Following an Orange County Register opinion piece that took direct aim at the conservative cred of local Republican politicians who opposed selling the Orange County Fairgrounds to the highest private bidder, one of those called-out has fired back.
Orange County Supervisor John Moorlach, writing in his emailed newsletter, lays out his reasons for being wary not only of the earlier bidding process but the current deal on the table that would have the city of Costa Mesa owning the land under the fairgrounds, which would be leased to a private company.
“I'm a little tired of being the 'doom and gloom' person,” states Moorlach, who owes his political career to having predicted the 1994 Orange County bankruptcy, “but I would expect this transaction to fall apart within 10 years.”
But Moorlach makes the deal sound inevitable given the “tenuous” times we're in.
“That's what happens when you have a desperate deal, with a desperate Governor, at a desperate time,” he writes. “And I'm not optimistic that our Governor will wake up in time to stop this madness.”
Fresh from a nap, Arnold Schwarzenegger was staring into a $20 billion budget hole a year ago (as opposed to the $19 billion one now) when he revealed his desire to sell “high value” state assets like fairgrounds to raise much needed cash for California.
The Costa Mesa fairgrounds were quickly propped up as among the first chunks of state property to go on the auction block, with the city, county, private companies and even members of the state fair district board all licking their chops at the thought of snagging 150 acres of prime Orange County real estate.
With visions up to $180 million dancing in Arnie's 'roid-carved head, the land and facilities were put out to bid in January. Newport Beach-based outlet mall developer Craig Realty Group barely beat the competition with its $56.5 million nod. But that was deemed too measly by the Schwarzenegger administration, so the sale offer was yanked.
That represented the beginning of the end for Brian Calle, who replaced Steven Greenhut as a Register opinion writer. Like any card-carrying libertarian hack, Calle believes a market solution would be best for what had been a public asset.
In other words, the state should have let Craig Realty Group have the land for a song. The private company would have then found the best use for the land, because it would have been guided by the market instead of commie state bureaucrats.
Alas, that's a missed opportunity. But check out what happened next, as Calle puts it in his piece “Fairgrounds Sale Still Could Get Deep-Friend”:
Meanwhile, back in Costa Mesa, Mayor Alan Mansoor, the City Council, Orange County Supervisor John Moorlach and local community leaders and activists opposed the sale of the fairgrounds to a private company. They contended that the fair is a county tradition, a public asset and, basically, should stay under the control of local government. So much for conservative principles, such as letting the market set a price or putting property to its highest and best use.
The Mansoor-Moorlach socialism, which must've made Obama green with envy, led to much lobbying and whining and eventually the “manufactured” Costa Mesa ballot initiative that voters overwhelmingly passed, restricting the usage of the property as a fair in perpetuity.
With a quasi-partner in Facilities Management West—the local company that came in third in the bidding Craig won but first in the deal cut with Costa Mesa to run and, if FMW sees fit, re-do the fairgrounds—Costa Mesa got the Terminator to bite off on a $96 million offer.
Calle sounds like he's kissing his sister as he writes . . .
This public-private partnership is hypothetically a win-win. Taxpayers are off the hook. Voters keep their fair. Investors turn a profit. The city generates new revenue. The state gets $96 million to offset its budget deficit. Everyone wins except, one might argue, those of us ascribing to a limited government philosophy. It would be preferable for FMW or another private company to buy the land outright without any government meddling. But in this case, the partnership between Costa Mesa and FMW is probably the best outcome.
Fortunately, Calle's tale still has villains: unionized state workers and the legislators who do their bidding. Because the Legislature must still approve this deal, the opinionista fears the 82 state workers who will lose their jobs to a city/FMW takeover can convince enough lawmakers to kill the deal. Hell, some Assembly members and state senators are already spitting latte over Costa Mesa declaring itself a “rule of law” city on illegal immigration. Can you say payback? In Spanish?
The glimmer of hope for Calle is FMW chief operating officer Guy Lemmon, who took time away from his busy churro-making schedule to meet the Register's editorial board recently and outline a business plan that Calle calls “a crowd pleaser—right up there with pancake-batter dipped ice cream.”
He forgets to mention the indigestion that soon follows, but I'm getting ahead of myself.
Without really going into any detail about that business plan or why it's so golden, Calle implies that because a private company will be directing the property, it “will be better served in the hands of people committed to enhancing its uses.”
