Fair Games Over the OC Fairgrounds

It slammed down as fast as a giant mallet hitting a “Test Your Strength!” game. In May 2009, Governor Arnold Schwarzenegger recommended that the Orange County Fairgrounds be put up for sale.

Schwarzenegger listed the fairgrounds among other state assets he deemed “surplus or underutilized.” By his measure, the land would better serve the state if it were sold to the highest bidder.

Suddenly, all 150 acres of concrete and culture, which had been serving a community purpose since 1949, became just a massive chunk of real estate. The fairgrounds were in play—in a county with more than its fair share of players.

What followed was a story of deception by a small group in a position of power within the fairgrounds hierarchy. Through various contractual agreements between people of wealth and power, a move was made to privatize that public land in what members of the Orange County Fairgrounds Preservation Society call one of the largest, most deliberate land grabs in the county's long history of land grabs.

In response, the Preservation Society—a group of volunteers with commercial and personal interests at stake—stepped up to stop the sale. It argued that because Orange County legislators in Sacramento hadn't pushed hard enough to discourage it—that's how the Del Mar Fairgrounds and the Los Angeles Memorial Coliseum are said to have been saved—the sale of this public land was both ill-advised and illegal.

Following a public auction, plus two more rounds of bids, Facilities Management West (FMW) presented the most compelling offer: a $100 million bid. Before the paperwork could be signed, two lawsuits were filed (one by the Preservation Society, the other by Tel Phil Enterprises), and the sale was halted—despite what appeared to be 11th-hour efforts from the Schwarzenegger administration to push it through.

As of press time, the two sides—those who support the sale and those who do not—were waiting for one of two developments: The opening brief in the Court of Appeal for lawsuits alleging the sale was illegal, or for the new governor, Jerry Brown, to dismiss the sale outright.

If the governor dismisses the sale, the land will be protected and the show will go on. If he does not, the worry is that under the control of FMW—a firm that appears to have ties to the former governor—the fairgrounds as people know them today could be lost forever.

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On weekend mornings, the parking lot of the fairgrounds becomes a patchwork of moving trucks and tents made from tarps. Customers weave their way through the OC Marketplace, where almost anything can be purchased, from fresh bagels to a new car. On weekday afternoons, large, muscular horses carrying willowy teenagers gallop around dirt arenas and leap over wood poles at the Equestrian Center; Olympians have trained on these grounds. For a month every summer, each square foot of the 150 acres is transformed into the OC Fair, when the city of Costa Mesa welcomes more than l million visitors to dine on deep-fried Twinkies, ride the giant Ferris wheel and view the Giant Steer. During this time, the songs of Boston or B.B. King or, come this July, Bob Dylan carry beyond the walls of the Pacific Amphitheatre and into surrounding neighborhoods.

On a cloudy Thursday morning in late February, just as another contentious OC Fair & Event Center (OCFEC) Board of Directors meeting is about to begin, chatty elementary-school children spill out of a bus outside Centennial Farm. Just like the thousands who have come before them, they spend a couple of hours learning about baby chicks and mother pigs.

In the administration building of the OCFEC, the board members sit around a rectangular table, its center cut out, staring inward at one another. The setting feels like an apt representation of the way the group has gone about handling its business: taking into consideration the interests of those at the table before anyone outside it.

The meeting is run much like that of any other governing agency: the Pledge of Allegiance, reading from the agenda, motions and votes—all of which represent an improvement. “They didn't even used to understand Robert's Rules of Order,” says Lisa Sabo, who can often be found sitting in the audience, keeping a close eye and sharp ear for what's discussed and decided.

Meetings have the feeling of a stage play, with audience members watching every movement, reading body language and devouring each statement. When a key topic comes up, such as an increase in vendor space-rental fees, only the occasional groan or whispered discussion is heard.

During the time for public comments, regardless of the subject matter, the board is not required to respond. When questions are posed or accusations made, the group will sit and stare, and then thank the individual for his or her time. On occasion, a conversation will ensue, but that's usually when the stakes are low. At the Feb. 24 meeting, while Sabo played an audio recording in which Steve Beazley, the president and CEO of OCFEC, is denying the existence of an appraisal, he sat slouched in his chair, chewing on his pen, his withering gaze set on Sabo. When her three minutes were up, a bell rang, and the next speaker was called.

