Arnold Pulls A Fast One...

WHAT COULD POSSIBLY HAPPEN OVER THE HOLIDAYS?
So, I ask myself, what could possibly happen in this Fairgrounds drama now that there is a firm temporary restraining order in place until at least January 10, 2011? I know that the folks at Facilities Management West are planning to file paperwork with the appellate court, but beyond that I thought we were home free for the holidays. HA! Silly me!

SCHWARZENEGGER APPOINTS A MAJORITY
Today Governor Arnold Schwarzenegger appointed three new members to the 32nd District Agricultural Association AND the 32a DAA and re-appointed two current members. The current members re-appointed are current Chair Dave Ellis and David Dykema. The new folks are Ali Jahangiri, a 35 year-old Republican lawyer from Newport Beach; Douglas La Belle, a 67 year-old retired City Manager (Chino Hills) from Costa Mesa (also a Republican) and Alexander Vellandi a 40 year-old Republican attorney and real estate broker and business owner from Ladera Ranch. You can read about their backgrounds and the others Schwarzenegger appointed at the last minutes of his reign HERE.

STATE DEMANDS A QUIT CLAIM TITLE TRANSFER!
Virtually simultaneously, the State and Consumer Services Agency directed the Fair Board to meet to consider a quit claim deed transferring the Orange County Fair and Event Center from the 32 DAA to the 32a DAA, which was formed with the original legislation authorizing the sale of the Fairgrounds when this whole basket of snakes was created. That meeting is scheduled for 4:30 p.m. January 1, 2011! That's right, New Year's Day! How do you guarantee limited opposition at a meeting? Why, hold it on a holiday when folks will be immersed in watching football games and replays of the Rose Parade, that's how!

ARNOLD STACKED THE DECK
Clearly, the governor is trying to circumvent the legal process and has stacked the Fair Board deck with new folks who, along with known kindred spirits, will form a majority to follow his wishes. He may, however, have overstepped himself and violated the current temporary restraining order. That's for the lawyers to sort out.

WILL THEY HAVE A QUORUM?
There appear to be even more complications in this farce. It seems that at least a couple of board members are out of town, vacationing. I suppose it's possible that there will be no quorum at the meeting on the 1st, but I can't imagine that kind of a gaffe being made - even by this Fair Board. Nope, I suspect we'll see the new guys plus Ellis and maybe one more which will form a quorum. Then it will probably only take 4 of the 5 to vote for the quit claim transfer and the State will have a clear path to sell the property.

LOOKS LIKE A MUGGING TO ME
Seems to me that this validates the questionable status of the title to the Fairgrounds - a point that has been made frequently over the past few months not only by Fairgrounds sale opponents, but the Fairgrounds management, too. Apparently the State doesn't really own the Fairgrounds, so it can't sell it, which may make the whole process being conducted by the Department of General Services illegal. However, if this maneuver goes through - holding a gun to the heads of the Fair Board members and ordering them to hand over the property - then it's clear sailing for The State and Facilities Management West to consummate their deal once the TRO is released.

WHICH LAWS HAVE BEEN VIOLATED?
I find myself wondering just how ticked-off the appeals court must be right about now... I know how angry opponents to the sale are tonight. I wonder if the court has any recourse in this process, or will they be left with their collective jaws on the floor like the rest of us.


I WARNED YOU...
I've cautioned you in the past to never relax when contemplating this Fairgrounds Sale issue. This is why... There is so much money at stake here - hundreds of millions of dollars - that nothing at all will surprise me as this mess moves forward. Merry Christmas!

Fair Board Trying An End-Run?

UH-OH!
The staff report for the Fair Board meeting Monday, August 2nd is posted and can be read in total HERE. It's clear from reading that report that the Fair Board is trying an end run on the sale of the Fairgrounds.


CHAIR DODGE'S LETTER TO ARNOLD
Once there you will scroll down a few pages through the agenda to a letter dated today from Board Chair Kristina Dodge to Governor Arnold Schwarzenegger informing him that in it's meeting on the 2nd the Board will discuss a potential revenue sharing plan between the 32nd DAA and the State of California. Following Dodge's letter you will find a lengthy and thorough staff report outlining the proposal being formulated to present to the State as an alternative to the deal that is pending with Costa Mesa.

