State Fair Buildings and Grounds Exempt Therefrom

Subject:

Requested By: Governor James B. Hunt, Jr. and the Council of State

Question: Does the exemption from the provisions of G.S. 66-58(b)(12), namely "The North Carolina State Fair" extend to the buildings and grounds thereof on a year-round basis?

Conclusion: Yes, based on legislative enactments relating to the fairgrounds, annual budgets contained in the State budget and administrative interpretation of various statutes discussed herein.

In October 1983, the North Carolina Department of Agriculture requested the Governor and Council of State to approve the lease of two buildings (Commercial and Educational) located on the North Carolina State Fairgrounds to private individuals for the period from November 1, 1983 to March 1, 1984. The lease would be accomplished by amending a current lease of two other buildings located on the fairgrounds currently leased to the same individual for a period of three years, ending on March 1, 1984.

A question was raised at the November 1, 1983 meeting of the Council of State as to whether the proposed lease described above, which was under consideration by the Council of State, violated the provisions of G.S. 66-58 which are, in part, as follows:

"(a) Except as may be provided in this section, it shall be unlawful for any unit, department or agency of the State government, or any division or subdivision of any such unit, department or agency, or any individual employee or employees of any such unit, department or agency in his, or her, or their capacity as employee or employees thereof, to engage directly or indirectly in the sale of goods, wares or merchandise in competition with citizens of the State, . . . or to contract with any person, firm or corporation for the operation or rendering of any such businesses or services on behalf of any such unit, department or agency . . .

(b)

The provisions of subsection (a) of this section shall not apply to: . . .

(12)

The North Carolina State Fair." (Emphasis added)

The buildings under current lease and the two proposed to be leased are and would be respectively subleased to individuals to offer for sale and sell to the general public various goods, wares and merchandise. Such a commercial operation is generally referred to as a "flea market."

A brief review of the history of the North Carolina State Fair appears appropriate. The following are excerpts from a publication of the North Carolina Department of Agriculture, entitled N.C. State Fair — 1983 — Premium Book, pp. 12-14, entitled "North Carolina State Fair History"

"The first State Fair was founded in October 1853 by the State Agricultural Society. . . . It was planned to offer premiums to farmers who developed better practices for crop improvement, or designed and built more effective implements. Immediately plans were underway toward the first State Fair to spread constructive agricultural information.

The site for the first fair was a 16-acre tract about 10 blocks east of the Capitol in Raleigh. . . .

The fair was moved in 1873 to what was then described as a "55 acre broom sage filed comprising an eminence known as "Cook’s Hill" on Hillsboro Road some 300 years from the

N.C. and Augusta Air Line Railroad, one and one-quarter miles west of the city limits of Raleigh." This is now a residential and business district across from the campus of N.C. State College. The Raleigh Little Theatre now occupies the site. . . .

By 1895 the Agricultural Society’s show and exhibition had become the main annual event among rural Tar Heels. . . .

The Agricultural Society conducted the State Fair for 73 years. . . .

In 1924 the society requested aid from the state and City of Raleigh. The first State Fair Board was appointd by Governor McLean in 1925 with representatives from the State, City and Agricultural Society. After this, the society disbanded. There was no State Fair in 1926 and 1927. The late Governor J. Melville Broughton succeeded in convincing the Legislature to designate 200 acres of land to the State Fair. Thus, the State Fair moved in 1928 to its present site with additional land granted in 1952.

The State Fair was placed under the auspices of the Department of Agriculture in 1930. The various committees continued to operate the fair until 1933 when the Board of Agriculture leased the fair until 1933 when the Board of Agriculture leased the fair to George Hamid for operation on a commercial basis.

The late Governor W. Kerr Scott returned the State Fair to the management of the Department of Agriculture in 1937 when he took office as commissioner of agriculture. That year in excess of $12,000 was paid out in educational exhibitor premiums, and by 1968 this figure had reached more than $70,000. Currently the figure exceeds $140,000.

Dr. J. S. Dorton of Shelby was appointed manager of the new State Fair, Division of the Department of Agriculture, in 1937. Immediately the fair was no longer a burden and showed a profit of over $8,000. . . .

