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Rigonomics:

Fair deal gets even stranger

January 15, 2010|By Jim Righeimer

I have been involved, in one way or another, in the real estate business since 1979.

I got my real estate license while in college to help pay my way through school. The plan was to sell houses in the summer to pay my way through the rest of the year. I did well at brokering real estate. I decided to take the fall semester off and start back at school the following semester. One thing led to another, and let’s just say that I received my degree 12 years later at night school.

Over the years I have been involved in everything from selling and building houses to developing neighborhood shopping centers. In my 30 years in this business, I have never seen what happened at Thursday’s auction of the Orange County Fairgrounds. In this columnist’s humble opinion, there was something strange with the bidding.

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The bidding for our fairgrounds was the most bizarre process I’d ever seen. First off, the state allowed in a bidder whose opening bid was $1,000. That bidder had to put up a $50,000 cashier’s check to bid, yet was bidding only $1,000.

But what was really strange was that the original high bidder never so much as raised their paddle to bid during the live auction that followed the opening of initial bids.

A little background: The Department of General Services (DGS) received seven sealed bids by Monday’s submission deadline. Those bids were opened Thursday at the auction, when this was supposed to be the first time that the state publicly announced who the bidders were. More on that later.

The highest initial bid was set as the starting point for all seven bidders to raise their offer during a live auction. The highest bid was from Facilities Management West Inc., which is owned by a local Orange County family. The written bid was $55 million. The next-highest bid was from Craig Realty, a Newport Beach-based outlet mall developer, at $42.5 million.

Minimum bid raises were $500,000, so Craig Realty Group opened with $55.5 million. Advanced Real Estate Service, a Lake Forest-based apartment development company, countered with a bid of $56 million. Craig Realty followed with $56.5 million, and the auction ended as quickly as it started.

What was strange was what did not happen. The highest original bidder, Facilities Management West, sat on their paddle and did not bid even once to raise their original bid.

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