Latest state fair wrangling has echoes of Metro vs. State again.

Monday, February 11, 2013 at 7:38am

At this month’s meeting of the Metro Board of Fair Commissioners, board member Kenny Byrd appealed to recent local history. As the board discussed how to proceed with sputtering lease negotiations for the 2013 state fair, Byrd was preaching caution.

“Just ask the school board,” he said.

The details of course, both legally and circumstantially, are somewhat different. But by invoking the Metro school board’s public run-in with the state over the approval of the Great Hearts Academies charter school application, Byrd called to mind the last time a local body decided to thumb its nose at the state, and questioned the wisdom in rushing to do the same.

His comments came amidst a stalemate between the fair board and the Tennessee State Fair Association — the nonprofit chosen by a new state commission to operate this year’s Tennessee State Fair — that has put the fair in jeopardy, and raised the specter of the event’s relocation outside of Davidson County for the first time in its 106-year history. The TSFA, which has run the state fair for the past two years, is offering more money than it did in 2012, and has said that paying any more would put the organization at risk of losing money. The fair board, which oversees the Tennessee State Fairgrounds — a Metro facility that has long struggled financially — says they need more money to even come close to covering costs.

The fair board approved a final offer to the TSFA last week that would bring the two sides closer together, with a deadline of Feb. 13. After that, fair board chairman Ned Horton said, “All bets are off.”

But hanging over the proceedings is a disagreement about whether the two sides are legally compelled to work together, no matter if the math works out or not. A law passed by the state legislature last year created the Tennessee State Fair and Exposition Commission, shifting oversight and control of the state fair from Metro’s hands to the state. Many Metro officials opposed the bill, for fear that it could lead to the city losing the state fair, and the Metro Council passed a resolution urging Gov. Bill Haslam to veto it. 

Nevertheless, Haslam signed the bill, and the nine-member commission it created selected the TSFA in November to run this year’s state fair.

TSFA chairman John Rose, who has been representing the group throughout the negotiations, cited the Metro charter and city ordinances requiring the city to host the state fair at the fairgrounds, and argued the state law did nothing to change that obligation. The implication is that Metro has no choice but to sign a lease with whomever the state commission selects to run the fair — in this case, the TSFA.

“Of course, they don’t like that, but if you think about it, what’s that mean?” Rose told The City Paper after the recent fair board meeting. “It means that they have to provide this space for a state fair annually, and they have to let whoever the commission appoints to run it, run it. Well that seems kind of harsh, right? ‘Here’s who you have to let run a fair.’ However, think about the school board. They have to run the schools on the budget that the council gives them.”

If there are financial obstacles that would keep the fair board from agreeing to a deal with the TSFA, Rose said, Metro must overcome them.

“I think the current posture is that the council is obligated to abide by the charter, which says there will be a state fair here,” he said. “So the financial burden presently is on Davidson County to fund the fairgrounds sufficiently to provide for a state fair.”

The fair board, under advisement from Metro’s legal department, feels that by usurping the city’s control of the event, the state effectively nullified Metro’s obligation to host the fair in Davidson County. In other words, they believe, if the fair board can’t come to agreeable terms with the TSFA, they don’t have to play ball.

“I don’t think we’re required to enter into a bad deal, no,” Horton said. “We can have a fair. We believe we can have any kind of fair we want. In fact if they do have that name [the Tennessee State Fair] — which is open to some debate — if they do, we can have another fair that benefits the people of Davidson County and the state of Tennessee.”

The matter of the fair’s name referred to by Horton springs from a provision in the state legislation that states “the use of the name ‘Tennessee State Fair’ or ‘Tennessee State Exposition’ to denote a fair serving the state shall only be granted by the Department of Agriculture with the approval of the commission.”

When the law was signed last year, local officials pointed out that Metro owned the naming rights of the “Tennessee State Fair.” Horton was only half joking when he suggested at last week’s board meeting that the state pay Metro a $50,000 fee for the naming rights to this year’s fair, thereby closing the gap between the board and the TSFA.

As for the obligation to ensure that the state fair occurs each year, Metro officials believe the commission, and the authority granted to it by the state, supersedes their role in the process. Specifically, the section of the statute that explains its legislative intent says “it is the intent of the general assembly that the commission created herein shall be the sole body in Tennessee charged with administering a state fair and exposition.”