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When the Santa Ana Army Air Base was purchased by the state of California in 1949 and authorized to the 32nd District Agricultural Association, the Orange County Fairgrounds found a permanent location in Costa Mesa and became property of the taxpayers. That district functions under the name Orange County Fair & Event Center, and it is a state entity within the Division of Fairs and Expositions, California Department of Food and Agriculture. The history of the fair and its location, however, date back to the late 19th century. Soon after Orange County was formed in 1889, the Fair Corporation followed, and in 1890, a small fair was hosted; it included a few exhibits and a horse race. Every few years until the 1940s, the fair would undergo some transformation or relocation. After finally settling in Costa Mesa, the fair expanded beyond a seasonal five-day fair to include weekend community gatherings, pet expositions, gun shows, motorcycle races, big-name concerts, campgrounds, horse stables and a wildly unsuccessful exhibit called “Al's Brain.”

Its history and its purpose as fairgrounds for the people was why the Orange County Fairgrounds Preservation Society came to be in November 2009, when its survival seemed at stake.

“The fairgrounds were never meant to be an asset,” says Theresa Sears. “You have a lot of people here who love what they do, but the board doesn't seem to care about that. The needy, greedy, seedy—that's what I call it.” Sears was among the earliest and most involved Preservation Society members, with her interest stemming from her long-standing relationship with the Equestrian Center. Sears has spent most of her life around horses, working as a trainer. She points to the history of the fairgrounds, in which revenue and taxes from pari-mutuel betting enabled fairs to survive. “The horses deserve their space,” she says.

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Mike Robbins, a.k.a. “The Cigar Guy,” owns and operates Paradise Cigars with his wife, Jeanine, and has been a vendor at the fairgrounds since 1979. During his first 10 years doing business at the weekend swap meet (before it became the OC Marketplace), he did most of his complaining to a neighbor who happened to be a politician in Anaheim. After a few years of hearing Robbins' venting, the politician gave the disgruntled businessman some advice: If he didn't defend himself by speaking up, no one would. In 1990, Robbins began attending board meetings. Within a few years, he was the unofficial spokesman for the vendors, organizing them when necessary, such as when the rate charged per square foot was increased from $30 to $100.

Robbins remembers the relationship between the board and the vendors wasn't always a pleasant one—but, more important, neither was the relationship between fellow board members.

“They'd yell at each other; they'd fight over issues,” Robbins recalls. That dynamic doesn't exist with the current board, he says; now, “they smile and agree on everything.”

Robbins has made a substantial investment in his cigar business. With the help of a business partner, he says, he spent $100,000 on a mobile cigar humidor that “opens like an ice-cream truck.” Longtime customers will buy a few cigars, then sit and smoke one with Robbins. These days, he loves to talk politics and theorize about the fair board.

“I think they're taxing the vendors in order to pay their lawyers,” Robbins says, referencing the reported $300,000 bill the fair board racked up with its new legal representation.

While the relationship between vendors and the fair board was businesslike, the relationship of the board with the public remained generally cordial until mid-2009. Beginning that July and continuing to the present, a series of questionable incidents and business relationships left opponents of the sale in search of explanation.

But some say the real date that everything changed was March 30, 2007, when Schwarzenegger appointed David Ellis to the board. For Sandy Genis, a former Costa Mesa mayor from the early '90s, that's when “red flags started waving.”

Ellis has one of the county's thickest little black books of political and business connections. A local political blog calls Ellis a “cut-throat consultant.” He has been linked as a lobbyist to Orange County's 1994 bankruptcy. He was a well-paid consultant for the Airport Working Group during its unsuccessful attempt to rally support for an international airport at the El Toro Marine Corps Station. Tax records discovered by the Weekly showed that between 1998 and 2000, AWG paid Ellis more than $626,000, which was 60 percent of the total contributions to the group (see Anthony Pignataro's “Backstabber,” Nov. 28, 2002). After the turn of the century, Ellis was a consultant for various political campaigns, using some questionable tactics to get his men elected, including involvement with a robo-call message filled with misinformation about an opposing candidate.

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Members of the fair board are appointed by the governor, with staggered four-year terms. Appointees are not compensated, but in the past, they have used their positions to acquire perks. An Orange County Register story from April 11, 2008, revealed that during a two-year period, board members gave themselves 8,872 tickets worth $376,532 to concerts at the fairgrounds' Pacific Amphitheatre. The story identified former board member Deborah Carona—wife of OC's convicted-felon former sheriff, Mike Carona—as taking the most tickets, often distributing them to her husband's co-workers and political donors. One current board member, Dale Dykema, was interviewed for that story and saw no harm in the ticket issue, saying, “Unless someone forces a change, it's not likely to change.”

