Hefty rent spike at Santa Clara County Fairgrounds could push out longtime business

As the underutilized Santa Clara County Fairgrounds tries to balance its fate with a challenging financial budget, one longtime family business might have to get out because of a proposed rent hike.

Santa Clara Paintball, which boasts 12 fields for paintball and outdoor activities, paid $9,630 a month for its 9 acres in 2019. But a new amended lease proposal would raise rent from $1,070 an acre to $3,500 an acre next year — a 227 percent increase.

Owner Serene DeCorra said such a large rent increase caught her off guard – and could mean the end of the 17-year outdoor recreation business.

“That will put us out of business,” said DeCorra, who has operated on that land since 2003. “If you don’t see us as a long-term viable tenant, then tell us that. This was a deliberate attempt to push us out.”

According to the Fairgrounds Management Corporation, or FMC, the new rent proposal — totaling around $376,000 annually — was an attempt to get closer to market rates; leaders say those 9 acres would fetch $756,000 annually from other tenants. But DeCorra said Santa Clara County has a policy that below market rates can be justified for important public benefits and services, if market rates aren’t economically feasible.

DeCorra collected and presented more than 500 emails from customers to the FMC during its board meeting Wednesday, asking for a compromise that would allow Santa Clara Paintball to stay at the fairgrounds. After an hour of discussion, the board recommended reassessing the increase, trying to find a balance between financial responsibilities and its own charter for oversight and public service.

FMC Vice Chair Tyson Greaves called it a “momentous” decision.

“Maybe (the rent increase) is too wide of a gap to jump in a bite or two, and maybe we’ll have to take a longer time,” Greaves said, who abstained from the vote. “In such short notice, if I had been in their shoes, such a significant increase would have been the end of our business model.”

Abe Andrade, executive director of the Santa Clara County Fairgrounds, said he’s taking a look at the numbers, based on the board’s direction. Santa Clara Paintball is the only business currently facing a hefty rent increase because the other tenants are either paying close to market rates or have contracts that can’t yet be modified.

“It’s a difficult situation to be in, because I’m trying to take into account the full picture of the operation of the fairgrounds,” Andrade said. “We will certainly make a proposal (before year-end), but whether they accept it before the end of the year is up to them.”

That could mean a rate adjustment or reducing Paintball’s acreage on the grounds.

“To his credit, he came in with a job to do — that’s fine — but this is a community prize,” DeCorra said. “This is where we’re supposed to gather and it’s supposed to be for the public’s use. Why are you going to push out the only family recreation center serving the public in the entire region? That’s the trade off.”

If Santa Clara Paintball closes, the nearest paintball area would be Sunol Paintball Outdoor Park, nearly 30 miles north of San Jose.

But Andrade said this isn’t about pushing out a longtime business. According to an FMC analysis, the company’s paid $1.2 million less than the market rate for the land they occupy from 2018-2019. If Santa Clara Paintball accepts the currently proposed $376,000 rate for 2020, those rates would still be subsidized from the market rate value by $380,000.

“When you’re operating on government property and, you know, providing subsidies to for-profit companies, that has to be questioned,” said Andrade, adding that he wants to keep rents affordable to nonprofits and community cultural groups that host events at the fairgrounds.

“Everybody’s focused just on this business, isolated on its own,” he said. “But you can’t just look at that, otherwise you’re doing a disservice to all the users that come onto the fairgrounds, over a million people a year.”

Longtime Santa Clara Paintball customers urged the board to allow the business to stay on the publicly owned land.

“Santa Clara Paintball is so much fun,” customer Sian Ferguson said. “There aren’t many places that allow kids to run around in the fresh air and have fun. It is shameful and greedy that you are increasing their rent. (Santa Clara Paintball) is the only reason I have ever visited the fairgrounds. If you evict them, you are not serving the community, and I — for one — will no longer come out to the fairgrounds.”

Although discussion of the county fairgrounds’ future has included many ideas, including fields for USA Cricket and a San Jose Earthquakes Soccer Academy, the FMC board said there are no immediate plans for Santa Clara Paintball’s 9 acres.

“There are a number of opportunities that may be out there, but I don’t think paintball is precluded in this,” Greaves said.

DeCorra agrees.

“If you find something you think is better for the community and willing to pay more money, I’m out tomorrow,” DeCorra said. “But he have nothing set to replace us. He’s stripping this away from these people without any real fore thought about it.”

Contact Katie Lauer at [email protected] or follow @_katielauer on Twitter.