the -- what you
62
might call the environmental aspect or the theme aspect of the
amusement park. That's the only conclusion I can draw.
CHAIRMAN CULLEN: Well, you know --
MR. BAIR: Looking at that discrepancy --
CHAIRMAN CULLEN: -- General Lolli's Committee only took
testimony on three days, March 15, 20 and 21.
MR. NISSEN: That's true.
CHAIRMAN CULLEN: And this point deviated sharply from the
ERA conclusions. As I repeat, the State of California paid a lot
of money. Now, for example, General Lolli's Commission stated
that the Flume Ride would cost $635,000. How much did --
MR. BAIR: It actually cost about -- the one that we have
there cost about $340,000 to $360,000, somewhere in that neighborhood.
CHAIRMAN CULLEN: Why is that?
MR. BAIR: Well, it is not -- it is what is known as a --
I forget the term, but it is not the length of -- it hasn't got
the length of flume that was originally planned in this thing,
but we -- we settled for it because the amusement park operator
that we contracted with felt that this was going to be sufficient
to handle the capacity of the people that would be using it and I
for one agreed with it. And, also, the -- the Flume Ride and --
it depends on what company you buy from. This happens to be a
Japanese ride.
CHAIRMAN CULLEN: Is it possible that the Lolli Commission could
have - I really shouldn't lay it off onto him -- Governor Reagan's
Committee erred on the high side?
MR. BAIR: It is possible. However, there is some substantiation
63
for the figure. For example, they have the Flume Ride -- because
I believe the one at Knott's Berry Farm, that could possibly have
been where they got the figure. I believe that's what it cost.
CHAIRMAN CULLEN: Could you tell the Committee, as you did
last week, that it probably cost roughly -- and I'll stipulate
that was a curbstone estimate on your part, roughly $11 million to
complete the capital improvements out there? Are you relying on
Governor Reagan's Committee figures of 1967, or during the past
five years as a part of your management responsibilities, have you
kept these figures updated?
MR. BAIR: Yes.
CHAIRMAN CULLEN: You have?
MR. BAIR: Yes.
CHAIRMAN CULLEN: And is it possible for you to let us know
to the penny what it will cost for the capital improvements to
achieve the Governor's stated long-range goal?
MR. BAIR: I don't think that I could do it. I don't think
that I could or anyone else could let you know to the penny how
much it will cost because the -- when you buy a ride it fluctuates
from where you buy it and at the time you buy it. Like everything
else, inflation is at work here and the difference between the
figure that -- some of those figures and some of the figures I
quoted to you have to do with the inflationary aspect of it.
CHAIRMAN CULLEN: What was the 1967 value -- appraised value
of Point West?
MR. NISSEN: The appraisal as I remember it -- I believe
Mr. Relat probably will remember it better than I and Mr. Kelts.
64
As you know, there was a General Services appraisal and then an
appraisal by an independent appraiser and I don't know which one
you are referring to, but I believe that probably --
CHAIRMAN CULLEN: Throw one out.
MR. BAIR: Mr. Kelts or Mr. Relat could give you a pretty
good -- give you the figure.
CHAIRMAN CULLEN: What figure is that?
MR. BAIR: You want to know 1967, is that it, what the appraisal
value was -
CHAIRMAN CULLEN: The one described by Mr. Payne of the PERS,
said it required an appraisal of land that was conducted --
APPEARANCE OF MR. LAWRENCE ROBINSON, JR., DIRECTOR, DEPARTMENT
OF GENERAL SERVICES; ACCOMPANIED BY MR. ARTHUR COLLINS, ASSISTANT
DIRECTOR, DEPARTMENT OF GENERAL SERVICES, AND MR. EMIL RELAT, CHIEF
COUNSEL, DEPARTMENT OF GENERAL SERVICES.
MR. EMIL RELAT: That's the same appraisal you were talking
about last time, right?
CHAIRMAN CULLEN: 1967.
MR. RELAT: Yes, that was the appraisal that was obtained for
the purposes of getting the loan from PERS.
CHAIRMAN CULLEN: What was the --
MR. RELAT: It was first an appraisal by John Day who worked
for the Department of General Services, Property Acquisition, who
made the formalistic appraisal, the big book. He came up with
$8.5 million for Point West. Then they had a man down south by
the name of Goode who was a -- also an appraiser in the business
and he took that appraisal, reviewed it and then made his report
which consists of about maybe ten pages which basically said,
"I concur with the methodology used. The review is right. But I
65
differ with some valuations," and he said, "I think it is worth
$7.5 million."
CHAIRMAN CULLEN: All right.
MR. RELAT: Then you had a difference between the two and
Mr. Vincent as the Chief of the Property Acquisition Division,
having to make the report to PERS, then got the two together and
there was a letter under which both agreed we will say the property
is worth $8 million, and that's what was then used as the figure
of appraisal.
CHAIRMAN CULLEN: All right, for the sake of discussion, let's
take the lesser appraisal figure, $7.5 million. Mr. Bair has just
advised the Committee that due to inflation some of these costs in
the Governor's Blue Ribbon Committee report, perhaps maybe more,
I would like to ask Mr. Robinson as the new Director of the Depart-
ment of General Services, generally speaking, has the cost of choice
land in a metropolitan area kept pace with the inflation since 1967?
MR. LAWRENCE ROBINSON: I would think choice land has, Mr.
Cullen. Getting back to your original question, though, if I
understood it correctly, you were asking Mr. Bair what the appraised
value of Cal Expo was and the figure that Mr. Relat gave you was
the appraised value of Point West. There is no relationship.
CHAIRMAN CULLEN: Thank you for clarifying that. We are talking
about Point West. I'm obviously leading up to the fact that if the
low appraisal of 1967 was $7.5 million, if the Governor is correct
in his estimate that inflation has increased costs on the average
of five percent a year since -- since he took office, well then
that $7.5 million -- that land probably ought to be worth about
66
25 percent more than it was in 1967. Did Coldwell Banker give you
an appraisal on this latest sale?
MR. RELAT: Well, they handled it from the point of view of the
buyer, so they wouldn't be doing that on Point West.
CHAIRMAN CULLEN: Well, did anyone --
MR. RELAT: If I -- you know, your original -
CHAIRMAN CULLEN: Did the State of California hire an appraiser?
MR. RELAT: With regard to the -- as of the time it got ready
to sell, the matter was reviewed and it was brought up to date by
the Property Acquisition Division.
CHAIRMAN CULLEN: Who -- who concluded that inflation had not
touched --
MR. RELAT: Well, as a matter of fact, the conclusion was one
of the things that was mentioned; it was that the rate of growth
of population in the Sacramento area had diminished and that there-
fore there were factors which indicated that the inflationary effect
on this land would not be as great as might otherwise be expected
and they -- the document has been submitted to your Committee which
covers this more accurately. As I recall it, it basically said
that $7.5 million -- $7.3 million was a reasonable price for that
property to be sold for the purpose, that Kaiser-Aetna sale.
CHAIRMAN CULLEN: How much is that an acre? Do you recall?
I don't want the figure now.
MR. RELAT: But I would like to mention one thing about the
Committee report and you are asking about the price.
CHAIRMAN CULLEN: Before I leave this, before I leave this
point, Mr. Relat, I'd like to ask for -- if I may, Mr. Robinson --
67
MR. ROBINSON: Yes.
CHAIRMAN CULLEN: -- a copy of the State appraisal of this
$7 million worth of land because --
MR. RELAT: Mr. Cullen, it's been submitted to your Committee.
(Appendix A)
CHAIRMAN CULLEN: We have the appraisal?
MR. RELAT: We have everything -- everything we have we
submitted to your --
CHAIRMAN CULLEN: I'm sorry.
MR. RELAT: -- on last Friday, and --
CHAIRMAN CULLEN: I haven't seen it.