On May 14, 2009, the first blow to the fairgrounds was dealt when Schwarzenegger announced a revised state budget plan, one that included selling public assets; among those listed were the Del Mar Fairgrounds, the Los Angeles Memorial Coliseum and the Orange County Fairgrounds. It was about then when Genis says she began regularly attending fair board meetings.

In response to the then-governor's plan, a two-person task force of Ellis and Kristina Dodge was put together to research the proposal and bring its findings and a recommendation back to the fair board.

At a meeting on July 15, to the surprise of the various stakeholders who had pushed for the fairgrounds to remain publicly run, the board announced its support of the sale to a locally run, nonprofit entity.

Janice Posnikoff, a horse veterinarian at the Equestrian Center, was there that day. “[People in the audience] were all in opposition,” says Posnikoff. “I think [the fair board] was surprised, but they behaved as they usually do—our concerns just fell on deaf ears.”

On July 21, without any indication to the public or stakeholders, articles of incorporation were filed for the Orange County Fair & Event Center Foundation. Six members of the fair board, including Ellis and Dodge, were listed among the board of directors for the nonprofit foundation.

David Padilla was the only fair board member who did not join. He says he tried to warn his fellow board members that forming the foundation would result in public backlash, that the board was placing “a political bulls-eye” on its back.

“I had heard several months before that Ellis was maneuvering to buy the fairgrounds; it made me wary,” Genis says. “Had the state just turned [the fairgrounds] over to the county, with certain deed restrictions, I probably wouldn't have gotten out of my La-Z-Boy.”

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Two days after the foundation was discreetly formed, Assembly Bill X4 22 appeared on the floor of the Senate in Sacramento. The bill that appeared on July 2 made no mention of the sale of the Orange County Fairgrounds, but this amended copy authorized the Department of General Services (DGS) to sell the land through a public bidding process. The bill passed in the Senate, then again in the Assembly.

While the public continued to decry the sale, the fair board, which was supposed to be representing the people's best interest, seemed to be working against it. And spending OCFEC money to do so.

The OC Fairgrounds is the only self-supporting entity like it in the state. To operate, other fairgrounds receive allotments from the California general fund, but the revenue the OC Fairgrounds accrues from its commercial partners has been enough to forgo those funds. However, the spending by the fair board—on consultants, legal fees and an appraisal that never came out—caused suspicion.

At the July 29, 2009, meeting, the board still presented a front that it was investigating options to maintain local control, but in reality, the newly formed foundation was actively organizing its own push for control.

“If we can bring the fairgrounds into local control here in Orange County, we won't have that dark cloud [the state looking to sell public assets] over us every few years, when the state has their budget issues,” said Julie Vandermost, the then-chairwoman of the board.

At that same meeting, Dodge made a motion for the board to authorize the OCFEC staff to hire consultants “to assist in carrying out the governor's and the Legislature's intent.” The motion passed.

According to documents obtained by the Weekly, consultants had already been hired. Former state senator Dick Ackerman, who left office at the end of 2008, had been chatting up local officials and former colleagues in Sacramento. As a former senator, it was illegal for him to lobby former colleagues within one year of leaving office. From May to December 2009, six invoices totaling $104,236.57 were issued by Ackerman's firm, Nossaman LLP, to LSA Associates, a land-use subcontractor that worked with the fair board. The contracts were filed with the California Construction Authority (CCA), a joint-powers authority in Sacramento that works exclusively with state fairs and fairgrounds. By funneling contracts through CCA and LSA, the fair board was able to deny the existence of a relationship with Ackerman. His contract specifically called for him to “[act] as liaison with state elected officials.” Ackerman's legal billings include telephone calls with state senators Dennis Hollingsworth and Mimi Walters, as well conferences with various fair-board members and CEO Beazley, multiple members of the Orange County Board of Supervisors, and Fred Aguiar, who was Schwarzenegger's chief of staff.

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The fair board would later admit it had, in fact, contracted with Ackerman, but it claimed to have paid no more than $19,000. Ackerman did not respond to requests for comment for this story.

In October 2010, following a year-long investigation, the Orange County district attorney's office cleared Ackerman and the board of any conflict-of-interest charges. (On Feb. 24, 2011, the local political news website Voice of OC broke the story that the DA's office ignored what would seem key elements of such an investigation, including making document requests, and did not speak with key parties, including legislators, board member Padilla or anyone from the Preservation Society. The Fair Political Practices Commission, the state political watchdog, is currently looking into the matter to determine whether Ackerman's interaction with legislators could be construed as illegal lobbying.)