The N.C. General Assembly approved funds in the late 40’s for construction of a year-round facility to serve agriculture, industry, commerce and the general welfare of the state. . . . It was in

1961 that the fair operated six days for the first time. Robert W. Shoffner, an assistant manager of the fair from 1947 to 1960 was appointed by James A. Graham to complete production of the ’64 fair. Arthur K. Pitzer was named permanent manager in January, 1965 by Commissioner Graham. . . .

. . . This set the state for the 1970’s, which was to be a decade of significant growth.

Four new structures were completed: The Gov. Kerr Scott Building (1972), Crafts Pavilion (1974), Livestock Building (1975) and Forestry Resources Center (1976). An ambitious grounds improvement program of landscaping, paving, curbing and guttering was implemented. . . .

Efforts to speak to the wishes of the fairgoers paid off handsomely at the gate. Attendance averaged 570,000 in the 1970’s. In 1976 the nine-day event, highlighted with a visit by President Gerald Ford, was attended by 587,000 despite several days of cold and rain. An all-time attendance mark of more than 680,207 was set in 1982.

The State Fair and grounds operate on a year-round basis.There are 42 permanent employees, 34 of which are maintenance personnel.

Non-fairtime utilization of buildings and grounds increased dramatically in the 1970’s as new sales initiatives by management and a complex of new facilities consisting of the Kerr Scott Building (exhibit hall), the Jim Holshouser Building (crafts pavillion) and the Jim Graham Building (livestock pavillion) made the fairgrounds an active center for entertainment, meetings, expositions and agricultural shows.

The 1978 North Carolina Legislature authorized funds used by the fair to purchase an additional 144 acres of land adjacent to the grounds. The acquisition brought the fairgrounds to 344 total acres." (Emphasis added).

Most of the funds for capital improvements mentioned above were appropriated by the General Assembly. It is self-evident that these buildings were designed for and have been used since their construction for year-round use, not just during the nine-day fair.

The crucial question to be resolved is whether "The North Carolina State Fair" as worded in G.S. 66-58(b)(12) is limited to the nine-day event held in October of each year. Clearly, as quoted above, the administrators of the Fair and the Department of Agriculture, responsible for its publication, think not. Legislation enacted during the past several years supports this conclusion.

The budget for the Department of Agriculture, enacted by the General Assembly, has for at least 20 years, been entitled "Department of Agriculture, North Carolina State Fair (Special Fund)" and contains numerous line items for the yearly use of buildings on the fairgrounds.

In 1959, the General Assembly in a rewrite of G.S. 106-503 (S.L. 1186, s. 3) provided: "All actions heretofore taken by the Manager of the North Carolina State Fair in the operation of projects on the fair grounds at times other than the annual dates of the State Fair are confirmed, ratified and validated." (Emphasis added).

Our interpretation of the phrase "State Fair" is supported in G.S. 106-503.1, which authorizes the Board of Agriculture to borrow money to improve "the facilities on the properties of the State Fair". This indicates that the General Assembly considered all the facilities on the fairgrounds to be a part of an entity known as the "State Fair", without regard to the annual Fair itself.

In the 1979 Session Laws, Second Session (1980), Chapter 1260, the General Assembly authorized the use of planning money "to plan for the improvement of the State Fair horse show facilities". The horse show facilities will be used throughout the year. This clearly indicates the use of the term "State Fair" to refer to the year-round operation of those facilities.

For many years all contracts and leases used by the State Fair have referred to the "N.C. State Fair" as the lessor or contracting party. No distinction is made between the nine day fair and the year-round operation of the facilities.

It is clear from the above-described administrative actions of the Department of Agriculture and laws enacted by the General Assembly that year-round use of the Fair’s buildings and grounds was intended by the repeated use of the term "State Fair".

Finally, our courts give weight to the interpretation of statutes by an administrative agency. Strong’s Index, 3rd Ed., Statutes, s. 5.7, citing MacPherson v. Asheville, 283 NC 299, 196 SE 2d 200 (1973).

We conclude therefore that all leases and rentals of fair properties and buildings, at whatever time, are exempt from G.S. 66-58.

Rufus L. Edmisten Attorney General

Millard R. Rich, Jr. Deputy Attorney General