To: Sonoma County Board of Supervisors
Department or Agency Name(s): Sonoma County Fair & Exposition, Inc.
Staff Name and Phone Number: Rebecca Bartling, 707-545-4218
Vote Requirement: Majority
Supervisorial District(s): Countywide
Title:
Title
2023 Sonoma County Fairgrounds Budget
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Recommended Action:
Recommended action
Adopt a Resolution approving the 2023 Operating and Capital Improvements Budget and the 2023 Position Allocation List, for Sonoma County Fair and Exposition, Inc.
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Executive Summary:
Pursuant to Government Code 25905, the Board of Supervisors contracts with the Sonoma County Fair and Exposition, Inc. (Fair) to operate the Sonoma County Fairgrounds. The Board of Supervisors retains authority to approve and/or alter the budget of the Fair*. The Fair Board of Directors request that the Sonoma County Board of Supervisors approve the 2023 annual budget, as adopted by the Fair Board of Directors on December 20, 2022.
The 2023 budget forecasts a full annual County Fair as well as non-fair Interim revenues (non-fair building and facility rentals, and Recreational Vehicle Park and golf course use) returning to pre-COVID levels.
*There are no specific statutes governing the Board of Supervisors process for consideration of the Fairgrounds budget, thus Government Code 29064 public hearing noticing requirements do not apply.
2023 Budget Overview
The 2023 budget includes $13,431,046 in expenditures financed with $12,189,199 in revenues and $1,241,847 in fund balance, which is a 16% increase over the prior year, primarily due to an increase in capital improvements, equipment purchases, wage and benefit increases for both permanent and seasonal staff and increases to materials cost due to supply restrictions and in vendor supply and service charges. The budget projects a net operating surplus of $303,153 and identifies capital improvement projects of $1,545,000.
Fund balance is budgeted to decrease $1,241,847 in 2023. This represents an increase in use of fund balance by $917,397 from the prior year, a 283% change.
Discussion:
The Fair’s 2023 budget is comprised of operational and non-operational components.
Operating revenues consist of County Fair 44%, Interim Events (non-fair building and facility rentals, and Recreational Vehicle Park and golf course use) 32%, Horse Racing and Satellite Wagering 9%, of total revenues. Non-operating revenues, and use of fund balance are 15% of total revenues.
Operational expenditures by program area include County Fair 24%, Maintenance 27%, Interim Events 14%, Administration and Debt Service 13%, Capital Improvements 12%, and Horse Racing and Simulcast 10%.
Summary of Significant Budget Changes and Projections from Prior Year’s Adopted Budget
Expenses by Category
1. Salaries and Benefits increased $812,872 or 15%, to $6,330,673.
• Increase in expense from the prior year are due to an increase in permanent position allocations from 25 to 27, $229,740. This includes a 1.0 Business Development Manager position that was approved by the Board of Supervisors on June 13, 2022, and a request to add a 1.0 Secretary and 1.0 Administrative Aide allocations and deletion of (1.0) Senior Account Clerk allocation. The requested positions include a position that was eliminated in June 2020 as a result of impacts from the pandemic and are necessary to provide increased and expanded administrative support for full fairgrounds operational activities.
• Increase in cost of living adjustments, benefit costs and workers compensation insurance as well as merit increases for 11 allocations filled during 2022, $485,543.
2. Services and Supplies increased $688,998 or 14.7% to $5,555,373.
• Fair expense increased $196,548, primarily due to a new 10 robotic full-size animatronic dinosaur attraction in the Hall of Flowers, $150,000, and anticipated increases in vendor and supply costs due to price increases and the pass through of minimum wage increases to the Fair.
• Interim expenses increased $71,159 primarily due to increases in contracted security as well as utility charges in the RV park.
• Administrative expenses increased $138,967 due primarily to increased costs of $48,196 in contract services for Enterprise Resource Planning software upgrades, maintenance of the Fair’s telephony and wifi networks $99,000, and increases in bank charges as more customers utilize non-cash methods of payment, $16,000.
• Maintenance expenses increased $249,098 primarily due to utility and trash removal services increases, $189,000, price increases in janitorial, electrical, paint and ground supplies, $28,000, and increases in fuel costs for equipment and vehicles, $15,000.