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In the fall of 2009, the foundation continued to try to establish itself as a viable contender to assume control of the fairgrounds. The Weekly obtained a letter from Dodge dated Oct. 15, 2009, addressed to then-Costa Mesa Mayor Allan Mansoor. In it, the foundation invited the city of Costa Mesa to appoint two “non-elected individuals” to its board of directors. Dodge called the governor's decision to sell the fairgrounds a “once-in-a-lifetime opportunity for local control of the property” and said the foundation's bid to control the property would “be the 'community's' offer to protect the property from future state budget deficits or political whims.”

If a private foundation were in control, it would be free from all the laws and oversight that prevent the fairgrounds' land from being used as a money-making enterprise. Without being held accountable to the government and the public, lucrative vendor and consulting contracts could be handed out to friends, decisions could be made without any regard for public interest, and in many instances, the public would never know, since open-meeting laws would no longer apply.

When the city requested from the foundation copies of such documents as its bylaws, the financial plan for acquiring the fairgrounds, any planned changes to operation, and any agreements or contracts since being established, the foundation refused.

On Dec. 1, the Attorney General's office, which usually represents all state agencies, resigned from representing the 32nd District Agricultural Association. In a letter addressed to the fair board's then-chairwoman Dodge, the AG's office explained that “given the seemingly intertwined and potentially conflicting interests of the district, the district board members and the nonprofit,” its office had to withdraw its services.

Without state representation, the fair board contracted with the firm Manatt, Phelps & Phillips. According to records, the bill from 2010 into 2011 was nearly $300,000. During a similar period of time, while still represented by the AG's office, the bill reached $57,889.

The Weekly's request to speak with members of the fair board—about the nonprofit foundation or anything else—was “respectfully” denied.

In the months that followed, the attention around the conflict-of-interest allegations increased, in part because of a letter from Assemblyman Jose Solorio to the governor. The public outcry increased, and the foundation fell apart. In December, Dykema, Joyce Tucker and Gary Hayakawa resigned from the foundation, followed by Ellis. By the beginning of 2010, the foundation was a non-player—clearing the way for others to make bids on the fairgrounds.

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On a rainy Tuesday in January 2010, days prior to the fairgrounds auction, assemblymen Jose Solorio and Van Tran—a Democrat and a Republican, respectively—approached the capitol building in Sacramento, pushing a wheelbarrow that was overflowing with post cards and petitions, totaling more than 50,000 signatures against the sale. Following closely behind was a crowd carrying signs reading, “Super Un-Fair,” “The Only Safe Sale Is No Sale,” “Once It's Gone . . . It's Gone Forever!” Among them were state Senator Lou Correa and former Costa Mesa City Council member Katrina Foley.

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When the group reached the governor's office, one of his spokesmen was waiting. Upon receiving the signatures, the spokesman said, “You voted for this,” referring to Assembly Bill X4 22.

Two days later, the small administration building on the fairgrounds was filled in anticipation of the live auction. Outside, protesters held signs and rode horses. In total, seven bids were submitted. One by one, the sealed envelopes were opened, and the bidder and the bid amount were read aloud. Tel Phil Enterprises, the owner and operator of the OC Marketplace and weekend swap meet since 1969, offered $1,000. “It was a protest bid,” says Jeff Teller, the president of Tel Phil, more than a year after the auction. The Orange County-Costa Mesa partnership bid was for $6.5 million.

After the final bid was read, Craig Realty Group, a Newport Beach-based private realty firm, increased its initial offer from $42.5 million to $56.5 million, surpassing the top bid by FMW ($55 million). In less than a minute, the auction was complete, and the three representatives from Craig Realty were smiling smugly and shaking hands.

The state had placed the fairgrounds value at somewhere between $96 million and $180 million. After the auction, some in attendance didn't believe the sale would officially go through. “It doesn't make sense to sell high-value Orange County real estate at 25 cents on the dollar,” Solorio told the Register.

By March, the $56.5 million bid was deemed to be too low, and the Department of General Services rejected the sale, citing in a letter to the governor that it was “not in the best interest of the citizens” and did not “contain the highest and most certain return for the state.”

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The sun is sinking on an afternoon in late February, while a chilly breeze is sweeping through the rows of stables at the Equestrian Center. The breeze carries with it a familiar farm smell, creating the illusion you're not standing in the middle of the suburban jungle.

When the Equestrian Center was established in 1980, it sat on 15 acres. It was cut in half in 2003 to make room for more parking. Today, seven trainers and boarders keep horses at the facility, which has been family-run since 2004. That same year, Lisa Sabo relocated to the center from the El Toro stables after she was given a 30-day notice it was closing.

She only gave a couple of lessons today and is making the rounds to see what the other trainers are up to. She stops and admires each horse and comments on every child or adult riding.

