Appeals court essentially kills deal on sale of Orange County Fairgrounds

In a decision that all but kills a deal to sell the state-owned Orange County Fairgrounds to a private investment group, an appeals court panel has ruled that the bidding process for the 150-acre property was flawed and must begin again if a sale is to proceed.

The would-be buyer, Newport Beach-based Facilities Management West, said it may challenge the ruling, issued Tuesday by a three-judge panel from the state 4th District Court of Appeal. Such an appeal would go before the state Supreme Court.

“We disagree with the appellate court’s decision,” said company spokesman Guy Lemmon. “We are weighing our options and considering an appeal. The sales process was open, fair and in full compliance with the law.”

Countered Assemblyman Jose Solorio (D-Santa Ana), a sale opponent who has introduced legislation seeking to keep the site of the popular Orange County Fair in public hands: “The court’s decision today is a great victory for the residents of Orange County. I hope the governor lets us keep our fairgrounds public and does not put the fair out to bid again.”

In the 21-page opinion, Presiding Justice William Rylaarsdam wrote that the state Department of General Services erred last year when it didn’t get an outside appraisal of the property before striking the $100-million deal with Facilities Management West.

“The Legislature reserved for itself the opportunity to veto the sale if it was not satisfied with the terms,” Rylaarsdam wrote. “It never got that opportunity … any future sale must begin at square one.”

In 2009, then-Gov. Arnold Schwarzenegger put the fairgrounds and other state properties up for sale to help reduce the state’s budget deficit. The state agreed to sell the O.C. fairgrounds to Facilities Management West in October for $100 million — with a $20-million down payment and a 35-year note — after rejecting earlier bids of half that amount.

“What this does is the inevitable: It puts [the sale] in the hands of the governor,” said O.C. Fair President and Chief Executive Steve Beazley.

Gov. Jerry Brown hasn’t issued a public opinion on the sale.

Solorio’s bill, AB 35, would put the fairgrounds in the hands of the Fair Board and funnel a portion of the property’s revenue to the state. It was approved last week and is on its way to the state Senate.

If California again decides to try to sell the property, officials should include a process for losing bidders to appeal the decision, the appellate panel ruled; such a process was not available before.

One company in particular, Advanced Real Estate, actually made a higher bid and contended that the sale was tilted in Facilities Management West’s favor. But Advanced Real Estate had nowhere to make its case outside a courtroom, the panel ruled.

“There was no opportunity at all to present such a claim administratively, and there should have been,” Rylaarsdam wrote.

joseph.serna@latimes.com