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FMW files with Court of Appeal over fairgrounds sale

The prospective buyer argues that its offer beats the state's minimum requirements to buy the property, and the lower court came to the wrong conclusion with a stay on the sale.

February 11, 2011|By Joseph Serna, joseph.serna@latimes.com

FOR THE RECORD: This version clarifies the headline and sub-headline.

COSTA MESA – Attorneys for a group that wants to purchase the Orange County Fairgrounds from the state argued in a state Court of Appeal filing this week that a lower court drew the wrong conclusion in maintaining a stay on the sale.

In the motion seeking to lift the stay of the sale to Facilities Management West (FMW), attorneys for the Newport Beach-based company and the OC Fair & Event Center lay out their points on why they their winning $100-million bid should lead to a legal sale of the property.

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An Orange County Superior Court judge in December said opponents of the sale probably wouldn't succeed in a higher court, but maintained a stay on the purchase while the case works through its way through the courts.

It wasn't a secret that the state was trying to off-load the property and businesses had two chances to make competitive bids to buy the fairgrounds, FMW attorneys argued.

FMW's offer actually beats the state's minimum requirements for buying the grounds, offering 20% of its $100-million price up front and a 35-year plan to pay the rest instead of a 40-year plan others offered.

"When the bid terms are inconsistent, FMW's bid demonstrably yielded the highest and most certain return," the motion reads. "FMW was the only bidder who offered personal guaranties of the loan, which would be given by Kenneth Fait and David Pyle — both high-net-worth individuals. As such, FMW's bid was the only bid that offered the state recourse beyond the property in the event of default."

Opposition to the sale is comprised of private citizen groups, politicians, a competing developer and Jeff Teller's American Fairs and Festivals, which runs the weekend swap meet at the fairgrounds.

They filed separate lawsuits last year trying to stop the sale of the 150-acre property and had their cases consolidated in December.

Attorneys for sale opponents could not be reached for comment early Friday evening.

The parties claim the state stacked the deck in FMW's favor when they opened up the property for bidding last summer.

Not only did the terms of the bid mirror the terms FMW was working out with Costa Mesa when they jointly pursued buying the fairgrounds earlier in 2010, but not all competitors had ample time to prepare a bid and FMW didn't follow the terms of the state's requirements, anyway, the appellants argue.

The state and FMW said those claims are groundless.

FMW also argues that because state legislators did not pass anything in Sacramento to stop the sale in the summer, officials gave the deal tacit approval.

The fairgrounds were put up for sale in 2009 as part of then-Gov. Arnold Schwarzenegger's plan to shore up a massive state budget deficit. Officials this week said it's unclear if Gov. Jerry Brown wants to sell the property.

This week he announced he was halting the sale of 11 state properties Schwarzenegger had previously tried to sell.

American Fairs and the other appellants have until Feb. 28 to file their response to FMW's request to permit the sale, court records show.

Brown withdrew support for the selling of many state parcels earlier this week, but did not give a strong opinion on the fairgrounds deal.

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