Costa Mesa agrees to buy Orange County Fairgrounds from California

The city of Costa Mesa has reached an agreement to buy the Orange County Fairgrounds from the state for $96 million and lease it to a private operator that would continue to stage the annual county fair.

The tentative deal for the 150-acre piece of prime property was reached Wednesday after months of negotiations between Costa Mesa officials and Gov. Arnold Schwarzenegger’s office.

After several hours of debate, the Costa Mesa City Council approved agreements with the state and Facilities Management West Inc., a Newport Beach-based investment firm, just after 12 a.m.

The sale still requires approval from the state Legislature to move forward, and it may face hurdles from legislators who have criticized an ordinance that Costa Mesa approved last month declaring itself a “Rule of Law City” when it comes to dealing with illegal immigration.

Assemblyman Jose Solorio (D-Santa Ana) said in a statement that he still had to be “convinced it’s a good deal for Orange County residents. Also, I know many of my legislative colleagues have great concerns about Costa Mesa’s recent anti-immigrant ordinance, so that will definitely be a factor and the city will need to address it.”

The state put the fairgrounds up for auction to try to cut its budget deficit, but the high bid — $56.5 million from an outlet mall developer — came in woefully short of the state’s expected $96-million to $180-million price tag and was rejected.

Under the new deal, the city would lease the land to Facilities Management West for 55 years. On behalf of the city, the company would pay the state the full price of the fairgrounds over 40 years.

In return, the firm would have the right to develop and build on the property and reap revenue that would come from operating it as a fairgrounds and event center.

On June 8, Costa Mesa voters overwhelmingly approved a measure that locks in the property as a fairgrounds, a move intended to quell concerns that a private buyer or operator could turn the property into stores or housing.

City Manager Allan Roeder said the deal was structured to protect the city, which cut two dozen positions Tuesday night to reduce its own deficit. The agreement, for instance, requires Facilities Management West to make annual lease payments to Costa Mesa, which would increase incrementally from $750,000 to $3.2 million over the years.

tony.barboza@latimes.com