In other words, you folks who live around Pacific Amphitheater, dust off those ear plugs and noise-o-meters. (The city might also dust off its numerous lawsuits against the fairgrounds over noise and traffic issues over the years. Wait, as the landowner, can the city sue itself?)
I'm getting ahead of myself again.
Without any more than a Frankenstein's monster-like, “private company good, Latino lawmakers bad,” Calle writes:
If the arrangement is approved, it looks like it will work out for taxpayers, at least for the short term, and, if things go as planned, for the long term as well. But the process would have been much smoother, more profitable and more beneficial for local residents in the hands of the private sector and free of government meddling and bureaucratic red tape.
Sadly this scenario is a perfect local example of the failings of big-government philosophy and the problems it creates. Local elected officials used political power to hamper the market. Some special interests encouraged them to do so. Voters implored legislative solutions. Government picked economic winners and losers. Private business played ball and kowtowed to government whims.
What falls by the wayside is a constitutional-government approach that dictates free markets and responsible, unfettered business and private solutions, as opposed to government impositions.
Them's obviously fighting words to John Moorlach.
First, the supervisor—who joined the hard-right Costa Mesa Republican Assembly shortly after the Stone Age—informs in his Sunday "Moorlach Update” that before Lemmon made his swing by Register HQ, he'd already been by to kiss his ring.
Who's your messiah now, Brian Calle?
"My opening salvo was something like, 'I want to wish you much success, but I don't think this will be a financially profitable venture for you and your company. Would you please convince me that I'm wrong?'” Moorlach says he told Lemmon.
The accounting whiz-turned-politico claims FMW is paying too much for the opportunity to run the fairgrounds. Further, the $96 million the city and FMW are paying—and "the Governor, for whatever reason, became fixated on selling the property for”—is over $25 million more than the land is worth.
"That's why the OC Board of Supervisors dropped out of the deal,” Moorlach says of a onetime joint city/county bid to buy the land.
Speaking of which, the $96 million the state stands to raise is but a droplet in that mighty large budget deficit bucket, notes Moorlach, who reserves his harshest doomsday scenario-making for FMW.
He says FMW's payment stream to run the fairgrounds "resembles a debt.”
Hey, is Bob Citron their treasurer, too?
"To increase net revenues,” Moorlach writes, "FMW will have to implement a number of interesting 'business' maneuvers.”
He then ticks them off:
- "Consider increasing the ticket price to the annual fair;
- "Add additional 'fairs'” on the site during the remaining eleven months of the year;
- "Provide an ongoing concert venue during the remainder of the year;
- "Add buildings that would allow for a 'convention-lite' opportunity for venues too small for the Anaheim Convention Center and too large for any available hotel in the county;
- "Decrease the current staffing;
- "Negotiate a new contract or approach to the 'swap meet' venue on the weekends;
- "Find other "rentable” opportunities for the facilities.”
In one quick, bulleted list, Moorlach not only reveals the FMW "business plan” Calle ballyhooed, but he lays out most of the future saddle burrs that will have Costa Mesa residents flooding into the Costa Mesa City Council Chambers to scream about. And, make no mistake, the people who ring the fairgrounds have had their way with the council more successfully over the years than the Segerstroms, car dealers and Mexican haters combined.
Moorlach, of course, looks more at the financial realities than the emotional ones. Since its essentially a rental property, he notes, the fairgrounds can never be counted on to generate fixed revenues. And if FMW cannot make its lease payments, the city will have to pick up the slack, he worries.
"If FMW chokes on this deal and walks,” the supervisor says, "then the residents of Costa Mesa will have to deal with this alligator. An alligator, in real estate terms, is a property that consumes more in debt and operating payments than it spins off in rental income.”
A Costa Mesa resident himself (last time I checked, anyway), Moorlach does not want to see his prediction come true.
"I want to, again, wish Mr. Lemmon much success,” he concludes. "But I'm not interested in buying any stock in FMW anytime soon. (You can't purchase stock in FMW, but this is a line that I shared with Mr. Lemmon to make a point.)
"My prayer? I hope that I am wrong.”
This is from a man who also wished he was wrong—but wasn't—when it came to what was then the largest municipal bankruptcy in U.S. history.