Fair deal debated in court
SANTA ANA — The battle over selling the Orange County Fairgrounds moved from Sacramento to a Santa Ana appellate courtroom Friday.
Attorneys for the state, which is trying to sell the 150-acre Costa mesa property, and for a Newport Beach company that intends to buy it tried to persuade a three-judge panel to bring the almost two-year saga to a close.
Friday’s hearing was supposed to focus on whether the Court of Appeal should lift a court order blocking the sale of fairgrounds to the company, Facilities Management West.
Instead, a courtroom debate on whether FMW’s deal with the state’s Department of General Services was legal ultimately transpired.
A sale to FMW would net the state an estimated $224 million over 35 years and $20 million through an initial down payment, according to the proposed deal detailed in court documents.
Those opposed to the transaction who are trying to block it through an appeal to the court include: Jeff Teller, owner of the OC Marketplace, which operates the swap meets at the fairgrounds; a competing bidder, Advanced Real Estate Services; State Sen. Lou Correa (D-Santa Ana); and Assemblyman Jose Solorio (D-Anaheim).
These appellants argue that the state steered the public bidding process on the fairgrounds in FMW’s favor.
Wylie Aitken, the attorney representing the appellants, said in court on Friday that DGS didn’t follow state guidelines for open bidding when it put the fairgrounds on the auction block. He told the panel that the misstep occurred because California lawmakers were in a rush to plug the state’s budget gap and offload expendable property.
“I understand the motivation, but it doesn’t mean you can throw out the Constitution,” Aitken said.
California Dep. Atty. Gen. Michael Dwitmer argued that the state’s guidelines were mainly used as a compass, but they didn’t need to be followed explicitly because state open bidding statutes apply only to property purchases, not sales.
Lawmakers essentially said, “Go for it and sell this property, let us know how it goes,” Dwitmer argued.
He also said that because lawmakers gave the green light in 2009 to sell the fairgrounds, they didn’t require reapproval for FMW’s proposal.
The judges focused many of their questions on how the case ended up before them and how the price was determined, suggesting that if the bidding process had allowed for other bidders to protest the outcome formally, they wouldn’t be in court.
“Had there been a protest, it wouldn’t have made any difference,” argued Thomas Gibbs, the attorney representing FMW.
The first round of bidding on the fairgrounds in January 2010 didn’t live up to the state’s expectations, with the highest bid coming in at $56.5 million.
DGS rejected it and the city of Costa Mesa moved in to buy the fair through a public-private partnership, first tapping Advanced Real Estate Services as a partner, and then FMW. The partnership needed to be approved by state lawmakers through legislation, but the deal fell short of enough votes.
Assemblyman Solorio eventually dropped his support for the Costa Mesa deal.
FMW continued on alone with its plans to buy the fairgrounds, and when the state opened up the fairgrounds for another round of bidding last year, FMW came out the winner.
The legislation approving the fairgrounds sale requires that it be sold for fair market value. Opponents of the sale argued that FMW never proved that its offer met that standard, while FMW countered that the auction process set that price.
Lawmakers delayed discussing a bill from Solorio earlier this week that could keep the fairgrounds in public hands through profit-sharing with the state because they wanted to see how Friday’s court hearing went.
The court is expected to come back in a few weeks with a decision on whether DGS and FMW can go ahead with the sale.