At the fair board’s January meeting, according to its official minutes, Metro attorney Susan Jones told the board that, because of the new legislation, “the requirement/charge for the Metropolitan Fair Board to carry on the ‘Tennessee State Fair’ was no longer in place.” The board’s only responsibility, she said according to the minutes, “would be to lease the premises, if they so choose.”

Rose, who is also an attorney, recalled the terms under which Metro obtained the fairgrounds.

“The state authorized Metro to be in the state fair business long ago and there was a quid pro quo,” he said. “And the quid pro quo was, we’ll let you sell bonds to buy this property if you agree that you’ll operate it as a state fair. And the commission statute did not invalidate that law. So, I hope it doesn’t come to that, but I believe the legal obligation, notwithstanding what their Metro attorney says, I believe ultimately the legal obligation of this board is to do what they have to do to have the Tennessee State Fair.”

Later, he told The City Paper that another attorney who has been working with him on the matter has begun preparing the legal memoranda to argue just that, should the dispute escalate further.

That’s the kind of storm Byrd said he’d like to avoid, if at all possible. He disagrees with the new state law, he said, and has been frustrated by the commission, noting that TSFA board members were serving on the commission at the time it awarded the contract to the TSFA. (Former state Sen. Joe Haynes was the sponsor of the bill that created the commission, and also serves on the TSFA board. Currently, however, there are no TSFA board members serving on the commission.)

Byrd told the fair board the law was “not well done, questionable, and a stupid decision by the governor and his cronies to counter their most basic principles of not messing with local government.” But in the first year of the arrangement — messy, and ill-defined as it might be — and with a century-long tradition at stake, he said he didn’t want to rush off the cliff.

“I don’t think invoking that battle is the first thing we ought to do,” Byrd told The City Paper days after the meeting. “I think the first thing we ought to do is try to work this out. And I’m still very hopeful that we can. I don’t think we ought to be as reactionary as the people who pushed to pass the law that put us in this position.”

That patience is not boundless, though. Byrd has said that while he does not want to lose the state fair, he’s also not ready to cave in to what the board feels is a substandard offer from the TSFA. Furthermore, he’s asked Rose to open up the nonprofit’s books for the fair board, to show how much money the TSFA truly has at their disposal. (If they can’t take the board’s offer, he said, “I need to understand why.”)

If the nonprofit truly is operating on the edge of their budget, the pressure doesn’t end there. While the fair board may have its own anxieties about losing a century-long tradition, the TSFA is charged with putting on a successful state fair — if not here, then somewhere. A protracted legal dispute, eating up time and money, would only make that more difficult to pull off.

Others on the board, and council members in the area, have expressed a desire to entertain other offers for the dates normally reserved for the fair, such as one from Memphis-area operator Delta Agribusiness.

That could invite a legal fight with the TSFA, if not the state, that could have unforeseen consequences. Just ask the school board.

8 Comments on this post:

By: BigPapa on 2/11/13 at 8:51

I'd bet on Dean vs Haslam on this. Haslam may have the bigger stick, but Dean is smarter.

By: RJP on 2/11/13 at 9:14

rjp Can we get a list of how the council members voted. Would be nice to see what the fair could be if everyone worked together.

By: pipecarver on 2/11/13 at 9:29

Might as well hand over the keys to the bought and paid for political establishment. Their deep pocket "constituents" (AKA Real Estate Developers) will get their capitalistic panties in a wad if they are unable to secure more land to build yet more overpriced, poorly-built condos near town; thus displacing and/or significantly raising the property taxes to existing homeowners (on fixed incomes) in the area. If this causes a major problem, the powers that be will simply get "their people" on said fair board to remedy the situation at hand. Same play book, different Bubba's.

By: fair_minded on 2/11/13 at 9:55

Actually Mr. Rose is misreading the Charter and the circumstances of the bond referendum on the property.

Firstly, the quid pro quo on the property was that Davidson County would operate a permanent fairgrounds, which they could lease when the fair was not in session. No mention was made of a state fair being required.

Secondly, the Charter, which borrows its language from the prior state law does NOT specify, nor require a "State" fair be held on the property, only that a fair of at least 10 days duration be held. It can be a county or regional fair.

The only mention of the state fair being in Nashville in state law is in a superseded law which authorized the payment of a grant from the state to the fair board to be used for participant premiums.

When crafting the new law which removed the state fair from the control of the Davidson County Fair Board of Commissioners, Mr. Rose and his friends in the legislature were careful to remove any links to Davidson County, and now it's coming back to bite them.