3. Capital Expenditures increased $410,000 or 36% to $1,545,000. The budgeted 2023 capital improvements and equipment purchases include:
• HVAC repairs and replacement - $250,000
• Americans with Disabilities Act (ADA) accessibility improvements at the RV park - $750,000
• Other RV park enhancements - $75,000
• Pavement replacement to parking areas and paths of travel - $75,000
• Other improvements - $130,000
• Equipment replacement to include a street sweeper, metal detectors and maintenance fleet vehicles - $265,000
4. Other Expenses decreased $66,147 (100%) to $0.
• The decrease in Other Expenses is due to the elimination of debt service on the Fair’s second Paycheck Protection Program loan of $477,500 which was fully forgiven by the U.S. Small Business Administration (SBA) during 2022.
Revenue (Sources)
1. Use of Fund Balance increased $917,397, or 283%, to $1,241,847. Use of Fund Balance is due to:
• An anticipated $446,887 net operating loss compared to $21,697 net operating income in 2022.
• Capital expenditures (net of external funding) of $795,000.
2. Fees and Charges for Services increased $1,033,326, or 10%, to $11,439,199.
• Increase in Fair revenue $570,321 or 8.8%.
a. The County Fair attendance is projected to increase slightly from 2022 levels, due to a new animatronic dinosaur attraction in the Hall of Flowers. Fair ticket prices will increase $1, to $15, for advanced Adult tickets and $2, to $20, for Adult tickets at the gate. Youth prices increase $2, to $12. Children 6 and under remain free and there will be three days where children 12 and under will be free. Fair parking will increase $2, from $10 to $12.
• Increase in Interim revenue $610,269 or 17%.
a. Building rental rates will be increased 20 - 25%. Increases are necessary to cover the increasing cost to maintain and operate the facilities as the last time rates were increased was in 2018.
b. Daily rates in the RV park increased by $5, to $55 for 30 amp spots and $60 for 50 amp spots.
• Decrease in Satellite Horse Racing of $196,860 or 60%
a. The 2022 budget anticipated the return of off-track betting to the Jockey Club. However, the facility remained closed to the public to support vaccination and testing efforts during the pandemic. The 2023 budget anticipates a reopening of the Jockey Club in June, after the completion of deferred HVAC maintenance.
3. Other Departmental Revenue is decreasing $105,000, 12%, to $750,000. The decrease is due to one-time Capital Improvement contributions in the prior year from the Targeted Support Program of the California 2021 Budget Act, Sonoma County Fair Foundation and County of Sonoma. The Fair’s 2023 Budget includes the approximate value of accessible toilet and shower improvements at the RV park, contributed through the County ADA Barrier Removal Program ($750,000).
Other Budget and Financial information
Cash Balances, projected 2022 year-end compared to 2021 year-end actuals - Cash balances, at December 31, 2022, are projected to be $8,319,562, an increase of $178,295 from December 31, 2021. This increase is due to projected 2022 pre-depreciation income of $1,391,482, less the use of cash for capital expenditures, $706,000, and the paydown of the second Paycheck Protection Program loan (with loan forgiveness funds), $477,500.
Cash Balances, 2023 budgeted compared to projected 2022 year-end - Cash balances are budgeted to be $7,077,714 at December 31, 2023 a decrease of $1,241,848, from the projected balance at December 31, 2022, due primarily to a projected net deficit of $446,887 in 2023 and capital asset purchases (net of external funding) of $795,000.
Debt Service -In February 2021, the Fair applied for, and received, a second loan of $477,500 under the U.S. Small Business Administration (SBA) Paycheck Protection Program established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The Paycheck Protection Program (PPP) provided small businesses funds for 8-24 weeks of payroll costs including benefits, rent, and utilities. The Fair used loan proceeds to cover payroll and operational expenses. In 2022, the Fair applied for and received loan forgiveness funds to retire the entire $477,500 debt.
2022 Financial Overview
Pre-Depreciation Net Income - 2022 pre-depreciation net income is projected to be $1,391,842, compared to a $4,092,635 pre-deprecation net income in 2021, a $2,700,793 decrease.
Net Revenues
• 2022 Interim Event net revenue (net revenues other than Annual County Fair that includes facility rentals, and RV Park use) is projected to increase $519,330 when compared to 2021. The increase is primarily due to rental activity returning to pre-COVID 19 levels.
