After several years of trying to get the city to renegotiate its lease of 60 acres of land off East Washington Street, the Sonoma-Marin Fair and its board of directors is finally getting its wish.

The City Council set a goal this year to sign a new lease with the fair, and City Manager John Brown said he thinks a new lease option could come before the Council for approval sometime this year.

Chances are the new lease will be a far cry from the fair's current $1 per year, 50-year deal that gives the fair control over all operations on the prime real estate parcel through 2023.

The city began leasing the land to the Sonoma-Marin Fair in 1936 and the lease terms haven't changed since. The annual five-day fair has a $1.4 million budget and typically breaks even each year. The fair also leases space to a charter school, a preschool, an Airport Express stop, the Petaluma Speedway, Skip Dominguez auctions, and a coffee drive-thru hut. It also rents space for events throughout the year. The fair itself and its tenants each generate about 50 percent of the $1.4 million budget.

While the fair has lost about $173,000 in state funds over the past two years, the board has dealt with the losses through budget cuts and remains diligent about maintaining operations. There has been no serious discussion about moving the fair to another site, officials say.

Fair officials have been pushing for a new, extended lease contract for years, in hopes of securing capital improvements funds that are contingent on them proving the fair will remain on the site in the long-term.

While both the city and the fair board — along with many residents and businesses — are interested in keeping the fair at the current site, Brown said that any new lease agreement would have to focus on generating more money for the city.

"The city is interested in looking at sharing the resources of the fairgrounds with the fair," said Brown.

Brown said he has suggested a "sliding scale" option, where the fair would pay a set, affordable amount up front each year, but would also be asked to pay an additional amount if its revenues were higher than expected in a given year. "What we have is an old lease that needs modernizing," Brown added.

Fair Board President James Burleson said he does not necessarily disagree that the city should be getting more money off the land, despite having raised concerns about higher lease costs in the past. Burleson acknowledged that, while many other fairs throughout the state have relatively inexpensive lease terms — thought to encourage the agricultural and social benefits fairs provide — Petaluma's fairgrounds have become prime real estate located in an area with major economic potential.

While most fairgrounds tend to be on the outskirts of cities, Petaluma's are located in the middle of town. This is because, over the decades, the city developed around the once-rural property, making Petaluma's grounds highly sought-after land.

"To be a good tenant, we have to allow the city greater control over the use of the fairgrounds," said Burleson. "The city and the fair both realize that there is a great economic opportunity at the fairgrounds. But how we get there is the hard part."

Burleson said the fair board is waiting for the city to make an opening offer before it suggests any potential changes regarding terms of use and control over the land.

"The fair needs to occupy that space during fair time," he said. "But the other 360 days of the year, other entities can be down there. If that means that the fairgrounds has to be on a smaller portion of the grounds and a certain percentage has to become something else, it has to be considered."

Developing a portion of the fairgrounds is an idea that has been bantered about by both city and fair board members for quite some time. In January, the fair board held a public forum to discuss its master plan, during which several ideas for development came up, including sports fields and a farmers market. Another idea proposed by the business community is a conference or event center.

Councilmembers have expressed a desire to move forward with signing a new lease agreement, but stress that the city should maintain ultimate control over what goes on at the site.

"More access, more revenue and more control for the city of Petaluma," said Mayor David Glass, who called the fairgrounds the most valuable asset the city owns. "We need to stay within those parameters and make a winning situation for the fair, but most importantly for the citizens and residents of Petaluma."

Fair CEO Pat Conklin said that she and fair officials are open to anything right now. "I think we can all work together and do something really great," she said. "The fair is a constantly changing and evolving event and we need a certain amount of space to operate, but I think we can create something really wonderful for the city."

(Contact Janelle Wetzstein at janelle.wetzstein@arguscourier.com)