State rejects fairgrounds bid

A Newport Beach development company’s $56.5-million offer to buy the Orange County Fairgrounds from the state has been rejected by the head of the California Department of General Services, which is in charge of selling the 150-acre property in Costa Mesa.

In a letter to Gov. Arnold Schwarzenegger dated Wednesday, Ronald Diedrich, the department’s acting director, said he had decided to reject the bid by Newport’s Craig Realty Group and six other bids on the fairgrounds as “they are not in the best interest of the citizens of California because they do not obtain the highest and most certain return for the state.”

Craig is a developer of outlet shopping centers. The company’s clinching bid at live auction Jan. 14 came in well under the $96 million to $180 million that the state had expected to fetch for the fairgrounds.

“We’re certainly not satisfied with the results,” Jeffrey Young, a spokesman from General Services, said Wednesday.

The department’s dissatisfaction is satisfying to Costa Mesa officials.

“This is great news,” said Costa Mesa Councilwoman Katrina Foley. “Anybody who’s been paying attention would realize that this is great news. It’s nice to see that the will of the people is something that Sacramento is listening to, and we can now begin the next phase of this process.”

That next phase is for the city to gain local control over the fairgrounds, Foley said.

Although the $6.5-million joint city and county bid on the fairgrounds didn’t measure up to Craig Realty’s offer, the city has continued to negotiate with the state to find a way to gain control and preserve the fairgrounds, Foley said.

Foley would not provide more details on the negotiations between the city and the state, but said Costa Mesa is doing all it can to ensure that the fairgrounds is preserved.

Rejecting all bids does not mean the fairgrounds will not be sold.

“The governor remains committed to selling the fairgrounds because he believes that the state shouldn’t be in the real estate business,” said Mike Naple, a spokesman for the governor. “The current bids were rejected because they are not in the best interest of the taxpayers and the state is in the process of exploring other alternatives.”

Exploring other alternatives could mean starting another process that allows interested bidders to offer more money to the state or giving control to local government, Young said.

The Daily Pilot requested the dollar amount that General Services has spent on the sale process, but that figure was not immediately available.

Assemblyman Van Tran (R-Westminster) said he does not believe the state would take the same direction it took in October to sell the fairgrounds.

“The bids were extremely low. They did not meet anyone’s expectations, least of all the governor’s expectations,” he said. “... I would encourage, once again, the governor’s office through DGS to work with local authorities to best maximize the potential of this property.”

Members from the Orange County Fairgrounds Preservation Society, which formed to oppose the sale and maintain the property for fair and exposition purpose, will hold a news conference at 10 a.m. today at the Fairgrounds, 88 Fair Drive, to thank the governor.

“I’m pleased with the decision,” said society President Sandy Genis. “Of course, that’s just one step in the process, and clearly that does not mean that the fairgrounds is totally out of the woods.”