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
2024 Sonoma County Fairgrounds Budget
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Recommended Action:
Recommended action
Adopt a Resolution approving the 2024 Operating and Capital Improvements Budget and the 2024 Employee 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 & 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*. See attachment 1 - Budget Resolution. The Fair Board of Directors request that the Sonoma County Board of Supervisors approve the 2024 annual budget, as adopted by the Fair Board of Directors on December 19, 2023.
*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.
2024 Budget Overview:
The 2024 budget includes $12,294,142 in expenditures financed with $11,555,268 in revenues and $738,874 use of accumulated fund balance. The total proposed budget is an 8.5% expenditure decrease over the prior year budget, primarily due to a decrease in capital improvements and equipment purchases. The budget projects a net operating loss of $63,874 and identifies capital improvement projects of $675,000.
Use of fund balance in 2024 budget is expected to decrease by $502,973 from the prior year budget, a 40% change. Most of this decrease is tied to a decrease in planned expenditures for capital improvements.
See attachment 2 - Financial Summary. Overall, the costs to maintain the buildings and facilities continues to increase, particularly in areas of labor, contracted services, insurance and utilities.
In 2024 staff will continue to cut costs where opportunities exist along with maximizing efforts in maintaining and securing the property and in seeking out new revenue opportunities. The Fair & Exposition, Inc. leadership is engaged in the need to address the potential loss of horse racing income in 2025, which represents 20.4% or $$1,296,900 of the total 2024 budgeted revenue and impacts overall annual fair attendance.
Discussion:
The Fair’s 2024 budget is comprised of operational and non-operational components.
Operating sources consist of County Fair 56%; Interim Events (non-fair building and facility rentals, and Recreational Vehicle Park and golf course use) 28%; and Horse Racing and Satellite Wagering, 10%, of total revenues. Non-operating revenues (e.g. interest income) and use of fund balance are 6% of total sources.
Operational expenditures by program area include County Fair 25%, Maintenance 29%, Interim Events 14%, Administration and Debt Service 15%, Capital Improvements 6%, and Horse Racing and Simulcast 11%, of total expenditures.
Summary of Significant Budget Changes and Projections from Prior Year’s (CY 2023) Adopted Budget:
1) Salaries and Benefits decreased $194,225 or 3.1% to $6,136,449; mainly as a result of planning to keep four permanent positions vacant and using some external vendor support in lieu of staffing shortages
2) Services and Supplies decreased $72,680 or 1.3% to $5,482,693; due to event programming reductions offset by increased administrative cost for legal, credit card, and insurance services.
3) Capital Expenditures decreased $870,000 or 56.3% to $675,000. The budgeted 2024 capital improvements and equipment purchases include:
a) HVAC repairs and replacement - $200,000. This was in the 2023 budget but not begun in 2023. This will be completed in 2024.
b) Repair/replace portions of Mexican Village Roof - $180,000
c) General improvements to the RV Park, including a dog park - $100,000
d) Pavement replacement to parking areas and paths of travel, ongoing annual - $75,000
e) Americans with Disabilities Act (ADA) accessibility improvements to parking - $25,000
f) RV park bathroom refresh - $25,000
g) RV park dump station improvements - $10,000
h) Parking lot B gates - $10,000
i) Equipment purchases to include a used flatbed truck for the maintenance - $50,000
j) Deferred (to a future year) capital improvements include new flooring in Kraft Hall ($100,000) and an arena tractor with a tier 4 or better engine ($100,000)
Revenue (Sources)
1) Use of Fund Balance decreased $502,973, or 40.5%, to $738,874 primarily due prior year capital expenditures.
2) Fees and Charges for Services increased $116,069, or 1%, to $11,555,268 as a result of Horse Racing and Satellite Wagering, improved fair attendance, and adjustments in admission fair tickets. In 2024 reduction in interim revenues associated mainly with facilities rentals is expected.
a) Increase in County Fair revenues, excluding Horse Racing revenues, $881,707 or 14.8%.
i) The County Fair attendance is projected to increase slightly from 2023 levels due to targeted marketing and a liberte equine event described as equestrian theatre, live music, aerial arts and professional dance offering daily in the Community Theatre area. Ticket prices for the daily show are anticipated to be $10 on Mondays through Thursdays and $25 on Fridays, Saturdays, and Sundays.
ii) County Fair ticket prices will increase $1, to $16, for advanced adult tickets, will remain at $20 at the gate on Mondays through Thursdays for adults, and increase $5, to $25, at the gate on Fridays, Saturdays and Sundays for adults. Youth ticket prices will increase $1, to $13 for advance sales and sales at the gate on Mondays through Thursdays and increase $3, to $15 at the gate on Fridays, Saturdays, and Sundays. Children 5 and under remain free. Senior 60 years of age and up are $5 on Fridays. The County Fair will again host a Food Bank Day on Monday August 5th. On this day, County Fair patrons can get into the Fair for just $1 with a three-food item donation. Advance tickets are valid any one day of the County Fair. County Fair parking will increase $5, to $20, on Fridays, Saturdays and Sundays, and remain at $15 on Mondays through Thursdays. Advanced parking tickets will also be sold online for $15 and are valid any one day of the County Fair. There will continue to be other discount packages offered in advance.
