Fairgrounds Deals Outlined
With only a few hours until the meeting this evening the City released a revised agenda report for the Orange County Fairgrounds Authority (OCFA) meeting. In addition to the presentation of the bylaws of the organization, the most recent revision also includes two critical items - the Purchase and Sale Agreement with the State of California and the Proposed Memorandum of Understanding (MOU) with Facilities Management West (FMW) for the ground lease and operating agreement.
PLENTY OF LEGAL JARGON
The Purchase and Sales Agreement, all 75 pages of it, is replete with all the legal jargon you would expect for an agreement of this type. I'm not going to begin to try to decipher it for you - among my many shortcomings is a lack of legal training - but there are some pearls of information to be found on those pages.
The purchase price, as was the case with the previous set of partners, is $96 million, for which the State will carry a note.
At close of escrow the Buyer (the OCFA) will pay $19.2 million.
Facilities Management West must deposit $1 million in an escrow account controlled by them within three days following the execution of the agreement. That will be applied to the amount, above, paid at close of escrow.
The closing date is set at September 30, 2010, unless another date is mutually agreed upon.
As part of it's agreement the State legislature must have enacted legislation authorizing the sale of the property which also addresses the dissolution of the 32nd and/or 32A District Agricultural Associations and assigning the right to hold the Orange County Fair to the OCFA, which must be signed by the governor.
The state must make arrangement for the existing employees of the Fairgrounds. The OCFA assumes no responsibility for hiring the State's employees.
NO COMPETING FAIR
As long as there is a fair conducted at this site the State may not authorize another competing event in the County of Orange.
MOU BETWEEN OCFA AND FMW
The Memorandum of Understanding between the OCFA and Facilities Management West includes the terms of the ground lease and operation parameters for the Fairgrounds.
The term is 55 years, with no options to extend.
The OCFA will receive a minimum of $750,000 per year beyond the amount necessary to service the debt for the first 5 years. Years 6-10 that increases to $1.5 million; years 11-20 it goes to $2.5 million; years 21-30, $2.85 million; years 31-55, $3.2 million.
PLUS A PERCENTAGE
In addition, OCFA shall be paid a portion of the revenue generated, 5%, with an annual maximum as follows: Years 1-5, $50,000; 6-20, $75,000; 21-35, $100,000 and 36-55, $200,000.
The following operations must be maintained by FMW: Annual Fair (minimum 24 days in July/August); Centennial Farm; Youth Expo; Equestrian use; Civic Center reciprocal uses, parking and such; minimum 18 month transition to maintain existing agreements for the marketplace/swap meet operations. FMW may terminate those agreements following the 18 month period.
FMW will make capital improvements of $6-8 million over the next 5 years.
COMPLETE DOCUMENTS AVAILABLE FOR READING
If you're interested, you can read the entire text of both documents at the city website, HERE.
LONG NIGHT AHEAD
This is going to be a very interesting, very long evening. This subject will be considered following the budget discussions tonight. Hope you have some No-Doze or a large pot of coffee.