• 2022 Annual County Fair net revenue increased $646,251 from 2021. The fairgrounds was able to produce a full annual fair in 2022, including the return of horse racing to Sonoma.
• 2022 Satellite Wagering net revenue decreased $179,333 from 2021. The Jockey Club was primarily rented for COVID vaccination/testing during 2021. This was a high margin source of revenue.
• 2022 Miscellaneous Non-Fair revenue decreased $1,681,574, when compared to 2021. In 2021, the Fair received assistance funds from various programs including:
a. Forgiveness of $970,000 for the first Paycheck Protection Program loan.
b. AB 1499 New Fair Funds, $199,240 - On October 14, 2017, Governor Brown signed Assembly Bill No. 1499 which requires a seller of taxable goods to identify sales made at California fairgrounds. The bill requires that an amount equal to 3/4 of 1% of the total amount of gross receipts reported to the Department of Finance be included in the subsequent annual Governor’s Budget for the Department of Food and Agriculture for allocation to fairs.
c. Budget Act of 2021, $780,000 - The State budget included $50 million in General Fund to the entire Network of California Fairs, for operational support {Targeted Support Program}
Expenses
• In 2021 the Fair was not yet operating at its pre-COVID 19 capacity. This included a modified annual fair, and fewer Interim rentals. Increases in projected 2022 expenses are primarily due to:
a. $2,166,008 increase in wages and benefits, due to filling of allocated position that were added in the 2022 budget for positions that were eliminated in June of 2020 due to the pandemic, increase in seasonal employees for the annual fair and increases to wage and benefit rates.
b. $124, 846 increase in utility costs.
c. $103,786 increase in equipment maintenance.
d. $160, 251 increase in buildings and grounds maintenance.
Capital Improvement Project list
The Capital Improvement Project list is shown as Attachment #3. Funding will come from reserves totaling $795,000. Also included in the list of projects are capitalized cost for ADA improvements at the RV park to be performed and funded by the County of Sonoma via the County’s ADA Barrier Removal Program, $750,000.
Position Allocation List
In the 2022 budget, the Fair requested a total of seven (7) net positions. The majority of the requested allocations were for positions that were eliminated in June of 2020 in an effort to reduce expenses as the Fairgrounds could no longer host large gatherings as a result of impacts from the pandemic. Due to hiring challenges, the final allocation was not filled until November 2022. Additionally, in June 2022, the Board of Supervisors approved the addition of one allocation for a Business Development Manager. The Business Development Manager position was requested to address the need of the Fair to secure new revenue sources to supplement the Fair’s traditional revenue sources. After an unsuccessful recruitment effort, the position remained open at the end of 2022. The Fair anticipates recruiting for and filling the Business Development Manager position in the first quarter of 2023.
In its 2023 budget, the Fair is requesting the addition of 1.0 Secretary allocation, the addition of 1.0 Administrative Aide allocation and the elimination of 1.0 Senior Account Clerk allocation.
If approved by the Board, the requested allocations will total 27 full time equivalent positions, an increase of 2.0 net allocations, when compared to the 2022 adopted budget. Please see Attachment #4 for the listing requested to be approved.
The 2023 calendar year expenses for the new positions reflect a start date of April 01, 2023. The position expenses totaling $115,270 are as follows:
• Secretary - $94,111
• Administrative Aide - $107,768
• Senior Account Clerk ($86,609)
The calendar year expenses for the above allocations have been included in the 2023 budget. The additional allocations will be funded primarily by a one-time use of fund balance. Future years will be financed with Fair revenues.
A Secretary allocation existed prior to the 2020 pandemic. This position was deleted as a result of staff reductions due to impacts from COVID-19. During this time existing staff, including the CEO, absorbed additional duties previously performed by the Secretary that included clerking Fair Board meetings and providing reception and customer service coverage among other tasks however with Fair activities and events resuming to pre-COVID levels this is no longer feasible. The requested position will facilitate contracts for the annual Sonoma County Fair and non-fair contracts, manage the Requests for Proposals RFP process, assist the CEO in scheduling of meetings and appointments, support the various Fair Board committees including full board agendas, taking minutes at these meetings and noticing public meetings. Additionally, this position will track departmental safety trainings and ensure compliance with the Fairgrounds Injury Illness Prevention Program, among other duties
The Administrative Aide position is requested to provide administrative support to all internal units including human resource needs, information technology training support for staff, manage onboarding for seasonal workers, and provide analysis and support during annual independent audits. This position will also maintain employee manuals and documents, process cash handling and reconciliations, and assist with event management, including ticketing, technology utilization and design, and frontline operational functions.
