A proposed public-private partnership to operate and manage Laguna Seca Recreation Area in Monterey County would put the racetrack and park under private management for as long as 55 years, if certain conditions are met.
The agreement — which is scheduled to go before the Monterey County Board of Supervisors for final approval next week — would give a nonprofit organization, Friends of Laguna Seca, the ability to manage the recreation area off state Highway 68 without interference from the county, as well as allow the organization to retain exclusive naming, advertising and sponsorship rights for the length of the contract.
The organization would retain all net operating income through 2028. After that, 10 percent of net operating income will go to a county-established fund to invest in local parks. Fifty percent of net operating income must be used to make capital improvements to the county-owned property.
The so-called concessionaire agreement to operate the property includes the park, campgrounds, paddock and raceway, but does not include the public rifle and pistol shooting range.
The contract for naming rights for the WeatherTech Raceway Laguna Seca was renewed in June and runs through 2028.
Friends of Laguna Seca must first establish a capital improvement fund with $1 million, and a separate $5 million operating expense fund. The organization would then have to identify the property’s current financial conditions and come up with a master facility plan.
If the organization invests $10 million in capital improvements by 2028, it will get a 25-year extension on the contract. If it invests an additional $40 million by 2053, another 25-year extension will kick in, bringing the potential date of the commitment through 2078.
Thinking about the future
The project received unanimous preliminary support from county supervisors at the board’s June 27 meeting, but Supervisor Glenn Church said during the presentation that he had reservations about the length of the contract.
“I don’t like to bind future leaders of this county, the future leaders of the community of Laguna Seca, or just the future generations of this county with such a long-term contract. It’s a little too iron-clad for me, that’s really where my concern rests at this point,” Church said.
He said that inflation could make the potential $40 million dollars inadequate by the time the investment is made.
But he also said Laguna Seca had needed too much funding from the county’s general fund in recent years and that he supported a public-private partnership to change the trajectory of the way it is operated.
“I don’t like to bind future leaders of this county, the future leaders of the community of Laguna Seca, or just the future generations of this county with such a long-term contract. …”Supervisor Glenn Church
John Narigi, president and manager of the raceway, said at the board meeting that the racetrack and park could generate net income if the organization is given the chance, although margins will likely be thin.
“If we did privatize it, Laguna Seca can make a profit. Not a huge profit, but it definitely can pay for itself and turn a profit without the overhead that’s been placed on it because it is literally under the oversight of the county,” said Narigi.
The county spent more than $12 million last year to repave the track and repair a bridge at the start/finish line. That project, awarded to Granite Construction Inc., has just been completed.
The matter will come back for final consideration at the board’s July 11 meeting.