City approves fairgrounds lease

COSTA MESA — After hours of debate, the City Council voted 4 to 1 Tuesday night in favor of a ground lease agreement with a Newport Beach-based real estate company that will finance and operate the Orange County Fairgrounds for the city, if the state Legislature permits Costa Mesa to buy the landmark property from the state.

Calling the process flawed, Councilwoman Katrina Foley dissented.

The city and its chosen partner, Facilities Management West, still must work out community use and other terms of the $96-million agreement to buy the fairgrounds.

And perhaps more importantly, the lease cannot be finalized unless the Legislature passes laws allowing the sale — an issue that is now in question since the state put the fairgrounds back up for sale this week.

In order for escrow to close by the end of September, a goal the state and the city set during their negotiations, the Legislature must sign off on the sale by Tuesday.

So far, no legislation has been introduced in Sacramento. Assemblyman Jose Solorio, D-Santa Ana, committed to helping city and county residents get the best deal out of the sale while keeping it in public hands. However, he said he first needs to ensure that all areas of concern are addressed.

Meanwhile, the state’s recent move to put the fairgrounds back on the market has intensified the process and it’s no longer clear whether the fairgrounds will remain in public hands at the end of the day.

The California Department of General Services, the state agency in charge of selling the fairgrounds, issued a second call on Tuesday for offers, this time making the city’s offer of $96 million the minimum starting point for bids.

Those interested have until Sept. 30 to turn in bids. The state plans to choose a buyer by mid-October.

But even if legislation is passed in time to finalize the sale to the city, it’s not certain whether Costa Mesa and Facilities Management will end up agreeing on key issues of the 55-year ground lease. Tuesday’s joint meeting with the City Council and the Orange County Fairgrounds Authority, a body that consists of the five council members, focused mainly on the unresolved issues between the city and the company.

Facilities Management removed portions of the lease that called for both parties to draft a joint policy that provides nonprofit, community and educational groups with fair access to the grounds. The real estate company wants to draft the policy on its own. The company also deleted portions of the ground lease that prohibited it from participating in other competing events and festivals throughout the county.

At the end of the night, Guy Lemmon, Facilities Management’s spokesman, said it would continue negotiating with the city on both issues.

The company is also opposed to providing the city with access to the property for up to five events per year, but the Fairgrounds Authority voted to pass an alternative option that allows the city and Facilities Management to work together putting on fairgrounds events.

The company, however, struck out portions that prohibited it from changing the name of the center or the events that take place on the property without the Fairgrounds Authority’s approval. The company refuses to negotiate on that matter. However, representatives agreed to keeping the name of the annual Orange County Fair.

Facilities Management also deleted portions that prohibited it from hosting raves — a term for late-night dance parties — on the property. Alternative language, which was approved, allows Facilities Management to hold school events like proms as long as adult chaperones are present.

In a prepared statement, Lemmon said his company was started by three Orange County families that want to protect and preserve the fair.

“The lease agreement before you tonight for approval assures the community that the ambitious goals you set out to achieve will be accomplished and implemented as promised — and with local control, something the city never had under state ownership …, " he said.

Janice Posnikoff, a local veterinarian and vice president of the Equestrian Coalition of Orange County, urged the council not to pass the ground lease as it is.

“I stand here in front of you today to ask you not to vote for this lease tonight,” she said. “Instead, I ask you to support not selling the property completely and also consider finishing this lease. This lease isn’t finished and it’s not one that should be voted on.”

Theresa Sears, an Orange resident and a board member of the Orange County Fairgrounds Preservation Society, told the council that the lease doesn’t guarantee the society’s mission to protect the public and preserve the fair.

But she also said that she didn’t expect the council to support the preservationists’ position.

“I fully expect you to pass this tonight.”