A young girl wearing a multicolored polo shirt is sitting on a regal-looking bay filly that just jumped over a white-and-purple-striped rail. “See how the horse responds differently when she sits back in the saddle?” Sabo asks.

Dozens of riders of various ages and levels of experience come through the stables on a weekly basis, according to Sabo. “It's a great form of exercise,” she says. “And it gets them outside.”

Kate Riley has been coming to the stables since she was 5 years old; here, she learned to ride and developed a love for horses. She's now in her 30s and makes a career as trainer and boarder. Same as Sabo, she spends countless hours roaming from stall to stall, tending to her horses or working with students. These days, she's also talking with anyone who will listen about the latest updates on the future of the land.

“Horses are used for therapy for a reason,” says Lauren Vogel, one of the trainers. “It's therapeutic to come scoop shit.”

But the fair board is determined to pave over the Equestrian Center. Beazley refers to the equestrians as “elitists” and has made it clear that he believes the land is worth more as a parking lot, according to Sabo. At a January 2010 meeting, Ellis told the equestrians, “You couldn't send a kid to USC” on the amount of money the center brings in yearly.

Advocates for the center point out that it functions as an emergency shelter for other Orange County stables when fires and floods happen; that the stables host underprivileged children and give them a chance to learn to ride; and that the number of stables countywide is dwindling, forced out by urbanization, zoning laws and tighter environmental standards.

And the center has made sacrifices. During the past couple of years, it has given up one of its three riding arenas to trailer parking during the OC Fair, which resulted in the loss of business from clients, trainers and entire barns. There used to be a waiting list for stalls; these days, 72 sit empty.

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In April 2010, soon after the auction bids were rejected, the city of Costa Mesa teamed with a few of the bidders and offered the state $96 million in hopes of keeping the fairgrounds in local hands.

In a late-breaking development, FMW was selected over the Costa Mesa consortium to purchase the fairgrounds for a price of $100 million. The Preservation Society has asked about a land appraisal several times, something the fair board has denied it has. Yet documents from 2009 show that Ackerman's firm was invoiced on three occasions by Newport Beach-based Richard Fuller Consulting for “appraisal services” of the fairgrounds. The invoices totaled nearly $37,000. Beazley and the board continue to deny that an appraisal existed.

FMW believes its $100 million bid should be upheld. But the sale is currently locked up in appellate court. Briefings are scheduled for March 28. If Brown doesn't step in before that point—which some, like Tel Phil Enterprises' Teller, believe may happen—the case could be back in the courtroom by mid-April.

Teller is just doing what any businessman would do, says FMW attorney Tom Gibbs—trying to protect his business interests. But Gibbs feels FMW is being misrepresented.

As with the fair board's nonprofit gambit, FMW's allegiances and various ties are questionable, particularly that of Becky Bailey-Findley, who was once the fairgrounds' CEO and, at one point, was involved in Costa Mesa's bid as a consultant. She is now consulting with FMW. There's also well-connected lobbyist Gary Hunt, who has been retained by FMW; he was Schwarzenegger's campaign-finance chairman.

Gibbs echoes the company's stance that it intends to continue the land's use as a fairgrounds. He points to Measure C, which passed in June 2010, which requires voter approval of any changes to that stated usage. He doesn't know how or why Costa Mesa's bid fell through, but it did.

That “it just happened” isn't enough of an explanation for the Preservation Society and other interested parties.

At the Feb. 11 meeting, Posnikoff once again stood before the board to issue her concerns. She pointed to the appointment of Beazley to CEO as the turning point that disrupted “an era of harmony” between the board and the public. “We were met with often hostile words from board members [and] deaf ears, closed eyes and tunnel vision,” she continued. At the end of her statement, she asked for the resignation of the board.

To the surprise of no one, a resignation never came. But both sides of the ongoing fairgrounds saga believe the ride is coming to its end. FMW believes the court will uphold its right to purchase the land. The Preservation Society hopes the governor will step in and the board will get its comeuppance.

Among those watching and waiting is former board member Padilla, who was removed from the board by Schwarzenegger last November. He had begun asking a lot of questions and second-guessing his fellow board members. When the call came from the governor's appointment secretary, no rationale for his dismissal was provided.

Padilla points out the irony of the original stated purpose of the sale being an attempt to close the state's budget deficit. The current $100 million sale price, he notes, would “affect the budget deficit [of $26 billion] for 15 seconds.”

This article appeared in print as “Fair Games: The OC Fairgrounds are in play. But is the whole thing rigged?”