MR. RELAT: That's why I happen to recall that particular
document. I happened to see it.
CHAIRMAN CULLEN: All right. You were going to ask me about --
MR. RELAT: I just wanted in a sense of being constructive,
you asked how would you have a differential in the price of the
Flume Ride. With regard to putting out the bond issues, this was
the document the Public Works Board put out and they were talking
about progress that they made and with regard to a Flume Ride they
have the specific statement that said; "A contract was executed in
January 1967 with Arrow Development Company of Mountain View,
California, for engineering a Log Flume Ride, one of the major
attractions of the Recreation Park. This action assures an early
completion of the phase of the work so that the ride can be
completed prior to opening." And I call it to your attention
that they did have the input of that type of information and
there just was quite a variation at times with regard to what the
68
costs of a specific phase of the amusement park would be, because
it depended upon the visualization of the people. It took respon-
sibility for what would be the scope of the ride, so that in the
particular point that you mentioned, apparently the Committee did
have an input of information of that nature.
CHAIRMAN CULLEN: Mr. Bair ---
MR. BAIR: I'd like to add something to that, too, Mr. Cullen,
is that if -- if you are -- what you're implying here is that some
sort of a tie between the value of land and the value of rides
exists. You can't -- this is like comparing apples and oranges.
A ride is a -- something like an automobile. It fluctuates
according to the labor that goes in it and materials, steel,
plastics, electric motors, pumps and all this sort of thing. And
I think that you would agree that there has been in this area -
there has been a considerable rise in prices over the last four
or five years. This is not necessarily true of land because of
the factors that Mr. Relat mentioned, that were shown to be an
actual slowdown in the growth of the area in which Point West
occupies.
CHAIRMAN CULLEN: Mr. Nissen, what are we going to do with
that contract with Atlas?
MR. NISSEN: I beg your pardon?
CHAIRMAN CULLEN. What's the recommendation of the Executive
Committee with respect to the long-term contract with Atlas?
MR. NISSEN: Well, I hope the thing works out satisfactorily.
Certainly their first year of operation was that they made a good
start on the thing. There is a long way to go as far as developing
69
an amusement park and we recognized this when we entered into the
contract with them. We advertised for bids and this was something
like the Point West sale. However, there were a lot of people
interested and came shopping around, but everybody was -- was
willing to -- if the State was willing to put up -- put up a big
block of money and put an amusement park in there with all kinds
of people that were willing to enter into some kind of a negotiation
with us. We came down to -- when we finally made the decision to
go with Atlas, that was the one real live prospect that we had.
CHAIRMAN CULLEN: Has he responded to your October resolution
telling him to shape up or ship out?
MR. NISSEN: I think Mr. Bair could probably answer that better
than I could.
CHAIRMAN CULLEN: Has he, Mr. Bair?
MR. BAIR: He has. I'll put it this way, he has verbally.
He has agreed to do all the things that we set forth for him to do.
And, to the best of my knowledge, he intends to do them. I talked
to him on the telephone this morning in regard to some of the things
that we are going to require of him, and we are requiring of him,
and he assured me that he was going to be here Friday to reassure
the Executive Committee that he intends to live up to his contract.
CHAIRMAN CULLEN: And the contract says, "Upon default,
provided such default is not cured within 30 days, the State shall
have the immediate right of re-entry and may remove all property."
Are you serious about that? You said in the letter of October 15 --
30 days later was November 15 -- you said in that letter, "Failure
to provide rest rooms or even temporary facilities." You said that
70
he contracted with individuals operating in games judged by the
Attorney General to be illegal or contrary to this contract. You
say the Flume Ride is a lower capacity than you were given to
understand and it was constructed in such a way that it has been
shut down for inordinate lengths of time causing loss of revenue.
He has failed to install permanent light towers or even temporary
light towers upon your request. The general quality of the materials
used was under the estimate that it was led to believe would be
brought in. You received many complaints to his labor practices.
He has mishandled parking in the carnival area after original
prohibition had been waived temporarily by management, and Mr.
Nissen's committee has been unable to identify any advertising
campaign as called for in the original contract.
MR. NISSEN: That's right.
MR. BAIR: This is a bill of particulars that was prepared by
Mr. -- and given to Mr. Alevy and some of these things he has
taken steps to correct already and we have every expectation --
CHAIRMAN CULLEN: Which one? Capacity of the Flume, for
example?
MR. BAIR: Yes, they are working on the Flume Ride now,
to increase its capacity.
CHAIRMAN CULLEN: What else?
MR. BAIR: He has assured us that as far as the parking is
concerned, that would be under our control during this next year
and that he will --- he will leave that to us.
CHAIRMAN CULLEN: Maybe you could --- if you would, Mr. Nissen,
let's know what -- what's been corrected, because if --
71
MR. NISSEN: We can.
CHAIRMAN CULLEN: If Mr. Cory's suggestion is correct, that we
tend to lose -- continue to lose a million dollars a year, it would
seem to me that Mr. Bair could either substantiate it or come up
with a good estimate and maybe the Legislature ought to be asked
to take this $90 million windfall that the Governor speaks of
and apportion perhaps $10 million to $11 million to Cal Expo and
get rid of this operator that doesn't seem to be too responsible.
MR. NISSEN: He will be before the Executive Committee to
report -- at our regular meeting -- our regular meeting is this
Friday, Friday of this week.
CHAIRMAN CULLEN: You may want to -- I don't know whether
anything is going on here that is really valid. I'm sure people
will little remember it ten years from now, but if there is the
slightest bit of validity in the alternatives that I propose,
you might discuss them with Earl Coke and say, "Look, here's an
opportunity to perhaps salvage a very good thing for the State of
California."
All right, Mr. Relat, last week you told me that -- in spite
of the apparent restriction in the California State Exposition
and Fair Law that the Director of General Services could only sell
surplus property for industrial and commercial purposes. You said
that the property had been sold pursuant to another portion of the
Code, is that right?
MR. RELAT: No, I said the way you read it to me I didn't
know whether I identified the Flume, and then I stated my -- in
my language the statutory powers, as I understood it, and that
72
is Section 3557, which is the Section you are reading and it is --
and that's the way I understand it.
CHAIRMAN CULLEN: All right.
MR. RELAT: And the reference to commercial and industrial
property is a word of art. I'm sure it doesn't preclude a develop-
ment such as was obtained by the Department of General Services.
Under the statute which was passed, which authorized the Public
Employees' Retirement System to actually buy this property and
provide Cal Expo with money to complete its construction, there
was placed in the statute, and this was by reason of the desire
of certain legislators that when it came time for the Directors
to exercise the option to take it back, that they do it only
pursuant to a purchase at appraised prices and that the buying
back of it would be for the purposes of disposing of the property
only in accordance with a good master plan for the development of
sale of Point West. That's in the Government Code. And it was very
easily understood because that was the only way you had to assure
that the disposition of the property on piecemeal arrangements --
CHAIRMAN CULLEN: All right.
MR. RELAT: -- wouldn't end up with a bad fiscal situation.
CHAIRMAN CULLEN: Mr. Nissen, do you have a copy of the Master
Plan for Point West?
MR. NISSEN: Not with me, no, sir.
CHAIRMAN CULLEN: Mr. Bair, you are prepared on the Master
Plan of Point West?
MR. BAIR: No, we never have --
CHAIRMAN CULLEN: Why are we talking about a Master Plan,
73
Mr. Relat? None exists.
MR. RELAT: Oh, yes, it exists.
CHAIRMAN CULLEN: Not for Point West.
MR. RELAT: Yes, sir. That's the DRA, the Development
Research Associates. Now, Mr. Collins can talk to that because
our Department --
CHAIRMAN CULLEN: All right.
