Del Mar Fairgrounds looks to create its own craft beer brand with brewery, restaurant

By Joe Tash

Hoping to tap into a growing craft beer industry in San Diego County, the agency that operates the Del Mar Fairgrounds is moving forward with plans to build a micro-brewery inside an existing, under-used satellite wagering facility on its 400-acre property.

The brewery would not only brew beer for the fairgrounds’ own brand for consumption during events at the venue, including the annual San Diego County Fair and horse racing meets, but also potentially sell its product off-site, officials said.

“It’s a growth industry, we want to be a part of that,” said Fred Schenk, a Carmel Valley resident and president of the 22nd District Agricultural Association Board of Directors, which oversees the state-owned fairgrounds. “We’re confident that with the millions of people we attract to the fairgrounds, it’ll be very successful.”

The board voted 5-1 at its meeting on Tuesday, Sept. 10, to issue a “request for proposals” from companies interested in operating the fairgrounds brewery. It was the third time this year the board has taken action on the micro-brewery proposal.

In February, the board rejected a proposed partnership with Blue Moon Brewery, a subsidiary of beer giant MillerCoors, to operate a micro-brewery. At the time, some board members said the 22nd DAA had not done enough to solicit proposals, especially from locally-based breweries.

In June, the board approved a request for proposals, but had to bring the matter back for another vote this month after the document was amended. Also, for the September vote, director David Lizerbram recused himself from the discussion and left the meeting room.

Lizerbram had informed Schenk that he has been actively involved in forming a marketing association to promote San Diego’s craft beer industry. Before voting on the request for proposals, directors said they wanted to make sure that any company bidding on the micro-brewery proposal has no business ties to any member of the board.

“We want to do this in a way that passes every smell test,” said Schenk in an interview after the meeting.

In spite of the board’s efforts to avoid any potential conflicts of interest related to the micro-brewery proposal, at least one member felt the board had not gone far enough. Director David Watson, who also voted against the request for proposals in June, cast the lone opposing vote Tuesday.

“I think the process is irreparably tainted. I don’t see how we can go forward with a micro-brewery at this time,” said Watson, a land-use attorney.

Watson also said he was concerned that smaller, local companies would not be able to compete for the contract with larger national brands.

The proposal calls for a brewing company to pay the district at least $1.5 million over five years to lease the fairgrounds micro-brewery, which would be built inside the Surfside Race Place, a satellite wagering facility at the northeast corner of the fairgrounds. The 22md DAA would spend up to $1 million on construction of the project, which would include the craft brewery, a restaurant, tasting room and brewing museum.

The district plans to award the contract to the qualified company with the highest bid, officials said. Small businesses would be given a preference, allowing them to bid 5 percent less.

“That’s being fair and will encourage more local breweries to participate in the process,” said director Stephen Shewmaker, who is heading up the effort to find a new use for the satellite wagering facility.

Schenk said he is confident that major San Diego craft brew players such as Stone or Karl Strauss could compete for the contract, and that the tasting room would also feature the beers of local companies.

“My observation is there’s enough local business to generate that investment,” he said.

San Diego’s craft brew industry is thriving and growing rapidly, according to a 2014 report by the National University System Institute for Policy Research.

The report estimated that, in 2013, the craft beer industry generated more than $500 million in direct economic impact in San Diego County, made $781.5 million in sales and employed 2,279 workers. More than half of the brewery licenses in the region have been issued since 2011, the report said.

As of August, 93 brew houses were operating in San Diego County, according to West Coaster, an online publication that tracks San Diego’s craft brew industry. An additional 42 breweries are planned.

In North County alone, nearly 40 breweries and brew pubs are up and running, according to National University.

At Thursday’s meeting, district staff said the request for proposals will be released to the industry this month, and it will take two to three months to evaluate the proposals, depending on how many are submitted.

The contract would have to be approved both by the 22nd DAA board and state officials.

Before the proposals are submitted, interested companies will be asked to attend a mandatory meeting at which the project will be discussed, a tour of the satellite wagering facility will be held, and officials will also determine if any of the companies have business ties with 22nd DAA board members, which would disqualify them from bidding on the project, officials said.

If the process moves forward as planned, Schenk said, the micro-brewery could be up and running by June 5, the start of the 2015 San Diego County Fair.

“Certainly, that’s a goal,” he said.