By Marlena Chavira-Medford/Staff Writer
According to a preliminary valuation by CB Richard Ellis (CBRE), the Del Mar Fairgrounds is worth at least $250 million — an amount that is $130 million more than the $120 price tag the state put on it and what Del Mar will pay for the property, if the state Senate OKs the deal.
The state set that $120 million sales price based on valuation done by Integra Realty Resources. Thinking that dollar amount seemed extremely low, Del Mar Racetrack Authority President Russ Penniman hired CBRE to do its own assessment of the property. CBRE is currently conducting a full appraisal of the Del Mar Fairgrounds, which Penniman said he expects will come in significantly higher than the initial $250 million.
The reason for the $130 million disparity between two appraisals of the same property boils down to how “fair market value” was defined, Penniman said.
During a Jan. 11 report to the 22nd District Agricultural Association (22nd DAA) board, Penniman went on to explain that CBRE defined “fair market value” as having a motivated buyer and seller — whereas Integra Realty Resources derived its definition from California’s eminent domain law, which is typically seen in cases where the state is seizing property it does not own.
“It seems particularly unusual the state would direct an appraiser to use eminent domain law methodology in order to determine the value of a property it already owns, which, by extension, might lead to question of competence and/or motivation,” Penniman wrote in a Jan. 3 letter to several state representatives.
At the time of press, there had been no response by the state to Penniman’s letter.
In its appraisal, Integra Realty Resources said it did not use a sales-comparison approach because there were no similar properties, although Penniman points to the Orange County Fairgrounds 60 miles away, which is pending a $120 million sale by the state to a private company called Facilities Management West.
Penniman also suggested that should Del Mar get the green light to buy the fairgrounds, the Race Track Authority retain a third party expert to independently evaluate the terms and conditions of the sale.