MR. RELAT: No, sir, that's not -- I believe we have furnished
you a copy of it. (Appendix B)
CHAIRMAN CULLEN: Mr. Collins, can you address yourself to
the State Master Plan described in the Government Code relevant
to Point West?
MR. ARTHUR COLLINS: Yes, Mr. Chairman. At the time we were
preparing to dispose of the Point West property we hired a firm
of Research Development Associates, RDA, not the same as the
earlier firm, the ERA, that we had on the thing - excuse me,
Development Research Associates, DRA, and they prepared a Master
Plan for Point West and eventually this Master Plan, or a very
similar Master Plan, was generally approved by the City authorities
for planning purposes and it was part of the basis of the sale.
It was general in nature, not specific, saying this identical
building had to go to this identical place, such as that.
CHAIRMAN CULLEN: Well, now, Mr. Relat, when you say the words
"commercial", "industrial", they are words of art. I assume you
have attended as many zoning hearings as I have.
MR. RELAT: I'm sure I haven't.
CHAIRMAN CULLEN: When Jack Clifford wants to go before a Board
74
of Supervisors or a City Council with a project, he knows what
area of town is zoned commercial, what's zoned industrial, what's
zoned residential, does he not? And we give him names, don't we
of C1, C2, R1, R2?
MR. RELAT: Yes, sir.
CHAIRMAN CULLEN: Right. Now, as far as I'm concerned the
Legislature says that those lands shall not be used for residential.
It explicitly says commercial and industrial.
MR. RELAT: Mr. Cullen, I have to disagree with you in that
because as a matter of statutory construction you always read it
to arrive at a reasonable conclusion. You wouldn't want to end
up with a conclusion that would not be in the best interests of
the State or ridiculous result.
CHAIRMAN CULLEN: That's right, sir, we didn't want a sub-
division out there, did we, because we'd have to put in a school,
that's why.
MR. RELAT: If you read the Section, it is part of the new
State Fair Law, and it was part of a plan by which the property
to be used for the Cal Expo would be determined by the Executive
Committee, which they did, and then it was also an authority -- as
to those properties which were not to be used that way the Director
of the Department of General Services was given the authority to
sell it. The purpose of the sale would be to sell it consistent
with the development of the overall property out there and to then
yield money by reason of the sale, which would be available for the
further construction of Cal Expo. The Legislature indicated that
this would be one of the assets by which this construction could be
75
finally completed and when it comes to then developing the plan
for the best utilization of the property, that's why we hired
experts in the field. They come up with a mix and if the mix
includes some residential property as well as apartments it is --
CHAIRMAN CULLEN: I understand, Mr. Relat. I'm sure the City
and County think it is a great thing.
MR. RELAT: Yes, sir.
CHAIRMAN CULLEN: My point is that there is a possibility
that State law, as far as Point West is concerned, has pre-empted
City and County zoning laws because State law plainly says the
only way the Director of General Services can sell surplus land
at Cal Expo is for commercial or industrial development in areas
of the Exposition site. Now, the Director of General Services
through a -- a Deputy Director, Mr. Oliver, has conveyed Point
West without any such restriction. The buyer went down to the
County of Sacramento and got a building permit for 348 residential
units. So the question I'm posing, rhetorical as it may be, is
does the County have the authority to issue such a building permit
where State law, as far as I'm concerned, has clearly zoned surplus
land only for commercial and industrial development? Now, that's
rhetorical and I'm sure you have to disagree because the deed is
done.
MR. RELAT: But I would --
CHAIRMAN CULLEN: That's the point I want to make.
MR. RELAT: -- make the observation that zoning did include
commercial and industrial as well.
CHAIRMAN CULLEN: So far as that's all right --
76
MR. RELAT: The property out there is a property that will
support industrial and commercial and it is included in the over-
all plan. And actually the residential properties which were sold
as described by the persons that made the study was that that would
better serve the commercial property there also.
CHAIRMAN CULLEN: Well, perhaps to avoid any difficulty General
Services may want to pose legislation removing that restriction, as
we do sometimes, saying that the Legislature didn't intend -- no
matter what the Legislature said it didn't intend to say that.
That's quite enough for today unless anyone has anything to add.
So we will --
MR. JACK WATSON: If it is all right?
CHAIRMAN CULLEN: Mr. Watson.
MR. WATSON: Yes. In that regard, does the Executive Committee
have any control over the compatibility of the building on Point West
with Cal Expo?
MR. RELAT: No, sir, not at this point. The plan of the sale
was -- a condition to the sale was that the buyer have their plan of
development approved by local government, and they did. And that's
the only control that was exercised.
MR. WATSON: If it is all right, Mr. Cullen, two more questions.
CHAIRMAN CULLEN: Go ahead.
MR. WATSON: Has the Committee received the review of the
appraisal made by the Property Acquisition Section of General Services
just prior to the sale?
MR. RELAT: May I make an observation? The Committee didn't
receive these informations because the Executive Committee had no
77
part in the sale of Point West. I don't mean the Executive
Committee, I mean this Committee.
MR. WATSON: Received the review of the appraisal just prior
to sale?
MR. RELAT: Yes, I believe -- if it is not in the papers
I'll certainly find it. It is my belief it is among the papers
we sent to your Committees last Friday, it would be that information.
(Appendix C)
MR. WATSON: All right, and Mr. Nissen, if the admonition
came down to you from the Governor to hold the line on the budget
regardless to what might or might not happen, and evidence was
presented to the Executive Committee that it would be wiser in the
long run to expend a large sum of money, which would prevail?
MR. NISSEN: Well, I'm sure we would approach the Administration
and ask for -- try to point out the -- what we would feel in that
case, presuming that was the situation, there was an inequity and
we would just -- because after all, we don't -- the final say on
what our budget is isn't our responsibility.
MR. WATSON: It isn't the Executive Committee's responsibility
to recommend --
MR. NISSEN: To recommend, yes, but as far as -- it goes from
us and then it is reviewed -- the Director of General Services --
MR. WATSON: Does he have veto power over that recommendation?
MR. NISSEN: I think you could interpret it as veto power,
couldn't you, on that? He has -- he has review power over it.
MR. RELAT: The Executive Committee is within the Department
of General Services. So the State Fair budget is one of the budgets
78
subject to review by the Director as one part of his Department.
MR. WATSON: Would it be fair to state it would be difficult
to see a recommendation for a larger expenditure of funds from the
Executive Committee arriving at the Legislature?
MR. NISSEN: You say a larger --
MR. WATSON: A large sum, say $10 million or $11 million
knowing the Governor's position on increasing the budget.
MR. NISSEN: Yes, I think that would be very true, presently.
MR. WATSON: Thank you.
CHAIRMAN CULLEN: Mr. Robinson, did you ever reverse the budget
procedure and tell the Cal Expo Committee not to request more than
$135,000 or don't request more than $180,000?
MR. ROBINSON: Today -- meaning this particular budget process,
probably would be a good example of what's happened, Mr. Cullen.
I came on duty with the State the last week in July and the last
week in July was the week of final approval by my Department on
all of the budgets. The Cal Expo budget was not finally approved
at that particular time because Mr. Bair and the Executive Committee
needed some more thinking on it. They did come up with a budget
which we have not submitted and it is of the same order, give or
take a few percentage points, as last year's. However, since that
time we have been holding hearings, Mr. Nissen has, and Mr. Bair,
with myself in attendance, with the various committee groups --
committees, and the different specialties of the Fair. And while
our budget is submitted I intend shortly with the approval, Friday,
of the Executive Committee, if they give to me that approval, to
submit augmentations to that budget for special projects, special
79
developments that will augment the cost of the State Fair by
upwards of $200,000. Now, the reason that it's taken time is
that we wish to see what the productivity of those augmentations
would be. We wanted to analyze the additional attendance. We
wanted to analyze the possibility of increasing the gate. In other
words, the type of cost-benefit analysis for each type of augmen-
tation to make the Fair better, but to be sure that we did not
expand our reliance upon the General Fund and hopefully even
eliminate our reliance upon the General Fund, as far as the $19,000
augmentation.
