Thursday, February 14, 2013
A fresh-faced CSU-Monterey Bay student takes a flight from Monterey to Los Angeles, then a train to the Del Mar Thoroughbred Club near San Diego, where he’s dazzled by a horse-racing wonderland. We see a trainer on the back stretch, a thoroughbred owner in a luxe hotel, the owner’s wife playing tennis, a pari-mutuel clerk taking wagers, a gambler circling his favorites, a jockey on a horse.
The promo video then jumps to a young beach beauty, who later heads to a wild concert and ends up in a sexy embrace with that fresh-faced CSUMB student. Full circle. Nearly every race-goer in the video appears to be white, rich and carefree; some sip froufy cocktails and wear big floppy hats.
This is how the team at Monterey Downs, LLC, is selling their proposed “equestrian-based community” to Monterey County. One point of the video, according to managing partner Brian Boudreau: The CSUMB student wouldn’t have to travel all the way to San Diego if that racetrack was in his Fort Ord backyard. “We think the missing market is youth,” he says.
The Calabasas developer has a gray crew-cut and a voice that sounds like it’s been ground up by years of cigar smoking. The Downs chief operating officer, Beth Palmer, perches beside him in the Weekly’s office in slim white jeans and proper black riding boots. They’ve brought along Sid Williams of the county Military & Veterans Affairs Advisory Committee, who barely says a word during the two-hour meeting.
Monterey Downs is a head-spinning plan, a $750-million vision spanning 550 acres of the former Fort Ord. But it won’t be an easy trot to the finish line.
The team’s next big hurdle is getting project approval from the Seaside City Council. And despite all the public yammering about the Downs-dependent vet cemetery and Fort Ord open space, that five-man dais is most likely to place its wager based on one overriding issue: the economy.
The Monterey Downs plan – which covers the trail-threaded, oak-studded part of Fort Ord most heavily used by recreationalists – includes a 1-mile racetrack with a 1,500-seat grandstand, a 5,000-seat sports arena, and a 115-acre horse park with competition arenas and stables. It has staging areas with parking for bikes, dogs and horses; open spaces and trails. And two hotels, an office complex, a tennis and swim center, a veterinarian clinic, a pedestrian town center with visitor-serving commercial space. And 1,528 homes, one-sixth of them priced below market.
The California Horse Racing Board sets a fixed number of racing days statewide. If Monterey Downs takes some, other tracks lose them. Boudreau wants Downs to race nine weeks a year, from September to November, siphoning up to 45 racing days from Golden Gate Fields in Berkeley. The two could work together symbiotically, he says, like L.A.’s Santa Anita does with Del Mar; Downs could pull in revenue with facility rentals (like concerts, car shows and other events) when it’s not racing.
Boudreau estimates Monterey Downs will produce 700 permanent equestrian training jobs, including grooms, stablemen, nutritionists, barn foremen, trainers and veterinarians, plus about 400 more during the racing season. He counts another 1,400 non-equestrian positions in places like offices, hotels, recreation companies and restaurants. That’s on top of the temporary work generated by 10 years of construction, which Boudreau pegs at an average of 500 jobs per day – all at prevailing wages – and some 2,000 indirect jobs in the community.
Boudreau goes on about potential community partnerships, like getting at-risk youth together with equine therapists to “keep kids on horses and off the streets.” He sees opportunities to coordinate with CSUMB and Monterey Peninsula College in veterinary-tech programs, training Downs’ future horse dentists and blacksmiths. Culinary students could make food for the racetrack.
Then there’s the money that goes straight to local governments. When it’s fully built, Downs will have paid about $50 million in impact fees to the Fort Ord Reuse Authority, Boudreau says, and $23 million more to the county and Seaside. And if it pulls in $100 million in annual revenue, up to $15 million of that will go to local tax coffers.
Of course, local jurisdictions will be providing Monterey Downs with public services: police and fire, water and electrical infrastructure. Boudreau says the project will, at the very least, be revenue-neutral to the city and county general funds.
He concedes that about 80 percent of today’s gambling is done off-track, in satellite betting bars and online. But the racetrack gets a cut of that. So it doesn’t really matter, he says, if most of the people at the track are college students coming for $1 beers and barely betting. “They’re not your gambling market at all,” he says. “The gambling market is online. The on-track market is for fun.”