The proposed position changes have been approved by the Human Resources Department. Sonoma County Fair requests the Board adopt a Resolution amending the Position Allocation List of Sonoma County Fair to add 1 - Secretary and, 1 - Administrative Aide and eliminate 1 - Senior Account Clerk.
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Calendar Year 2022 Adopted Budget with June 2021 Addition |
Calendar Year 2023 Recommended Budget* |
Change from 2022 Adopted Budget, with Addition |
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Total Permanent Positions |
25 |
27 |
2.00 |
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*The Recommended Budget includes 1.0 Business Development Manager position approved by the Board of Supervisors on June 13, 2022
Strategic Objectives
Staff of the Sonoma County Fair and Expo inc. have been negotiating and have now confirmed a highly anticipated unique addition to the annual Fair’s Hall of Flowers. This coming year the Hall of Flowers will feature 10 robotic full-size dinosaurs from Imagination Exhibitions. The Hall of Flowers theme “Dinosaurs around the world” will feature one of these realistic replicas in each of the 10 professional gardens. The Objective is to increase attendance at the Fair through an addition to the Hall of Flowers that will appeal to patrons of all ages.
Not only will the Hall of flowers feature dinosaurs, but our Special Events Department will also be theming youth activities daily around the grounds with fun events such as dinosaur bone digs, fun contests and more.
The Competitive Exhibits department of the Fair will be adding an exciting Agriculture Exhibit in the Saralee and Richards barn featuring displays and education about the top 10 commodities of the Sonoma County Crop report. Additionally new featured livestock shows should result in additional participants locally as well as from out of the area. This department will also be doing additional outreach to increase still entries into the Fair such as photography, fine art, baked goods and home arts.
Although an increase in attendance is expected for the 2023 Fair due to exciting new exhibits, costs to produce the Fair and support Interim (non-Fair) events has increased substantially. Due to these increases the Adult Fair price will increase at the Gate from $18 to $20 and the advance sale discount Adult price will increase from $14 to $15. The youth price (ages 6-12) will increase to $12. Children 6 and under will remain free.
Interim rental rates are increasing as well and have not been increased since 2018.
The strategic objective of the team at the Sonoma County Fairgrounds in 2023 will be to look at cost cutting opportunities along with maximizing efforts in maintaining the property. And a final goal is to bring on a Business and Development Manager in the Spring that will help increase events and sponsorships for the Fairgrounds.
Strategic Plan:
N/A
Prior Board Actions:
The Board of Supervisors approves the fair budget, annually.
Fiscal Summary
The Financial Summary Table is shown as Attachment #2
Narrative Explanation of Fiscal Impacts:
The Sonoma County Fair budget total expenses, revenues, and fund balance use for calendar year 2023 are $13,431,046
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Staffing Impacts: |
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Position Title (Payroll Classification) |
Monthly Salary Range (A-I Step) |
Additions (Number) |
Deletions (Number) |
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Secretary |
$4,226.42-$5,139.53 |
1.0 |
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|
Administrative Aide |
$4,939.52-$6,003.95 |
1.0 |
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Senior Account Clerk |
$4,254.25-$5,170.84 |
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1.0 |
Narrative Explanation of Staffing Impacts (If Required):
The proposed positions will result in an estimated cost of $115,270, (partial year) and will be funded primarily by the use of fund balance.
The estimated annual cost for 2024 is estimated at $148,480 (twelve months).
Requested allocations can be seen in Attachment 4.
Attachments:
Attachment #1 Board Resolution
Attachment #2 Financial Summary
Attachment #3 Capital Improvement Budget
Attachment #4 Sonoma County Fairgrounds Position Allocation List
Attachment #5 Fair 2021 Budget as Approved by Fair Board
Attachment #6 PowerPoint Presentation
Related Items “On File” with the Clerk of the Board:
N/A