Wednesday, June 23, 2010 | After an hours-long public hearing Tuesday night, a visibly tired, frustrated and emotional Costa Mesa City Council agreed to what they largely described as a forced partnership with a Newport Beach firm to buy the Orange County Fairgrounds from the state for $96 million.
Council members, who over the course of the evening held several closed, parking lot, and public sessions, described the take-it-or-leave-it offer from Gov. Arnold Schwarzenegger thusly: Buy this property tonight as a partner with Facilities Management West for $96 million or tomorrow morning it’s on the auction block.
In a 4-1 vote, the council took the governor’s deal. Earlier in the evening, the council voted to lay off 24 city workers in order to pass its 2010-11 budget.
The vote on the Fairgrounds is the culmination of several months of quiet and tense negotiations between council members, the state and several private sector suitors all vying for control of the historic swath of land between the 55 and 405 freeways and just south of South Coast Plaza.
While the deal does offer Costa Mesa some sort of local control over the 150-acre property, it is essentially turning it over to the private investor group. After more than a year battling the state and local fair board over a lack of transparency in governing the Fairgrounds, council members have essentially now agreed to not have any formal role in the administration of the property.
Talks with Facilities Management West had reportedly broken down Friday.
Apparently, at one point words got so heated between the group’s lawyers and city officials that Mayor Alan Mansoor criticized the group publicly on Tuesday night before joining three of his colleagues — Wendy Leece, Gary Monahan and Eric Bever — in supporting the purchase.
While Councilwoman Katrina Foley said the finances on the deal weren’t necessarily bad for local taxpayers, she ultimately opposed the deal saying the newly formed joint powers authority didn’t give local residents — or city officials — any say in the day-to-day dealings of the Fairgrounds.
Activists who fought the fairgrounds sale for more than a year were mortified as they read the fresh agreements streaming out from the council. Most couldn’t understand the language but had a bad feeling all night.
“I’ve heard a lot of talk about money,” said equestrian activist Greg Ridge. “The one thing I think is we’ve thrown the baby out with the bathwater. We wanted to have public input and oversight. Having a voice on how our fairgrounds are treated. And I don’t see that.”
City Attorney Kimberly Hall Barlow began describing the deal points on the purchase memorandum of understanding with the price, saying, “We were told what the purchase price would be $96 million.”
Other deal points include:
- City general funds are not at risk: The purchase agreement would not obligate the general funds of the city and would not require the city to make any payments to the state.
- An LLC that Facilities West Management proposes to form would finance and operate the property under a 55-year term. The property would be officially owned by the newly formed OC Fairgrounds Joint Powers Authority which would hold a deed of trust. That means the only remedy the state would have against the JPA in case of a loan default is foreclosing on the property.
- The purchase agreement covers all personal property associated with the fairgrounds, the equipment, the names and trademarks.
- The transitioning of fair employees has been left to the state.
- Ground rent covers debt service but also provides a revenue source to JPA. But the ground rent is subject to change if land use changes, or if a portion of the property is parceled out.
- The annual fair will continue, along with Centennial Farms and the Youth Expo. Equestrian uses will remain, “although there may be a change in location.”
- There is an 18-month transition for the OC marketplace in case of a lease termination.
According to the deal points distributed Tuesday night, the city’s JPA will meet once a year — as opposed to monthly meetings of the OC Fair Board — where they can forward suggestions. However, Facilities Management West won’t be obligated to listen.
“For a few dollars, we’ve lost everything we fought to preserve,” Ridge said. “The real losers here are the people.”
Most council members struggled with the lack of transparency on the governance structure but said they had no choice but to authorize the deal.
“It all boils down to yes or no,” Mansoor said. “There’s no ‘maybe’ or ‘I need more time’ button.”
However, the deal is nowhere near finished. A final agreement still has to come back to the City Council for approval, and the state Legislature is also expected to have to weigh in to authorize a transition.