Sixty prime acres in the middle of Petaluma. Land ripe for revenue-generating development or land to be used to encourage the area's agricultural base?

Board members of the Sonoma-Marin Fairgrounds and Event Center are hoping the city-owned but state-governed property can be both.

The city began leasing the land to the Sonoma-Marin Fair district in 1936 for $1 a year. Those lease terms are identical today, with the current, 50-year lease running through 2023.

But some would like that to change — for different reasons but the same goal: money.

"It's a gem of a property right here in the middle of our two counties of Marin and Sonoma," said new board President James Burleson during a brain-storming session this week about the fair's sustainability.

The annual five-day summertime fair, with a $1.4 million budget, is break-even financially. The grounds also lease space to a charter school, a preschool, an Airport Express stop, the Petaluma Speedway, Skip Dominguez auctions and a coffee drive-thru hut. The fair and its tenants, including numerous short-term event rentals, each generate about 50 percent of the fair district's income.

Fair officials have for years sought another long-term extension of the lease, arguing that they need the financial stability to assure financing for improvements to fair buildings and facilities.

In the past several years, the fair broached the topic multiple times with city leaders, but met opposition — and sometimes downright hostility — and nothing changed.

Some city leaders have said the land is so valuable to Petaluma it is irresponsible to extend such a lease for the state.

Mayor David Glass, in a previous term as mayor, said the fair board should start looking for other sites, saying: "They're like a tenant that's going to be evicted."

In ensuing years, the discussion's tone has become more cooperative.

Glass said he is willing to discuss extending the lease, if it benefits the citizens of Petaluma.

"If we can craft a framework where the city maintains control, city maintains access to the property and the city receives a fair rate of return on city land — under those conditions, maybe we can hammer out a lease extension that would allow the fair to prosper."

In the past two years, the fair has lost about $173,000 in state fair funds, most of which came from horse-racing revenues shared among all state fairs.

The board has absorbed the cuts through belt-tightening, but is firm about its commitment to serving its mission of showcasing agriculture and regional interests and talents of the community, particularly young people through animal presentations and skills exhibits.

There has been no serious discussion about the fair moving to another site.

Business leaders have suggested a hotel, convention facility or events center be built with a cost- and revenue-sharing agreement between the fair and city.

"We don't have a place to do conferences and expos," said Onita Pellegrini, chief executive of the 750-member Petaluma Chamber of Commerce. "With a conference center, we would be able to bring those things in to Petaluma."

Petaluma's economic development manager, Ingrid Alverde, called the fairgrounds "a very important economic development opportunity for the city.

"It's sort of a jewel in the city and we see a lot of opportunities for growth and community benefit," she said, suggesting a focus on specialty food production and related tourism.

Fair board member Jim Mickelson said those improvements simply aren't possible without a lease extension from the city.

"We cannot do those big long-term convention center-type projects without time to recoup our investment," he said.

Councilman Mike Harris said now may be the time to work together to forge a deal that benefits both the city and the fair.

"We need to work collaboratively," he said. "That's prime real estate. Everybody wants to see something done there. They have reasons to come to us and we have reasons to go to them."

(You can reach Staff Writer Lori A. Carter at 762-7297 or lori.carter@pressdemocrat.com.)