THE "TABLED" DEAL FROM APRIL
This is the deal they were told to table last April, apparently because it would interfere with negotiations between the City of Costa Mesa and The State.

THEIR GOALS
As you read down through the report you will find the goals of this plan, which I've reproduced here:

I. Recommended Goals of a Revenue Sharing Model

1) 32nd DAA creates revenue sharing model analogous to a purchase in most of its economic features using the State’s desired purchase price of $96 million dollars.

2) OCFEC is preserved as a fair and event center.

3) Offers reasonable scenario to “pose the best opportunity for the State to achieve the highest and most certain return for the property” as stated by the Department of General Services.

4) No taxpayer dollars assumed in financial analysis. OCFEC has no ability to levy taxes to support its programs or facilities. User fees will fund 100% of the plan.

5) Continuity of fairgrounds operations by an experienced staff.

6) OCFEC moves from being a revenue neutral State Agency to a revenue contributing State Agency.

7) As such, OCFEC is removed from “underutilized” status.

8) As OCFEC profitability increases, so too does the contribution to the State of California.

9) OCFEC employees’ jobs and benefits are kept whole.

10) Property remains in the State’s real estate holdings.

11) Number and size of public-private partnerships is expanded.

12) 32nd DAA enters into discussions with State of California on the appropriate application of the Governor's California Performance Review as it relates to governance restructuring of the DAA to permit the DAA more flexibility in the entrepreneurial aspects of its operations while maintaining appropriate governance procedures such as open meeting, financial disclosure and conflict of interest requirements currently applicable to the DAA.

FINANCIALS
For example, under their Item ll, Price and Terms of Payment Summary, they present a plan that stretches out for 80 years and provide a summary of total payout that exceeds the current City deal. It appears, however, that the State would receive less money up front - the City deal calls for $19.2 million in prepaid interest at the beginning. This deal calls for $5 million up front, then 14% of the gross revenues in years 2-25, with a minimum annual of $2.5 million. They would pay 7.5% of gross revenues in years 26-80 and the State retains title to the property in perpetuity.

READ THE REST YOURSELF
I'm not going to attempt to repeat every element of the staff report here, honest. You can read it for yourselves. The staff report goes on and on, with exhibits, floor plan, financial summaries, etc. I'm not going to attempt to interpret all that for you - it makes my head hurt. Some of you who use that side of your brain more often may enjoy that trip through Numbersland, so I'll leave it up to you.

THE GOAL IS CLEAR
One thing is very clear to me - the Fair Board is pulling out all the stops to quash the sale of the Fairgrounds and are throwing this plan into the mix at what amounts to the last minute to sway the Governor and the folks at the Department of General Services.

WHY NOW?
If accepted by the The State, this would kill the proposed sale. I asked CEO Steve Beazley a few minutes ago why this was being proposed now. He told me that was a question for the Board Chair, Kristina Dodge.

WHAT DO DODGE AND ELLIS KNOW?
Well, one can read much into that - like maybe the well-connected Mrs. Dodge and her Vice Chair, political king maker, Dave Ellis, have heard from their pals in Sacramento that the City deal is dead and they're trying to head-off the placement of the Fairgrounds back on the auction block, which is what the DGS leadership said they would do immediately if our deal falls through.

THIS MAY ALREADY BE A DONE DEAL!
I postulated with Beazley that, at the meeting Monday, the Board would hear this proposal presented and explained, mull it over and perhaps recommend changes, then approve it for presentation to the Governor. Beazley agreed with that scenario, but reminded me that the Governor probably already has this plan in his hands today.

EXPECT A BIG CROWD MONDAY
I imagine Monday's Fair Board meeting will draw a pretty large crowd, including many Fairgrounds employees and vendors of the Marketplace and Fair vendors, too, since the Fair is dark on Mondays and Tuesdays. It's going to be a very, very interesting meeting - to say the very least. I'll report back when I know more.