b) Decrease in Interim revenues, $854,938 or 20%.
i) Facility rentals are reduced, $378,764, primarily due to a reduction in facility rentals for covid care and emergency management.
ii) RV Park rentals are reduced, $485,414, primarily due to a reduction in rental spaces used by out of area contractors rebuilding homes.
iii) Concessions and other revenue reductions are offset in part by increases in building rental revenues and parking revenues.
iv) Building rental rates were increased in 2023 with targeted increases again in 2024. These increases are projected to be below market rates, allowing the Fair to remain competitive. Equipment rental rates and service rates will be increased in 2024, again at below market rates. Increases are necessary to cover the continued increasing costs of labor, services, supplies, and materials needed to maintain and operate the Facility. Additionally, increases are necessary to support the cost of increasing utilities, particularly gas and electricity.
3) Other Revenues decreased $750,000, to $0. The decrease is due to no expectation of capital contributions of cash funds, materials, time nor labor from outside sources.
Other Budget and Financial Information:
Cash Balances - budgeted 2024-year end compared to projected 2023 year-end - Cash balances are projected to be $9,281,911 on December 31, 2024, a decrease of $13,874, from the projected balance on December 31, 2023.
A significant cash balance is required to fund ongoing operations throughout the year due to several factors, some of which are:
1) the Fair generates the majority its cash resources seasonally from the annual County Fair in August,
2) the Fair must promote and prepare for the annual County Fair in advance of the event which includes advance cash payments to vendors and suppliers,
3) the Fair does not receive cash funds from the County nor other municipal resources to support the cost of operations, and
4) the Fair needs to hold cash on hand sufficient for ongoing operations without revenue receipts from the County Fair and/or other significant Interim events that could be cancelled due to emergencies and other unknown major events.
5) Healthy cash on hand is imperative to support the fairground facility’s operations in the occurrence of a catastrophic event, including pandemic, which would and have disallowed the production of the annual County Fair and interim events. Additionally, the Fair budgets minimally for net profit and in recent years has budgeted for a deficit. Budget deficits and catastrophic events can significantly decrease cash reserves and therefore it is prudent to ensure the viability of the operation by maintaining enough cash reserves to maintain operations in the occurrence of such events.
Position Allocation List:
No additions nor eliminations are requested for the 2024 budget. Attachment #4 contains the listing of allocated positions.
2024 Programming:
Staff of the Sonoma County Fair & Expo Inc. are excited for the 2024 County Fair and are busy negotiating with performers and promoters for concerts, shows, and theme centric talent to highlight the 2024 Sonoma County Fair theme, which will soon be announced. A very special addition to the 2024 Fair, also soon to be announced, will highlight a liberte equine event described as equestrian theatre, live music, aerial arts and professional dance offering daily in the Community Theatre area. This will be an entertainment experience sure to attract those of all ages and backgrounds.
Wine Country Thoroughbred Horse Racing at the Fair will include a “bonus week” of racing (3 additional days) during the week following the County Fair this year for those who wish to watch and wager a bit longer.
The Competitive Exhibits department of the Fair will be enhancing the Agriculture Exhibit in the Saralee and Richards barn featuring displays and fun agricultural education as well as adding adorable barnyard babies. Additionally, new featured livestock shows should result in additional participants locally as well as from out of the area. This department will also be working with the Sebastopol Center for the Arts for a juried art exhibition in the EC Kraft building during the county Fair. This will become an Art Trails location.
Interim rental rates will again increase 5-10% in target areas in 2024 to align closer to market rates. While similar increases in 2023 were made, the rates were still below rising market rates. The costs to maintain the buildings and facilities continue to increase, particularly in areas of labor, contracted services, insurance and utilities.
The team at the Sonoma County Fairgrounds in 2024 will be to continue to cut costs where opportunities exist along with maximizing efforts in maintaining and securing the property and in seeking out new revenue opportunities. Additionally, strategic planning is on-going as to the potential of the loss of horse racing in 2025 and how to offset the revenue loss as a result.
Strategic Plan:
N/A
Prior Board Actions:
The Board of Supervisors approves the fairgrounds’ budget annually.
February 7, 2023 the Board of Supervisors adopted the resolution approving the Calendar 2023 County Fairgrounds budget.
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 2024 are $12,294,142.
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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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No additions |
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No eliminations |
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Narrative Explanation of Staffing Impacts (If Required):
N/A
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 2024 Budget as Approved by Fair Board
Attachment #6 PowerPoint Presentation
Related Items “On File” with the Clerk of the Board:
N/A