With off-track gamblers worldwide betting on Downs races through sites like xpressbet.com and calracing.com, Boudreau says, they’ll absorb the Monterey brand and become potential future tourists: “It’s a constant signal.”
The Downs partners are wagering $8 million on the entitlement stage, he says, money they’ll lose if the proposal goes down. He says it’s been fronted by himself and “four passionate horse racing people who are extremely wealthy enough to make this happen.” He won’t name those partners, but later confirms two of them: Calabasas real-estate mogul Paul Griffin and thoroughbred breeder William de Burgh. The other two, he says, are represented by de Burgh.
The racetrack itself will probably be funded through a private-issue investment bond that’s repaid through the gambling takeout and racetrack concessions, Boudreau says. The horse owners will likely provide some capital, he says; he’s also looking to hotel operators and Griffin’s real-estate company to finance construction of the inns and homes.
Boudreau won’t name potential investors in the core features, like the grandstand and sports arena, but suggests he’s lined up the kind of absurd wealth that comes from oil barons in Dubai. “It’s not Saudi Arabia,” he says. “It’s interests that rival Sheik Mohammed.”
Fort Ord looks different from atop a horse. Just that extra 5 feet of height offers clearer views into the distance and the bushes below, framed by an alert pair of velvety ears.
I’m straddling a gentle quarter-horse named Jyhoo, and Jim Huggins rides beside me on Dozer. I can count on one hand the number of times I’ve ridden, but both Huggins and Jyhoo are patient. Walking beside us are Margaret Davis, executive director of Friends of the Fort Ord Warhorse; and Jerry Cooley, a Hollister carriage driver. Huggins’ collie, Queenie, runs grinning in front.
Huggins, a private eye, is retired from a career as a Salinas police officer and D.A. investigator. He hunted on Fort Ord back when it was legal, and he despises taxes – “You can tell I didn’t vote Democrat,” he jokes. Yet like a lot of local left-wing enviros, Huggins despises the Downs proposal.
He’s worried the development would, ironically, restrict equestrian access. And he says his heart aches for the oak savannah rolling out on both sides of our ride down the 8th Street Extension (for now, the only public-access corridor from the west entrance to Fort Ord). “There’s only one commodity they don’t make anymore in this world: land,” he says. “We’re gonna take the lives of these oaks for the sake of [Monterey Downs]?”
Huggins lives off Highway 68 and regularly rides here, saying it’s physical therapy for his titanium hip and shoulder. Mental therapy, too. “When I come out here, I don’t have a care in the world,” he says. “When you’re riding alone, you’ll look out into those trees and see a bobcat watching you go by.”
But the former cop’s objections go beyond conservation. He predicts the racetrack would attract a criminal element from the Bay Area, not to mention Salinas gangs, sex workers and Mexican cartels laundering money. “Tracks attract crime,” he says. “When I worked at Salinas Police Department, we were always 50 officers down. And here we are putting in more houses, more services when we can’t take care of the ones we have now?”
Huggins, who uses his quarter-horses to haul packs in the Sierras and aid county search-and-rescue missions, pities racehorses conscripted at a tender age and treated even worse when they stop winning. “By the time they come off the track they’re damn near lame, because they’ve just been pounded and pounded and pounded,” he says. “The animals are being exploited for financial gain. Downs is all about making money.”
We ride past an old cavalry training field and concrete horse troughs, turning around at the grave of Comanche, Fort Ord’s last ceremonial horse. “This is heritage out here,” Huggins says. “Once you develop it, you lose it.”
He echoes a theme resonating among Fort Ord’s growing open-space advocates: He’s not against development, and he knows local cities need the tax revenue. But true blight should be developed first, he says. Not wild lands.
Ian Oglesby can’t remember ever going to a horse racetrack. I tell him I haven’t either; it makes me imagine country belles in big hats.
“Mint juleps,” he quips.
Oglesby, an investigator at the state prison in Soledad, was stationed at Fort Ord from 1990-1994. “I helped close down Fort Ord,” he says. “I walked those paths. I marched those roads. I’ve slept out there. When people say, ‘It’s wonderful, it’s beautiful,’ I’ve seen it.”
He’s also a Seaside city councilman and a member of the Fort Ord Reuse Authority board, positioning him and Seaside Mayor Ralph Rubio as two of the most powerful voting officials when it comes to Monterey Downs.
