Facilities Management West Wins OC Fairgrounds Race (UPDATED)

AND THE WINNER IS...
The following is the text of a press release issued at noon today announcing that Facilities Management West is the successful bidder for the Orange County Fair and Event Center.

California Names Buyer for Orange County Fairgrounds

Sacramento, Calif. – Today, the Department of General Services announced that it intends to sell the Orange County Fairgrounds in Costa Mesa to Facilities Management West (FMW) of Orange County for $100 million. FMW and other entities submitted offers in response to the DGS’ Request for Proposals dated August 24. The property will be sold “as is” and FMW will make an initial $20 million payment this year. The State will carry a promissory note in the amount of $80 million that requires FMW to make annual payments, beginning in two years and lasting for 35 years.

“This sale creates a new revenue stream to help shore up the state budget and prevent further cuts to programs or the need to raise taxes.” said DGS Acting Director Ron Diedrich. “I’m pleased that through our patience and perseverance we’ve truly earned the highest and most certain return for California taxpayers.”

Under the terms of the promissory note, FMW will make annual payments on the following schedule:

Ø $0 in year 1;

Ø $666,667 in years 2-4;

Ø $6,762, 591 in years 5-10; and

Ø $7,281,806 in years 11-35..

DGS expects to close the sale and transfer ownership to FMW by December 2010.

Last year, the Governor and the Legislature authorized the sale of the 150-acre property as part of a sweeping plan to change how the state manages real estate and create opportunities to raise revenue. The initial high bid of $56.5 million was rejected by DGS in March after it was determined that offer would not obtain the highest, most certain return for the state. In June, the State reached a tentative deal to sell the property to the City of Costa Mesa for $96 million; however, legislation was never enacted authorizing the department to move forward with that sale.

The Department of General Services acts as the business manager for the State of California, with more than 4,000 employees and a budget in excess of $1 billion. DGS helps state government better serve the public by providing services to state agencies including innovative procurement and acquisition solutions, creative real estate management, leasing and design services, environmentally friendly transportation, and architectural oversight and innovative funding for the construction of safe schools.

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FMW MADE BEST DEAL

According to DGS officials, it is anticipated that the sale will be completed by December. My source says that multiple bids were submitted and that the State could have gone with any of them, but the FMW offer and terms of the sale was the best deal for the State. The names and bids of the other bidders will be made public once the deal is completed.

NOT GOOD NEWS FOR THE CITY

While this is theoretically good news for the State in it's quest to balance the budget, it's not good news for the City of Costa Mesa. All the hard work - nearly 18 months of effort - and drama that has been involved in attempting to acquire the property and retain some semblance of local control has gone for naught.

LITIGATION ANTICIPATED

Previously other bidders and interested parties have announced that there will almost certainly be litigation regardless how this bid was finally resolved.

UPDATE: SOLORIO PROMISES LEGISLATION TO KILL THE SALE

In a related matter, Assemblyman Jose Solorio announced via a press release later today that, on December 6th, he will introduce legislation to stop the sale. He indicated that in the RFP for this sale there is wording as follows: " Subject to Department and legislative approval, the Department intends to execute a Purchase and Sale Agreement with the bidder deemed to have offered a bid that best complies with the State's objective of obtaining the highest and most certain return for the Property." It will be very interesting to see how this plays out if the DGS does, in fact, complete the sale BEFORE Solorio can introduce the legislation.