CHAIRMAN CULLEN: That reminds me of someone's suggestion last
week that you build a movie theater but you want to analyze the
attendance before you spend any money to put in seats.
MR. ROBINSON: You should analyze what the productivity will
be before you make the capital investment.
CHAIRMAN CULLEN: I don't understand your incremental spending.
You say you are going to ask for $200,000 and see if that increases
attendance and if it does you may ask for another $1,200, is that
what you are saying?
MR. ROBINSON: No, no, different shows. For instance, the
special events have asked for an augmentation.
CHAIRMAN CULLEN: I see, you are -
MR. ROBINSON: Different kinds of things that will increase,
presumably, the attractiveness of the show. The advertising and
publicity group have asked for an increase in advertising. Well,
we wanted to analyze where it would be spent and in what medium it
would be spent, where the bulk of the attendance of the State Fair
80
comes from and make sure that we are spending it in those particular
areas.
CHAIRMAN CULLEN: You are talking about increasing the allowance
for the 21 days?
MR. ROBINSON: That's correct, we are.
CHAIRMAN CULLEN: Is anyone going after funds for the Exposition
Center for the six unfinished display rooms that --- for the display
of the history of California and California's education system?
MR. ROBINSON: As a secondary project, yes. This particular
budget and this particular effort has been related more particularly
to the 21 day Exposition, but this is a subject that is discussed
at our regular meetings and at the Management Subcommittee meetings,
too. We have a proposal, for instance, from a displayer, I'm not at
liberty at the moment to say who or what the product is, but a man
would like to build a building that would be a building of general
interest displaying a product of general interest on our grounds.
We have that under review at the moment. These kinds of things we
are inviting and hoping to develop, but it is slow -- it is slow
battle.
CHAIRMAN CULLEN: Well, I suppose we could beat this horse
all afternoon. Did you want to say --
MR. CLIFFORD: I'd like to comment, in the four years I've
been on the Committee that Mr. Robinson is more sensitive to the
feelings of the individual Board members than any of the other heads
of General Services, which is a welcome relief.
CHAIRMAN CULLEN: I think we will recess on that happy note.
01
Tuesday, February 1, 1972
The Committee met at 2:30 p.m. in Room 6028, State Capitol,
Chairman Cullen presiding.
Present: Assemblymen Mike Cullen and Peter Schabarum.
Staff Present: John W. Billett, Senior Consultant, Jan
Sharpless, Associate Consultant, and Dean Cromwell, Staff.
CHAIRMAN CULLEN: The hearing will come to order. Supervisor
Pat Melarkey, Chairman of the Sacramento County Board of Supervisors,
has asked to make a short presentation relevant to Cal Expo, a
subject that this Committee is going into in depth.
APPEARANCE OF DR. PAT MELARKEY, CHAIRMAN OF THE SACRAMENTO
COUNTY BOARD OF SUPERVISORS.
DR. PAT MELARKEY: Chairman Cullen, Mr. Schabarum, I am Dr. Pat
Melarkey, Chairman of the Board of Supervisors of Sacramento County.
I very much appreciate this opportunity to appear before you today
and share some of the thoughts and feelings of our Board of Super-
visors regarding the continued existence of Cal Expo at its present
site. (Appendix D)
First, as a native Sacramentan, as you might expect, I am very
familiar with the fair, both the old State Fair on Stockton Boulevard,
and the new State Fair at the Cal Expo grounds. During my youth I
worked there many summers and the attendant excitement of preparing
for a fair and then seeing its pageant unfold brings back many
82
nostalgic memories for me. The first summer I worked at the fair
I convinced the race starter, Mr. Sid Swanson, who was well known
as a starting gate operator on the West Coast race circuit, that
I was an excellent horseman and therefore, should be allowed to
work on the track in the afternoon and place the horses in the
starting gate. Though he warned me of the peculiar meanness and
excitability of race horses I convinced him that I was qualified.
The first horse that I placed in the gate bit me on the arm, broke
my wrist watch that I had just received for high school graduation,
and left several scars on my wrist. Naturally, Mr. Swanson then
consigned me to a rake, with which I performed diligently for the
rest of the State Fair meet.
Today, however, I would like to concentrate my thoughts and
my presentation on just three areas that I believe are important
to the Board of Supervisors of our County and its residents.
Society's need for a common meeting place. The continued
existence of the California State Fair has been on shaky ground
since 1947. The reason is simple and that is California in the
last 25 years has moved swiftly to lose many of its rural influences
and since the fair was basically a rural concept, where people
gathered once a year during the harvest, the fair could not compete
for the people's attention with so many other types of entertainment
coming to the front. I can remember reading a survey in 1948 or
1949 that was commissioned by the Board of Governors of the old
83
State Fair, which determined that the State Fair in Sacramento was
at the wrong place and at the wrong time and should be split into
three regional fairs. One in Sacramento, one built around the Cow
Palace Exposition, and one built around the Los Angeles Fair at
Pomona. The study also brought out the fact that fairs were changing
and that the management must find other things to attract its patrons
besides the old traditional appeal to livestock and rural displays.
And I feel that the tragedy of the present Cal Expo is that after
many years of struggling, the fair is finally finding itself in terms
of a quality amusement park, on very modern grounds, and year-round
activities that cover things such as art auctions of our local
television stations, the Camellia Ball, and the use by three or
four high schools here in Sacramento. It was unfortunate that the
City of Sacramento could not have located its Convention Center on
the Cal Expo grounds, as many of us felt was a good idea, but on the
other hand, it was felt by others in the City that a facility like
this would bolster the downtown and maintain its high level of
quality atmosphere for the Capitol buildings and the people who
worked in them. Within ten years, there may well be something
going on at Cal Expo every day and every weekend such as rentals
and income of horse racing and now our new night harness racing
and perhaps in the future dog racing; and the income from Cal Expo
should be enough to sustain its year-round operation. The point I
want to make is society's need for gathering, young and old, and
84
I could tell you that our society does not have these opportunities
these days, and I think that is one of the problems of our society
and why so many things are going on that disturb us. The old
tradition of the farmers coming into town and displaying their wares
and the gathering of the clans was something that I don't think we
can ever bring back. But I don't think you would argue with me that
the present society we have generally does not take time for the old
traditions.
The second point I would like to make is the position of Cal Expo
in the American River Parkway Plan that was initiated by the Board
of Supervisors some years ago. The American River Parkway is a 23
mile strip on both sides of the American River running from Sacramento
to Nimbus Dam and Folsom Lake. In that area the County of Sacramento
has acquired over 1700 acres at a cost of almost $7 million in the
past 11 years. And I might tell you, gentlemen, that those dollars
were dollars coming out of the general tax rate and matching grants
we received from Federal sources and they were difficult dollars to
spend politically. But we felt that this Parkway could become a
monument and a jewel in the park system of our State. We have also
spent $400,000 in development cost at Discovery Park, which lies at
the confluence of the two rivers just two miles from the Capitol.
And we are hoping that some day this will be something extremely
valuable to the residents of this entire area. You have all heard
of the bike trails that we have operating and of the plans we have
to extend them. We are told that unofficial counts put the number
of cyclists using these bike trails at 5,000 a week. I don't think
that there is any doubt that when the trails were extended and
enlarged, and then, along with the horsemen and hikers who are
using these trails constantly, we can assume that there will be
25,000 to 50,000 people a week using these facilities. Now Cal Expo
is important to all these plans for the simple reason that it is
exactly in the middle of the Parkway and, since the inception of our
Parkway Plan, it has been assumed that Cal Expo would be a central
part of the whole arrangement. We are, in a short time, going to
open up the area below Cal Expo for an overnight camping and fishing
grounds. And the Board is contemplating at present, putting a bond
of some $5 million to $10 million on the November ballot so that we
may secure more development funds to improve the roads and park sites
so the residents of the County can get in to use the area we have
acquired.