Though some open-space advocates view Oglesby as gung-ho to develop the Fort Ord acres within Seaside limits, he bristles at that perception. “I’m not encouraging Seaside or any group to cement over all their land,” he says. “But don’t tell me we’re getting the land and nobody wants to put anything on it.”
He supported city and FORA resolutions encouraging the designation of Fort Ord National Monument. And he voted against the Downs’ planned annexation into Seaside, citing concerns about the public costs of servicing all those homes. But he says Downs might, if successful, actually allow Seaside to back off some of its other Fort Ord development parcels.
Oglesby couches the conversation in open-mindedness: He needs to read the environmental impact report before making a decision about Monterey Downs. But he sees plenty of ways it could help the city: as a tax driver, a source of living-wage jobs, a magnet for tourist dollars and a source of funding for the stalled Fort Ord fire station. And it could shine up a part of the city few developers have interest in today. “If this development doesn’t go through, there’s nothing else in the pipeline,” he says, “because we’ll be telling the developers we want to keep this wild.”
Environmentalists who oppose the proposal, he says, don’t seem to understand the economic elements: “They’re too busy to grasp what’s going on.”
And it pisses him off, though he’s too polite to use that word, when people from Monterey or Carmel stand up at public meetings to say Seaside should reject the development. “I’m a little passionate about protecting our sovereignty. Other entities are trying to tell us what we should and should not do,” he says. “That land belongs to the citizens of Seaside. It’s their livelihood that’s at stake here.”
Some opponents paint Downs as an attempted land grab, yet another development the city’s bending over backwards to court. But when Seaside’s redevelopment agency was dissolved by court order in late 2011, the city was left with few incentives to offer Monterey Downs. “We don’t have the money to sweeten the deal,” Oglesby says.
In fact, Seaside doesn’t have the money for much beyond the most basic services these days, he says, and it sorely needs a big revenue generator. “Monterey has the wharf. Pacific Grove has the butterflies. Carmel is Carmel, and then Pebble Beach – right?” he says. “Sand City has the big-box stores, and Marina has the bigger-box stores. So Seaside, what do we have?”
He senses more city residents are in favor of Monterey Downs than against it, but he doesn’t see the need for a public referendum: “If people don’t like me, then they can throw me out.”
They almost did. Last November Oglesby, a one-term incumbent, beat out challenger Jason Campbell, a landscaper and open-space activist, by only 24 votes.
Campbell campaigned on an anti-Downs, pro-open-space platform, and he has little faith in the developers’ motives.
“Just how cheap are they going to get this land?” he asks during a stroll of Fort Ord with his dogs, Labrador mix Loosey and rescued laboratory beagle Zachary. “It’s a transfer of wealth from the public and the citizens of Seaside to the developers. As an investor, of course I’d want the land. They make the money off someone, and it’s going to be off of us.”
The same thing changing music, media and just about everything else is changing the horse-racing industry: the Internet. People can now bet on races in their underwear, at home, while downloading music and streaming TV shows. Even if they schlep to the nearest off-track betting facility – the Monterey Fairgrounds runs one in Monterey and is due to open another in Salinas – those are bodies not traveling to the tracks.
So the horse-racing industry is facing a weird dynamic, in which attendance at the tracks doesn’t necessarily correlate with the money coming in.
Doug Burge, executive vice president of the California Thoroughbred Breeders’ Association, offers a primer on the economics of horse betting.
Horse racing in California started in the 1930s and gained popularity along with boxing and baseball. “For several decades, racing had a monopoly on gaming,” Burge says. “It was the only legal gambling.”
The rise of the state lottery, tribal casinos and card clubs brought competition, but attendance remained strong into the 1980s. In the mid-’90s, however, the state authorized satellite wagering at off-track betting facilities. In 2002 it legalized Internet and phone wagering. Attendance plummeted. “Some could say it cannibalized the on-track and satellites, but the biggest growth we’ve had is with the [Internet],” Burge says.
The total money wagered on state races, called the handle, hit a high of about $4 billion a decade ago, he says. It took a nosedive with the recession, sinking to $2.6 billion in 2011. Last year it rebounded a little, to $2.75 billion.
Burge thinks the California racing industry has stabilized, but others say it’s on the decline. California lost a major track with the 2008 closure of Bay Meadows in San Mateo, and Hollywood Park in L.A. is posturing to shutter next summer – leaving only Santa Anita, Del Mar and Golden Gate Fields, plus various county and state fairs.
