Swap Meet Bidders Go Back to Table

A contentious bidding war over a popular weekend swap meet at the Orange County Fairgrounds was renewed Monday when two potential operators squared off again, this time over how much money should be paid to the state.

The 32nd District Agricultural Assn., which owns the Costa Mesa fairgrounds, wants to reopen bidding this fall for the lucrative Orange County Market Place. The massive outdoor shopping mall is open every Saturday and Sunday from August through June. The Orange County Fair runs in July.

Bids received last year from the current swap meet operator, Tel-Phil Enterprises of Newport Beach, and concession giant Delaware North of Buffalo, N.Y., were rejected after protests from both sides over alleged unfairness and bidding irregularities.

A point of contention this time hinges on how much money is paid for leasing the public fairgrounds. A state report released this week identified the property as underutilized and suggested that selling it would bring in the most money.

Tel-Phil Enterprises, which conceived the parking-lot swap meet in 1969 and has run it since, pays the state 35% of revenues from vendor rents, parking and food. Delaware North last year offered 50% in its bid, arguing that Tel-Phil was underpaying on the value of the swap meet, which generated about $15 million last year. Tel-Phil paid the state about $5 million.

Fair officials asked for public comment Monday on a draft of a new bidding package, which drew 38 speakers -- all but two urging the board to continue its lease with Tel-Phil and owners, Bob and Jeff Teller. Speakers from community groups, vendors and neighbors praised the Tellers for building the swap meet into a quality operation that has become a city institution.

Changing operators would be “like taking Disney out of Disneyland or Knott’s out of Knott’s Berry Farm,” said vendor Dave Lampe.

Jeff Flint, a spokesman for Delaware North, questioned why bidders would get bonus points for pledging revenues up to 40%, with any bids above that scored the same.

Because so many bid elements were subjective and favored the current operator, he said, the only way to produce a better bid was by offering more money.

“The fair board needs to demonstrate to taxpayers that they’re getting the maximum value for the property,” said Flint, who added that Delaware North was willing to contribute additional profits into a building fund for improvements.

But Jeff Teller countered that a winning bid should have as much to do with community commitment and demonstrated success as with money. Delaware North’s swap meet in Phoenix, he argued, pales in comparison with the Orange County Market Place, even though the company has operated it for 10 years.

“It can’t be about promises, about what they say they’re going to do,” Jeff Teller said. “You have to look at the quality of the operation because that’s what makes the money ... 40% of $20 million is more than 50% of $10 million.”

Writing in the 40% cap is a good idea, several speakers said, because it would deter bidders from offering a lucrative amount to the fair board and then renegotiating after being awarded the lease. A letter from Delaware North pointed out, however, that Tel-Phil had renegotiated its payment several years ago.

Fair officials invited more public comment on the bidding process at its regular meeting Aug. 26.

The final bid package will be approved in September, with the lease to be awarded in mid-December.