My point in stressing the American River Parkway is two-fold.
First of all, it shows a commitment of the County to this area in
terms of plans and money and secondly, it shows a very effective
partnership between the City, County, State and Federal Governments
and all are contributing their money to secure a quality environment
and a good recreation area for the people of this entire urban area.
In closing, gentlemen, we understand your Committee's concern
involving the operation and fiscal problems relating to Cal Expo.
We believe that it will be a great asset to our community, naturally,
and particularly its relationship to our plans for enhancing the
environment of the area. People of the County have made a substan-
tial commitment involving over $5 million, coupled with active
community involvement to the concept and implementation of the
American River Parkway, and will soon be asked to make even a greater
fiscal commitment. People of the County have made extensive use of
Cal Expo and there is every reason to expect that they will continue
to expand their use. The attendance this year would have broken
last year's record had it not been for some disturbances caused by
groups of the young people. I do not feel, however, because of this,
that we should back away from these public gatherings but we should
proceed on and try to find out how we can gather in peace and
harmony like we used to 20 years ago and enjoy each other's company.
I believe that Cal Expo is an opportunity to do this and believe
that operations of this type should be continued. I know they are
expensive, but I think it is more expensive to do without them. We
would hate to see the State take precipitous action that would
result in the removal from our community of one of the historic
facilities which was once a major attraction and a major recreational
opportunity for our citizens.
I am also appending a short statement made by the Sacramento
Metropolitan Chamber of Commerce regarding some of the economic
information regarding Sacramento and Cal Expo.
87
When developing an exposition appropriate to the State of
California, flexibility, compatibility and economic land use were
prime considerations. All planning, both the activities and of
structures, were to be flexible. Adjustments for attendance
fluctuation and growth were important.
The California Exposition promotes and extols the State in all
aspects, its heritage, culture, industry, people and resources.
While maintaining the values of a traditional fair, the concept
of year-round use makes it a distinct departure from tradition.
It is the only project of its kind in North America whose scope
has been planned from the outset as a continuous program of mutually
sustaining balanced activities.
The economic effects of Cal Expo flow in a variety of channels
all resulting from the spending and employment generated by the
attraction. From these new spending inputs the State of California
has benefited from added tax receipts, increased retail sales, new
employment and Sacramento County has benefitted from a general raise
in the economy.
During 1971, 1,815,273 persons visited the Cal Expo site, an
increase of 216,112 over 1970, and set an all-time attendance record.
893,737 persons attended the State Fair and 921,536 persons attended
the interim events. Thirty-eight new interim events were added to
1971's calendar of events. Among the most successful were the Home Show,
40 nights of harness racing, the Auto Expo, Lippizaner Horse Show,
and Sacramento's biggest social event of the year - the Camellia
Ball. 1972 will find more attractions added to the calendar of
events. Agri Expo West, a first-time attraction, scheduled in
February, will bring the agriculture enthusiasts from all of
California and the Western United States together with the new
and innovative techniques of farm equipment manufacturers. Accord-
ing to Economics Research Associates, the grand total of new spending
input directly generated by the exposition comes to approximately
$330 million between the years 1968 through 1980. It can be
considered a net increase in the flow of money in the economy
because it represents spending that would not have occurred, or
that probably would not have occurred in California were there no
exposition or fair.
The economic impact of Cal Expo is being felt in a broad area
of California, the economic benefits that flow from the exposition
are of significant dimensions and Cal Expo will generate substantial
increases in tax revenues, retail sales and payrolls for the State
of California.
CHAIRMAN CULLEN: We feel that the park, Dr. Melarkey, the
original concept still embraced by this administration, according
to the testimony given before this Committee is that of the year-
round operation, which is certainly more than the 20 day State Fair.
Can you tell us whether or not the Board of Supervisors have
ever considered participating with the State in developing
89
additional attractions at Cal Expo, such as, for example, a sports
arena?
DR. MELARKEY: We have never discussed that since I have been
on the Board. Last year there was discussion of some private citizens,
as I read the paper, feeling that there was a need for a sports arena
in the community and Cal Expo was considered as one of the sites.
Whether or not this is newspaper talk or it was really serious, I
don't know. There was, of course, a problem when they located the
convention center downtown. I think in some ways it was a great
tragedy that it wasn't placed at Cal Expo. On the other hand, as I
mentioned in my statement here, we have other urban renewal needs
that are important, also. Since we do have the Capitol downtown
and this fine park and buildings here, we cannot afford in this
community to let the downtown area deteriorate as they have done
all over the country. So, that was part of the reason which I
think the convention center was probably placed downtown. Ideally,
we would have placed it out there because of the parking and central
location of it.
Sacramento County has no plans, but I would certainly be
interested in participating in any activity of that kind.
CHAIRMAN CULLEN: Are there any other co-op things between
the County of Sacramento and the State of California?
DR. MELARKEY: Only in this Parkway. Our trails and right-of-
ways open up onto the Cal Expo grounds, and we have a very fine
90
working relationship, but we haven't had any joint projects that
I know of.
CHAIRMAN CULLEN: So, there is precedent with respect to
utilization of Cal Expo?
DR. MELARKEY: Yes. I would assume that would be an integral
part of the whole park there. It's right in the middle of it and
it's the biggest piece of ground.
CHAIRMAN CULLEN: Thank you.
Mr. Schabarum?
ASSEMBLYMAN SCHABARUM: I think, only for the record, I do
want to inject into the dialogue the fact that Chairman Cullen and
I have been involved in overviewing Cal Expo since we came here five
years ago. And, to say the least, it got off to a very bad beginning.
I think that the consensus might be that it hasn't really improved.
I'm using the criteria of income versus expenses, namely, then what
the State's General Fund has had to provide by way of additional
funds. That is far from satisfactory. I don't personally see any
change in the attitude of the management of the State Fair and its
policy department, notwithstanding the fact that legislative efforts
have been made and representations have been made by the Fair and
Exposition Executive Committee that things would improve.
Dr. Melarkey, as to the City and County relationship, you've
touched on the convention center, and from where I sit, would have
to observe that the City and the County have been most neglectful
01
in terms of their interest or involvement in assisting or partici-
pating in improving the Expo facility as it currently stands or in
the development of the surrounding property, which, of course, at
this point is in a state of loss. We are going to have to, I think,
still work towards putting that thing on a paying basis. It can be
done. I only point to my own fair, Los Angeles County Fair, which
for years has operated on a plus basis. I don't believe there's
much sentiment for a perpetual deficit continuing at Expo.
DR. MELARKEY: I won't argue the point that it could be made
to be a money maker. I don't know if we have the population mass
in this community as you do in L. A., where its shear numbers are
going to make the turnstiles go and the fair come out even. I have
been to the fair in L. A. and it's an outstanding County Fair,
twice as big as the State Fair. But you have the people there.
I don't think we can compete with the Disneyland concept.
As you stated, we got off to a very bad start. I happened to
be at the opening of Disneyland some years ago because of a television
director friend of mine who was in charge of the opening, and it was
a semi-disaster itself. But we got the State Fair - the State Fair
was not completed to its -- its original concept and this also
leaves a bad flavor in people's mouths. They had the carnival zone
and all the rides at the doorway right away and it looked just like
the old rehash. And the new State Fair really hasn't come through
yet as far as I'm concerned. But I could pledge to you that the
County is trying to scrape together every dime they can.
I recognize you have the same problems we do in terms of
money but every dime we get goes to complete that park. And I
think if our bond issue passes in November that within a year you
will see some sizeable development along that land, of which we
own quite a bit already; but, it is just sitting there. And, as
I mentioned we are trying to emphasize purchase instead of develop-
ment so we can get the land before it's all gone.
