Panel calls for review of failed fairgrounds sale

A special committee charged with independently examining the proposed sale of the Orange County Fairgrounds called for an audit, additional review of the failed deal and greater overall transparency.

Among the Fair Sale Review Committee’s nine principal recommendations — which a small contingent of the committee’s 12 members presented during the Orange County Fair Board’s meeting Thursday morning — were for all board members and fairgrounds executive staff to participate in training for ethics, state open-meeting laws, board policies, public records requests and other fields.

They also advised that the board urge the appeal of Assembly Bill X4 22, which permitted the sale of the fairgrounds, and for the board to never again take action that would cause the state attorney general’s office to no longer represent the fairgrounds’ interests.

The committee’s 17-page report said that in 2009, the attorney general’s office withdrew its legal representation of the Fair Board, citing a conflict of interest between the board and the newly formed O.C. Fair and Event Center Foundation, which sought to buy the 150-acre fairgrounds.

That loss, the report contends, caused the board to hire outside counsel and consequently spend $804,000 in legal fees between February 2010 and September 2012.

“We are the poster child of how not to sell fairgrounds, and how this should not happen, mismanagement, et cetera,” said committee member Theresa Sears who, along with committee Chairman Mike McCrary, gave the bulk of Thursday’s presentation.

The board unanimously approved the recommendations, which will be discussed and potentially implemented by board members at a future meeting.

The report also questioned several contracts related to the deal, including one with former state Sen. Dick Ackerman’s law firm, which subcontracted work through others. Ackerman worked with local officials and the state after then-Gov. Arnold Schwarzenegger called for the sale of public assets.

The agreement with Ackerman and other contractors were not publicly disclosed at the time of the negotiations, the report asserts.

Ackerman told the Orange County Register that the report was “off-base” and that “a lot of subcontracts are paid through other contractors.”

Also questioned was $8 million paid by the fairgrounds to the now-defunct California Construction Authority, or CCA, for construction and planning services.

According to the report, when Sears asked former fairgrounds CEO Steve Beazley about the payments, he said that the “funds were sent to CCA to safeguard them from the state.”

When reached by the Daily Pilot on Thursday, Beazley, who was not present at the morning meeting, said he had not yet read the committee’s report and did not feel qualified to comment on its contents.

During the meeting, board member Nick Berardino criticized Beazley and previous fair administrators for, in his view, not fully informing the board about the sale process.

Some members of the fairgrounds’ staff “clearly failed — failed — to protect these board members,” Berardino said.

Sears and her colleagues brought to the meeting four boxes, each containing binders packed with hundreds of documents. They stacked the boxes on a dolly to move them around. Sears described the fairgrounds sale saga as serious because the public “came within two inches of losing the property.”

“The problem I’m having, and it’s pretty outrageous to me, is that nobody during all of this process ever said no,” she said.

“I came away really disturbed,” Sears added, of what she deemed a “scheme” to sell the property. “I was so hoping there would be some answers out there that pointed me in a different direction, and I would be wrong. That just did not happen. It actually got worse.”

Board member Dave Ellis, who has contended that a privatized fairgrounds may be more effective than a state-controlled one, expressed some criticism of the report, calling parts “speculation,” “conjecture,” and overtly biased.

“There was a narrative, and y’all stuck to the narrative, and you neglected a bunch of chapters in your book,” he said.

The committee, which was formed in early 2012, did admit that without legal authority, it relied on voluntary cooperation based on available documents and seven interviews.

“The committee recognized that while it could be helpful to interview the parties suggested by Director Ellis, it was not really practical,” the report states. “The committee had no ability to compel anyone to speak with the committee, nor compel complete veracity.”

Ellis said while he appreciated the committee’s work, a majority of the Fair Board at the time of the sale process felt the fairgrounds should be sold.

“That’s a philosophical position,” he said. “We believed that the private sector, be it a nonprofit corporation or an investment management firm, would better and more efficiently” operate the property.

“To this day, I believe that,” he added.

Berardino said some of the board may have been well-intentioned in its effort, but he disagreed with the notion of privatized state fair.

“Most of this stuff is political, and politics is an inside game,” he said. “Anybody who doesn’t think it’s an inside game, they’re kidding themselves … there are people that play in the game and people that don’t. I’m one that does, and I’ll admit it.”

Berardino, who is also general manager of the Orange County Employees Assn., called the fairgrounds sale an opportunity for “money to be made … people want to be upset over the word ‘laundering.’ They’ll be upset, ‘cause that’s exactly what happened. Money was laundered by these people. Period.”

He said if opponents, including Ackerman, want to sue, “Let’s have it, cause I’d love to get started giving depositions.”

McCrary, a former chief of the Los Alamitos Police Department, said it will be an ethical responsibility of fairgrounds CEO Jerome Hoban and the Fair Board to monitor future contracts.

“Transparency is what makes good government … and that’s really what we’re recommending: a lot of transparency,” he said.

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