Group protesting city’s fairgrounds partnership

COSTA MESA — American Fairs and Festivals, the group that Costa Mesa once negotiated with to finance the purchase of the Orange County Fairgrounds, is protesting the city agreement granted to the winning company, Facilities Management West, calling the deal unfavorable and biased.

In a letter to Costa Mesa City Manager Allan Roeder, American Fairs argues that Facilities Management, the Newport Beach-based real estate company that would finance and operate the fairgrounds for the city, was given preference and an unfair advantage over any other interested financier or operator.

“If our client would have been aware that certain objectives set out by the council would be ignored, while others were placed on a pedestal, we would have had an opportunity to submit a more favorable proposal,” the letter stated. “In effect, the deviation of the council’s objectives for the other party gave them an advantage that our client did not have. As such, we are left with no other recourse but to appeal the council’s decision.”

In its deal with Facilities Management, Costa Mesa, which is working on buying the fairgrounds from the state for $96 million, ignored many of the eight objectives it established in its search for a fit operator and financier of the fairgrounds, including a governance process where the operation would be under community oversight, the letter states.

American Fairs, the group made up of the stakeholders and the vendors already operating at the fairgrounds — including Tel Phil Enterprises Inc., the company that runs the weekly O.C. Market Place swap meet — contends that the deal between the city and Facilities Management satisfies only one objective: “The potential for economic benefit to the city.”

But even that objective is not sound for the city because unless major changes are implemented, the fairgrounds cannot generate enough revenue to fulfill its debt, and hence the transaction could later put Costa Mesa in a financial predicament. The letter cites Orange County Supervisor John Moorlach and the city’s financial advisers’ analysis to back up American Fairs’ argument, saying its numbers and the city advisers’ numbers mirror one another.

Roeder would not comment on the numbers that were shared with American Fairs, saying they were discussed during negotiations and he has not agreed to make them public. But he said it’s a matter of how the numbers are interpreted.

“We have a very different understanding of the numbers and their characterization than American Fairs,” Roeder said. “We simply disagree on that point.”

The city also disagreed with American Fairs’ findings.

Costa Mesa City Atty. Kimberly Hall Barlow on Monday responded to Adorno Yoss Alvarado & Smith, the firm representing American Fairs, saying the City Council and the Orange County Fairgrounds Authority disagree with its findings.

“There is no administrative appeal process currently available to your client with respect to the council’s decision,” Barlow’s letter stated. “The MOU [memorandum of understanding] was entered into on June 18th.

“Any request for rehearing or reconsideration would have been required to be filed within seven days of the date the MOU was approved … thus, even if there was a basis for your client’s ‘appeal’ of the decision, your request was not timely. Thus, no rehearing request will be agendized for discussion.”