Newport Beach firm places winning bid on OC Fairgrounds

In less than a minute of live bidding, Newport Beach-based developer Craig Realty Group came away with Thursday’s clinching bid of $56.5 million on the Orange County Fairgrounds. The unsealing of initial bids from seven prospective buyers, along with the public auction, drew a packed house at the fairgrounds in Costa Mesa.

“This is an opportunity to improve what’s here,” said Steven Craig, president and chief executive of Craig Realty. “I’m happy to keep the fair here, but we’d like to find a way to make it financially viable, maybe a private enterprise approach will work.”

His commercial development company that dubs itself a leader in producing upscale factory outlet centers was deemed the winning bidder by officials from the state Department of General Services, who presided over the opening of initial bids and the live auction that followed. But the highest bid, which initially came in at $42.5 million, was considerably lower than the $96 million to $180 million range that state officials were looking to get from the sale of the 150-acre property.

The winning bid was also nearly 10 times bigger than the joint initial offer of $6.5 million made by the city of Costa Mesa and Orange County. County officials said they were willing to bid for up to $40 million at live auction, which ended up being opened at the highest initial bid of $55 million.

Pressed for details, Craig wouldn’t elaborate on how he proposes to make the fairgrounds “financially viable.” He said he was unaware of a plan by the city of Costa Mesa to place the issue of the fairgrounds’ land-use on the June ballot. At this time, he said, he has no specific plan for the fairgrounds site. He wouldn’t give any guarantee that he would keep it as a fairground.

The other initial bids included a $55 million offer from Facilities Management West, a $20 million from Anaheim Sports Holdings, a $17 million offer from Advanced Real Estate Services, and a $2 million offer from the Newport Beach consulting firm Forde & Mollrich.

At live auction, Craig Realty raised its bid to $55.5 million. Then Advanced Real Estate Services countered with an offer of $56 million. But, in the end, Craig Realty outbid the Lake Forest developer by a half-million dollars.

Tel Phil Enterprises, Inc., which runs the weekly swap meet at the fairgrounds, placed a protest bid of $1,000.

“This is a bid on behalf of the people of Orange County,” said Jeff Teller, president of the Tel Phil company. “The fairgrounds is nothing but a jewel of Orange County.”

At least two dozen men in suits — and no women — filled up the two front rows of the room where the auction took place. All were bidders or their representatives. The rest of the room was occupied by members of the press. There were also community members in the room, who wore big orange buttons bearing the words “derail the sale” in bold black letters.

After the auction, Orange County Supervisor John Moorlach said that with a winning bid this low, he hopes Gov. Arnold Schwarzenegger closes this “Pandora’s box” and calls off the sale for good.

A developer winning the bid is what Costa Mesa and county officials had feared the most. It’s what Councilwoman Katrina Foley called “the worst case scenario.”“We only have so much money and we can’t put the tax payers’ dollars at risk; we already cut $19 million from our budget,” Foley said, referring to how the city was limited in bidding for the fairgrounds.

Outside the auction room, Brad Shefmire, who was among the people protesting against the sale, struck an optimistic note, even though a developer had cast the highest bid.

“I think this is a win for us,” said Shefmire, who runs his equestrian business out of the fairgrounds. “I see this as a win that the state got a low bid. This has given me hope. It’s a push for the sale to be stopped.”

The fairgrounds is not yet officially sold. The state will first have to accept the realty group’s offer, which is the next step of the process. The state also has the option to reject Craig’s offer.

“The administration is going to review the bid and see if it’s beneficial to the state of California,” Mike Naple, a spokesman for the governor, said Thursday from Sacramento.