The handle is split according to a rather complicated formula, which Burge breaks down as simply as he can. About $0.80 of every dollar is used for payouts to winning gamblers. The other $0.20 is split between the winning horsemen (including the thoroughbred owner, trainer, jockey and groom) and the racetrack (which pays out its employees and overhead). The California Thoroughbred Breeders Association gets about one half of 1 percent off the top.
Monterey Downs draws inspiration from Del Mar, which by most accounts is the classiest and most successful track in California. While Golden Gate and Santa Anita are basically straight-ahead tracks and stables, Del Mar, which leases its facilities from the 22nd District Agricultural Association, is a boutique meet that races seven weeks a year. Its average daily attendance over 37 racing days in 2012 was almost 18,000, according to Del Mar spokesman Mac McBride.
“It’s a destination point for a lot of people, so their attendance and their handle is on average the highest in California,” Burge says. “People want to ride on Del Mar.”
Monterey Downs partner William de Burgh knows Del Mar as well as anybody. He came to the U.S. from Ireland as a teenager, dropped out of high school to work with horses, and ascended up the elite racing ladder to become a thoroughbred breeder and an industry mogul based near the racetrack.
De Burgh, a lifelong friend of Boudreau’s, says Monterey Downs is designed to be even better than Del Mar: upscale, scenic and located at the auspicious intersection of Monterey Peninsula tourism and Salinas Valley agriculture.
“THE THING THAT ALWAYS COMES BACK TO ME IS HOW INEXPENSIVE IT IS TO LIVE IN MONTEREY."
“I love that vision of a Monterey horse park,” he says. “The thing that always comes back to me is how inexpensive it is to live in Monterey. It’s beautiful, you can own a house for $350,000, and I just don’t understand how you don’t have a bigger economy there.”
De Burgh’s horse trainer, Jerry Hollendorfer, a U.S. Racing Hall-of-Famer among the winningest trainers in California history, is a believer in Monterey Downs, too. He says he learned about the proposal a few months back, when the development team gave a presentation to about 50 trainers and horse owners at Golden Gate. He was impressed by its elaborate plans, its strategic location between Northern and Southern California tracks, and the potential for a brand-new facility in a scenic tourist destination to renew interest in on-track wagering.
“There was probably 100-percent agreement that it was a great project that would be good for our business, in the long run especially,” he says. “It’ll get total support from the industry.”
Golden Gate Fields on a Thursday afternoon is a pretty lonely place. A guy in a white do-rag posts up at the rows of satellite-feed TV screens, hollering at jockeys like a football fan yells at running backs. At the bottom of the grandstand, a buzz-haired man rests his hand on the butt-pocket bling of a blond woman’s jeans. A family with three young children leans on the fence, craning to see the horses. Several crusty men order nachos at the snack bar, and a guy missing his front teeth gestures at my turkey sandwich: “Have some para mi?”
I don’t see any mint juleps.
Being a total newbie, I sidle up to a betting window and ask the pari-mutuel clerk to help me place a wager. Keeping it simple, I go with a $5 bet to win on Memo to Maggie. (The clerk likes her odds; I like her name.)
I take a seat among empty rows in the grandstand. A bugle plays “The Call to the Post” over the loudspeaker. Memo to Maggie, a 3-year-old filly with glossy loins and red leg wraps, takes an early lead, but Hot French Fries, a gorgeous chestnut filly trained by Hollendorfer, pulls ahead in the top of the stretch.
The afternoon proceeds in 15-minute increments, the seven Golden Gate races alternating with those at L.A.’s Santa Anita. Two people in black-bear costumes, mascots for the diner, do an awkward little dance by the track. Golden Gate spokesman Sam Spear, a seasoned race commentator in a mismatched suit, joins me at a metal table.
Between the grandstand, club house and turf club, Golden Gate seats nearly 15,000; Spear pins the day’s visitors at 1,200. I would’ve guessed a quarter that, max, but he says a lot of no-nonsense gamblers just come in, place their bets and leave. Sundays are dollar days and draw thicker crowds.
He evokes a theme I’d heard earlier. “There aren’t a lot of people here today,” he says, “but betting is happening” – off-track and online, worldwide. The money is invisibly flowing in.
