Del Mar Fairgrounds Under Federal Scrutiny For PPP Loan Discrepancies

Person in suit putting money in jacket pocket.

A federal investigation has highlighted the misuse of a $4.7 million Paycheck Protection Program (PPP) loan by the 22nd District Agricultural Association responsible for the Del Mar Fairgrounds.

At a Glance

Del Mar Fairgrounds reached a $5.7 million settlement over PPP loan misuse allegations.
The association was ineligible for the PPP loan as a government-owned entity.
The settlement was reached without liability admission but included the full loan repayment.
The DAA aims to clarify funding eligibility with lawmakers.

Federal Investigation and Settlement

The 22nd District Agricultural Association, operating the Del Mar Fairgrounds, obtained a $4.7 million PPP loan during the pandemic, despite ineligibility due to its government ownership. The Paycheck Protection Program was established to provide aid to small businesses and nonprofits, explicitly excluding government-controlled entities. Facing allegations, the association and its CEO settled for $5.7 million, which includes repayment of the loan, fees, and interest. The settlement was finalized without the admission of guilt or liability.

The U.S. Department of Justice highlighted the Del Mar Fairgrounds settlement as essential to maintaining the integrity of the COVID-19 relief program. Federal authorities have been conducting investigations to ensure that financial aid from the program was utilized properly, unearthing instances of ineligibility and misuse. The Del Mar Fairgrounds represents just one of many government-related entities scrutinized in this oversight process.

Controversies and Clarifications

San Diego U.S. Attorney Tara McGrath stated, “This settlement upholds the integrity of the COVID relief program and holds the DAA accountable for obtaining millions in taxpayer-funded benefits to which they were not entitled.” The association argued that due to the financial impacts of the pandemic, the PPP loan was essential for retaining fairgrounds operations. The DAA claims they applied without malicious intent and cited ambiguity around government entities’ eligibility for such funding during emergencies.

“To survive during a chaotic and confusing period when revenue sources were cut off, the 22nd DAA—like many other DAAs across the state—applied for federal aid through the newly established Paycheck Protection Program (PPP) after exhausting other possibilities,” according to a statement from the group.

The DAA was surprised by the extent of federal oversight on their loan application. The discrepancy has led to initiatives aimed at working with lawmakers to better define the status of district agricultural associations under state and federal laws. The organization stresses a need for clearer guidance to prevent similar issues from arising in the future.

Del Mar Fairgrounds to pay $5.6M to settle pandemic-related loan allegations https://t.co/2WAb2HWNB2

— FOX 5 San Diego (@fox5sandiego) October 23, 2024

Financial and Operational Impact

The Del Mar Fairgrounds serves as a significant hub for events, including the annual San Diego County Fair, generating substantial local and sales tax revenues. The fairgrounds management indicated the necessity of layoffs and drastic measures at the peak of the pandemic, which threatened community engagement and local economic activity. However, despite the repayment, they emphasize their commitment to moving forward and focus on their pivotal role in hosting numerous community events post-settlement.

The 22nd DAA claims it will continue to cooperate fully with federal and state agencies while striving to sustain operations. The outcome of the investigation and ensuing settlement demonstrates the necessity for continued scrutiny and definitive guidelines for any future initiatives under emergency frameworks such as the Paycheck Protection Program.