CHAIRMAN CULLEN: Any further questions? Mr. Billett?
MR. JOHN BILLETT: Dr. Melarkey, with regard to the Parkway,
has the County considered or would it be possible that the County
would be interested in working out an arrangement with the State
for additional lands, say, for example, a long-term lease or some-
thing of that nature to be used as a public golf course or to be
used, perhaps, for some kind of public camping facilities or a
recreational park of some type?
DR. MELARKEY: I think that would be a great idea. We might
trade you the County Hospital for that land.
It just dawned on me, maybe we can work a deal here. No,
I think that would be great. Our problem, frankly, is like yours;
it's money. And we've got our development. Money has been nil.
And every time we -- every time something raises, like Medi-Cal,
they take development money out to pay the County bills and the
park budget is the one that is razed. And it's too bad, but that
might be something that might be possible. We could probably work
that out with the State Fair Directors.
CHAIRMAN CULLEN: Do you have any County golf courses?
DR. MELARKEY: Yes. We have Haggin Oaks.
CHAIRMAN CULLEN: Are you making any money?
DR. MELARKEY: Probably paying its way. I don't think golf
courses are big money. We have Ancil Hoffman, which is on the river
up stream which is very --
CHAIRMAN CULLEN: Do you think there would be a demand?
DR. MELARKEY: I think that close into town, I would assume
there is. I was told there are private developers interested in
doing these things and that the Fair Board has not been too, you
know, encouraging about it. But maybe --- maybe we should take the
initiative here and ask them.
CHAIRMAN CULLEN: We understand it. The Board of Directors
out there, which is called the Executive Committee --
DR. MELARKEY: Yes.
CHAIRMAN CULLEN: -- rather --
DR. MELARKEY: Among other things, yes.
CHAIRMAN CULLEN: The Fair again, as we understand, is one
of the tenants of Cal Expo. But Tom Bair is the Manager at Cal
Expo. We've been advised that they have shelved any plans for a
golf course at that location.
DR. MELARKEY: Well, maybe we should take the initiative.
94
CHAIRMAN CULLEN: I would not want to see, for example, that
land declared surplus and turned into an industrial site when you
have a bicycle trail going through there.
DR. MELARKEY: That would be a tragedy.
CHAIRMAN CULLEN: It's certainly something to consider.
DR. MELARKEY: I'll follow that up. I appreciate the
suggestion. We -- that just might be possible, and there might be
a gesture on our part that might make a beginning, but I would also
like to state we have talked about arenas being built in the
community and I would weigh that against what the effect the
construction of an arena elsewhere might have on the future of
Cal Expo. I think we have to get all of these facts out.
CHAIRMAN CULLEN: Very good. Your testimony certainly is
appreciated by the Committee.
DR. MELARKEY: Thank you.
CHAIRMAN CULLEN: And thank you for coming.
(PORTIONS OF THE HEARING NOT PERTAINING TO THIS SUBJECT HAVE
BEEN DELETED)
The hearing was adjourned.
DE
Appendix A
Due to the extensiveness of this document, it is not reprinted,
but is available for inspection in the Committee Office.
96
Appendix B
Due to the extensiveness of this document, it is not reprinted,
but is available for inspection in the Committee Office.
97
Appendix C
TO:
H. C. VINCENT, JR.
January 8, 1968
Chief Land Agent
SUBJECT: Appraisal Review
Point West Subdivision
"New State Fair Site"
Department of General Service Appraisal
John E. Day, M.A.I., Appraiser
This review is concerned with a 229 acre portion of State property known as
Point West Subdivision at the State Fair and Exposition Site on Arden Way,
Sacramento. The appraisal was prepared by John E. Day of Property Acquisition
Division with advice from Stanley Goode of Goode and Goode in Santa Ana. Mr.
Day's conclusion of value was $8,500,000 or approximately $37,000 per acre.
The first of the major assumptions in the report is that there is a market for
six general uses to which the subject property can be put. These uses are-
service station, motor hotel, shopping center, general commercial, multi-resi-
dential and industrial.
The information leading to this conclusion was carefully considered in the highest
and best use section of the appraisal. A comprehensive analysis by the appraiser
concluded that each of these uses could be expected on the subject property within
a reasonable future time. Considering the excellent location of the subject prop-
erty in connection with the growth of Sacramento and the location of new enter-
prises, we are in complete agreement that there would be a market for each of the
uses mentioned.
A second assumption is the location of each use on the designated "parcels".
The size and location of these parcels were determined prior to the commencement
of the appraisal report. It was the appraiser's decision, however, as to loca-
tion of each use. He used logic in placement of the various uses: For instance,
industrial uses were placed west of Interstate 80, commercial areas were along
the major access routes, and service stations were at the most strategic corners.
These conclusions were reviewed in the field and we consider them to be valid
and reasonable.
A third major assumption made by the appraiser was that the property would be
marketed in the approximate size parcels indicated in the report. Again the
appraiser has carefully sampled the market to aid him in the size determination.
His assumptions and conclusions appear reasonable,
The final major assumption was the time taken to market these parcels. This rate
of absorption varies in each of the uses. The appraiser has again "gone to the
market" to determine absorption periods of similar property. The present value
of the monics estimated to be received yearly for the length of this period Was
then computed. The conclusion is the value the property is worth as of the date
Appendix C
RE: Appraisal Review Point West Subdivision
"New State Fair Site" - Department of General Services
John E. Day, M.A.I., Appraiser
Page 2
of the appraisal. The subject property has been valued as available for purchase
by only one buyer. The valuation of each separate use as shown in the report is
simply an intermediate step (by the use of the discounting process) in arriving
at total value.
The appraiser's selection of a rate is a major part of the discount process. He
has selected 15%. This is the return the prudent investor would consider necessary
to receive during the "holding period" from the present time to the date of sale
of each type of property. The 15% rate includes return on investment (or interest),
administrative costs, and real property taxes. The 15% rate has not been "proven"
in the report; however, it is a judgment factor in any case. Our conclusion is
that his judgment has been as good here as it has been in other major decision
areas in the report.
We viewed each of the major sales used in the report in company with Mr. Day.
Our general conclusion is that there was a wealth of comparable data and that
the appraiser did a competent job in working from these sales to value each of
the uses that subject property would be put to.
Adjustments were necessary in many cases but the appraiser has done a uniformly
good job of explaining the reasons for his adjustments and consequently leading
the reader to concur with each conclusion. There are 52 total sales included in
the report; a much greater number than this were considered. Each of these 52
sales is analyzed separately and compared to the applicable type use. As a gen-
eral comment, these comparisons have been carefully considered.
The depth of investigation and extent of analysis required in an appraisal of
this type is considerable. Mr. Day has taken the time to do the complete job
necessary to be convincing that his conclusions are valid. The organization of
the report is excellent. The length of the readable material at first appears
formidable, and the appraiser may have been somewhat redundant in his desire
to cover each use and each valuation problem to its fullest. However, this is
not a criticism; the conclusion assures the reviewer that no major step has
been overlooked in the appraisal process.
As stated above, Mr. Stanley Goode was contracted by the State to aid Mr. Day
in the valuation process. Specifically, the refined objectives of Mr. Goode's
employment are as follows:
1. To function as a consulting appraiser.
2. To provide advice and consultation regarding all abstracts of the appraisal
problem including alternate and logical patterns of land utilization.
3. To offer appropriate direction as to criteria for data assembly, analytical
methods, and methods of correlation employed in formulating market value
conclusion.
4. To review the appraisal report prepared by Mr. Day and provide opinions
as to adequacy of data, soundness of methods employed, logic of optimum-
use estimates, and accuracy of the conclusion of final estimate of market
value.
