Fairgrounds down payment: $19.2 million

A complex deal that would allow Costa Mesa and a private party to purchase the Orange County Fairgrounds from the state would require a $19.2 million up-front payment toward the $96 million purchase price, city officials said.

The fee for the 150-acre property would be paid by the city before the close of escrow, but it’s also the sum of the first five years of mortgage payments, said City Manager Allan Roeder.

“This is basically the down payment,” Roeder said. “It’s pre-payment of the first five years of debt service.”

The state announced Wednesday that it has tentatively accepted the city’s offer for the fairgrounds. The transaction would have to first be approved by the state Legislature, which could be stalled because of concerns raised by the Latino Caucus about Costa Mesa declaring itself a “Rule of Law” city in ceremonial opposition to illegal immigration.

If the sale transaction is finalized between the state and Costa Mesa and the down payment is made, the Orange County Fairgrounds Authority, which is made up of the five council members, will not have to make a mortgage payment until the sixth year, at which point the mortgage payment will be $5.6 million a year, Roeder said.

Facilities Management West, a Newport Beach-based real estate company, would finance and operate the fairgrounds for the city.

Facilities Management would also make the initial $19.2 million in payment to the state and the subsequent mortgage payments for the next 40 years.

While Costa Mesa would hold the title of the property, it would not be financially responsible.

Facilities Management will pay Costa Mesa $750,000 in annual rent for the first five years of the lease. The rent will go up to $3.2 million throughout the life of the lease.

An agreement between the city and Facilities Management that was approved early Wednesday morning allows the private group to lease the fairgrounds for the next 55 years.

Although Costa Mesa will not have much say in the day-to-day operations of the fairgrounds, the agreement ensures that the property will remain a fairgrounds and exposition center. Measure C, which easily passed during the June primaries, also ensures that the land would not be developed for other purposes.

Many residents who spoke during Tuesday’s meeting before the City Council voted 4-1 to enter into the agreement with Facilities Management raised concerns about the level of oversight and public involvement they will have under the leadership of Facilities Management.

“This is not what we fought hard for,” said Theresa Sears, a Fullerton resident who serves on the board of the Orange County Fairgrounds Preservation Society. “I feel like the city is in a very subservient role and I think even more so is just mentioned by the fact that [you’re] now ‘not going to give a penny more and I want all the money.’ I think everybody is having a tough time with that one. I don’t understand that. I don’t believe they are safeguards for the public. I personally wouldn’t make a deal out of fear.”

Guy Lemmon, spokesman for Facilities Management, said only time will tell that his organization’s goal is to honor and preserve the fairgrounds.

“We have been very active in the pursuit of this heritage and asset since the state was going to sell it,” he said. “And all during that time, from last year up to and including now, it has been our interest to keep it under its current configuration as a fair, as a marketplace, as a centennial farm and an equestrian center.”