No blue ribbon on sale of fairgrounds

Gov. Arnold Schwarzenegger’s much-ballyhooed plan to ease the state budget crisis by selling off landmark properties is facing a surprisingly tough first test in Orange County, a place where public officials regularly talk up free markets and privatization of government.

A rare bipartisan wave is rising to block the governor’s proposed sale of the beloved Orange County Fairgrounds, including conservative politicians who at first backed their Republican governor but are now urging him to call off today’s auction and keep the land in public hands.

The fairgrounds, in Costa Mesa a few miles from South Coast Plaza, holds a special place in the hearts of Orange County residents, who flock each year to its decidedly old-fashioned fair to hear dated music groups, ride the Ferris wheel and devour deep-fried everything.

In the collision between political ideology and nostalgia, nostalgia is winning, said Orange County Supervisor John Moorlach, a conservative Republican. Privatizing public lands makes sense in some situations, he said, but not this one.

“In normal circumstances, we’re all for that,” he said. “But this is a property that has significance for everybody in Orange County.”

The opposition to the auction doesn’t bode well for the proposed sale of such high-profile properties as the Los Angeles Memorial Coliseum, Del Mar racetrack and San Quentin State Prison.

The Cow Palace in Daly City, fairgrounds in Ventura and San Diego and even the site of the state fair in Sacramento were also listed in the governor’s May budget proposal as properties the state might unload. The sales were supposed to raise $600 million to $1 billion for the general fund. But legislators balked at most of them, agreeing only to sell the Orange County Fairgrounds, a 150-acre parcel that includes a concert amphitheater, exhibition halls, an outdoor swap meet and an equestrian center.

Orange County supervisors and city leaders have pushed back aggressively. Both agencies have passed resolutions urging the governor to drop the plan and the city of Costa Mesa is threatening a June ballot measure that would require a public vote before anything is built, potentially reducing the land’s value. Costa Mesa officials personally pleaded with Schwarzenegger to back off. He refused.

As the fairgrounds heads to the auction block, government leaders here have adopted a “if you can’t beat ‘em, join ‘em” stance.

“We tried everything to get the governor to rescind the sale,” Moorlach said. “Plan B is for the county and Costa Mesa to become co-bidders.”

Schwarzenegger was successful in winning expanded powers to sell and lease back 11 large state office buildings, including the Ronald Reagan building in downtown Los Angeles, and those sales are expected to begin in a few weeks, administration officials said.

But a governor’s spokesman was vague when asked if Schwarzenegger intended to make another attempt at selling off the highest-value properties in this year’s budget session.

“The governor has said time and again that the state shouldn’t be in the real estate business,” spokesman Mike Naple said. “We should continue to look at opportunities to maximize the value of available real estate assets.”

The real estate push came as the state was looking to cut $45 billion from the budget. It has completed those painful reductions but is projecting an additional $20-billion shortfall this year.

The governor said last year that he was thinking from a business standpoint in pitching the real estate sales. He also asked for broader powers to enter into long-term leases on state-owned property. The Legislature agreed, giving the administration authority to extend leases beyond five years.

That gives the state’s Department of General Services more flexibility to enter into decade-long leases at properties where the state holds acreage it’s not using, said Jeffrey Young, a department spokesman. In its first effort, the state will seek long-term partnerships with developers interested in acreage surrounding Chino State Prison, with the state sharing in the profits of any development.

General Services is also finalizing plans to market 11 large state complexes, including the Reagan building in downtown Los Angeles, the Franchise Tax Board campus in Sacramento and the Public Utilities Commission building in San Francisco. The plan is to offer to lease the buildings for a set number of years, guaranteeing income for investors, Young said.

Those sales could raise up to $660 million, according to state estimates.

“Our intention is to lease for up to 20 years,” he said. “But the market is going to tell us what buyers want.”

Proposed sales of the highest-profile properties -- the Coliseum and the like -- hit a snag in the Legislature, with lawmakers arguing against selling off landmarks in their districts. The Legislature agreed to the Orange County Fairgrounds sale in part because it initially had the backing of some local lawmakers and governments, including the Orange County Board of Supervisors.

Moorlach said the board changed its mind because there were too many unanswered questions about what might happen with the fairgrounds property.

Now, Orange County and the city of Costa Mesa think their best strategy is to jointly purchase it. The state estimates it could bring in $96 million to $180 million. They are among seven bidders who have put up the required $50,000 deposit. The bids will be unsealed today at the Orange County Fairgrounds.

The two governments signed a joint powers agreement to guide the purchase and potential future operation of the fairgrounds, Costa Mesa Mayor Allan Mansoor said.

Unless they are outbid, their priority is to keep the land as a place where people will continue to display cattle, attend car shows and show off prized tomatoes, he said.

“It’s the only way to guarantee it remains a fairgrounds,” said the mayor.

Mansoor said the experience has left him disappointed with the governor.

“This is not the way to solve our budget crisis,” he said.

catherine.saillant@latimes.com