SANTA ANA — An Orange County Superior Court judge on Wednesday issued a temporary restraining order blocking the sale of the Orange County Fairgrounds to a private developer.
A consortium of businesses, led by the operator of the regular swap meet at the fairgrounds, Tel-Phil Enterprises, petitioned the court to temporarily halt the $100-million sale.
Judge Frederick P. Horn ordered the state's Department of General Services (DGS), which is in charge of selling the 150-acre property to shore up money for ailing Sacramento coffers, to halt transferring the fairgrounds to Newport Beach-based Facilities Management West.
The real estate company has agreed to buy the property, but Tel-Phil Enterprises has called the bidding process flawed and unfair.
"We're not going to let you sign a contract," said Gene Livingston, the attorney representing Tel-Phil and American Fairs and Festivals, the group of businesses that want to stop the sale.
Horn said he wouldn't loosen up the restraining order's restrictions, which include barring the state from talking with Facilities Management West about terms of the sale.
"I don't have enough information to make an informed decision," he said. "There are too many moving parts to this."
A hearing on whether the court should issue an injunction regarding the sale is scheduled for Dec. 8 in Santa Ana.
"Anything that will stop what is basically a giant mistake makes sense to me," said former Costa Mesa Mayor Sandy Genis, who heads the Orange County Fairgrounds Preservation Society.
Guy Lemmon, spokesman for Facilities Management West, said his group is confident the state will prevail and be allowed to sell the property. Though it plans other uses throughout the year, Facilities Management has pledged to keep operating the annual Orange County Fair every summer.
"The Tel-Phil lawsuit represents a last gasp effort by a three-time unsuccessful bidder," Lemmon wrote in an e-mail. "FMW believes the lawsuit is without merit."
Michael Glenn Witmer, a state deputy attorney general, tried to persuade the judge to allow the state to continue its negotiations with Facilities Management West — short of executing a deal — in exchange for pushing the hearing date to later in December.
There appear to be concerns that the transition of power in Sacramento — Gov. Arnold Schwarzenegger is the one who first called for the sale — could alter the state's position.
Gov.-elect Jerry Brown has not taken a public position on the sale.
Livingston and Ruben Smith, the attorney representing Advance Realty Services Inc., the group that once partnered with American Fairs and Festivals to finance and operate the fairgrounds on behalf of Costa Mesa, argued that the sale ignored the state Constitution, which calls for allocating revenues from selling surplus properties to paying down debt.
Livingston also argued that DGS violated the public process by negotiating privately with Costa Mesa City Hall, then issuing a second bid slated to benefit Facilities Management when the deal with the city fell through.
DGS refused to make public the list of the bidders who offered to buy the fairgrounds the second time around, Livingston said, creating the appearance of favoritism.
Costa Mesa Councilwoman Katrina Foley said the restraining order was the right decision.
"I don't think the process was fair to the public, and hopefully we can get back to doing what's best for the public at large and for the voters of Costa Mesa and Orange County and not what's best for the governor and his friends," she said.