It isn’t attendance, he adds, but rather a recession-spurred shortage of thoroughbreds that’s forced Golden Gate to scale back from five to four racing days a week.
About 10 minutes before the next race begins, grooms walk the horses around the paddock while spectators look for winning postures – arched necks, slightly raised tails, pricked-forward ears. Some people base their bets on the horses’ body language, Spear says, but he goes with past performance.
He’s placed a pick-four bet on the next race. The animals pound past, a brown blur of muscle mass bearing horizontal jockeys, their hoofs oddly quiet on the track. Spear says the brown fluff isn’t dirt: “It’s a secret recipe. Even we don’t know.”
Magical track duff. Lightly attended races pulling in heavy money. Wagers made on math, or superstition. In horse racing, the mystery is part of the allure.
The activists who opposed the 58-acre Whispering Oaks development a few years back – open-space groups including Fort Ord Rec Users, Keep Fort Ord Wild and LandWatch – collected 18,000 signatures for a referendum, pressuring the county supes to back off the oak-studded Fort Ord parcel. It’s a safe bet they, and their lawyers, will look at the 10-times-bigger Monterey Downs even more skeptically, and come out in full force at key decision-making moments.
But Downs may be a surer thing than most people realize. Its website lists about 700 individual supporters. It has the backing of the industry’s most powerful, and many of Monterey County’s too, including the Antle agriculture family, developer Don Chapin, and family members of County Supervisor Dave Potter and Mayor Rubio. (Potter takes credit for initially introducing the Downs idea to Boudreau, a longtime friend; both attended de Burgh’s 2011 wedding in Ireland.)
The planned annexation of Monterey Downs from the county into the city of Seaside was a shrewd political move. While the county Board of Supervisors had at least one Downs skeptic in Jane Parker – and one cheerleader in Potter, whose friendships with Boudreau and de Burgh have come under public scrutiny – not one of the five-member Seaside City Council appears to be frowning on the idea. At least not yet.
Another clever maneuver is the linking of Monterey Downs to the planned Central Coast Veterans Cemetery. In a deal with the city, Boudreau arranged to buy a 30-acre slice of the 178-acre cemetery parcel and use it for housing; the roughly $1.5 million selling price will fund the cemetery’s operations. By linking the popular and long-awaited cemetery with the controversial horse development, the Downs team has managed to create a misleading perception that its environmentalist opponents are anti-veteran.
The odds are good that a new racing track in California will make money. But if 80 percent of that money comes from off-track betting, the trickle-down to the local community could be a fairly small dribble. If, on the other hand, it draws robust crowds of wealthy out-of-towners like Del Mar does – dollar signs for Monterey County.
Open-space advocates like Campbell argue the equestrian development will drive away tourists who would otherwise flock to the new Fort Ord National Monument. Boudreau counters that Downs will become a welcoming entry point to it, but will pull in magnitudes more dollars per visitor than ecotourism.
The proposal could fail anywhere along the way, but Boudreau projects confidence. “The way you lose these things is, you can’t sustain the fight long enough and you walk away,” he says. “And that’s not going to happen.”
But a full-fledged development is at least 13 years away. Even if the approvals come through by the end of this year, Downs COO Palmer says, FORA needs to finish clearing the land of Army munitions, which will happen mid-2015 at the earliest. Conveniently, that gives the Downs team a year or so to deal with the expected enviro lawsuits. “The timing works out for us,” she says.
Then – assuming Downs prevails over legal challenges – come 52 phases of construction. The track can’t be built until the Eastside Parkway through Fort Ord is complete, and the housing will follow based on demand; the whole thing won’t be done until 2025. At the earliest.
Setting aside the valid questions about Fort Ord open space, water supply and animal rights to focus purely on economics, the question for local leaders is whether Monterey Downs will bring real, live, wallet-toting spectators to the tracks. The next big test comes when the final environmental impact report lands before the Seaside City Council, probably this fall. (The draft should be out by mid-August, followed by 60 days of public comment.)
But even with all the numbers presented, the councilmen may rely on gut instinct when placing their bets. Will Boudreau arch his neck and wear a shiny coat? What are the secret ingredients in that Fort Ord dust to which its veterans would return?
Maybe, as with my bet on Memo to Maggie, the council will be swayed by an adviser’s opinion.
Or the pretty name. But a lot more than $5 is riding on Monterey Downs.