Appendix C
RE: Appraisal Review - Point West Subdivision
"New State Fair Site" - Department of General Services
John E. Day, M.A.1., Appraiser
Page 3
In a letter to you dated January 2, 1968, Mr. Goode sets forth the results of
his participation in the appraisal and the appraisal review, and his own opinion
of market value at $7,500,000. The exceptions mentioned by Mr. Goode to Mr. Day's
report, which account for the difference in total valuation between the two ap-
praisers, are:
a. An insufficient discount rate on service-station use.
b. The absorption period for some of the uses.
C. Generally, a less optomistic view of the current real estate market.
Mr. Goode states that the Day report was prepared in a sound and competent manner
and evidenced-high standards in every respect.
The comments submitted by Mr. Goode have been analyzed and it appears that the main
difference of opinion is in the length of absorption time as to Parcel "E".
Mr. Day has supported his absorption period on local historic statistical data
which reflects the rate of development in the past which was used as a guide to
the reasonable future absorption rate. Mr. Goode, on the other hand, supports
his absorption period on his general experience with land utilization. However,
in his comments, he admits that "the industry acceptance of Site 'E' may be more
favorable than currently anticipated".
We have considered Mr. Day's final conclusion of value supported by his detailed
appraisal, and have carefully analyzed the reasons set forth by Nr. Goode for a
lower opinion of value, and are of the opinion that the value of $8,500,000 reflects
the fair market value of this site and we recommend its acceptance.
ROBERT F. COOPER, N.A.I.
Supervising Land Agent
Summan
ROBERT A. SWANSON, N.A.I.
Assistant Chief Land Agent
RFC:sgm
RAS:sgm
100
Appendix C
Thomas F. Sherman
Supervising Land Agent
and
file
November 13, 1970
Property Acquisition Division
Point West Subdivision
230-Acre Surplus Sale
November 18, 1970
VALUATION REVIEW
The purpose of this memorandum is to review the valuation history of the Point
West surplus property and to make recommandations as to:
1. The market value of Unit 1 containing 187.437 acros as of November 18,
1970.
2. The market value of Unit 2 containing 42.006 acres as of November 18,
1970.
3. The minimum reasonable bld that falls within the market value range
as estimated above.
The Point West subdivision is part of the original 1,065-acre Fair Sito purchased
In 1949 for $850,000. The new fair site Is now operational and the 230-acre
northerly portion of the original site has been declared surplus to State needs.
This 230-acre area was subdivided and Improved with streets, curbs, gutters, san-
Itary sewers, storm drains and water mains in 1967 at a cost of approximately
$2 million.
The Point West surplus was appraised by John E. Day, M.A.I., and Stanley Goode,
M.A.I., as of January 2, 1968 for $3,500,000 and $7,500,000, respectively. Mr.
Day updated his report as of December I, 1969 and as of that date concluded a
value of $7,500,000. Although Mr. Day sets forth five reasons for his value
change, the primary reasons are:
1. Cal Expo did not materialize as an Integrated year-round fair and amuse-
ment center with comp lementary golf courses and automobile race track.
At the time of the original appralsal, Investment in Cal Expo was esti-
mated at $34 million and attendance projected at 2,470,000. Actual in-
vostment WOS $20 million and 1970 attendance was 1,590,128.
2. Availability of mortgage funds for Investment purposes declined sharply
In the two-year period between estimates.
101
Appendix C
Thomas F. Sherman
Point West Subdivision : - Valuation Review
Page 2
Both the original Day-Goode approisal and the Day updating valued the 230-acre
parcel as one property, available for purchase by one buyer--as opposed to many
parcels available for purchase by many buyers.
Shortly after the original valuation report was submitted, the State employed the
firm of Development Research Associates (Los Angeles) to prepare Land Use and Mar-
keting Plans for the 230 acres. A summary of their findings and the two appraisals
are set out as follows:
Land Use
Day-Goode
D.R.A.
Day
(1-2-68)
(4-26-68)
(12-9-69)
Hotel-Hotel
48
44
30
Mobile Home Park
0
42
0
Industrial
41.306
0
41.3
Multi-femily Residential
59.795
68
68
Theatre
0
4
0ª
Theme or Satellite
Shopping Center
23.475
25
23.5
Speclal-Commercial-Institutional
or General Commercial
51.157
47
61
Service Station or Bank
5.71
0
5.7
TOTAL
229.443
230
229.5
The projected uses, as set out above, are in fairly close agreement.
The area devoted to Hotel-Hotel Use was lowered In the second Day report to reflect
the less than year-round operation of Cal Expo. This factor was not completely ap-
parent at the time of the original Day report or the DRA Study.
The Mobile Home Park Use was DRA's idea but hardly practical in view of the nonsuit-
ability of the site and competitive selling prices of mobile home park acreage in
the Sacramento area. This use was applicable to the area now designated Unit 2.
The Industrial Use was the Day olternative for the area west of Interstate 80 (now
called Unit 2). This use still appears to be the most reasonable use for this area.
(However, the service station site west of Interstate 80 appears to me to be Imprac-
tical.)
°Included In Special Commercial
102
Appendix C
Thomas F. Sherman
Point West Subdivision - Valuation Rovlew
Page 3
The Multi-Family Use was Increased to absorb some of the area formerly devoted
to the hotel-motel uso.
The Theme or Satellite Shopping area remains about the same in all three estl-
mates.
The Speclal-Cormerclal-Institutional or General Commercial use was Increased to
accomodate some of the area formerly devoted to hotel-motel use.
The big area of difference between DRA's proposal and the updated Day report
(other than the switch from mobile home park to Industrial) is the shift from
hotel-motel use to general commercial. Mr. Day also breaks out the service
station-bank use separately.
CONCLUSION
Values have generally remained constant in the Sacramento area during the last
year. I therefore feel the Day value of $7,500,000 is still applicable to the
entire site, 1 also feel that the highest and best use of the area wost of in-
terstate 80 (currently designated Unit 2) is for a light Industrial use and that
the Day Industrial values are appropriate for this area.
RECOMMENDATION
I recommend that the Day valuation of $7,500,000 most accurately reflects the
market value of the entire parcel.
The 137.437-acre parcel designated as Unit 1 should be valued at the acreage
unit rate applicable to the integrated use plan In the updated Day report of
$35,200 per acro, or $6,000,000.
The 42.006-acre parcel designated as Unit 2 should be valued at the Industrial
unit rate of $21,500 per acre, or $900,000.
The range of market value for this type of property is usually about ten per-
cent. Blds in the range of $5,940,000 to $7,260,000 for Unit 1 and $810,000
to $990,000 for Unit 2 should be expected. In my opinion, bids lower than the
minimums set out above should not be accepted.
FORREST D DAILEY
Senior Land Agent
FDB:Wg
APPROVED:
Thomas F. Sherman
102
Appendix D
STATEMENT OF 'DR. PATRICK E. MELARKEY, CHAIRMAN OF THE BOARD OF SUPERVISORS,
SACRAMENTO COUNTY
Given to the Assembly Efficiency and Cost Control Committee, February 1,
1972
****
Mr. Chairman and Members of the Committee, I am Dr. Pat Melarkey, Chairman
of the Board of Supervisors of Sacramento County. I very much appreciate this
opportunity to appear before you today and share some of the thoughts and
feelings of our Board of Supervisors regarding the continued existence of Cal
Expo at its present site.
First, as a native Sacramentan, as you might expect, I am very familiar with
the fair, both the old state fair on Stockton Boulevard, and the new state fair
at the Cal Expo Grounds. During my youth I worked there many summers and the
attendant excitement of preparing for a fair and then seeing its pageant unfold
brings back many nostalgic memories for me. The first summer I worked at the
fair I convinced the race starter, Mr. Sid Swanson, who was well known as a
starting gate operator on the West Coast race circuit, that I was an excellent
horseman and therefore, should be allowed to work on the track in the afternoon and
place the horses in the starting gate. Though he warned me of the peculiar mean-
ness and excitability of race horses I convinced him that I was qualified. The
first horse that I placed in the gate bit me on the arm, broke my wrist watch
that I had just received for high school graduation, and left several scars. on
my wrist. Naturally, Mr. Swanson then consigned me to a rake with which I
performed diligently for the rest of the State Fair meet.