The Fair Board has a fiduciary responsibility to operate the fairgrounds as a business and thus to maximize its income as much as possible. This does not include giving less-that-cost contracts to private organizations who wish to operate the state fair on the property.

The TSFA went to great lengths to get the state fair-- well now they have it, and it's time to run with it. It's their responsibility to pay the bills-- not Davidson County-- we were removed from that responsibility by the friends of TSFA.

The Fair Board is acting correctly in demanding a fair price for the rental of the property.

By: joe41 on 2/11/13 at 10:29

I have said for years that the fair board who has been running the state fair is stoopid. That is why we have this problem. Look at the Wilson County Fair. It is better run that the state fair and better attended. I hope they get it right this time. It could be a good deal for the city. If not, it will be a great deal for Lebanon.

Joe

By: Shane Smiley on 2/11/13 at 11:50

The TSFA is responsible for the legislation taking the obligation of operating the State Fair away from Davidson County.
4 members of the TSFA Board of Directors are named in this legislation to be on the newly formed Tennessee State Fair Commission.
This Commission has voted twice to award the right to operate the Tennessee State Fair to the TSFA.
The Four people who served on both Commissions did not recuse themselves from the vote awarding the contract to an organization they helped create and, according to the TSFA web site on the day of the vote, were still members of the TSFA.http://www.tnstatefair.org/about.
Thus, Awarding the Fair without an RFP or any other bidding process.

That is a story our media knows about and has at this time failed to report.

The TSFA was instructed by Fair Board Commissioners at the January Fair Board meeting to have their financials available for review at Today's meeting. They once again failed to produce the requested tax forms showing the account balance carried by TSFA. Transparency is not in their interest.

Why is this important?
The TSFA, a Non- Profit should have in excess of $500,000.
They claim a great deal of this money is tied up in grants with a specific purpose.
One of the said grants is for $90k. The reason listed in the TSFA 2011 tax return is, "For future use and Master Planning Project".

So, A non profit who likely has half a Million Dollars is asking the Tax Payers of Nashville to give them a subsidy of $50k+ to operate their Fair. The Fair Grounds does not subsidize Racing or Expo events.

The TSFA had $48,287 from the 2010 State Fair when the took on the task of running the State Fair on their own in 2011. The 2011 and 2012 State Fairs were subsidized as part of the Referendum requiring the TN State Fair be held at the Fairgrounds. In the opinion of Metro Legal, The State Legislation signed by the Governor stripped Nashville of the ability and obligation of operating the State Fair on the property.
According to IRS tax statements, the TSFA had Net Assets of $314,500 after the 2011 State Fair. A pull of $266,213 for the 2011 Fair.
According to the TSFA, their attendance, sponsorships and charitable contributions all went up in 2012. somewhere in the area of 68k paid attendance (although they tout over 100k served to the IRS).
If you count workers, free student passes and sponsors, you would still be hard pressed to come up with the 32k unpaid admissions.
If they had a better year, making exactly what they did the year before, you have a balance of $580,713.
The TSFA was willing to run the Fair in 2011 with a subsidy and $48,287 in assets, now that the have in the neighborhood of $580k, They should take the burden off of the Davidson County Tax payer and meet the facility needs. In other words, pay their own way.

The TSFA needs to remember, The property would not even be available if not for the voice of the citizens and SaveOurFairgrounds.com stopping the administration from moving the Flea Market, Destroying the track and shutting the property down.

By: Shane Smiley on 2/11/13 at 12:28

It is interesting that the author of this article fails to point out that the TSFA refused to support an amendment to their state bill that would have "required" the fair be held on the property, which we all know as "The Tennessee State fairgrounds." To quote the supporters of the bill, "That amendment would weaken their [TSFA's] ability to negotiate." Had they supported the amendment, Rose's bogus argument might be true!

By: CrimesDown on 2/11/13 at 6:55

Government is not in the "business" of making money. Government spends money. This is why the Fairgrounds is in the shape it is. That, and the fact that the mayor wants his buds to have it. An average person, with an average business mind, could make a fortune with the Fairgrounds. With the right person in charge and if that person was allowed to run it correctly, the Fairgrounds would be a very profitable location for many local citizens, middle Tennesseans and others from out of state, to enjoy.

People "In the know", will admit off the record, that the last two mayors have done everything possible to make the Fairgrounds fail. If they had spent half the effort in taking care of the Fairgrounds, it would still be a very lucrative place.