104
Page two.
Appendix D
Today, however, I would like to concentrate my thoughts and my presentation
on just three areas that I believe are important to the Board of Supervisors of
our County and its residents.
1. Societies' need for a common meeting place.
The continued existence of the California State Fair has been on shaky
ground since 1947. The reason is simple and that is, California in the last
25 years has moved swiftly to lose many of its rural influences and since the
fair was basically a rural concept, where people gathered once a year during
the harvest, the fair could not compete for the peoples' attention with so
many other types of entertainment coming to the front. I can remember reading
a survey in 1948 or 49 that was commissioned by the Board of Governors of the
Old State Fair, which determined that State Fair in Sacramento was at the wrong
place and at the wrong time and should be split into three regional fairs. One
in Sacramento, one built around the Cow Palace Exposition, and one built
around the Los Angeles Fair at Pomona. The study also brought out the fact that
fairs were changing and that the management must find other things to attract
its patrons besides the old traditional appeal to livestock and rural displays.
And I feel that the tragedy of the present Cal Expo is that after many years of
struggling, the fair is finally finding itself in terms of a quality amusement
park, on very modern grounds, and year round activities that cover things such
as Art Auctions of our local television stations, the Camellia Ball, and the use
by three or four high schools here in Sacramento. It was unfortunate that the
City could not have located its Convention Center on the Cal Expo Grounds, as
many of us felt was a good idea, but on the other hand, it was felt by others
in the City that a facility like this would bolster the downtown and maintain
its high level of quality atmosphere for the capitol buildings and the people
who worked in them. Within 10 years there may well be something going on at
Cal Expo every day and every weekend such as rentals and income of horse racing
and now our new night harness racing and perhaps in the future dog racing, and
Appendix D
the income from Cal Expo should be enough to sustain its year round operation.
The point I want to make is societies' need for gathering, young and old, and
I could tell you that our society does not have these opportunities these days,
and I think that is one of the problems of our society and why so many things
are going on that disturbs us. The old tradition of the farmers coming into
town and displaying their wares and the gathering of the clans was something
that I don't think we can ever bring back. But I don't think you would argue
with me that the present society we have generally does not take time for the
old traditions.
The second point I would like to make is the position of Cal Expo in the
American River Parkway Plan that was initiated by the Board of Supervisors some
years ago. The American River Parkway is a 23 mile strip on both sides of the
American River running from Sacramento to Nimbus Dam and Folsom Lake. In that
area the county has acquired over 1700 acres at a cost of almost 7 million dollars
in the past 11 years. And I might tell you gentlemen, that those dollars were
dollars coming out of the general tax rate and matching grants we received from
Federal sources and they were difficult dollars to spend politically. But we
felt that this Parkway could become a monument and a jewel in the park system
of our state. We have also spent $400,000 in development cost at Discovery Park
which lies at the confluent of the two rivers just two miles from the Capitol.
And we are hoping that some day this will be something extremely valuable to the
residents of this entire area. You have all heard of the bike trails that we
have operating and of the plans we have to extend them. We are told that un-
official counts put the number of cyclists using these bike trails at 5,000 a
week. I don't think that there is any doubt that when the trails are extended
and enlarged, and then, along with the horsemen and hikers who are using these
trails constantly, we can assume that there will be 25 to 50,000 people a week
using these facilities. Now Cal Expo is important to all these plans for the
simple reason that it is exactly in the middle of the Parkway and since the
106
Appendix D
inception of our Parkway Plan it has been assumed that Cal Expo would be a
central part of the whole arrangement. We are, in a short time, going to open
up the area below Cal Expo for an overnight camping and fishing grounds. And
the Board is contemplating at present, putting a bond of some 5 or 10 million
dollars on the November ballot so that we may secure more development funds to
improve the roads and park sites so the residents of the County can get in to
use the area we have acquired.
My point in stressing the American River Parkway Plan is two-fold. First of
all, it shows a commitment of the County to this area in terms of plans and money
and secondly, it shows a very effective partnership between the City, County,
State and Federal Governments and all are contributing their money to secure a
quality environment and a good recreation area for the people of this entire
urban area.
In closing, Gentlemen, we understand your Committee's concern involving the
operation and fiscal problems relating to Cal Expo. We believe in the County,
however, that one does not do away with an operation of this type without
loosing some important historical and recreational opportunities that we seem
to have too few of these days in our modern society. We believe that it will
be a great asset to our community, naturally, and particularly its relationship
to our plans for enhancing the environment of the area. People of the County
have made a substantial commitment involving over five million dollars coupled
with active community involvement to the concept and implementation of the
American River Parkway and will soon be asked to make even a greater fiscal
commitment. People of the County have made extensive use of Cal Expo and there
is every reason to expect that they will continue to expend their use. The
attendance this year would have broken last years record had it not been for some
disturbances caused by groups of the young people. I do not feel, however
because of this, that we should back away from these public gatherings but we
should proceed on and try to find out how we can gather in peace and harmony
like we used to 20 years ago and enjoy each others company.
Appendix D
I believe that Cal Expo is an opportunity to do this and believe that operations
of this type should be continued. I know they are expensive, but I think it is
more expensive to do without them. We would hate to see the State take
precipitous action that would result in the removal from our community of one of
the historic facilities which was once a major attraction and a major recreational
opportunity for our citizens.
I am also appending a short statement made by the Sacramento Metropolitan
Chamber of Commerce regarding some of the economic information regarding Sacra-
mento and Cal Expo.
108
Appendix D
When developing an exposition appropriate to the State of California,
flexibility, compatibility and economic land use were prime considerations.
All planning, both of activities and of structures, were to be flexible. Ad-
justments for attendance fluctuation and growth were important.
The California Exposition promotes and extols the State in all aspects, its
heritage, culture, industry, people and resources. While maintaining the
values of a traditional fair, the concept of year round use makes it a district
departure from tradition. It is the only project of its kind in North America
whose scope has been planning from the outset as a continuous program of
mutually sustaining balanced activities.
The economic effects of Cal Expo flow in a variety of channels all resulting
from the spending and employment generated by the attraction. From these new
spending inputs the State of California has benefited from added tax receipts,
increased retail sales, new employment and Sacramento County has benefited
from a general raise in the economy.
During 1971, 1,815,273 persons visited the Cal Expo site, an increase of
216,112 over 1970, and set an all time attendance record. 893,737 persons
attended the State Fair and 921,536 persons attended the interim events. Thirty
eight new interim events were added to 1971's calendar of events. Among the
most successful were the Home Show, Forty nights of harness racing, the Auto
Expo, Lippizaner Horse Show, and Sacramento's biggest social event of the year -
The Camellia Ball. 1972 will find more attractions added to the calendar of
events. Agri Expo West, a first time attraction, scheduled in February, will
bring the agriculture enthusiasts from all of California and the Western United
States together with the new and innovative techniques of farm equipment
manufacturers. According to Economic Research Associates, the grand total of
new spending imput directly generated by the exposition comes to approximately
$330 million dollars between the years 1968 through 1980. It can be considered
109
Appendix D
a net increase in the flow of money in the economy because it represents spending
that would not have occurred, or that probably would not have occurred, in
California were there no Exposition or Fair.
The economic impact of Cal Expo is being felt in a broad area of California,
the economic benefits that flow from the Exposition are of significant dimensions
and Cal Expo will generate substantial increases in tax revenues, retail sales
and payrolls for the State of California.
*****
110